Archive for the ‘Demand management’ Category

The Supply Chain “Change” Dilemma!

Published December 15th, 2014 by Prasad Satyavolu 0 Comments

Trevor Miles and I have been having a healthy discussion on the Internet of Things and how these technology changes are shaping the way we work.

This is part 4 in our Internet of Things Series: The Supply Chain “Change” dilemma!

A few weeks ago, Charles Wehlage wrote a blog post on his take on The Innovators Dilemma. I thought his analogies with supply chain strategy and execution were spot on. In this piece, Clayton Christensen specifically focused on why organizations fail. And not just any organization, but the great ones! The key learning is that the individuals who as a team have just witnessed a big win as a result of a hard worked strategy are highly likely to miss the budding wave of disruptive forces and be ready for the next change.

My own experiences witsupply change dilemna Svyantek DeShon System interface and hierarchy of effortsh different large scale transformations certainly point to this valid the hypothesis. An organization’s capability to sustain its innovative streak is largely dependent on the organizational “software” a.k.a. human resource + DNA. Therefore, the dilemma is how to synchronize the “social dynamics” within an organization and lead continuous change as digital technologies evolve and their adoption is a necessity.

The graphic from Svyantek and DeShon’s thoughts on “System interface and hierarchy of efforts required for change in an organization” illustrates the complexity of change. Organizational software comes before process and technology.

 

supply change dilemna organizations as machine or living system

I equate corporates especially the supply chain organizations with living organisms. They evolve as new scenarios emerge, oil prices fluctuate, new suppliers are added, customers are acquired, new markets penetrated and more data and information becomes available. It is wrong to assume that the collective intelligence of a thinking group can be subsumed in the so-perceived “automated Internet of Things (IoT)” world. Also, pushing the organizational supply chain change issues to a set of mere “team building” workshops will not suffice either.

Information flow within an organization plays a critical role in creating a culture of transparency, commitment to shared goals and observable leadership behaviors. The microcosm of the organization is thus formed within each cell of the organization. The information flow through these cells or nodes spread out within and outside the organization’s supply network shall determine the sustainability of change. Can we leverage the IoT paradigm to create a different organizational culture?

For most global organizations, the supply chain as a system can perhaps be best characterized as geographically spread but comprising of interdependent elements guided and orchestrated by thousands of brains. Arguably, these supply chains are highly complex and difficult to change.

As technologies provide new opportunities for disruptive innovation, building a “learning organization”- along the lines of the model proposed by Peter Senge- could perhaps help in not getting caught in its own success. According to Senge:

‘learning organizations’ are those organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.”

He argues that only those organizations that are able to adapt quickly and effectively will be able to excel in their field or market.

So, when Trevor and I started discussing the impact of Internet of Things on the Supply Chain; it soon became clear that we are looking at a massive opportunity for transformation. The path to realization will require balancing the communication, computing and control with human intervention on one hand and building a continuously learning organization on the other.

What are your thoughts on this matter? Comment and let us know.

Posted in Demand management, General News, Inventory management, Supply chain collaboration, Supply chain management


Overcoming the Challenges to Achieving End-to-End Supply Chain Visibility

Published December 1st, 2014 by Melissa Clow 2 Comments

Supply chain visibility alone won’t yield effective supply chain orchestration; it is a prerequisite capability, among others.

The 2014 Strategic Road Map for Supply Chain Visibility research recently conducted by Gartner (and included in our new Supply Chain Visibility: Envisioning the Broader Need paper), describes the current state of maturity as it relates to visibility, as follows:

“Most supply chain organizations are at Stage 2 or 3 of supply chain maturity, and thus have an inside-out view of supply chain plans, events and data. Their current visibility capabilities are most likely departmental or functional and focus separately on data and processes for planning and execution.”1

Overcoming the Challenges to Achieving End-to-End Supply Chain VisibilityThe defined maturity model consists of five stages, which means there is plenty of opportunity for organizations to make improvements in their supply chains to enhance visibility. The ultimate goal is to have visibility into not just to what is happening within your own company but extended to all areas of your supply chain, including partners. This is the shift from an inside-out to an outside-in focus. Stage 5 also entails achieving visibility across supply chain planning and execution. Attaining this level of visibility is obviously no small feat.

As supply chains get longer and more global, there has been a significant increase in the number of supply chain nodes that need to be connected and the volume of data moving among these nodes. The complexity associated with connecting these nodes – both those internal and external to the organization – is a barrier to end-to-end supply chain visibility. Data harmonization across multiple systems of record also adds another layer of complexity.

Despite these challenges, it is possible for organizations to achieve the higher levels of visibility outlined in Gartner’s model. And the benefits – which many believe include a more agile, resilient, competitive and profitable supply chain – are worth the effort.

If you are looking to establish critical supply chain visibility capabilities and progress towards higher levels in the visibility maturity model, our new paper entitled Supply Chain Visibility: Envisioning the Broader Need, is a worthwhile read. Featuring research from Gartner, the paper sheds more light on the complexities surrounding the attainment of supply chain visibility and provides a strategic roadmap for supply chain visibility initiatives. Download your copy today, as it is only be available for a limited time.

 

1Titze C., Payne T., Sarangdhar V., Devereux, P.; Gartner; 2014 Strategic Road Map for Supply Chain Visibility Initiatives; 8 September 2014

Posted in Demand management, Gartner Supply Chain Managment, General News, Sales and operations planning (S&OP), Supply chain management


Live Webcast: Continuous S&OP for Life Sciences – Breaking the Mold

Published November 17th, 2014 by Melissa Clow 0 Comments

Live Webcast: Continuous S&OP for Life Sciences - Breaking the Mold

Just a quick post to let you know of our upcoming live webcast, “Continuous S&OP for Life Sciences – Breaking the Mold“, which we will host this Wednesday, November 19th at 11am EST.

Trevor Miles, VP of Thought Leadership, Kinaxis, will present on the following topic.

Webcast Abstract

Trevor MilesBusiness realities have changed so tremendously in the last thirty years that the traditional ‘plan then execute’ S&OP model has become highly ineffective. It is unable to facilitate decision making amid acutely complex supply chain networks, or within the time horizons required. This is particularly true for Life Sciences companies faced with varying regulatory requirements and aging product portfolios.

In response, there is an emerging recognition that operational information must be accessed and evaluated on a continuous basis, whereby decisions that may have once only been considered as part of a scheduled S&OP process can be made as needed throughout the cycle. In this capacity, process execution evolves into operational orchestration.

In this webcast, learn about the unique S&OP challenges for Life Sciences companies, the importance of changing S&OP mindsets, and how to break the S&OP mold from both a process and technology perspective.

Register now!

 

Posted in Demand management, General News, Inventory management, Milesahead, Supply Chain Events


Supply Chain Professionals Speak on Delivering Better Business Outcomes with Kinaxis

Published November 13th, 2014 by Melissa Clow 1 Comment

I wanted to share this video compilation of several supply chain professionals that we have interviewed over the years. In the following clip these supply chain practitioners share their opinions on:

  • What is the primary change we are seeing in today’s supply chain?
  • What are key supply chain challenges organizations are faced with today?
  • How does Kinaxis compliment and extend ERP investments?
  • How is Kinaxis helping improve supply chain processes and deliver better business outcomes?
  • How is Kinaxis unique in helping solve complex supply chain challenges?

Hear customers from Qualcomm, TriQuint, Flextronics and Jabil speak on how RapidResponse has transformed their supply chain.

Posted in Best practices, Control tower, Demand management, General News, Inventory management, Miscellanea, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


On-demand Recording of Purposeful Collaboration: What It Could Mean for Your S&OP Process

Published October 21st, 2014 by Melissa Clow 1 Comment

Purposeful Collaboration What It Could Mean for Your S&OP Process

Collaboration is not about “being social”, it’s about making information available, connecting people and improving business processes.

Last week Alan Lepofsky, VP and Principal Analyst, Constellation Research and Trevor Miles, VP Thought Leadership, Kinaxis participated in a webcast on ‘Purposeful Collaboration: What It Could Mean for Your S&OP Process’.

The two discussed how even with heavy investments in Sales and Operations Planning (S&OP), many organizations are not achieving material or sustainable breakthroughs. This is often because they are executing a sequential, disjointed process with contributors operating in their narrow functional box.

In this recorded webcast, learn how purposeful collaboration can connect content, conversations, colleagues and communities to drive improved business outcomes.

Topics covered:

  • Harnessing and capitalizing on “working social” in a B2B environment
  • Using the key tenets of purposeful collaboration to enable effective decision-making, resolution and consensus building
  • Capabilities required to facilitate purposeful collaboration in S&OP
  • Changing the mindset away from the individual supply chain / S&OP functions to connecting functions and most importantly, people

If you missed it, feel free to check out the slides or the webcast recording.

 

Posted in Demand management, General News, Inventory management, Milesahead, Sales and operations planning (S&OP), Supply Chain Events, Supply chain management


Your supply chain is costing you money – Reason #6 Not effectively managing inventory.

Published October 20th, 2014 by John Westerveld 4 Comments

Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money.  Over the next several weeks, I’ll outline these issues and discuss some ideas around how to avoid these practices. You can find the previous posts here:

Not effectively managing inventory.

Reason #6 Not effectively managing inventory

I had to throw out some carrots yesterday. I hate throwing food out but there was nothing to be done for it…all I can say is that I’m glad the carrots were in a bag….and it didn’t leak. That got me thinking about why I was throwing away what had been perfectly good food;

  • I had forecasted needing a certain amount, but the customers (my family) didn’t take what I’d forecasted.
  • I thought we would want carrots, but everyone wanted broccoli…which I didn’t have.
  • I lost track of how many carrots we had and ended up buying more when we really didn’t need any.
  • Spoilage can happen.  In the case of my carrots, there was a limited shelf life – but they could have been dropped or stolen (hey, it could happen!).

That was carrots.  All in all, it cost me a couple of dollars.  Unfortunately, all the same kinds of things can happen to your supply chain inventory.  Except that your inventory costs millions of dollars.

Those of you that manage inventories know how hard it can be to get the quantities just right.  If you maintain too little inventory, you have stockouts, line stoppages and unhappy customers.  If you have excess inventory, it ties up working capital and is at risk of damage and obsolescence.  The worst possible world is when you have too much of something you don’t need, and too little of something you do need.

So what strategies are out there to maintain inventories at the “right” level? There are many but let’s focus on some of the high runners;

  • Sales and Operations Planning – How many times have you seen this scenario play out? Marketing sees an opportunity and plans a huge promotion for Product B.  Operations is going full out building anticipation inventory for Product A because Product A’s demand always goes up this time of year. By the time operations realizes that marketing is promoting a different product, they already have too much inventory of Product A and don’t have enough time to make enough Product B to satisfy the demand driven by the promotion.   If this company had an effective S&OP process, operations and marketing would have been aligned as soon as Marketing had approved the promotion, and would have had the right amount of inventory of the right product.
  • Better forecasts – Forecasts are always wrong! True.  But sometimes they can be less wrong…and the more accurate your forecast, the more likely it is that you’ll be building the right quantity of the right products at the right time.  Forecasting is hard, however, advanced tools like statistical forecasting algorithms, collaborative forecasting tools and forecast accuracy measures and what-if scenarios helps guide demand planners to a more accurate set of numbers.
  • Lead time reductions – Supply chain improvements can actually help improve forecasting!  Well,actually it would reduce the impact of bad forecasting when you are a make to stock shop.  How does that work you ask?   Imagine you were asked to accurately predict the weather for this time next year.  Pretty tough right? What about six months from now….still hard. What about next week? Getting easier.  How about tomorrow?  No problem (usually)!  In a make to stock environment, if I have a 6 month cumulative lead time, my forecast is being used to buy inventory today for something I’m going to sell in 6 months.  If through process improvements, I can reduce my lead time to 2 months, my accuracy will be much better where it really matters; during my cumulative lead time.
  • Better/faster planning – While there are things you can (and should) do to improve your forecasts, you are never going to realize truly accurate forecasts.  For example, a surveyfrom 2012 showed that average forecast error by industry ranged from 15% for retail to 39% for manufacturing/industrial and consumer packaged goods. Forecast error for most other industries was around 30%.One of the problems with poor forecast accuracy is that today’s legacy systems are unable to respond fast enough to satisfy demand that is in excess of forecast.  This leads to a) higher than necessary inventory levels as we maintain higher inventories on those items with the highest variability and forecast error or b) lower than acceptable customer service. Neither are good results.

So how do we respond faster? There are multiple capabilities your demand system must have to allow faster response to demand fluctuations;

  1. Visibility across the enterprise – to be able to respond effectively, your planning system must contain all data across all plants, regardless of the source system. Responding quickly means knowing what you have and what you don’t have.  If you have to wait hours or days to get a report off a remote system, you can’t respond.
  2. Always on analytics – Imagine creating an excel model but every time you made a change, you had to wait 6 hours to see the impact.   It wouldn’t be very useful, right? Yet this is what we accept from our ERP systems every day. To simulate effectively, you need to be able to see the result of a change as soon as that change is made.  Not only must the calculations be fast (seconds not hours) but the calculations must be configurable enough to allow you to model ERP results from any ERP system (what’s the point of figuring out what to do, if you can’t replicate the results in your execution system)
  3. What-if scenarios including scenario comparison – There is never only one answer to complex problems like supply change. Being able to try out multiple approaches very quickly and compare these approaches means that you can quickly zero in on the best answer.
  4. Collaboration – No one person has the knowledge of the entire supply chain in their head.  You must be able to rely on others to help figure things out.  You must be able to determine who needs to be involved, then share the appropriate scenarios and information with those people if you want to respond quickly (and confidently).
  5. Alerting based on impact, not on the event – There are a lot of things vying for our attention today.  So many, in fact, that we don’t have time to deal with items that aren’t truly important.  Traditional ERP systems drown us in frivolous messages; this supply order is 1 day late, this customer added an order, this job finished on time, etc, etc.  This is not important information –and as a rule can be relegated to summarized reports.  What is critical is: what the impact of these events?  For example, if that order is one day late, it impacts $3 million in customer orders. That’s what you want to know.  If the order is replenishing safety stock – who cares?
  • Inventory planning and optimization – Safety stock traditionally has been a pain to calculate – as a result many people didn’t. They either set the safety stock level once – and forgot about it or did a best guess at what the Safety Stock should be.  Inventory Planning is a relatively new area where safety stock is statistically determined based desired customer service levels and on supply and/or demand history. Traditionally, Safety stock was calculated a single level at a time and didn’t consider the stock of the parent or component item when calculating its own stock level.  Multi-Echelon optimization looks at the inventory for a family of parts and determines where it makes the most sense to locate inventory for individual items within that family and potentially lowers the overall inventory for the family.
  • Inventory accuracy – similar to my carrot analogy –  we all have had situations where you go to the store, buy some goods – then discover that you have 6 cans of the thing you just bought hiding behind the peanut butter.  Or worse, you THINK you have 6 cans of thing you need for supper and you don’t pick more of it up – then you discover that someone (maybe you?) ate it and you actually have none.  In supply chain, the same thing happens – but the cause is inaccurate inventory records and the cost can be huge.  How do inventory records get out of alignment?  In a previous life, I used to work with the operations team and track down inventory records. The biggest culprit was human error; incorrect quantities, incorrect BOMs, spillage, waste, etc.There are two approaches to maintaining accurate records;1. Annual physical inventory – This is a traditional inventory management technique where you take several days, tag all of the items in inventory and have some poor guy count the items, write the count on the tag and turn the tag into a central team that updates the records.  If there is a problem, the poor guy may be asked to go out and count the items again.  There are some problems with this approach;
    • While the inventory is being done, the factory cannot run. This means inventory must be done over the weekend or the factory needs to be shut down.
    • Physical inventories are not fun.  It’s tedious, boring, dirty, nasty work (speaking as someone who’s done it). It’s often performed by people not necessarily tied to the inventory function. It’s difficult to be precise counting thousands of different parts in the course of a few days.  It’s very likely that a significant number of the counts will be wrong.
    • The root cause of the error (why the inventory is wrong) is seldom ever caught and as such, doesn’t get corrected.

    2. Cycle counting – Cycle counting is a system where some small percentage of items get counted every day.  Important parts get counted several times per year, while unimportant parts are counted once per year. Every item is guaranteed to be counted at least once. The advantages of cycle counting are numerous;

    • The supply chain continues to function while the cycle count is done
    • The count is performed by inventory specialists that know the inventory, are used to counting and are incented to get it right.
    • Key parts are counted more frequently and therefore will be more accurate.
    • When a discrepancy is found, the team seeks to understand why the error occurred and ideally determines what changes they need to make to prevent the error from happening again.

    Inventory Management is a large and changing topic.  I’ve hit on what I think are some of the top runners in this post, but I know there are more factors that can cause inventory problems.  What issues have you seen?  Comment back and let us know!

     

Posted in Demand management, General News, Inventory management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Will the Internet of Things (IoT) Help Eliminate Information Latency and Deficiency in Supply Planning?

Published October 14th, 2014 by Prasad Satyavolu 5 Comments

Last week, Trevor Miles wrote “SMAC in the Middle of Supply Chain Change” and it made me recall the dozen or so articles I’ve read recently on the Internet of Things (IoT). I find that most have a similar opening – 30 billion or so devices will be connected by 2017 and more “things” will be connected than human beings on the earth. More and more sensors are getting embedded in the “things” and leading to an explosion of information availability.

devices internet of things

But in all fairness, this is indeed an unprecedented opportunity to leverage IoT for a transformation of the supply planning paradigm.

A multitude of challenges are emerging from a rapidly evolving supply & demand environment that warrant a fresh look at planning – really to assess the level of entropy! So when I started to think about planning processes in the context of IoT, I was wondering if we can conquer those two old enemies of planning effectiveness: information deficiency and information latency. The prospect seems exciting – new offerings targeted to finely segmented markets customized to individual customers, and movement of goods providing continuous visibility. Will IoT design enable us to get demand signals from the products and sensory information from the entire set of physical infrastructure for planning?

It is evident that this is crucial, as most manufacturers are still citing incidents of supply chain disruptions resulting from the lack of information visibility. In a 2013 survey by Business Continuity Institute  of over 500 business continuity professionals from 71 countries, 75% of respondents reported that they did not have full visibility of their supply chains.

From the proceedings at the Intelligent Transportation Systems World Congress in Detroit earlier this month, it certainly appeared that the green shoots are in sight. Mary Barra, GM’s CEO, announced a partnership for the development of a 125 mile long corridor of Intelligent and Connected Infrastructure in collaboration with academia, government and industry. While it by no means provides complete coverage, it is a bold start to create a truly interconnected ecosystem that will generate information efficiencies and not information overload for extreme planning.

sensors mobile internet of things

Umberto Eco writes that “Any fact becomes important when it’s connected to another.” Perhaps a philosophical underpinning to the possibilities from convergence of physical and digital supply chain? The path to realization certainly lies in synchronous orchestration of multiple technologies.

Applying Systems Thinking to all aspects of planning in supply chain will therefore help to improve the “input” and create better “closed loop feedback”. The developing IoT ecosystem certainly has the potential for eliminating the information latency and deficiency that we see today in the planning processes.

What do you think? Comment back and share your thoughts.

Posted in Demand management, General News, Inventory management, Sales and operations planning (S&OP), Supply chain management


Remembering: Turning Visibility into Possibility by Don Gaspari, NCR at Kinexions

Published October 9th, 2014 by Melissa Clow 0 Comments

As we countdown the days until Kinexions (18 days!). I’m remembering our fascinating customer videos. Today I’d like to share the interview on ‘Turning Visibility into Possibility’ from Kinexions.

In this video hear, Don Gaspari, Director, Materials & Inventory, Global Operations and Logistics, NCR, speak about his time at NCR and their vision to leverage it’s market leadership in self service devices and applications to transform the way that business does business with consumers. To support the company’s vision, NCR’s Global Operations team has developed a “Next in Class” supply chain strategy to enable it’s manufacturing and distribution network to efficiently and effectively respond to customer requirement’s.

To view the video in its entirety, watch it below or here.

Posted in Demand management, General News, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain management