Archive for the ‘Inventory 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


Kinexions: Is “User Conference” the Right Description?

Published November 28th, 2014 by Bill DuBois 0 Comments

Being a presales consultant (…by day, Late Late Supply Chain Show host by night) during the last quarter of the year, there’s little, if any, time to reflect back on what was the most successful user conference in Kinaxis history. To be honest, my reflections didn’t start until I read Josh Greenbaum’s post, “Women of the Supply Chain: Responsibility, Collaboration and Bathroom Lines”.

Kinexions is supply chain user conference the right descriptionMy first thought was “hey, there’ll be no collaboration in the bathroom” but then I realized he was referring to the gender ratio at the conference. Josh used the longer lines to the ladies restroom as a way to highlight the higher ratio of women at Kinexions.  I didn’t want to be the one to tell Josh that ladies go to the bathroom in pairs so that line would be double by default. Even so, Josh noted that ratio came in somewhat higher than the tech average at 23% but judging from this picture I would have guessed it was 50/50.

The heart of Josh’s post called out the reasons way women make great supply chain leaders. Josh quoted Trevor Miles as observing “women appear to be better at cooperation and collaboration and to be more open to alternative points of view, all skills that are valued in the supply chain world.”  Josh’s article got me thinking about the other groups that were there and made me question if the description “user conference” is the best way to describe Kinexions.

Doug Colbeth Kinexions supply chain user conferenceAs Kinaxis CEO Doug Colbeth stated in his opening remarks, it all starts with the customers and nothing is possible in our world without our customers. We logically think customer equals user which equals person hitting the keyboard and managing their supply chains with RapidResponse. However, there were people from the customer base that were non-users. For example, executives, who reap the benefits of a more profitable supply chain, or members from the IT community who can be more responsive to user requests but are not necessarily users themselves. The term user just seemed to leave a few people out. Doug also put to bed many misconceptions about Kinexions. For anyone who has googled the term Kinexions, it’s not a spa or an online dating site for supply chain professionals!? Thanks Doug!

Kinexions software companyThe second group was a unique one: prospects. Kinaxis is the only software company I know of that would let potential customers walk the halls freely and mingle with current customers. You couldn’t tell the difference between existing and potential customers as they had free access to all sessions. I don’t think Josh could have pointed out the prospects in the bathroom lines. Certainly there were break-out sessions designed for the more experienced user but we found those prospects looking for as much detail as they could get in these sessions. Do we now call it a “User and Wanna Be User Conference”?

Kinexions supply chain user conference analystsThe third group to note was partners. There has never been a higher level of participation from Kinaxis partners at Kinexions. We saw them on stage in the main session, hosting their own break-out sessions and in booths set up in the halls which allowed anyone to go a bit deeper on their offerings. This group has a mountain of user, deployment and supply chain strategy experience. Again, these groups are delivering value to the user community but are not users. The term user just got diluted even more. Partners are a vital member of the Kinaxis community so perhaps we should rename Kinexions to the “User and Partner Conference.”

Let’s move onto the fourth group: analysts. I’ll group both the supply chain and financial analysts together for this conversation. Obviously not users, this group is there to dig into the real user story. Sometimes it’s like playing a round of golf with a golf instructor. They’ve seen it all before so the only thing you can do is relax and swing like nobody’s watching. It’s the only way to get the most from this group in terms of feedback, insights and suggestions for improvement. We’re now up to the “User/Partner and Analyst Conference.”

Kinexions supply chain user conference marketingThe final group of “non-users” is the Kinaxis employees. All levels of sales, marketing, development and services were represented at Kinexions. Here’s a little known secret, for the staff of Kinaxis this is likely the most valuable event of the year. There is nothing like hearing firsthand how customers are maximizing the benefits of their RapidResponse deployments and validating those success stories with partners and analysts. I don’t think we can go with the “User, Partner, Analyst and Employee Conference.” However the theme of Kinexions for the last several years has been “Learn, Laugh, Share and Connect.” Perhaps the connotation of the term “user conference” should change to reflect the experience and not a single group of attendees. If you have ever logged onto the Kinaxis Community you’ll notice the “Learn, Laugh, Share and Connect” banner. So, my suggestion is that next year we refer to Kinexions as the Kinaxis Community Conference. Regardless of the tag line, everyone at Kinaxis is looking forward to Kinexions 2015. Hope to see you there!

 

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


SMAC in the Middle of Supply Chain Change – Part 3 of Kinaxis & Cognizant Series

Published October 27th, 2014 by Trevor Miles @milesahead 0 Comments

digital natives versus digital immigrantsMy friends at Cognizant 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 3 in our series.

Some colleagues and friends think I am nuts to put so much emphasis on the Digital Natives, and perhaps I am. Being a Digital Immigrant myself, I am only too aware of the command and control structures with which I grew up and which have been the foundation of all organizations for which I have worked. I’m not so naïve as to think that this change will happen quickly.

Throughout history major changes in technology have driven changes in social and business structures, the classic being the Pony Express and the steam train. But more fundamental change came from the printing press. This is a closer equivalent to the impact digitization will have on business structures, including a major shift in business models and therefore winners and losers.

We used to go to an office (many still do) because this was the easiest way to organize a workforce and structure work. Similarly with factories. People have to go to where the machines are. But in a digital world the only reason to have an office is for the management, which are almost always Digital Immigrants, to enforce a structure and linear decision making processes, the very things that Digital Natives find most constrictive.

I’d also like to point out that these are the very things that cause siloed organizations and long decision cycles in our supply chains. The hand-offs and approvals which are the basis for our existing organizational structure date from the days of runners and carrier pigeons.  Jonathan Lofton raises many of these points, form a different perspective, in his blog “Unleash Pixar-like Creativity in Your Supply Chain Management Organization”. The braintrust Jonathan writes about has no authority, is collaborative, and is consensual. This is how Digital Natives like to work and what Digital Immigrants find threatening.

Technology is simply an enabler. It is how we use it that brings value. And much as we have had to rethink the first applications that were simply a digitization of a paper based paradigm, we need to rethink how we structure our organizations and get work done to get maximum utility out of the digital world. And the Digital natives are experimenting with these as we speak. As we have in the past, let us, the Digital Immigrants, extract the value from their experimentation rather than resist the inevitable change. I find these tremendously exciting times.

For additional reading on the topic of Digital Natives and Digital Immigrants, check out my recent blog on “Do Supply Chain Planning systems generate any value?” as well as the following presentation by Marc Prensky from the Handheld Learning conference.

 

 

Posted in Inventory management, Milesahead, 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