Archive for the ‘Demand management’ Category

We recently completed a survey project with TechValidate – a software service provider that is used to collect and produce third party verified customer content.

Over the last few weeks we began to see the results come together from over 150 customer survey responses and now we would like to share it with our readers! Every Friday for the next few weeks, we will feature real-world experiences and testimonials of verified users of Kinaxis RapidResponse.

In this series, we will explore the following topics:

Part 2: Supply Chain Visibility
Part 3: Supply Chain Planning
Part 4: What-if Analysis
Part 5: Response
Part 6: Alternative Technologies
Part 7: Competitive Advantage

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

First up, we asked what supply chain functions do you use RapidResponse for and why did you select it over alternatives? As you can see, this proves our one to many value proposition – our customers use RapidResponse to support many different processes, and more than one of them within any given organization.

Flexibility is key. Agile processes requires equally agile technology.

SupplyChainBrain attended our annual Kinexions user conference. At our event they completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are loaded with great information and we would like to share it with our readers.

Each week, we have been sharing the clips. The final video in our series is Celestica!

Celestica’s Supply Chain Collaboration Center

Celestica’s collaborative initiative comprises three elements – inventory visibility, much closer relations with suppliers, and optimized inventory management, says Erwin Hermans, vice president of supply chain solutions at the contract manufacturer. [Run Time (Min.): 12:22]

If you haven’t already heard, the Gartner Supply Chain Executive Conference  ̶  ‘The World’s Most Important Gathering of Supply Chain Leaders’  ̶   is taking place May 21-23 in Phoenix, AZ.

The theme of the conference is ‘Re-Imagine Supply Chain: Fast, Forward, Focus’ and features a fantastic line up of presenters. You can find lots of information on the conference site, but here’s what we think are the top 5 things you should know for this event!

#5 We are attending: Kinaxis will have a staffed booth at the event. Please come by booth #101 and say hi to the team!

#4 We are tweeting: We’ll be tweeting live commentary! Follow #GartnerSCC, @kinaxis or @milesahead.

#3 We are sponsoring: Kinaxis is the Premier Sponsor of the conference, and once again we are also proud to sponsor the Supply Chain Top 25 Dinner celebrating world-class supply chain achievements.

#2 We are presenting: We are hosting a Solution Provider Session in the Grand Canyon, Room 6, on Wednesday May 22nd at 3:15pm.

But most of all…

#1 We are having fun: We are turning our session into a live taping of the LATE LATE SUPPLY CHAIN SHOW.  Laugh and learn with Kinaxis business consultant, Bill Dubois, as he interviews senior supply chain executives to get to the heart of their control tower initiatives in “Supply Chain Control Towers-Defining an Approach and Driving Results”.

Special guests include:

Laura Dionne, Senior Director, Worldwide Operations Planning at TriQuint

Don Gaspari, Director, Global Inventory Management at NCR

Roddy Martin, Managing Director at Accenture

C.J. Wehlage, Vice President, High Tech Solutions at Kinaxis

I’m excited to tell you about our upcoming webcast with Frank Scavo of Constellation Research entitled, “Seven Recommendations for Gaining Positive ROI and Strategic Benefits from SCM Technology”. Register now for this May 7th webcast exploring investment trends and solution needs for midsize organizations.

Event Details:
Research indicates small and midsize organizations are investing in SCM technology at a slightly higher rate than are large organizations, signifying that SCM solutions are moving down market. With pervasive industry trends such as globalization and outsourcing, midsize organizations are facing similar planning challenges as larger enterprises, and thus are experiencing ever-increasing SCM and S&OP solution needs. Supply chain management systems can deliver concrete results and measurable financial benefits; however, it is important to recognize the challenges and plan accordingly.

Reserve your spot for this complimentary webcast.

Presenter
Frank Scavo, CFPIM
Vice President and Principal Analyst, Constellation Research

Frank Scavo has over 20 years of experience in IT strategy, IT management metrics, enterprise applications and business process improvement in a broad range of industries, including process and discrete manufacturing, medical devices, pharmaceuticals, consumer products, high-tech, wholesale and retail distribution and information services. He is especially skilled at aligning business and IT strategy, developing the business case for new systems and facilitating the selection of enterprise systems, such as ERP, CRM and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations.

If it wasn’t so depressing, I’d laugh. Last week, we discovered that one of the leading studies that has been driving the EU Austerity policy is flawed. Why? An Error in an Excel spreadsheet.

The Eurozone Crisis really hit its stride in 2010 when several European countries (lead by Greece, Ireland and Portugal) found themselves unable to repay or refinance their government held debt. As a result, this prompted EU countries to implement austerity measures (higher taxes and lower expenses) targeted at cutting government deficits and hopefully reducing debt. The study that drove the austerity decision linked high debt to negative impact on growth. Researchers have finally been able to replicate this study and found issues. One is that the causation may be backwards; that in fact, it could be that slow growth drives higher debt. The other thing they discovered was an error that anyone who has used excel has probably made themselves; a formula that calculates the average for a range of numbers didn’t include the entire range. This error and some tweaks to the assumptions (the years included in the study) actually fundamentally changes the results.

This is one of many examples that bring home the risk inherent in Excel models. They can be incredibly complex and errors tend to hide in the underlying formulas hidden to casual inspection. Forbes calls Excel “The most Dangerous Software on The Planet” yet companies still make many decisions every day based on Excel models.

Supply Chain is no different. How many times have you pulled data from your ERP system and modeled it in Excel? Companies, even those with costly, complex ERP suites very often turn to Excel for complex decisions. Why?

1. They want to simulate something, but don’t want to run it in their ERP system because it takes too long.
2. They want to simulate something, but don’t want to risk making changes to their production data until they know for sure that the change is a positive one.
3. The data is in their ERP system, but they can’t get the data visualizations they need from their ERP system without an expensive, time consuming customization project.
4. Some data is in one system, and other data is in the other system (might even be the same software but a different instance), but both sets of data are needed to make a complete decision.

As a supply chain professional, what would you need to stop using Excel for supply chain decisions? What if you had a tool that allowed you to:

• Create scenarios instantly. Those scenarios are private until you want to share. You can change anything you want and those changes won’t impact production until you want them to.
• Have current data from multiple systems, yet have it all connected as if it were a single environment. One site is Oracle, another is SAP? No problem – the analytics from each system are replicated.
• View numerous standard reports, graphs, dashboards and scorecards. The reporting model is similar to Excel (Rows and columns) so users are comfortable with navigating. Reports leverage deep supply chain and business analytics. Workbook design can be limited to a select few so business logic can be locked down.
• Get analytic results instantly. All data and analytics reside in memory so full ERP calculations occur in seconds, not hours or (gulp) days.
• Share results and have everyone on the team see the exact same version. No worries about people using different versions.

If you had such a tool why would you still use Excel?

Have you had any spreadsheet fiascos? If so, comment back and let us know!

I’ve been waiting for this time of year.  Since a blog is about an opinion, and I spent two years running the AMR Research High Tech practice, I want to share my predictions on how the Gartner 2013 Supply Chain Top 25 will shake out. 

Before I dive into my predictions, let’s first look at the voting process. For level setting, the voting is broken into the following:

• 50% Financial Metrics: Return on Assets, Inventory Turns and Revenue Growth
• 25% Peer Vote
• 25% Analyst Vote

Remember, if you aren’t on the Fortune 500 or global Forbes 2000, you are not even put in the bucket.  Also, I am ok with eliminating insurance and banking.  Hey, for what the banking industry has done in the past few years, they deserve it.   It also doesn’t help that PNC Bank took 7 months to close on our California house!  But, eliminating IBM and Microsoft because they are too software focused doesn’t seem right – especially with all the digital supply chain opportunities. And, this is coming from an ex Apple guy! 

The financial metrics continue to reward the low asset, high turn companies.  Therefore, it’s a tough road for those in aerospace, chemicals and automotive.

So, let’s focus on the voting aspect.  Most of the analyst votes are unavoidably influenced by “soft” factors.  For example, many companies make it a specific goal to be on the Top 25 list and will make a concerted effort to interact with the analysts leading up to voting. By default, the more the analysts know of a given company/supply chain, the better position the analysts are in to gauge their appropriateness for the list. Other “soft” factors include the changeover of analysts, as well as the differing perspectives they bring with them given previous experience. I believe there is a growing contingency of analysts with management consulting backgrounds as opposed to practitioner experience.

At the end of the day, the voting is based on opinions which, of course, will naturally include biases. 

The peer voting is also a tough one to measure.  Brand is certainly a huge factor.  That’s why Apple gets a lot of votes, not FoxConn (Hon Hai).  Voting by industry also makes a difference.  If more high tech voters participate, then they are more likely to “know” about their peer’s supply chain.  I also like to watch which companies are attending & presenting at the major supply chain conferences.  Getting the word out at these events seems to correlate to peer voting.

2013 Supply Chain Top 25: Five Bold Predictions

1. After a three year run at #1, Apple will fall out of the top spot in 2013

• This is a tough one for me, being ex Apple.  2012 sales were up 45%, earnings up 59%.  But, average employee salaries jumped from ~60k to ~72k.  Share prices were down ~ 10%.  There’s a good amount of peer talk about Apple’s product line being hit by the competition.   Apple is expected to open 30-35 new retail stores in 2013, something that will impact their ROA.  I also think the new product “halo” factor has been hit this past year due to product and management issues.

2.  After placing 18^th in 2010, 16^th in 2011, and 7^th in 2012, I preditct Intel will be in the top 3 of the 2013 Top 25

• Intel has done a lot in 2012 to move up.  In the Gartner “Supply Chain’s Journey Through the Five Stages of DDVN Maturity”, they are the “Stage 5” case example.  The new COO, who also is in charge of IT and HR, is putting a ton of focus on speed and agility, positioning him as a forerunner to CEO.

3.  After placing 5^th in 2010, 2^nd in 2011, and 4^th in 2012, Dell will fall out of the top 10

• Dell has one of the better supply chains, with a focus on operations as well as sustainability.  However, their recent focus on services and acquisitions may impact their “Top 25” financial numbers.  They announced a $1B investment in cloud data – opening 11 solution centers, 2 data centers, and increased R&D budget by 30%.  Dell has been busy on the acquisition front as well – RNA Networks, Force10, AppAssure, SonicWal, Wyse Technology, Clerity, and Make Techologies.
• Recent news (i.e. just before voting started) will also impact peer votes.  Dell posted a decline of 31% in 4^th quarter profit and a 32% decline for the fiscal year.  The leveraged buyout of shareholders may sway voters, and ultimately take Dell off the Top 25 list due to “readily available, audited public data”.

4.  Don’t be surprised if Coca Cola (#13 in 2010, #11 in 2011, and #6 in 2012) places #2 in 2013

• This is one of those gut calls.   Coca Cola has been rising in the Top 25 ranks.  They’ve recently had good press for higher than expected profits.  They announced a refranchise model, getting out of the capital intensive, low return business of delivery bottles & cans.  That margin improvement plan helped their stock, and my gut says it will put a positive light on peer voting.

5.  From #10 in 2010, to #5 in 2011, to #2 in 2012, Amazon will come in at the #1 spot in the 2013 Top  25 Supply Chains

• Amazon’s AWS (Amazon Web Services) is fast becoming the cloud computing platform of choice.  Bernstein Research expects AWS to have an estimated $20B in revenues by the end of the decade.   Peer voting will be influenced by Amazon’s cloud reach & success.
• Sales for 2012 were at an all-time high of $61B! a 27% increase from 2011.  But, and this is a big but, 2012 net loss of $39M was a big swing from the 2011 net income of $631M.  The investments in Kindle, digital content and global infrastructure impacts profit, but is the right strategic play for the multi-billion dollar e-books business.

Amazon brings me to my final point.  Supply Chains are now considered part of business success, not just a needed function.  New supply chain skills & techniques: consumer loyalty & trust, high touch service, social commerce, mobility, and predictive analytics, will be required.  Most of these techniques will be delivered via the cloud.  Cloud is an expense item,  not on the COGS, and will greatly impact the Top 25 financial metrics of ROA and Inventory Turns.   Amazon, and supply chains that integrate new business models (like social commerce and online consumer) will be the cutting edge supply chain leaders, and we will need to re-think demand driven vs. ROA/Turns.

In the end, the Top 25 Supply Chains is mostly about bringing corporate awareness to the benefits of supply chain.  I’d love to have innovation, agility, collaboration, service and profitability metrics.  Aside from self-reporting, these are not readily available, audited, and comparable across industry.  The best part about the Supply Chain Top 25 list is that supply chain is more than ever being seen as a key part of corporate success.

In my last blog, I made the statement, “The traditional thinking of improving speed of transactions between systems was usurped by improving speed of knowledge between people.” Case in point from my own experience:

EMC end of quarter – it was more important to have finance, sales, supply chain and service collaborate in person, to share their knowledge.  Orders were prioritized, product was moved, and profit was optimized.  The system transactions were certainly needed, but took a back seat to the speed of inter-team collaboration.

Apple new product introduction – departments would restructure.  The entire team would have common goals & common compensation plans. This core team held the decision power to meet the announcement date.  When you are betting the company on a few SKU’s, the personal collaborative spirit usurped the system transactions.

I think back to these days, especially when I hear my old friends at AMR Research (now Gartner) reference High Tech as an industry to measure for supply chain leadership. There are a lot of reasons this reference makes sense.  High Tech has intense product innovation, forcing quick life cycles.  We embraced globalization, pushed the envelope of outsourcing, and fundamentally changed the “plan-by-make-deliver” model.

I recently read Supply Chain Insights’ A Focus on Consumer Electronics (Mayer, A., Supply Chain Insights LLC, 4/05/2013). I spoke to Abby Mayer about the industry, and agree with her finding, “the consumer electronics industry has outperformed most other industries in four significant areas: growth, profitability, cycle management, and complexity.”  Ah, there’s that word from my prior blog: complexity.  Once again, I will state that speed is the inverse function of complexity.  High Tech embraces, in fact builds, complexity.  It’s a differentiator, when you can control speed.

However, speed in your vertical supply network is not the end game.  I found this out when I was recently talking with a supply chain executive, a person I met back in 2008 in Suwon, South Korea.  Soon, most high tech supply chains will have speed.  It will be the norm to have vertical speed.  The new battle ground for supply chain leadership will be the ability to leverage that vertical speed against other supply chain networks.  ‘Faster supply chains’ will get the better opportunity for profitability.  How?  It’s classic for high tech to master a skill, in this case, vertical speed.  Then, take that skill and leverage it against the competition.  Soon, supply chain networks will compete on speed.   The faster ones will place profitability metrics to speed.  The South Korean supply chain executive said, “As a brand, I want to position our speed as a means of profitability to our partners.  If they can’t answer in hours, especially if they are waiting on slower brands, I will change their profitability targets.” That’s a wake-up call to high tech supply chains.  Imagine if your 1 hour response can get 25% better profit margin that your 1 day response.

So, building speed, then leveraging speed, is where High Tech is going.  But, if speed of transactions is being usurped by speed of knowledge between people, then what enables speed between people?  I posed this question to my South Korean friend, a supply chain CIO from a semiconductor company, as well as to my old Apple network.  They came up with two common answers:

•  End-to-end visibility – raw material to end consumer
•  Tight collaboration – in the form of personal interactions

And, I agree with their responses. These answers are what made my days at Apple and EMC work well.  But, all collaboration seems to resonate around a time fence.  At EMC, the best personal interactions came over the last two weeks of the quarter.  This core team acted as one unit, with common goals, and shared knowledge.  At Apple, the same interactions would occur extremely well during the 2 months before new product introduction.  Even at Bose, the common bond would happen during those few days called Black Friday.

Which brings me to my largest concern for high tech supply chain leadership: While end-to-end visibility is a gimme in high tech, most companies’ collaboration still isn’t healthy. And, if it’s not fixed, it will have a degrading impact on the future of high tech supply networks.  Look at scenario planning as an indicator.  Most high tech supply chains aspire to run effective scenario management models.  Most don’t do it effectively.  Why?  Here’s the secret. Effective people to people collaboration requires end–to-end modeling and common goals, and this isn’t happening in high tech.

As a practitioner, I’ll stand up in the high tech circle and say, “hello, my name is C.J. Wehlage, and I am a recovering collaborator.” When I was “collaborating”, I was always making sure my margin was maximized.  Let’s not confuse collaborating with fighting for margin.  Effective collaboration had not much to do with true end-to-end modeling, as much as it was about margin attainment at the expense of suppliers.  My common goals weren’t including Contract Manufacturers and suppliers all the time.  Take a second read of the Supply Chain Insight report.  Table 3 – while the Consumer Electronic operating margin was fantastic over the 2000-2011 time-frame, the Contract Manufacturers operating margin was low to even negative over the same time frame.  I’m not the first to whisper at the AMR Top 25 Supply Chain dinner, “they may be in the Top 10, but really it should be FoxConn/Jabil/Flextronics accepting that award….”

This is my concern, and it’s the game changer for High Tech supply chains.  Negative margin in a major node cannot be sustained.  Collaboration needs to consider true end-to-end modeling. The complete margin of the network needs to be the metric that drives success.  Then, cool terms like ‘total cost to serve’ will mature.  But don’t look to mathematical models to bring about this collaborative change. I expect it will be human judgment & ingenuity.

We still have a global, complex network that crosses multiple nodes, not all under the same controls, not all driven by the same metrics, and not well trained to share benefits; Couple all this with economic reconfiguration (see China growth), cultures, language and levels of sophistication.

That’s why it’s so critical to begin with sharing knowledge, end-to-end, with the network.  Innovation breeds from this sharing.  I believe this innovation will create the step function in collaboration.

I’ll leave this blog with a shout out to an old AMR Research friend, David Aquino, now a SVP Supply Chain in Irvine, CA.  Dave and his colleague Lucie Draper wrote a great report on supply chain talent while at AMR.  The report described that the lack of talent is a great risk to seeing this step function in collaboration. From Figure 6 of the report, the section for Highest Level of Skills Sought & Lowest Skills Available is: Customer Management, Strategy and Change Management, Technology Enablement.

Within the report, the comment was made that leaders would like to see candidates that are better able to “connect the dots.” That sounds a lot like true end-to-end innovation – the kind of innovation that is created out of human ingenuity.  Something that gives me hopes that this will occur.  From my two years at AMR Research, I recognized that the Top 25 supply chains didn’t always have the best mathematical systems, but did have a desire for ingenuity.

Here is part three of my seven-part book review series of Lora Cecere’s Bricks Matter. In my Chapter 2 post, we discussed value networks.  In this blog, we will discuss Lora’s take on demand management – specifically, demand sensing, shaping, and translation.

As we learned, much like it is easy to use supply chains and value networks as synonyms, when they are not, it is easy to think about demand management and demand planning – or more specifically – using statistical forecasts to predict future demands, and thus, the inputs for supply planning.  However, as discussed in this chapter, demand management is much more than statistical forecasting based on history.

It is really hard to boil down all the concepts of demand management discussed in the chapter into a blog post, but I will give it my best shot.

Demand management comes down to four sub-processes as follows:

1) Demand sensing – this is the first of the demand management processes and is a continual process.  In the Internet age, demand signals come from everywhere – online shopping, social media, channel partners, and other endless sources.  To be truly effective, demand signals have to be captured by market, channel, category and product – regardless of industry.  The main parties who have to collaborate on demand sensing are sales and marketing – to come up with the best possible (and most up-to-date) market opportunities and key business drivers. Lora uses the example of Newell Rubbermaid and how they constantly monitored and used social media to make new product introduction much more successful than it was headed without these social demand signals.

2) Demand shaping – this is the process of using what-if analysis to shape demand based on both strategic and tactical sales and marketing plans.  The collaboration here is also between sales and marketing, but also with finance to make sure the most profitable decisions are being made.  Lora uses Dell as an example for demand shaping, which brought me back in time to 2003.  I was at a conference on managing by metrics (Moneyball has just been published) put on in Cambridge, MA by Dr. Michael Hammer.  Dr. Hammer had many guest speakers, but the one that was most memorable was a VP of Supply Chain from Dell.  The story of shaping the demand for CRT-based monitors over LCD monitors, when LCD demand exploded quicker than anyone expected, seemed like utopia to me (along with their cash-conversion-cycle of -38 days – that’s right NEGATIVE 38 days).  Now, almost 10 years later, I think I am more surprised by how few companies can even approach the demand shaping Dell was doing “6 Moore’s Laws” ago!

3) Demand shifting – different than actually shaping future demand in demand shaping, demand shifting is about matching supply to unconstrained demand.  The best example is promotions planning to drive supply before it become obsolete.  This process requires the collaboration between many departments including sales, marketing, finance and operations with consensus planning discipline.

4) Demand response – Finally, in spite of all the best sensing possible, unforeseen demands still occur.  Responding profitably to these unforeseen demands requires a great discipline around collaboration across most departments, real-time visibility to entire value network to determine if supply can match the new demand (and what about demands might be put at risk), and more.

Lora also explores the process, people and technology challenges to achieving excellence in demand management, using industry examples and case studies.

In short, achieving excellence in demand management – to become market-driven – is extremely challenging, but the rewards are more than worth the effort to get it right.  Or put another way, staying in business over the long term without achieving market-driven demand management excellence is going to be very hard.