Archive for the ‘Miscellanea’ Category

How do the Best-in-Class Respond to Supply Chain Disruptions?

Published July 22nd, 2014 by Melissa Clow 1 Comment

“Chief Supply Chain Officers (CSCO) know that there is no such thing as a perfect plan and disruptions will always occur.”

This is the reality that every member of a supply chain team lives with every day. And while sometimes, a disruption might be small and easily offset, some disruptions are more significant and have a greater impact on the supply chain before they can be resolved. Aberdeen Group’s recent research report – The Chief Supply Chain Officer’s View of Supply Chain Disruptions: How the Best-in-Class Respond – takes a look at this reality and what leading companies are doing to prepare for these unexpected events.

So how does Aberdeen define Best-in-Class? Based on a survey of 151 end-user organizations, Aberdeen used the following metrics to identify the top 20%:

  • 97% average customer service level (84% for All Others)
  • 30 day average cash conversion cycle (59 days for All Others)
  • 12% total logistics cost as a percentage of revenue (25% for All Others)
  • 85% average forecast accuracy at the product family level

Regardless of where an organization falls on Aberdeen’s scale of maturity, none are immune to the disruptive forces impacting supply chains around the world. How an organization prepares for and addresses disruptions when they do occur is what sets the Best-in-Class apart. Figure 1 shows not only the top disruptions for the 12 months preceding Aberdeen’s research, but also shows how concerned leading organizations are for each type of disruptive event.

supply chain disruptions research

So what are Best-in-Class organizations doing to mitigate or plan for these disruptions? Aberdeen’s research highlights an “attitude of continuous improvement to constantly advance” as a distinguishing characteristic of those organizations identified as Best-in-Class. Two of the primary areas these organizations have targeted for improvement focus are supply chain visibility and supply chain collaboration. In fact, these Best-in-Class orgs are 50% more likely to focus on supply chain visibility and 37% more likely to focus on supplier collaboration than other organizations.

supply chain disruptions research aberdeen

If you’re interested in digging into this research further, a full copy of the research report is available for download here.

 

Posted in Miscellanea


Thow Back Thursday: First Solar case study ‘First Solar & Kinaxis Killed the Excel Star’. A video worth remembering

Published July 17th, 2014 by Melissa Clow 0 Comments

first solar case study kinaxis killed the excel star at kinexions

Here at Kinaxis, we are starting to gear up for this year’s Kinexions (our annual training & user conference). I quickly began to reminisce about our fun yet educational customer videos from past conferences. So, on this ‘Throw Back Thursday’, I would like to share Shellie Molina’s First Solar case study ‘First Solar & Kinaxis Killed the Excel Star”.

In this presentation, you will learn how First Solar‘s global supply chain has leveraged change management and rapid problem solving to reduce their dependency on multiple spreadsheets by building a single integrated system for manufacturing Sales and Operations Planning and construction project management. In addition to analyzing the impact of changes through what-if analysis, scenario building, dashboards and alerts, Integrated Project Management has allowed First Solar to implement a closed-loop MRP with their ERP system effectively driving activities, such as creating and rescheduling POs, from one ‘source’ schedule.

First Solar & Kinaxis killed the Excel star: they can’t rewind, they’ve come too far!

 

Presenter: Shellie Molina, vice president, global supply chain, First Solar
Over 25 years of supply chain, customer service and warranty management experience, Shellie has a diverse industry background in contract manufacturing, aerospace including avionics, mechanical, repair and overhaul, global distribution, global contact centers and warranty management. She currently leads First Solar’s Global Supply Chain which includes sales operations and planning, customer service/order management, sourcing, fulfillment, logistics, and warranty support.

Mark Zeni, director, AE fulfillment, First Solar
Shannon Rawlins, director, sales and operations planning, First Solar

Posted in Miscellanea


Throwback Thursday: Competing against time. A concept worth re-exploring.

Published July 3rd, 2014 by Lori Smith 0 Comments

As the idea of “Throwback Thursday” grows in popularity, we couldn’t help ourselves but to jump on board!  Despite the temptation, we’ll refrain from posting pictures of women with teased hair and big shoulder pads; men with their bell bottoms; or adorable baby pictures from a time in our lives when we were all cute.  Instead, on this quiet holiday week, we’ll keep it professional and look back on a past blog post that covers a classic concept that remains as relevant as ever. This post certainly does not have to compete against time. Enjoy!

Originally published January 12, 2012 by Trevor Miles (@milesahead)

Every now and then a concept comes along that resonates very strongly with what I perceive to be key issues in operations in general, and supply chain in particular.  One of these is the seminal work by George Stalk of Boston Consulting Group titled Time—The Next Source of Competitive Advantage published in July 1988 in which he states that:

Today, time is on the cutting edge. The ways leading companies manage time – in production, in new product development and introduction, in sales and distribution – represent the most powerful new sources of competitive advantage.

Unfortunately Stalk decided to name the book he co-wrote on the topic as “Competing Against Time” which isn’t the point, although the subheading “How time-based competition is reshaping global markets” rescues the concept, which is really about competing against the competition with time.  It is all about being more agile, more responsive, to real conditions. Stalk sets out some Rules of Response very clearly:

  • The .05 to 5 Rule
    Across a spectrum of businesses, the amount of time required to execute a service or to order, manufacture, and deliver a product is far less than the actual time the service or product spends in the value-delivery system
  • The 3/3 Rule
    During the 95 to 99.95 percent of the time a product or service is not receiving value while in the value-delivery system, the product or service is waiting. (Stalk breaks this out into 3 components of waiting, hence the 3/3.) The amount of time lost is affected very little by working harder. But working smarter has tremendous impact.
  • The 1/4-2-20 Rule
    For every quartering of the time interval required to provide a service or product, the productivity of labor and of working capital can often double. These productivity gains result in as much as a 20 percent reduction in costs.
  • The 3 x 2 Rule
    Companies that cut the time consumption of their value-delivery systems turn the basis of competitive advantage to their favor. Growth rates of three times the industry average with two times the industry profit margins are exciting – and achievable – targets.

All too often though people get the impression that these rules are only applicable in the short term.  They are not.  The issue of responsiveness in operations is driven by the latency of the information and the time it takes to respond. In other words, the time to detect that something of significance has happened and the time to respond to the change, or correct the discrepancy. Reducing either of these will have a dramatic effect on a company’s competitiveness, whether this is a short term detection of demand change that requires rescheduling manufacturing or a longer term change in technology that requires the purchase of new manufacturing capacity.

Terms such as VUCA – Volatility, Uncertainty, Complexity, and Ambiguity – or PDCA – Plan, Do, Check, Act – don’t excite me because they are focused on removing volatility and complexity, usually promoting ‘stability’ at the cost of responsiveness, whereas Stalk’s concepts are all about being responsive, being agile. To me this is the correct emphasis. While of course there is an overlap in that a decision or manufacturing process that is overly complex will result in longer lead times, it is the overall sentiment of complexity and volatility being ‘bad’ expressed in VUCA and PDCA with which I disagree.  As I wrote in a previous blog from the 2011 Gartner Supply Chain Conference:

I say embrace VUCA. Accept that it is the new norm. Resistance is futile.

Similarly, Deming’s idea of PDCA is all about process improvement, it is about ‘managing’ complexity and ensuring ‘consistent’ processes. Again, I am not saying that these are bad approaches in and of themselves, only that they are insufficient.  Knowing that you are performing a process consistently doesn’t mean that you are performing it well.  It is like assuming that if you throw everyone in jail who has committed a crime that we will live in a crime-free environment.

Far more interesting to me is the OODA – Observe, Orient, Decide, Act – idea from the US military strategist Colonel John Boyd.

The steps of the OODA loop are:

  • Observation: the collection of data by means of the senses
  • Orientation: the analysis and synthesis of data to form one’s current mental perspective
  • Decision: the determination of a course of action based on one’s current mental perspective
  • Action: the physical playing-out of decisions

While at first this may seem to be very similar to VUCA and PDCA, the key point to the OODA loop is that:

 

Time is the dominant parameter. The pilot who goes through the OODA cycle in the shortest time prevails because his opponent is caught responding to situations that have already changed.

 

In other words reduce the time to detect and the time to respond.  To put this into supply chain speak, it is all about:

  • Visibility – having access to the state of the supply chain across a wide span of operations, especially in outsourced environments, in order to detect misalignments
  • Alerting – knowing or calculating the impact of misalignments on key financial and operational metrics in order to understand the severity of the issue
  • “What-If” – working with others in the supply chain to come up with alternatives and evaluating these quickly
  • Collaboration – to reach a consensus on the best course of action that reduces risk while increasing performance

Another absolutely key concept expressed by Boyd is the need for ‘human judgment’, for the system to act as an organic whole to adapt to situations as they unfold at the location at which they unfold.  Having long chains of command that force front line people to get approval from HQ is antithical to this idea:

… large organizations such as corporations, governments, or militaries possessed a hierarchy of OODA loops at tactical, grand-tactical (operational art), and strategic levels. In addition, he stated that most effective organizations have a highly decentralized chain of command that utilizes objective-driven orders, or directive control, rather than method-driven orders in order to harness the mental capacity and creative abilities of individual commanders at each level. In 2003, this power to the edge concept took the form of a DOD publication “Power to the Edge: Command…Control…in the Information Age” by Dr. David S. Alberts and Richard E. Hayes. Boyd argued that such a structure creates a flexible “organic whole” that is quicker to adapt to rapidly changing situations. He noted, however, that any such highly decentralized organization would necessitate a high degree of mutual trust and a common outlook that came from prior shared experiences. Headquarters needs to know that the troops are perfectly capable of forming a good plan for taking a specific objective, and the troops need to know that Headquarters does not direct them to achieve certain objectives without good reason.

These are key concepts we at Kinaxis have been promoting for a long time.  Every second that we waste in making a decision is a minute less that we have available to actually respond to situation.  In sports, reaction time is a well recognized competitive advantage.  Reaction time is coupled with the ability to ‘read the game’ and, for example, to call audibles at the line of scrimmage in American football. (I have always felt more comfortable with ‘European’ sports, such as soccer, that are a lot less structured and orchestrated precisely because the players have a lot more decision making power.) So in the end perhaps Stalk’s title “Competing Against Time” was correct, but this is a process efficiency perspective.  I still prefer the OODA concept of competing with time because this is about process effectiveness.

Posted in Best practices, Miscellanea, Supply chain management, Supply chain risk management


And the most important personality trait for someone in supply chain professional services is…

Published July 2nd, 2014 by Lori Smith 0 Comments

Today we announced the appointment of our new vice president of professional services, David Kelly.  Welcome aboard David!

With the formalities of the press release out of the way, we thought we would introduce David in a more fun and casual way.  So enjoy our Q&A post as we put David on the hot seat and get to know better the newest addition to the Kinaxis management team.

 

A QUICK TAKE ON PROFESSIONAL SERVICES

Name your top 3 implementation success factors?

  • Leadership, strong team and an effective and reasonable plan. All successful projects require strong leadership to lead and mentor the team through the difficult and challenging issues that will come up. That team needs to be made up of members that take ownership and responsibility for their role and actions during the project. And most importantly, a sound plan that is based on reality and reasonable time frames is key to allowing the team to be successful and the leader to lead.

In the goal of driving high user adoption, what are the essential  “must-dos”?

  • Organizations need to drive effective user adoption, which is almost always tied to change management. When new processes are put in place that are wrapped around the use of new technology, we need to work with our clients to define an effective program that will allow users to seamlessly adopt the new process. As a team, we need to bring prescriptive approaches that our clients can tailor for their specific situation. This effectively leads to happy users, which makes happy customers.

In your experience, what element of a deployment tends to be the hardest to manage?

  • Very few projects don’t have changes in requirements along the way. These requirement changes come up for various reasons and many times can be very valid. But, the project team needs to be able to address these changes while still keeping to the original plan, and many times we need to push the new requirements out to a future phase. These can be difficult conversations to have and requires effective project management from the outset. At the end of the day, customers almost always appreciate a project team that holds them accountable and manages towards an originally agreed upon time line.

What is the most important personality trait or competency for someone in professional services (and applicable to supply chain professional services in particular)?

  • I feel that individuals need to be effective listeners who can clearly and articulately document what they have heard. This process makes the foundation for defining the project requirements and drives the clarity necessary to lock down the business and technical requirements. All too often, we end up in conversations with clients about “what was said” and that leads to issues down the road. If we can effectively listen to our clients and document what was said, we greatly eliminate any confusion.

 

COMING INTO KINAXIS

What is one lesson learned or take-away from your previous roles that you will bring to Kinaxis?

  • Problem solving is the responsibility of every individual, and every individual should feel empowered to solve problems. Every day we will encounter challenges and the most efficient way for the team to progress forward is if individuals can clearly define the problem ahead of them and define the best path forward. Empowered team members lead to greater efficiency and happier employees.

Has anything surprised you about Kinaxis so far?

  • The culture and talent of the individuals that work here. Everybody I have met is very excited about Kinaxis and the future, and this has created a fantastic culture as a result.

Supply chain is being called everything from “the leader of the next decade” to “sexy”. As someone coming into the field, are you buying it?

  • Supply chain clearly is a backbone to many industries and can drive greater sales and profits. As our customers rely greatly upon their supply chain and suppliers, having that visibility into supply chain challenges and the right tools to manage is key to success. So, yes, I do believe that supply chain is “sexy”!

 

A PERSONAL GLIMPSE

Where did you grow up?

  • I lived in the suburbs of Washington, D.C. until I was 16 when my family moved to the suburbs of Detroit. I finished high school and went to college in Detroit and really consider myself a mid-westerner.

Favorite book?

  • Unbroken is one of my favorite books, it teaches us to never give up and always look for the positives in life.

Favorite motivational quote?

  • I love quotes and years ago bought the “Forbes Business Book of Quotations”. One of my favorites is “In this country, every man is the architect of his own ambitions” — Horton Bain.

Best advice you ever received?

  • Set 5-year goals that are manageable and attainable.

Posted in Best practices, Miscellanea, Supply chain management


The more things change, the more they stay the same: Gartner Supply Chain Top 25

Published May 29th, 2014 by CJ Wehlage 0 Comments

Jean Baptiste Alphonse Karr

 

“The more things change, they more they stay the same”
- Jean Baptiste Alphonse Karr, 1849, Les Guepes.

 

Jon Bon Jovi “The more things change, the more they stay the same”
- Jon Bon Jovi, 2010, Greatest Hits.

 

 

 

Separated by 161 years, but the phrase is well known worldwide.

In my opinion, the highlight of last week’s Gartner Supply Chain conference was the Top 25 dinner.  The days of creating an “Academy Awards night” feel, with cameras and trophies is gone, but the purpose of a Top 25 remains.  Recognizing supply chain from both the financial results, as well as leadership, makes the entire audience applaud the direction we are going.  However, this year just felt flat.  Not much changed in the Top 25.  I made my “Bold Predictions” blog a few weeks ago.   Should have changed my approach and just gone with “Not so Bold Predictions”.  Thirteen of the 2014 Top 25 had either no change from their 2013 ranking or +/- 1.

gartner supply chain conference top 25

I understand the metrics are difficult to collect, audit, and balance between the industries, but I’m calling out a need for innovation in the Top 25.  The general content is good, but let’s bring back some pomp and circumstance, some excitement and some intrigue.

My thoughts on innovation:

  • Industry Top 10’s, with awards
  • Take the Top 3 from each Industry, slot them into a “March Madness” bracket, and have the Gartner Analysts vote each “game” to get to a Final 4, Final 2, and Champion
  • Kevin O’Marah’s idea: move some companies into a Hall of Fame, and bring new companies in
  • Do a Live vote – where the audience texts in the Top 3

Delving deeper into the 2014 Top 25 numbers

While the general Top 25 didn’t change much, there is significant learnings for new companies interested in joining the ranks.

Dell Drops out of the Top 25

While this was to be expected, since Dell went private, it’s significant as Dell has been a perennial member of the Top 25.  In many ways, Dell has been instrumental in elevating supply chain in both the corporate view and the media.  The Dell Direct model is well documented and has been studied at universities.  Hats off to the foundation that Dell has provided for our practice.  The lesson to be learned is to recognize that leadership, and communication of that leadership, is a core part of your company’s Top 25 rank.

Don’t think that one category can’t hurt you

Intel had another good year.  From 2013 to 2014, Intel’s Peer score went up from 756 to 908.  Gartner score dipped slightly from 515 to 475.  ROA went down a little from 15.6% to 12.8%, and Inventory turns increased from 4.2 to 4.8.  It’s the Revenue category that really hurt Intel, dropping them from #5 to #8.  Things were great from the 2009 to 2011 stretch:

Year                        Intel Annual Revenue (USD)

2009                       $35.1B

2010                       $43.6B

2011                       $54.0B

 

The Three Year Weighted Revenue growth was a determining factor in their rise to the Top 10.  However, the past few years have created a trend that impacts their Top 25 standing:

2012                       $53.3B

2013                       $52.7B

And with guidance on 2014 revenue being flat to 2013, it’s a critical time for Intel’s supply chain to stand up to the profit margin challenge.  The lesson learned here is that certain supply chain metrics can make a good story, but controlling profitability will always make a great story.

The real battle is between Amazon and P&G

I find it interesting, rather make that perplexing, when looking just at the Peer Opinion Top 10 vs the Gartner Opinion Top 10

garter 2014 top 25 supply chian peer opinion gartner opinion

Three companies made it into the Peer Top 10, but not in the Gartner Top 10: Coca Cola, Walmart and Nike.  On the reverse, three companies made it into the Gartner Top 10, but not in the Peer Top 10: Intel, Colgate Palmolive, and PepsiCo.

But, when you look deeper at the numbers, Amazon and P&G are the two contenders.  Amazon’s Peer and Gartner votes jumped.  In fact, their Peer vote is nearly the highest, being in the “3000 Club”.  Their crutch is ROA.  Investments in web services and fulfillment have kept them at sub 2.0% Three Year Weighted ROA.  When these investments bring revenue, watch out.

P&G still has the higher Peer vote than rival Unilever, and similar financials to Unilever.  The wild card for P&G is bringing back AG Lafley.  He’s known for bringing innovation, customer is boss, and moments of truth, as key concepts for P&G’s June 2000 recovery.  Going forward, I look forward to seeing how P&G’s supply chain can control/cut costs, bring innovative products to the market, and reach into the emerging markets.

Leadership and conference presentations can get you everywhere

Take heed all ye in the 26-50 rankings.  Sharing your success and leadership at conferences can vault your position.  Look no further than Lenovo and Seagate.  Lenovo has been visible, both from presentations of their supply chain success, as well as notable acquisitions.  Case in point, their 2013 Peer vote was 397.  2014 Peer vote swelled to 808.  My recommendation to Lenovo would be to get their story to Gartner (2013 to 2014 fell from 211 to 210).

Seagate was the biggest surprise as the new entrant into the Top 25. They’ve done a great job at managing the post Thailand flood challenge, where a significant number of suppliers in the hard drives and components were impacted.  Also, Seagate has done well to get the message out, through SupplyChainBrain interviews, guest blogs on The Storage Effect and presenting at the 2013 SCM Logistics & Manufacturing World conference.  The one number that stands out for Seagate is the ROA.  At 19.5%, they rank 3rd behind #1 H&M (26.7%) and #2 Apple (20.5%).  It’s an intriguing rank, so I had to check out the details.  Seagate’s cash dropped from 2011 to 2012 by nearly $1B.  I would think that’s in support of their suppliers who were decimated from the 2011 Thailand floods.  Then, Seagate improved their Net Receivables from 2012 to 2013 by $638M.

Seagate Balance Sheet:

CJ Wehlage Gartner top 25 dinner

Seagate has talked about their transformation, especially in postponement, collaboration and simplification.  These facets will have a positive spin on the cash and receivables.  The challenge for Seagate to be able to stay in the Top 25 is to move their transformation to a value driven model, leveraging an integrated S&OP that drives tradeoffs across the network.

All that being said, here’s my early 2015 “Not So” Bold Predictions:

#5 P&G

#4 Unilever

#3 McDonalds

#2 Amazon

#1 Apple

Please send me your thoughts on the Gartner Top 25 Supply Chain model.  Who do you think didn’t make it in the Top 25 that should have?  What factors would you add to make it more interesting?Enhanced by Zemanta

Posted in Miscellanea


Gartner Supply Chain Executive Conference – Why ‘Flash Boys’ want to Know Sooner; Act Faster

Published May 28th, 2014 by Trevor Miles @milesahead 0 Comments

new sales model vs old sales modelSeveral of us from Kinaxis took the annual trip to Phoenix for the Gartner Supply Chain Executive Conference. It has been interesting to follow the evolution of the conference from the early AMR Research days, when only a little over 100 people attended and no vendors were allowed, to a conference with over 1200 end user attendees (excluding Gartner and vendor attendees) in which the vendors are an integral part of the program. I am sure for some of the participants there are pluses and minuses that the vendors attend too. For those who prefer to keep the vendors at arm’s length Gartner still runs peer forums, which are very popular. The peer forums give the end-user participants an opportunity to discuss key adoption and change management issues in a ‘safe’ environment.

The level of interest at our booth was phenomenal. The knowledge these visitors had of Kinaxis was very high. The quality of the keynotes was excellent. The sessions were very well attended and very informative. Compared to 10 years ago the topic of SCM has matured tremendously. While most certainly we see a trend in the direction of self-serve and self-education, there is still a propensity toward following the old model of engagement.

I made a bold prediction that visibility would be a hot topic at the conference. In fact I predicted that the data issue at the heart of visibility would be a hot topic. I was correct about visibility, but not correct about the data aspect. The data aspect was almost a non-topic, but visibility was a hot topic. More importantly the discussion of visibility is maturing beyond the simple ‘lights on’, ‘where’s my stuff’ discussion, to a richer discussion of ‘is my stuff in the right place’ with all the attendant analysis of what are the costs and consequences of it not being in the right place, and what do I do about it?

schneider electric logoAnnette Clayton of Schneider Electric gave a great keynote about their supply chain transformation. The manner in which they have coupled customer and supply chain segmentation with end-to-end supply chain planning and visibility is phenomenal and an example for many. Annette referred to this as a ‘tailored supply chain’ in which they have 10 main customer segments, each with different needs, 4 main supply chain manufacturing models breaking out into 7 supply chain delivery models, all supported by 6 supply chain transformation axes. This was the best keynote by far. The transformation Annette has brought about in a short time is amazing enough, but they have tangible benefits to prove the value of these changes:

  • About 6 pt improvement in net promoter score since 2011
  • About 1.5 pt reduction in inventory as a proportion of revenue
  • Over €500M cumulative saving in 2012-13Tom Peters Gartner keynote

The one time the issue of data came up at the conference was in the Tom Peters’ keynote. Tom was as entertaining and bombastic as ever. On his blog Tom writes that

Logistics have always been important. No doubt of it. (My first slide is a quote from General Omar Bradley, commander of U.S. forces on D-day: “Amateurs talk about strategy. Professionals talk about logistics.” Incidentally, the 70th anniversary of D-Day is just two weeks away.) But, if possible, the role of the logistics—supply chain—exec is becoming more important. By an order of magnitude. In the “Age of the Internet of Everything” and “Social Business” … everything truly is connected to everything else. And concocting and managing and harvesting maximum value from this ubiquitous web/moving target is arguably Corporate Job ONE.

The issue of data is embedded in his statement that “everything truly is connected to everything else. And concocting and managing and harvesting maximum value from this ubiquitous web/moving target is arguably Corporate Job ONE”.  Almost as an aside he mentioned the book “Flash Boys: A Wall Street Revolt” by Michael Lewis. There is a great 60 Minutes interview of Michael Lewis for those with little time to read the whole book, though I do recommend reading the book. Tom Peters quoted a passage from the book – “Steve, you’re costing me a hundred nanoseconds. Can you at least cross it diagonally?” – which refers to the laying of a high speed fiber optic cable between the Futures Market in Chicago and the stock exchanges in New Jersey that cost over $300M to shave off 3 milliseconds from the fastest route. At one point they needed to make 2 sharp turns to cross a road at right angles. Crossing the road diagonally would reduce the speed loss. They sold access to this cable to high-frequency tradersfor $10M, plus infrastructure costs, a pop. Apparently one HFT suggested that they sell access for a lot more so that the pool of companies that could access the cable was reduced

Now it must be noted that there is a lot of controversy about the legality of how the speed is being used to ‘front run’ many trades by high-frequency traders. Nevertheless the book brings out the real value of speed, whether to stock trading or to supply chain. Knowing sooner and acting faster are the business outcomes that add value. Solving the data problem in multi-tier supply chains is the equivalent of laying a $300M fiber optic cable to shave off 3 milliseconds. But until we solve the data problem we will not be able to make progress and reap the potential financial and operational benefits of supply chain visibility.

At some point speed is quality.Cook medical

The last presentation I attended had the most focus on data. Dave Reed of Cook Medical, a $2B medical device manufacturer, presented on “Optimizing Data Standards in the Healthcare Industry”. For those of you less familiar with the healthcare industry, there has been a 10 year debate about the adoption of serialization or an EPC (Electronic Product Code), but now the drug and device manufacturers have to comply. The California sequenced adoption requires that:

  • Manufacturers (generic and brand) must pedigree:
    • 50 percent of their products by 2015
    • remaining 50 percent by 2016
  • Wholesalers and repackagers must accept and pass pedigrees by July 2016
  • Pharmacies and pharmacy warehouses must accept pedigrees by July 2017

Part of the serialization is the adoption of GTIN (Global Trade Identification Numbers) and GLN (Global Location Numbers), which are part of the GS1 standard. And now the Apparel industry is looking to adopt GS1 too. I work with countless manufacturers that use different item numbers for the same item in different ERPs, let alone sharing a common item number with all their suppliers and customers. This level of data quality is one of the biggest barriers to end-to-end supply chain visibility, let alone end-to-end supply chain planning. While Master Data Management (MDM) is a start, until we adopt standards, like the radio and television broadcasting industries, we will be stuck in time consuming point-to-point integration.  I am very excited about the adoption of GS1 and look forward to watching the progress over the next few years.

It was a good way to end the Gartner conference, especially as I had dinner with Christian Titze, who is leading Gartner’s efforts in supply chain visibility, that evening. We had a lot to discuss.

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Posted in Miscellanea


3 Things I learned about Supply Chain Planning Control Towers at LogiPharma 2014 in Basel

Published April 24th, 2014 by Trevor Miles @milesahead 0 Comments

The LogiPharma conference held in spring every year is the premier event focused on all things supply chain and distribution in the pharmaceutical industry.  This year it was in Basel. The first thing I have learned over the past winter has been the impact of the Polar vortex and the fact that despite Basel being considerably further north than Toronto, spring can arrive a lot earlier, thanks also to the North Atlantic Drift. But I am getting distracted.

Lesson 1: Control Towers are becoming mainstream

In the case of LogiPharma they had a really interesting survey about the state of pharmaceutical supply chain capabilities and needs. A core theme of end-to-end planning and visibility that jumped out of the preconference survey continued throughout the conference. As per the diagram extracted from the survey, the term used by many people to encapsulate this idea of end-to-end planning and visibility is ‘control tower’.

What is interesting is how this theme is so consistent with Gartner’s most recent Magic Quadrant for  Supply Chain Planning Systems of Record.  In the report Gartner defines a supply chain planning (SCP) System of Record (SOR) as:

An SCP SOR is a planning platform that enables a company to create, manage, link, align, collaborate and share its planning data across a supply chain — from demand plan creation through the supply-side response, and from detailed operational planning through tactical-level planning. [i]

However, where a ‘control tower’ comes into play is when Gartner goes on to state that:

Increasingly the deployment of a SCP SOR will have to be in the context of multi-enterprise supply chains and the convergence of planning and execution to facilitate more responsive, agile planning – especially in the short-term horizon – across extended value chains. [ii]

In other words we are seeing the two ends of the supply chain – demand and supply – extend beyond the traditional span of control of the pharmaceutical manufacturers. On the demand side this is due to a number of factors, but the biggest drivers are expansion into global markets on the demand side and the relative explosion of outsourcing on the supply side. As the supply chain extends beyond the boundaries of the pharmaceutical manufacturers they have less and less visibility because typically they rely on their ERP solution, but as Jim Cafone, Vice President, Supply Network Services at Pfizer Pharmaceuticals said a few years ago at the Gartner Supply Chain Leaders conference:

ERP is fine if you only want to talk to yourself. But who can afford to do that in today’s world?

While Pfizer have deployed a logistics control tower through our partner GT Nexus, they have not yet matured to a Supply Chain Planning SOR as described by Gartner. Of course every increment in capability needs to be celebrated, and what Pfizer has done is a big leap forward, there is still some ways to go for them to be able to plan across multiple tiers, not just execute. Which brings me to the second thing I learned at LogiPharma…

Lesson 2: The definition of a Control Tower is evolving

The survey shows clearly that in general the idea of end-end planning has gained a lot of attention, but that the realization of this vision is some way off with 47% of companies saying that they have neither end-to-end visibility nor the ability to manage exceptions. A total of 80% (47% + 22% + 11%) don’t have the capability to create and impact analysis to exceptions. It is the remaining 20% (or 19% according to the survey results) that fascinate me. What exactly are they doing that allows them to claim that

We already have full end-to-end visibility and impact analysis triggered by automatic notification to enable corrective actions to pro-actively occur.

Here is a problem with all self-assessment surveys: The terms are never defined very well, if at all.  In the statement above:

  • What does end-to-end visibility mean? Does it mean from receipt of API (from a CMO) to shipment of finished product to an affiliate? Or does it include tracking of API production through the CMO and visibility into the affiliates inventories and sell-out demand?
  • How long does it take to calculate the impact? Is it that a shipment will arrive later than expected? Or does this mean that you can also calculate the impact of the late shipment on revenue (broad) and customer service (specific)? And determine the specific people who should know about the initial cause and who are responsible for the impact?
  • What constitutes corrective action occurring proactively? Does this mean that you can call up the logistics company and complain? Or does this mean that you can bring together a group of people in a virtual end-to-end environment to run rapid what-if analysis so that they can understand the business trade-offs they need to make across competing metrics?

Companies with very different performance and process maturity could have selected the same answer. I am pretty certain that few companies will have reached the level of maturity described by Gartner in the Planning SOR, definitely less than 20%. But I am encouraged by the fact that 80% of companies recognize the need to improve, because improvement starts with the recognition of the need to improve.

Lesson 3: It requires a certain type of person to get there

In my opinion the best presentation at LogiPharma was given by Hanns-Eberhard Erle of Merck Serono on “Elevating the supply chain function to meet the larger business needs”. This is at the core of every company’s need for end-to-end supply chain visibility and planning. This is the essence of what a mature supply chain planning Control Tower capability provides a company. The key to Hanns’ presentation was the observation that we need to develop T-shaped people. The idea of a T-shaped person , which is someone who has both a deep functional expertise and an understanding of how his/her role fits into the overall business , has been around for some time, but Hanns brought it to life in the context of a supply chain planning Control Tower.

Hanns’ contention is that in the Life Sciences industries we tend to celebrate the specialist too much, the I-shaped person. His solution is to rotate people through the different supply chain functions, and by that he meant through manufacturing, quality, commercial, regulatory, etc., functions which people do not necessarily associate with supply chain, but which have a big impact on lead times, profitability, and customer service. I agree. What I observe is that because the Life Sciences industry is so heavily regulated the tendency is to keep people within a function to ensure that they have a deep understanding of the process, regulations, and technology. But this is counterproductive because we have done is create very soloed processes which are in fact cross-functional. Hann’s answer is to rotate people through the functions so that they get a much better understanding of the impact of decisions made in one function and multiple other functions.

In a Harvard Business Review article titled “Introducing T-Shaped Managers: Knowledge Management’s Next Generation” by Morten T. Hansen and Bolko von Oetinger and dating from March 2001, state the following about becoming T-shaped:

It relies on a new kind of executive, one who breaks out of the traditional corporate hierarchy to share knowledge freely across the organization (the horizontal part of the “T”) while remaining fiercely committed to individual business unit performance (the vertical part). The successful T-shaped manager must learn to live with, and ultimately thrive within, the tension created by this dual responsibility. Although this tension is most acute for heads of business units, any T-shaped manager with operating unit obligations must wrestle with it.

I contend that it is only in the beginning, in early stages of maturity while the silos still dominate, that there is a tension in this role as described by HBR. A more mature organization, in which T-shaped mentality is the norm, will experience less tension because people will understand the business trade-offs and more time can be spent exploring the best cross-functional compromises and less time can be spent defending function specific metrics.

What’s Next?

In closing, at LogiPharma I presented on “Continuous S&OP – Breaking the Mold”. S&OP has been around for about 30 years and one of the original objectives was to bring the sales or commercial organization together with the manufacturing or supply side of the organization. I don’t know about you, but this sounds like the early stages of end-to-end supply chain planning. And I contend that it is, but that our idea about S&OP being a rigid monthly process has to change. Concepts such as a supply chain planning Control Tower provide the horizontal part of the T, but Gartner’s Supply Chain Planning SOR adds a third dimension by including the need to plan across different time horizons “…from detailed operational planning through tactical-level planning.”  This is where I believe the next wave of innovation in supply chain planning will be.

Disclaimer: Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.


[i] Gartner, Magic Quadrant for Supply Chain Planning System of Record, T. Payne, March 6, 2014

[ii] Gartner, Magic Quadrant for Supply Chain Planning System of Record, T. Payne, March 6, 2014

Posted in Miscellanea


Miami Vice, Diapers, SCM World and the Digital Supply Chain

Published April 14th, 2014 by CJ Wehlage 2 Comments

Let me set the scene for you:
It is Sunday, February 23, 2014 at 9:00a.m.  Location: Miami, the Trump National Doral… outside patio. I’m grasping two cups of coffee and wearing all white. I’m sitting with Kevin O’Marah and he has an inquisitive demeanor … do I have your attention?

Now, let’s go back 9 hours. I was north of San Diego celebrating at a local home. The event was the Scholars Circle White Party, to honor the donors of a local public school.  Naturally I wore white shoes, white pants, and a white shirt. I had to leave the event and go straight to the airport to catch my red-eye flight to Miami to attend the SCM World Live conference. I landed at 7am EST – nary a minute of sleep on the plane. I took a cab ride over to the Doral to meet my good friend Kevin O’Marah, Chief Content Office at SCM World (and wondering why I scheduled a 9am and not a 5pm, but that is beside the point).

Kevin and I go way back to our days at AMR Research. I always love catching up with him, sharing stories of supply chain, innovative practices and research concepts.

The first thing Kevin said to me was “you look ready for Miami!” … referring to my all white attire (for all you Millennials, it’s a Sonny Crockett thing…that’s Don Johnson from Miami Vice).

Not only was I ready for Miami and the SCM World Live conference, I was also ready for a very insightful 1+ hour back and forth with Kevin on digital demand and the impacts on supply chain.  I’m sure Kevin was expecting my insights to be on Apple or Bose, where I had worked prior.  However, I was actually captivated by an innovation on digital diapers. Yes, digital diapers.  I had just read a story about diapers that actually tweet you when they are, say, wet or soiled…

There’s a device inside each diaper: a sensor for identifying when the diaper is wet and a blue-tooth to send a tweet.  As a true supply chain practitioner, my main concern was that the cost would be too high for this product. But, when I spent some time thinking about the product and the customer experience, I concluded that the digital diaper cost could not only the same as the regular diaper, it stands a chance to be lower.  As the SCM World report “Demand Management 2020” states, “Value to the customer encompasses the product purchased as well as the complete experience around that purchase (Demand Management 2020, SCM World, Research Report, March 2014).”

Our discussion came back to how a supply chain practitioner can participate in building a “digital” product.  Certainly it takes marketing, engineering, and sales innovation, but also supply chain innovation.

Having worked at Kinaxis for a little over a year, I told Kevin, “one of the main benefits I see our customers achieving is planner productivity”.  Our end-to-end planning with exception based notifications and simulation removes steps from the process and brings significant speed. The result is that planners are more productive.  Or said another way, planners can spend more time on innovation.

The SCM World report states, “It is this translation (across demand and supply), that brings about the ability to evaluate different strategic scenarios (Demand Management 2020, SCM World, Research Report March 2014).”  Our discussion continued along these lines.  In order for supply chains to test innovation, planners need simulation capability to create scenarios.  In essence, test the innovation against operational realities and metrics.  At Kinaxis, our customers do just that. Achieve the benefit of planner productivity and use it to simulate scenarios.  Scenarios improve profit margin, inventory turns, operating costs, value to the customer, new product ramps, revenue growth, capacity, etc.

So, let’s go back to our digital diaper discussion.  How does a customer purchase diapers?  One would likely go to a retail store, buy a box of 100, get home and put 30 in the downstairs bathroom, 30 in the baby’s room, 30 in the travel bag, and the last 10 in the stroller pouch. When the 30 that are downstairs runs out, you steal from the travel bag a few times, and then probably go buy another box of 100.  Never realizing exactly how many you have. You just don’t want to be at Zero   Trust me – I have two young kids…

That’s the customer experience, much more than a spreadsheet of demand numbers for your supply chain planners.  Now, imagine your team using an application to simulate innovative scenarios and gain significant productivity.

Supply chain innovation scenario: Each tweet the diaper sends out can also count the tweets. When you get to 75 tweets, you also get a tweet or email telling you that there are 25 diapers to go, and asking if you would like a new box of 100 shipped direct to your home.  The tweet/email can also suggest other products (such as items in excess) to add to the order, or special price/promotional add-on’s. That data can also go back to the manufacturer, and used for supply chain planning.  As Kevin and I talked, we came to the possibility that the “digital” diaper could actually cost less when looking at the “complete experience around that purchase.”

SCM World And the digital supply chain

The opportunity is in front of us as supply chain practitioners.  Anything can be digital, and digital can change the supply chain significantly.  Kevin and I concluded that current business complexity keeps us so busy firefighting and resolving issues 24/7. As leaders, we need to get to true exception based end-to-end planning, and gain the benefit of planner productivity.  Only then can our supply chain planners take the time to simulate innovative scenarios that bring customer value, revenue growth, and supply chain excellence, even to products like diapers.

 

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Posted in Demand management, Miscellanea, Response Management, Supply chain collaboration