Archive for the ‘Inventory management’ Category

Three Distinct Capabilities of Best in Class – From the suppy chain leadership series

Published April 16th, 2014 by CJ Wehlage 2 Comments

supply chain leadership seriesAs I mentioned in my last post of this series, I am starting a blog series on “supply chain leadership”. I hope to pose thought provoking, and forward looking questions to executives in my supply chain network. This series will provide insights into the most pressing challenges, innovative items in supply chain leader’s budgets, and how these executives have handled talent, complexity, end-to-end S&OP, and technology. Next up is Clarence Chen, Partner at AT Kearney.  I have known Clarence from his days at PRTM as Partner of Electronics & Semiconductors.  His background and opinions on the future of supply chain is truly fascinating.

1. As we enter 2014, how would you describe the most pressing supply chain challenges?

Some of the most pressing supply chain challenges in 2014 continues to be that of delivery, quality and cost.  I think the factors that compound those challenges are changing at a faster pace than most industries are able to cope with, thereby making attainment of the core supply chain objectives even more challenging.

There are two vectors for those factors:

1)  At a geo-demographic level there are the shifting patterns of demand and growth along with cost factors rising quickly in some geographies/countries and inputs into production.

2) At a technological level, the pace of innovation continues to accelerate.  Not only is the pace of NPI increasing in technology, but that same clock speed is now moving into broad sectors as trends such as the internet of things/devices become more pervasive beyond traditional high tech penetrating into industrial, healthcare, automotive sectors, etc.

To cope with these factors, companies have to rethink the core supply chain capabilities of plan, source, make, deliver and the skills and resources required to manage supply chains in 2014 and beyond.   Companies will need to manage with greater precision, tightness, and control over their supply chain assets and partners. Those who don’t master that well will risk high E&O and overall inventories, supply-demand mix issues which impact service levels, and slow response times to changing market demand patterns

2. The End-to-End supply chain strategy has been well documented. What capabilities does your company have that is better in class for integrating end to end?

The best-in-class companies have three distinct capabilities that are more developed than others.  First is a thorough mastery of the demand management process – not just focused on forecasting, but on developing a better “quality” of demand.  This emphasizes factors such as being able to understand whether shifts in demand represent a timing issue driven by big deals, or whether the market is fundamentally at new level of demand, and then driving the rationalization of actual demand against a plan. Second is an ability to propagate demand across an extended supply chain, taking into account the key control nodes and depth of the supply chain, and balancing that against supply, inventory, service and supply chain level constraints. Third is the ability to collaborate with key long lead time suppliers to ensure that they are able to meet the forecast and execute against actual requirements. This direct control of the end-to-end supply chain minimizes bullwhip effects, and enables the responsiveness required in today’s volatile environments.

3. How aligned and connected are you to the many supply chain nodes?  What are the reasons you would want to improve this alignment?

Back in 2010, on the heels of a severe component shortage environment as companies emerged from the 2008 market downturn, I conducted a survey with 14 leading computing and storage companies to better understand how some coped better than others with the upswing in demand, and extreme supply shortages.  The findings validated that those companies with greater visibility and control of their extended supply chain fared much better in recovering supply than those companies that did not.  By visibility and control, it means that those that had visibility at component level, and sometimes at tier 3 level visibility, coupled with planning and orchestration across the extended supply could then proactively allocate precious supply to demand priorities and manage tightly the placement of P.O.s at the extend lead times. In particular, those that modeled what their contract manufacturers and key supplier suppliers (e.g. die banks with silicon devices) and were able to balance S-D at each node fared the best.

I love Clarence’s insights, especially on the main challenge: delivery, quality, and cost.  These are the core objectives from the past 20 years, and remain the core challenges.  However, as he notes, demand demographics and speed of NPI cycles are stressing the core in new ways.  Most people want visibility.  But, a lot don’t drill into the question, “What will you do with visibility?”  As Clarence notes, the quality of demand needs to improve.  What segments are relevant?  You need to propagate this relevance throughout your supply network.  What are the insights to this change?  And, then you need to collaborate with the key nodes to execute the change.

You can see those supply chains that can prioritize change, analyze the end-to-end impact, and collaborate in real time are doing so with better margin  and operating costs, capturing more market share, and controlling supply chain risk and disruptions better.

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


‘Know Sooner, Act Faster’: A Supply-Chain Mantra

Published April 9th, 2014 by Melissa Clow 2 Comments

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with customers, analysts, and Kinaxis executives. And, we’d like to share them!

In this interview, hear C.J. Wehlage, vice president of high-tech solutions with Kinaxis, detail industry’s major supply-chain management challenges in particular, the difficulty of obtaining full visibility of supply and demand, and dealing with the volatility of markets. Know sooner, act faster  is the mantra offered by Wehlage as a key strategy for dealing with growing market volatility. I run into supply chain practitioners who don’t know as much as they think they do, he says.  It’s about responsiveness, and how much you know about your supply chain.

 

Previously, we featured interviews with:

 

‘Know Sooner, Act Faster’: A Supply-Chain Mantra – Interview summary

CJ wehlageIn seeking upstream visibility, many companies don’t look beyond their first-tier suppliers. As a result, crises often devolve into firefighting, rather than being averted through proper oversight of all suppliers, third-party logistics providers and even the retail store.

It’s tough to put a value on the prevention of a crisis that never happens. Still, says Wehlage, that necessary level of responsiveness is the core of supply chain.  It’s the key to how managers can influence the reporting structure within their organizations. Being able to make informed decisions, and acting on them, provides executives with a level of power that isn’t reachable through traditional methods.

Responsiveness isn’t just a tool for managing supply-chain execution; it also bears a strategic element. Decisions can be driven at the C-level, rather than occurring exclusively in the trenches.

A key competency that many companies are missing today is leadership. There has to be somebody asking the end-to-end questions, says Wehlage. What’s my profitability across this?

Yet another key element of modern-day supply-chain management is obtaining the right talent. It used to be sufficient for employees to possess functional expertise. Now, end-to-end skills are critical.

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


5 Drivers of Supply Chain Complexity in the Life Sciences Industry

Published March 31st, 2014 by Trevor Miles @milesahead 0 Comments

I’ve attended several Life Sciences events recently (including Biomanufacturing Summit) and it’s quite clear that these supply chain teams are working in a new, complex world. Not only do they need to meet diverse customer expectations, but they need to do so while coordinating an extended supply chain, in an environment that is constantly changing. Additionally, they’re faced with a set of five industry trends that are driving complexity even further.

1.       Exceedingly Distinct Markets

Through accidents of history and industrial capabilities, the Life Sciences industry has developed to satisfy principally the diseases of the affluent West, such as cardiovascular disease, diabetes, respiratory disease, and obesity, while paying less attention to the diseases prevalent in the developing world, such as malnutrition, malaria, HIV/AIDS, and TB. This has led to a drug market segmented by geography and demographics, with companies in the emerging markets focused on satisfying the ‘local’ diseases. But in recent years, with the rapid expansion of the middle class in many emerging economies, many of the ‘Western’ diseases are increasing rapidly in the middle classes of the emerging markets – for example diabetes in India – stretching local healthcare provision while opening opportunities for expansion into these countries. While at the same time innovations by companies in emerging markets are challenging the market leadership of well-established Life Sciences companies in the West.

2.       Increased Outsourcing

With tremendous opportunities for growth in emerging markets, many manufacturers have executed aggressive globalization and outsourcing strategies, while relying increasingly on Third Party Operators (TPOs) in India and China for Active Pharmaceutical Ingredient (API) supply and subcomponents, or even the manufacturing of complete devices. Coming along with these shifts is an increase in business complexity and supply chain risks given the varying regulations across global supply chains and longer and riskier supply chains.

3.       New Regulations

With this rapid increase in the use of TPOs has come added risks to quality and of counterfeiting, leading the US Food and Drug Administration (FDA) to push for the passage of the Safety and Innovation Act (FDASIA), which focuses on the risks inherent in an increasingly global Life Sciences supply chain. Much of the public comment has been on the two user fee reauthorizations, as well as two new user fee programs, and the reauthorization for pediatric research. But buried deep in the text are provisions for supply chain validation – in both domestic and off-shore plants – and drug shortages that will have a profound impact on outsourced and global supply chains.

Stefanie Johns, Ph.D., Program Manager, Xavier Health Initiatives, commenting on conference sessions at Xavier University, states that:

“The new powers from FDASIA will level the playing field between foreign and domestic sites, enhance transparency and collaboration with foreign regulators, and shift focus “away from the border to a global safety net.” FDASIA also provides the FDA with new tools to destroy counterfeit products, misbrand products on the basis of inspection refusal, and deliver criminal penalties for intentional adulteration. In order to streamline resources, the FDA will be moving towards a risk-based inspection system and will work with foreign regulatory counterparts.”

In summary, the impact of FDASIA on the Life Sciences supply chain will come from provisions for:

  • reporting of drug shortage issues, and the penalties associated with not informing the FDA;
  • and more active inspections of production facilities, including sites in other countries, including those belonging to Third Party Operators.

 

Outsourcing in the Pharmaceutical Industry

phamacutical supply chain graph #1Source: Frost and Sullivan Global Bio-Pharma CMO Market Report,“ May 2010

 

4. Shift in Treatment Focus

One side effect of FDASIA is the fast-tracking of approval for treatments that address an ever narrower spectrum of diseases. Of particular importance to rare disease patients, and likely to help encourage further investment, is the Breakthrough Therapies Act addressing the need to provide expedited development and evaluation of potential therapies that show promise early in the research process; and the Therapeutics for Rare and Neglected Diseases which aims to encourage and speed up the development of new drugs for rare and neglected diseases.

Included in the Breakthrough Therapies Act is a voucher system that allows companies developing rare pediatric diseases to obtain a transferable voucher which they can use for the expedited approval of another treatment, whether that treatment satisfies the requirements for priority review or not.

The trend to ever more targeted products is widespread across most industries whether Life Sciences, High-Tech/Electronics, or Consumer Goods. In the past, the limited markets coupled with the fact that many of the patients were in less affluent areas of the world, were a disincentive to major Life Sciences companies that were addressing a large set of diseases with broad spectrum therapeutics. However, with many of the major disease categories covered effectively by existing treatments, combined with the fact that a) many treatments are reaching the end of their patent protection period, b) growing competition from generics, and c) increasing scrutiny from regulatory bodies have all led to a rapid shift in focus of research, as well as mergers and acquisition activity toward rare diseases. (While there isn’t a universally accepted definition of a rare disease, the US government defines a rare disease as one afflicting fewer than 200,000 Americans, while the European Union defines a rare disease as one afflicting fewer than 1 in 2,000 people.)

 

Innovation versus Cost

phamacutical supply chain graph #2

 

A report released by the Pharmaceutical Research and Manufacturers of America (PhRMA) in 2011 emphasized the extent of this shift away from broad spectrum drug research focused on diseases with large patient bodies to narrow spectrum drugs focused on rare diseases. According to the PhRMA report there were a record 460 medicines for rare diseases either in clinical trials or awaiting FDA review at the time the report was published.

To overcome the economic barriers associated with the discovery and development of diagnostic equipment, drugs and devices to treat rare disease, big Life Sciences companies have been pursuing collaborations, acquisitions, and joint ventures, often with companies in India and China.

This search for ‘long tail’ drugs will mean that Life Sciences must also deal with increasingly complex demand patterns. They have to simultaneously deal with predictable patterns for mid-life cycle products and highly unpredictable patterns for new introductions. They typically have to manage both low volume, high mix products that require quick response for clinical trials and high volume products that require ramped production and global delivery capabilities.phamacutical supply chain graph #3

5.       Shorter Patent Protection

An aging product portfolio, along with a future of shorter patent periods in general, with limited opportunities for patent extensions (as demonstrated by the recent challenge by the Indian government of patent extensions based upon reformulation), only serves to reinforce the critical requirement for supply chain efficiency and effectiveness, in order to capitalize fully on the opportunities while they exist.

These industry trends are having a significant impact on the way supply chains must operate. And unfortunately, there is growing evidence that existing technology architectures are not satisfying the capability needs for this new, complex world. In an upcoming blog post, I’ll be looking at seven supply chain processes (including jurisdictional control, expiry management, supply and capacity planning) that require an integrated approach to overcome these complexity drivers.

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Posted in Inventory management, Milesahead, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain management


A response to ‘Is Your Supply Chain Glass Half Full?’

Published November 13th, 2013 by Janice Kakazu 0 Comments

I just recently saw Bill DuBois’ blog post ‘Is Your Supply Chain Glass Half Full?’  It tickled my fancy and a few additional one-liners came to mind:

  • Project manager – I know you want to add cranberry juice to your martini glass, but I’ll need to write a change request for that.
  • Potential customer – I’ll order that drink if I can talk to 3 other customers who’ll tell me how good it is.
  • Supply chain consultant– Tell me about your requirements for filling that glass, and I’ll transform your glass-filling process!
  • Research analysts/Thought leaders – You’re at stage 4 of the maturity curve when you can segment all the glasses by fullness (or emptiness), sense how full each glass is with your eyes closed, and collaborate with the bartender to get a refill in real-time.

Hope you enjoyed that!

Do you have any other supply chain, “is the glass half full” one liners?

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


The Two Best Supply Chain Metrics…Influence and Power!

Published November 7th, 2013 by CJ Wehlage 0 Comments

Since I’ve joined Kinaxis, I’ve become so intrigued by the parallels I see between Apple and Kinaxis customers.

When I was at Apple, the joy that customers showed when using our products was so inspiring. They were always quick to say how cool something was.  Strangely enough, despite being in the enterprise software business, I’ve witnessed similar reactions from Kinaxis customers. In my 11 months here, customers are ecstatic when they talk about having RapidResponse. While I see the strategic benefits of using RapidResponse, it’s certainly not a consumer must-have gadget, like an iPad.  Yet, watch some of the Kinaxis videos, and see the passionate ways clients are using to explain what RapidResponse means to them.

 

 

 

 

 

During my time here, I’ve been pretty curious about this enthusiasm and have been investigating the why, and now, after our recent Kinexions conference it has become clearer to me. Here’s what I learned when I asked a handful of clients “What do you love about Kinaxis?” The two most common replies were:

  1. “Once RapidResponse went in, it spread like wild-fire.”
  2. “I wish I would have done this years ago.”

So, let’s analyze each statement:
“Once RapidResponse went in, it spread like wild-fire”, to me, means Influence.

Consider first what RapidResponse is: An end-to-end analytics solution, with incredible speed. Speed from in-memory and ONE code.  Now, I’ve been around the supply chain block these past 25 years, and the only “ONE” code I’ve seen is Excel (and we know, using excel has its drawbacks – see past blogs Hey Software Bullies Stop Picking On Excel and  Yet Another Excel Blooper When Will We Learn).

Everything else is functional modules that take time to stitch together.  Oh by the way, the complexity of supply chain nodes (from the companies I led) has increased from ~ 5-10 to ~ 20-25.  So, imagine gathering relevant data from EVERY node of your supply chain, into ONE code, and having incredible speed to perform analysis and collaboration.  To know what’s happening at every node, and respond before others are aware, brings a huge level of influence in the supply chain network.  People see it, and want it… badly! And, I can see why it spread like wild-fire.

“I wish I would have done this years ago”, to me, means Power

In this statement, customers are referring to using RapidResponse today.  And because of that, they are able to know sooner and act faster. For many companies, this has resulted in inventory and costs savings, margin and profit growth and utilization improvements.  The simulation capability has enabled them to use the supply chain operations to create a supply chain strategy and then align the supply chain strategy with the business strategy. So, when their competitors are fire-fighting disruptions (i.e. giving away profit to make revenues), they are simulating trade-offs in advance of competition, customer demand, industry and business plan changes and supply disruptions. The final result is a level of power in their company that they wish they had years ago.

This influence and power remind me of a great quote I once heard…

Information isn’t power…Informative decisions is power!

When Kinaxis clients are using words like ‘every node in the network’ and ‘total cost’, they are speaking about how they use the information to improve end-to-end decisions.  Functional wins are replaced with value driven wins.  This is what Gartner calls Stage 4 – Value Driven Supply Chain. Gartner’s Christian Titze attended Kinexions and wrote the following article entitled, ‘Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record’. In it, he says that: “Some are now decommissioning their other SCP solutions and even moving material requirements planning (MRP) out of their ERP systems. This indicates Stage 3+ IT maturity for planning, whereby a planning SOR is in place and ERP systems are seen solely as transactional SORs. ” – Titze, C., Payne, T.; Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record; Gartner, Inc.; 31 October 2013 .

A value driven, or market driven, or even a demand driven supply chain is Stage 4 in the supply chain journey.  However, many companies are stuck in Stage 3.  Why?  I think it’s because they grew up functionally, are organized functionally, and make functional decisions.  It’s easy to spot.  I like asking the first question… “tell me about your supply chain strategy”.

The typical response is, “we are working to reduce our costs”, “we have a goal of 98.5% on time delivery”, or “we want to improve our inventory turns by 20%”.  Great operational goals, but not a supply chain strategy.  Lora Cecere from Supply Chain Insight’s has stated, “…over 85% of companies are not clear on supply chain strategy,” in her blog Three Lies and a Truth. The answer starts with the business strategy – what is the company’s goal, what is being offered, when and where?  Then, how does the supply chain iterate and evaluate the cost benefit tradeoffs over time?

Most supply chains do the cost benefit tradeoff at the end of the quarter, or after the disruption has occurred.  Masked with the benefit of “made the revenue plan” is the failure of lost profitability.   It’s even worse when supply chain leaders reward the fire-fighters, enabling an organization that sees expediting more positive than preparation.

Call it Stage 4, call it value driven, call it supply chain strategy, the core is to know and respond across the complete supply chain network, and simulate the tradeoffs that enable the business plan.  You can see what the most important step in getting to stage 4 according to the Kinaxis clients…

GET THE END-TO-END DATA!

Using that data with incredible speed, affords you a level of influence and power across your company and supply chain network, and enables a value driven strategy.

 

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


Extending Supply Chain Planning Paradigms Beyond Advanced Planning Solutions

Published September 30th, 2013 by Trevor Miles @milesahead 1 Comment

“Many business process directors are under pressure to help make the best possible process-related decisions to ensure desirable business outcomes, business differentiation and continuous innovation.”
Sinur J., Schulte R.,

“Use Intelligent Business Operations to Create Business Advantage”
Gartner Research, 20 March 2013

Nowhere is this statement more applicable than in the supply chain.

While the inventive concept of Intelligent Business Operations (IBO) is gaining traction in multiple functions and process areas, the applicability and potential is particularly high within supply chain management.

Intelligent Business Operations Delivers the Benefits Promised by
Supply Chain Event Management

Supply Chain Event Management (SCEM) first emerged as a hot topic in 1999, peaking in interest in 2001, only to fall away into obscurity. It has resurfaced recently, but centers around transportation execution requirements such as track & trace. Several factors played a role in the rapid rise and fall of SCEM as a topic, including the fact that SCEM was part of the .com bubble and that the appreciation of the benefits of sharing information between trading partners was a very new concept. But the major factor in its demise was that it was treated as an add-on to planning systems rather than as an integral part of planning systems. At the time, the generally accepted process coverage of SCEM included measure, monitor, notify, simulate, and control; however, the more difficult parts of simulate and control were never realized because this required them to be integral parts of the planning systems.

supply chain planning - intelligent business operations (IBO)As a result, SCEM solutions were little more than alerting mechanisms flooding users’ inboxes with hundreds of messages which were of dubious importance and provided no mechanism for evaluating the resulting impact of the event on the wider supply chain, nor identifying the people that should be notified about such impacts. And, very importantly, there was no way to generate actionable responses to the events. The reemergence of SCEM within the transportation execution space has been as embedded capabilities within transportation management solutions (TMS), and are providing valuable advantages even though the events being tracked are very limited.

The benefits to be realized from SCEM concepts have not diminished since their early inception in the late 1990s. In fact, because the early solutions never got past the monitor and notify capabilities and the recent reemergence in TMS is so narrow in focus, the benefits remain largely untapped; one of the most significant ones being improved customer service at lower cost.

Even more intriguing though is the emergence at Gartner Research of  Intelligent Business Operations (IBO) which incorporates many of the initial SCEM concepts in the broader context of any process. According to Gartner (Sinur J., Schulte R., “Use Intelligent Business Operations to Create Business Advantage”, Gartner Research, 20 March 2013),

IBO is an emerging style of business behavior that leverages analytics embedded in processes to support better decision making and improved knowledge worker collaboration. IBO-based processes are “smart” about the context in which they run, which is influenced by events external to the process.

supply chain planning paradigms - gartner supply chain IT glossaryInterestingly, all the fundamental capabilities of measure, monitor, notify, simulate, and control of SCEM have been included in IBO. While not directly transferable, the ideas are largely represented (and have been extended) in recent IBO-related concepts such as

  • Business Activity Monitoring (BAM) instead of Measure and Monitor,
  • Complex Event Processing (CEP) instead of Notify, and
  • Business Process Management (BPM) instead of Control.

More important is the application of IBO in the wider contexts of strategic, tactical, and operation planning, not only in execution. In addition, the inclusion in IBO of Constraint Based Optimization (CBO) and Simulation capabilities as core requirements address the initial short comings of SCEM, namely the ability to determine an appropriate response to an event.

What is not captured explicitly in the definition of IBO is the need to create the initial plan against which performance will be measured. If the capabilities used to determine an appropriate response to an event are different than those used to generate the initial plan, then it is unlikely that the response will satisfy the business goals of the organization. (Of course in certain circumstances, the business rules used to address an exception are different from those used to plan and manage operations under normal circumstances.)

The separation of planning from event management was the key weakness of early SCEM concepts, which was exacerbated by the narrow focus on execution, ignoring the rich opportunities in all levels of planning. We should not repeat the same mistakes.

To learn more about this topic, feel free to view the complimentary Gartner Research report featured in the Kinaxis newsletter: How to Use Intelligent Business Operations to Create Business Advantage (Sinur J., Schulte R., Gartner Research, 20 March 2013).  And, be sure to keep an eye out for part 2.

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


Talent and the 50 Shades of Gray of Supply Chain

Published September 26th, 2013 by Trevor Miles @milesahead 4 Comments

I’m a ‘numbers guy’ and tend to gloss over ‘fluffy’ things like talent. Of course I understand and endorse the three-legged stool of People-Process-Technology and the need to keep the stool balanced by developing all the legs. Consequently when the panel on talent at the recent Supply Chain Insights Summit was introduced I was only paying partial attention.  My bad. You can watch a full replay using this link.

What I found was that the panel was rich is diagnosis and short in insights. There was too much description of the problem and not enough of the solution.  The panel did discuss what some firms are doing to recruit, train, and retain talent, but I was looking for that elusive notion of what is talent and how do we nurture it?  I am sure there were many line managers in the audience who would have found the panel very useful, and Lora Cecere of Supply Chain Insights (SCI) has written quite often about the need for T-shaped people, meaning having the ability to see the ‘big’ or end-to-end picture and deep functional capabilities. But I was still struggling with what is talent and what talents are needed in supply chain.  More on this later.

The raw numbers are sobering: There are 6 open positions for every recruit and the time it is taking to fill positions is increasing.  What I find interesting in this context is how the empty roles have changed over the past 2 years in which SCI has been conducting a talent survey. While there are nuances, the clear message is that it is middle-management where the biggest gaps lie. The biggest change is in the difficulty of finding people to fill an S&OP manager role. To me this is a clear indication of the increased importance of the end-to-end or horizontal capabilities rather than the deep functional capabilities.  Soft skills too, but also hard skills such as Finance.

 

 Supply Chain Insights Summit: Talent Track

 Supply Chain Insights Summit: Talent Track

 

My question to the panel was: “given that none of you have a degree in Supply Chain Management, and neither do most of the audience, what training/education is required to be successful in Supply Chain and what inherent capabilities are required for T-shaped people?” The training/education part was answered very well in that there are any number of universities and colleges that now offer courses in Supply Chain Management. Lora has also addressed this very well in one of her blogs: What do we do now?  The T-shaped part was more intriguing in that the answer, curiously, identified more of a mindset than a capability.  And it set me thinking. Way back in in 2011 Lora wrote a blog “Yes, Abby, there is a Santa Claus” about the different generations of supply chain professionals. It is Lora’s contention that we are in the 3rd generation, whereas Lora and I are clearly in the 2nd generation. But I was also interested in the summarized advice Lora gave Abby in her blog:

  • Get good at math
  • It starts with clarity of strategy
  • Take what you have learned in school with a grain of salt
  • Learn to ask the hard questions, but nicely
  • Learn to dance with the world of gray

All sage advice, but not enough for me. I guess what I am really struggling with is an existential moment of my own, rather than having any issue with the content of the panel and the advice given to Abby by Lora nearly 3 years ago. Perhaps the real issue is that I am struggling with a supply chain mid-life crisis. Lora states that

“The second generation of supply chain professional (ages 35-50) is where we are currently seeing the greatest talent issues.  This is the generation that implemented ERP, ecommerce, and Advanced Planning Systems (APS). They were often the boots on the ground for the global supply chain.  Many of them were pioneers:  relocating their families and learning the nuances of global supply chain management the hard way.”

Definitely true for me. I was one of those who moved around the world implementing APS.  And I think the core of my existential crisis is that I no longer believe in the over-stated promise of ERP, ecommerce, and APS. At the time the claims did not seem over-stated. We genuinely believed that science and maths could solve the issue, but we forgot the advice above that Lora gave to Abby, principally that we need to “Learn to Dance with the World of Gray”. We were taught in our Engineering and Operations Research classes that you just needed to refine your model or get better data. There was never any suggestion that the approach itself was wrong. No-one taught us that strategic objectives are very mushy and change frequently. Or that customers change their minds constantly and expect to still receive the same customer service at the same price.  Or many other factors that make the supply chain world very gray.  It is about nuance and ambiguity, but so many of us still believe it is about certainty and precision, about reducing complexity and not about embracing complexity.  I’m hoping the new generation has a more nuanced view.

Speaking of generations, I came across a really interesting blog through one of my ex-i2 buddies, Amit Paranjape. The blog titled “Why Generation-Y Yuppies are unhappy” clearly identifies the core of why the SCI Summit talent panel didn’t address my existential issue:

Happiness = Reality - ExpectationsI genuinely bought into the hype and promise of the value companies were going to achieve through the deployment of ERP, ecommerce, and APS solutions. I too was taught that

“…there was nothing stopping them from getting to that lush, green lawn of a career, but that they’d need to put in years of hard work to make it happen.

is the grass greener?

Of course I am referring is this context to the lush green lawn of productivity improvement brought about by years of hard work to deploy ERP, ecommerce, and APS solutions. In other words I am suffering from an expectations gap of over promising and under delivering. Supply chain insights expectations, frustrations disappointment, reality

If I got a do-over I would focus much more on helping people understand the limitation of what they can achieve through maths and much more on the value of compromise, consensus, and collaboration. Of course I still advocate having hard facts to back up a decision, I take these as a given, but I would focus more on the trade-offs across competing objectives and across functional silos. In other words I am not suggesting that we all rip out the APS solutions that we have deployed over the past 20-odd years and do everything with an abacus or Excel. What I am suggesting is additive. It is about the social side of making decisions as well as the skills to make decisions under uncertainty.

In summary, I agree that we need T-shaped people, as long as this means that they understand that there is no one answer. That there is no right answer, and definitely not an optimal answer that gets spat out by a computer with little or no human judgment involved.  There is a better answer, which is achieved through compromise, consensus, and collaboration, backed by hard facts which no-one can dispute.  I guess this means that I agree with the advice Lora gave to Abby. But if I had to rank the advice Lora gave to Abby I would use the following order:

    1. It starts with clarity of strategy
    2. Learn to dance with the world of gray
    3. Get good at math
    4. Take what you have learned in school with a grain of salt
    5. Learn to ask the hard questions, but nicely

What is not included in Lora’s list but came out in the panel is “be curious”. Stated differently, learning is a continuous journey, and SCM is still evolving.

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


Is your sales and operations process still effective and relevant?

Published September 23rd, 2013 by John Westerveld 2 Comments

sales and operations (S&OP) effective and relevantI saw an interesting article from Dave Jordan at the Supply Chain Blog. In it, Dave points out that many companies will be quick to say that they have a sales and operations process (S&OP), however if you look a bit deeper, you find that they are really just going through the motions. The company that Dave looked at had the following issues;

  • The marketing plan had a 1 month horizon – nowhere near enough visibility
  • The demand planning group was not engaged so the supply planner had to make their best guess as to what the forecast would be
  • As a result, procurement planning was a guess at best
  • There was no flexibility in financial targets so no alternate scenarios considered
  • KPIs were not used to drive improvement
  • No agendas, no minutes, no executive commitment

So, how do you ensure that you don’t slide down into this trap? How do you ensure that your sales and operations process (S&OP) continues to add value – more importantly how do you ensure that your S&OP process adds MORE value over time?

  • Executive Commitment and involvement – An effective sales and operations process (S&OP) sets forward a plan, and then ensures that plan gets executed. If the people attending the S&OP meeting don’t have the authority to make a decision and see that it gets implemented, the likelihood that the plan get executed has now reduced significantly
  • S&OP is used to run the business – In a previous life, I was responsible for preparing our divisional S&OP plans. S&OP was done in Excel, the rest of the company planning happened in the ERP system. It was always a battle to make sure that the S&OP Plan was reflected in the ERP system. At the time, there weren’t any alternatives. Today, you have decision support and planning tools that allow you to do your day-to-day planning and S&OP in the same system. In this way, daily decisions are taken in the context of the S&OP plan.
  • Accurate S&OP data – The decisions you make is only as good as the information you have. If the data is weeks old, inaccurate or has calculation errors. You will make bad decisions. As in the last point, if the data used to drive S&OP is the same data that you use to make your day-to-day decisions, you know it’s going to be current (it’s live data after all) and you know if there were accuracy issues they would show up in your daily activities.
  • Solutions – not just problems. An effective S&OP meeting is not a whining or blaming session. Effective S&OP is all about creating a plan. If there is an issue, make sure you bring forward AT LEAST one solution to the problem.
  • Scenario driven – There is rarely ever a single solution to a problem. Yet how many times have we sat in S&OP meetings where an issue was raised and only one solution was presented? Traditional S&OP tools didn’t allow us to consider multiple solutions, however with today’s scenario based tools and fully integrated data, several possible scenarios can be considered and compared.
  • Run effective meetings and keep meticulous minutes – We’ve all been in the meetings from hell. No agenda, hashing the same issues out without finding consensus and then finally after wasting several hours we go away…only to come to the next meeting to discover that no-one captured the decisions. Effective meetings have;
  • An Agenda – with realistic time guidelines. Remember that effective S&OP meetings need to include the executive team. Make sure that their time is well spent.
  • Defined roles; someone tasked to chair the meeting, someone tasked to keep minutes, and sometimes a timekeeper to make sure the agenda is met. If you are really struggling with effective meetings you can engage a facilitator for a while who will help guide the meeting process.
  • An action log that is followed up each meeting until the action is complete.

How do you ensure that your S&OP process maintains its effectiveness and relevance? Comment back and let us know!

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