Archive for the ‘Products’ Category

Your supply chain is costing you money – Reason #10 Failure to adequately train your supply chain planning staff

Published December 12th, 2014 by John Westerveld 0 Comments

Supply chain career pathOver 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:

Reason #10: Failure to adequately train your supply chain planning staff

When you think about it, your supply chain planning team is responsible for making decisions that can impact millions of dollars. A bad decision can result in missed orders, significant inventory, or scrapped materials.

Yet, when you look at the background of many supply chain planning workers, you’ll find a huge variation in education and experience. From people with a basic education that worked their way up from the shop floor, to people with engineering degrees that fell into supply chain planning, to business majors who have never been to the factory floor, to recent graduates with a supply chain planning background, but don’t have real-life experience on how manufacturing and supply chains work.

Having worked with a cross section of these people, I’ve seen the very best and the very worst. The very best include people that not only understand supply chain from end-to-end, but can also come up with creative solutions beyond what the typical supply chain education can prepare you for.

The worse have me wondering why they decided on a career in supply chain at all.  These are the planners that don’t know and don’t care how supply chain works. They do their jobs moving inventory from here to there, opening orders that the system says should be opened, cancelling orders that the system says should be cancelled, yet never questioning why or whether it makes sense.

Why is this a problem?  Lesupply chain management training t’s look at a quick example. Have you ever seen a situation where some result from a system– whether a bill from the phone company, a stock report or MRP recommended actions have been messed up?  It might be a programmatic error but more likely it is caused by bad data.  So imagine that you are a supply planner and the MRP report is telling you to increase orders 10x for an expensive component.  Do you do it?  The computer told you to, right?  If you are one of those planners that just blindly execute what the system says to do, then you probably would order it.  However, better supply chain planners might question that recommendation.  They use their knowledge of how planning systems work to peg up to find the source of the change and determine that someone changed the wrong record causing the change and confirm with the planner that the change was intended.  By doing this, they could potentially save the company millions of dollars in excess inventory.

There will always be people that just want to do things the way they always have. Don’t want training and aren’t interested in learning.  However, there are also those people who have a real drive to learn and would like to understand supply chain better. These are the folks you want to do everything in your power to give them the education they need.

While traditional supply chain training isn’t the only way to get really good at supply chain (I’ve met some planners that instinctively “got” supply chain – and knew their way around the system better than most) it certainly helps to have a good foundational knowledge of supply chain concepts.  One very good source of supply chain training is APICs (American Production and Inventory Control Society).  They have multiple resources as well as two certification programs; CPIM (Certified in Production Inventory Management) and CSCP (Certified Supply Chain Professional). CPIM is broken out in to 5 modules that each have an optional instructor led review course.  At the end of each module, the student is encouraged to write the exam.  Once all 5 exams have been passed, you achieve your CPIM certification.  CSCP consists of three workshops followed by an exam for certification.  Many companies have paid for their employees to achieve their certification and some have even brought instructors into the workplace to do the certification training there.  In reality, providing training in this way is a win-win for the company and the employee. The company gains by having better educated planners, the employee gains by having a certification that is recognized my many companies around the world.

Supply chain is a very complex world. Yet, it’s one place where practitioners can have a huge effect on the business yet have minimal education…and I really think that’s kind of cool!  But your supply chain team could be much more effective if given the right tools and some basic supply chain education.

How did you learn about supply chain?  Do you have any education advice for people just starting out and wanting to learn?  Comment back and let us know!


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

Guest Blog: Women of the Supply Chain: Responsibility, Collaboration and Bathroom Lines

Published November 20th, 2014 by Melissa Clow 0 Comments

Josh Greenbaum, Principal, Enterprise Applications ConsultingJosh Greenbaum, Principal, Enterprise Applications Consulting recently published an interesting blog that I would like to share with our readers.

Josh has over 30 years of experience in the industry as a computer programmer, systems analyst, author, consultant, and industry analyst. He founded Enterprise Applications Consulting in 1998 and has been a pioneering independent analyst and consultant ever since.

Women of the Supply Chain: Responsibility, Collaboration and Bathroom Lines

Hanging out with Kinaxis, the relatively small and always interesting supply chain vendor from Ottawa, Canada, never fails to be an eye-opening experience. It’s not just that I get to meet with a vendor and a loyal cadre of customers who are collectively pushing the envelope on all things supply chain, it’s that sometimes they’re pushing an envelope I hadn’t seen before in my peregrinations in the supply chain world.

This year’s Kinexions user conference was no different. What I heard from Kinaxis about taking RapidResponse, its in-memory supply chain planning product, further into the realm of collaboration by pushing users to self-identify their areas of responsibility represented an excellent strategic direction on the part of Kinaxis.

I also learned something from observing the lines forming outside of the bathrooms, which, if you’ll bear with me, I promise will actually reveal one of the reasons I like where Kinaxis is heading with RapidResponse.

I feel obliged to state unequivocally that I don’t usually pay much attention to plumbing and people, except when it comes to pure self-interest. But I couldn’t help noticing that the queue for the women’s room at Kinexions was one of the longest I had ever seen at a tech conference, other than my recent visit to Workday ‘s user conference.

Of course, what I’m really talking about is the proportion of women in attendance at Kinexions relative to both the number of men at Kinexions and the gender ratios found at most tech conferences. And while the lines outside the women’s room at the recent Workday conference that I attended were even longer, there’s an important difference between the disproportionate presence of women at a supply chain conference and the even greater disproportionality at a HRMS conference.

HRMS has always been, to be blunt, a comfortable domain for women in an otherwise all-male corporate world – comfortable perhaps more for the men than the women. This phenomenon is identical to the way minorities studying in the era of affirmative action were often shunted toward the social services – in order to serve their “people” – instead of being directed towards more challenging and intellectually rewarding careers in pure research, medicine, or, God forbid, the humanities. Similarly, HR was the woman’s track in business schools back when the women of my generation were getting their MBAs. This bias towards HR as a women’s field has continued, with a Forbes article from 2011 noting that 70 percent of HR jobs were held by women at that time. Judging by the lines at Workday’s conference, that ratio looks like it still holds.

When I started looking for data to back up bathroom line observation at Kinexions, I was surprised at how much women are represented in SCM, considering that the bias towards women in the HRMS world was never at play in SCM. One data point, from the National Center of Women in Technology (NCWIT), pegged the percent of women in operations research – the nerdy upper echelon of the supply chain world – at 55 percent in 2012, the highest percentage of the eight tech professions cited (#2 was database administrators, a profession where 37 percent of the positions are held by women.) This is a lot better than the percent of CIOs that are women – 24 percent – or the overall percent of women in high-tech – 26 percent – also according to the NCWIT.

So why are there so many women in supply chain roles? Maybe there is a natural bias, though one that speaks to women’s genuine strengths and not men’s discomfort. One interesting article in SCM World cited a survey of global supply chain companies in which 74% of men and 96% women surveyed believe women possess the special skills – labeled in the article as emotional intelligence, empathy and self-awareness – that are useful in managing supply chains. (This same article also claimed that only 10 percent of the senior leadership roles in the Fortune 500 were women – which means there may be a glass ceiling for the NCWIT 55 percenters who want to move up to executive positions.)

So it’s interesting to note that the number of women at Kinexions came in at 23 percent, according to the company, a number more in line with overall tech industry averages, but still higher than the percent of women who work at Google, for example (17 percent, according to IEEE Spectrum), and higher than what appears, anecdotally, to be the average at most tech conferences.

I asked Trevor Miles, Kinaxis’ resident deep-thinker, why there were more women at supply chain conferences like Kinexions, and his response dovetails nicely with those special skills I noted above. According to Trevor, 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.

I know I’m riding a fine line between stereotyping and arm-chair sociology, but I don’t think the notion that women on average possess these characteristics in greater percentages than men is too far-fetched. What is certainly true is that supply chain planning and management don’t lend themselves to absolute truths and command and control hierarchical management. In the world of supply chain planning there are relatively few irrefutable numbers and an over-abundance of options and alternatives that need to be weighed carefully in order for an optimal decision to be made.

This means that trade-offs, compromise, collaboration, and a whole host of people skills tend to matter a lot in getting the job done. It takes teamwork, and not just individual initiative, to consider multiple and even opposing or non-obvious alternatives in order to run a supply chain. And that teamwork doesn’t just include fellow employees: Myriad stakeholders, sometimes working across multiple companies simultaneously, must be marshalled in the service of supply chain excellence.

The fact that there is rarely, if ever, a “one true number” or single, irrefutable way to solve a supply chain problem dovetails nicely with the value of tool like RapidResponse, which makes modeling and sharing different scenarios particularly easy and efficient . Indeed, the fact that Kinaxis’ RapidResponse enables a high degree of collaborative decision-making – its use practically demands collaboration, the consideration of alternatives, teamwork, and consensus-building – makes it less surprising that Kinaxis, like the supply chain world in which it lives, can draw a disproportionate number of women to its conferences.

Which leads me to Kinaxis’ plans for RapidResponse. The company has been putting a lot more emphasis on a feature that allows stakeholders to identify – in a social collaboration-lite function inside RapidResponse – the areas that they are individually responsible for and, therefore, willing to help with when a problem in supply chain planning and management arises. What this means is that when a constraint appears, or an order suddenly changes, RapidResponse is able to connect the different stakeholders who share responsibility for a particular product, supply, region, customer, partner, or what have you, and get them working collaborative on a resolution. It’s a way to take the natural collaborative tendencies of supply chain planners and managers – regardless of their gender stereotypes – and enhance those tendencies with a collaboration tool.

The other reason I like this approach is that it serves as a justification for my position on why general-purpose collaboration tools haven’t really set the world on fire, despite the incessant hype around these tools. What Kinaxis is offering is the opposite of a general-purpose tool: the company has picked an essential and well-known business process and injected a new, relatively simple, and highly valuable form of collaboration. Of course you could do this with a general-purpose collaboration tool, but it makes much more sense to have the collaborative process function in the context of the business process and its tool, in this case RapidResponse.

This responsibility function will have a lot of applicability to other areas where Kinaxis wants to take what is fundamentally a superlative planning tool. Areas like capital equipment planning, asset management, project management, and the like are ripe for the things that RapidResponse does best: to go where planning is hard and help manage the path to compromise.

Whether Kinaxis will simultaneously drive an even greater participation for women outside the supply chain world remains to be seen. But it’s important to note, considering the current sturm und drang about diversity in high-tech, particularly gender diversity, that there are domains like supply chain and tools like RapidResponse that seem to attract more than the usual number of women, for all the right reasons.

In an industry that liberally festoons itself with the trappings of hipness, the de facto status of women as a minority borders on the absurd, as do the excuses, even in companies with female CEOs, for the lack of women in decision-making positions. I doubt Kinaxis set out to upend traditional gender norms and favor women and their unique skills when it developed RapidResponse, but it’s nice to note that moving the needle in the supply chain world can also move the needle in the larger society in which we live. For the better.

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

Streamlined Sales and Operations Planning: A Konica Minolta Case Study

Published August 13th, 2014 by Melissa Clow 0 Comments

Konica Minolta logoToday we have a great customer, Konica Minolta, that recently allowed us to write up their sales and operations planning story and I believe that it has merit in sharing with our readers!

At Konica Minolta, the IT Equipment Business team was struggling to get a quick and  comprehensive view of the global supply chain network.

The Japanese consumer electronics company didn’t have visibility into the impact of supply and demand changes on the business. As well, attaining agility and alignment across the supply chain was difficult.

Here’s a quote from Noboru Ota, Manager of SCM Planning, Konica Minolta on how they doing today:

“By integrating five systems into one, we gained a distinct advantage because multiple problems are solved by one product. We have the advantage of being able to streamline the operations. S&OP analysis has successfully changed from a weekly to a daily basis and now reflects the actual results, so the data is dramatically more accurate.”

And another quote from the case study:

With the deployment of RapidResponse, the team switched to daily calculations. Despite increasing the data size by seven fold (weeks to days), calculation times decreased from several hours to just minutes while supporting seamless transitions between volume and mix planning.

Very cool.

A big thank you to Konica Minolta for letting us tell their story.  We love what you are doing with the product!

If you are interested in learning more about this customer, read the complete case study. Trevor Miles also wrote a blog about Konica Minolta’s story when they presented at Kinexions Tokyo. Feel free to check it out.


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

Consumer Electronics Top 10 Questions: Supply Chain Leadership Series

Published May 7th, 2014 by CJ Wehlage 0 Comments

I am starting a blog series called “Supply Chain Leadership”, where I hope to pose thought provoking, and forward looking questions to executives in my supply chain network. Posted monthly, this series will provide insights into the most pressing challenges, innovative items in their budgets, and how these executives have handled talent, complexity, end-to-end S&OP, and technology.

Continuing the Supply Chain Leadership series, I caught up with an executive in the consumer electronics business. His deep manufacturing, planning and technology background led him to one of the top consumer electronics companies in the world. His insights on the challenges and future of supply chain are incredibly thought provoking.


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

a. Expanded product portfolios and product options are challenging our ability to maintain accurate forecasts.

b. Growth in new markets has presented us with challenges in understanding customer response to new products.

c. Material leadtimes have remained in an “extended horizon” status are affecting our ability to respond to demand variation.

d. International markets are growing as a proportion of overall sales, which is driving inventory growth.

2. Looking back at the past few years, what parts of supply chain have improved and what have you seen as the contributing factors for that improvement?

a. The company’s Sales and Operations Process has matured and is now providing consistent insight into Supply Chain challenges (mentioned in Q1), while creating visibility to risks and opportunities in the supply and demand balancing process.

b. The implementation of an enterprise system has enabled us to scale our planning and execution processes to keep up with significant growth and complexity of our product portfolio.

c. Reporting tools have been improved dramatically, driven by in memory based storage and on line (interactive) query capability.

d. Redesigned Supply Chain networks have enabled the company to ship more products direct from the source to the customer with a significant reduction in “hand offs” and material handling (waste).

e. Global Supply Chain operational personnel have matured in experience and skill due to corporate initiated training including; face to face, centralized class rooms, and on line classes.

3. In the creation or support of your Budget Plan, what are the new items you see for this year and beyond, things that haven’t been on prior year Budgets, or things that have seen the greatest increase in priority?

a. The new product portfolio is a much higher proportion of our budget and the volume of new products is generally higher than typical years.

b. Increased regional capacity has been put in place to support international growth.

c. A portion of the company’s portfolio is more margin challenged than in the past, leading to much higher scrutiny of premium freight, rework, and / or pricing flexibility

4. When assessing your S&OP/Integrated Planning, what are the areas you feel need addressed to improve your S&OP/IP process?

a. Much more work is needed to continuously and consistently align the Supply Chain and Financial plans.

b. The company’s ability to sense and respond to market variation is more complex (see Q1), given the broader product portfolio, which is challenging our (reporting) capability to provide ongoing insight to the executive team.

c. Sales and Operations processes in our international operations (local or ‘in region’ S&OP) have improved, but need to mature to keep up with regional challenges.

5. 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?

a. The company’s investment in an enterprise wide system using the same planning, transactional and reporting tools gives us the potential to re-plan on an ‘as required’ basis, giving us the capability to respond to any identified opportunities.

i. Typical planning activity is weekly – improved from monthly.

ii. Capability is daily or as required.

b. In region sourcing has expanded, giving the company an opportunity to reduced overall response time and ultimately improved service (flexibility).

c. When we do identify an opportunity (or risk) our integrated manufacturing strategy supports ‘quick turn’ at lower premium costs.

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

a. The company’s internal network is completely integrated which gives us the capability to see retail store level activity in remote regions (China) and respond.

b. Point of sales demand data is captured on a real time basis, providing us with responsive execution plans throughout our Distribution network.

c. Improved alignment on re-seller ‘sell thru’ data will give us the capability to ‘see beyond’ the next purchase order.

i. EDI and / or transactional integration is an area of opportunity for our non-Automotive businesses.

ii. Having access to customer sell thru and potentially customer inventory will help us identify risks and opportunities at the customer’s storefront.

7. This “connected nodes” is very much tied to supply chain visibility. How would you rate your complete visibility to all nodes? Why do you believe it is like this? What do you believe are the 2014 actions that need to be taken?

a. I would rate our internal visibility a 9 of 10. The limitation would be that our transactional system will not be global until July 2015. This limits our ability to ‘see’ the entire supply chain and limits (to some degree) our reporting capability.

b. Our entire network is ‘connected’ through system master data which enables a complete and integrated planning process. Each planning event includes retail stores, distribution centers, and manufacturing plants in the same requirements regeneration.

c. One of our limitations to visibility is customer information (see Q6.c.i and ii).

d. Our 2014 supply chain improvement plan includes, but is not limited to;

i. Continued roll out of the company wide transactional system

ii. Implementation of an improved and Hana based sales planning tool. This tool will enable sales ‘event’ planning such as margin analysis on a promotion.

iii. Complete implementation of a Long Range Planning process which will be integrated with the Financial Plan and enable continuous financial planning.

iv. Continued training for Supply Chain personnel.

v. Forecast improvement plans which focus on the adoption of improved reporting and better regional S&OP processes.


8. How would you rate your ability to understand risk & tradeoffs? With which functions do you need to improve your “simulation” tradeoff processes the most?

a. Today, we have the right information, but lack timely insight. We are addressing that through Hana based executive reporting and dashboard development. I would rate the company’s capability for scenario planning a 7 of 10.

b. The company’s longer range plan is to an S&OP simulator for risk and benefit analysis. The initial intent is to utilize the tool as a sales planning engine, which would feed our demand planning module.

c. The vision is to utilize this engine for scenario planning across the supply chain.

9. Supply chain “talent” has been brought forward as a concern. How would you assess the talent challenges in your organization, and what actions are you putting in place to address?

a. Our global supply chain maturity has improved from less than 5 to 7, on a scale of 1 – 10 (see Q2.e).

b. The company has stabilized our Supply Chain turnover to nearly zero, which has helped facilitate sustained and improved training. c. Our plan includes, but is not limited to;

i. Expanded on line training modules – related to operational and technical training

ii. Efforts to ‘cross train’ where Supply Chain personnel can work across regions and / or in different functions.

10. New technology, especially comprehensive customer data and internet connected devices, are driving new supply chain models. How has new technology impacted your area and what new supply chain models/capabilities have you put in place or are considering?

a. The most significant change in technology (other than the continued ERP roll out) is the migration to an in memory based storage and retrieval.

b. Our CIS roadmap includes mobile reporting and executive dashboard improvements, but those have not become operational plans to date.

Consumer Electronics is also my primary background, having led supply chains at Apple, Bose and Sony. His answers provide insight to what all consumer electronic companies are facing, customer intimacy. The impact of not getting closer to the customer is degrading forecasts and margin challenges. They are using S&OP to provide visibility to risk and opportunity, although they are challenged to extend a central S&OP to the regions. And, the regions, especially new markets, are where the growing demand is. It also is requiring them to manage freight, rework and pricing with more detail. New supply chain models, such as direct ship to the customer, regional capacity, and sell through analytics, are being created.

This is why consumer electronics is, in some ways, leading the supply chain innovation. Segmentation of demand, creating new supply chain models, analyzing new forms of data, and striving to solve the demand/supply challenge in real time are things that make consumer electronics supply chains a very interesting group to watch.

Posted in Products, S&OP Expert Blog Series, Supply chain collaboration, Supply chain expert series, Supply chain management

Making Connections at Kinexions – Our customers say it all

Published November 4th, 2013 by Trevor Miles 0 Comments

We had our annual user conference, Kinexions (pronounced ‘connections’ – isn’t English a strange and fabulous language?) in late October with record attendance and great feedback. The theme of the conference was our tag line ‘Know Sooner. Act Faster.’ Indulge me while I parse out our strap line.

Know Sooner – The ability to detect market changes quickly and determine whether the changes represent risk or opportunity, as well as identifying and alerting the people impacted by the risks or opportunities.

Act Faster – The ability to determine the best course of action quickly through scenario analysis within a team of people, across functions and even organizations, in a structured manner.

In other words our strap line is all about reducing decision latency through purposeful collaboration driven by responsibilities.

As usual it was the great customer testimonials that drive home the benefits of this theme through:

  • Rapid time to value in the initial deployment
  • Rapid innovation on the part of Kinaxis
  • Consistent value delivery over time as they expand into new BUs, geographies, and business processes
  • Mature into a Planning Control Tower – End-to-end supply chain planning process enablement

Of course that is easy for me to say, so I want to focus on external validation of these points.

We had Christian Titze attend our conference for the first time from Austria. In a short summary of the conference Christian states that:

Client companies at the conference demonstrated several ways in which they are adapting and improving their supply chains. These included speeding up time to value from deploying new software, and using embedded analytics and master data management (MDM). In doing so they showed how they were redefining their supply chain planning (SCP) application portfolios to support an adaptable and capable planning system of record (SOR).

Several client companies showed how they were using RapidResponse as a planning SOR. 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 .

Unfortunately Ray Wang had some travel issues meaning he could not attend our analyst/influencer session in which we have open kimono discussions with several customers, but Ray has attended our user conference in the past and knows several of our customers. However we were fortunate to have Holger Mueller on a panel which I moderated. Holger has tons of experience in large ERP vendors so it was great to see him endorse the benefits of our technical architecture in a Twitter stream with Ray, which is of course behind all the value delivery.


Lora Cecere has been a consistent voice of the customer in the analyst community for well over 10 years now, often putting the software vendors feet to the fire, including ours. She calls this ‘tough love’. As a consequence any positive statements about a vendor need to be cherished, so it is with great joy that I can report that while at our conference, Lora wrote a blog entitled ‘Applause’ in which she states:

In leaving the Kinaxis user meeting this week, I am struck by three things.

First, their recent work on mobility and defining the user experience on a mobile application is very cool.

Second, the flexibility of the Kinaxis solution makes the product hard to message, but the clients that have figured it out, are very happy.  (Some of the happiest….)

Third, the solution is most often deployed in material-intensive supply chains for what-if simulation and visibility. It is a cloud-based solution that scales easily for hundreds of users. It has helped many clients that were too constrained by the inflexibility of the traditional APS platform.

At the conference, Kinexions, I heard many clients speaking freely about the deployment of Kinaxis and the turning off of Oracle and SAP APS solutions.  Many were almost giddy. The ease-of-use of the Kinaxis system was freeing for their teams.

Our Customers
While I wish I could share details of the customer stories shared with the influencers and as keynotes, these days companies are very reluctant to provide public statements of benefit.  What I can say is that during the influencer session we had three customers speak:

•    Flextronics – Customer since Oct 2001
•    Amgen – Customer since Mar 2009
•    NCR – Customer since Jan 2010

The consistent story across all 3 is how they paid for the initial investment in less than a year and how they have expanded their deployment of Kinaxis ever since, often to adjacent functions such as Finance, R&D, and Regulatory/Control. These stories were repeated in the main stage presentations by Cisco, Applied Materials, and First Solar.

What I love about these customer stories is that they give us purpose. Without tangible business benefits software is nothing but a few bits and bytes.


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

What does mobile, project management, and data integration have in common?

Published May 22nd, 2012 by Lori Smith 0 Comments

They are the focus of our latest RapidResponse release.

The Gartner Supply Chain Executive Conference continues today and we took the opportunity to unveil powerful new RapidResponse capabilities.  I thought I would share some highlights.


  • access to “live” executive and operational dashboards on any tablet of choice
  • have uninterrupted visibility to the current state of the supply chain and make decisions regardless of location

Integrated Project Management:

  • manage  projects in the same system you manage your supply chain
  • gain an accurate view of how a project is impacted by supply chain disruptions, or conversely, how a project change alters supply chain requirements
  • link project management “what-if” analysis capabilities to supply chain analytics to accurately calculate the implications of changes

Rapid Supply Chain Data Integration

  •  new integration layer facilitates rapid integration and automation among heterogeneous system environments with multiple data sources
  • closed-loop integration to disparate transactional systems ensures companies operating in multi-application environments can work in near real-time

By the way, we are tweeting from the Gartner conference.  Follow #Gartnerscc, @kinaxis, or @milesahead for live commentary on the events.

Posted in Control tower, General News, Products

Rising Labor Costs in China and Their Impact on the Supply Chain

Published April 12th, 2012 by Jenny Tyrrell 0 Comments

laborIn October 2011, Simon Rabinovitch of the Financial Times published an article entitled “China labor cost soars as wages surge by 22%.” This figure is an average across the breadth of the country, with Shenzen and Beijing named as the costliest locations to do business. This trend has been covered extensively by the media in recent months, including Supply Chain Digest last month.

Rabinovitch’s article is interesting, and he listed a number of factors influencing this trend. Chinese inflation and local municipal policy on raising the minimum wage are the primary factors. Rabinovitch also talked of this being a direct policy of the Chinese government, driving municipal action, to move activity in the region further up the value chain. We now see contract manufacturers offering managed services, Celestica being a prime example. It is simply a case of margin. CMs build to low margin and high volume. Margin jumps significantly when they move into professional services.

It is incumbent upon the supply chain to ask if this is a positive move or a negative move.

In previous blogs, I have written about the move toward the Asia-Pacific labor market in the mid to late 90s, primarily driven by low-cost manufacturing, low corporate rates, power services, and inexpensive labor. So, the question is, how does this impact change of cost in the region, impact global companies and their manufacturing base, and ultimately, the cost for the consumer?

This is where the discussion becomes interesting. Do we move out of the Asia sphere, or is this actually a where supply chain needs to be positioned—close to an emerging market? Why would you disregard a market of this size  and continue to view this portion of the globe as an export-driven manufacturing base to support western consumerism? We need to be cautious about a knee-jerk reaction here and move bases out of China to lower cost bases in the APJ region or elsewhere. This reaction may well turn out to be a case of kicking the can down the road, as this wage trend is playing out across all of APJ.

So instead of looking at the negative, the supply chain should look at this as a potential growth and consumer market as well as a manufacturing base.

So initially, the base margin is being squeezed. The upshot of this trend, however, is that a large technology-hungry population has expendable income for “luxury goods.”

Take China alone. Chinas population exceeds 1.3 billion. With an average workforce of 900 million, this is an astonishing large consumer market. If the working population has money to spend, then, the demand chain needs to rise to the occasion and deliver. As a profession, the demand chain is becoming just as much of a buzz word as the supply chain.

So looking at the whole picture, reducing baseline margin, and placing the money into consumer hands will drive the “demand chain,” and ultimately drive sale of goods. Volume will ultimately win out over margin.

Companies need to get “smarter” at managing their supply chains. Labor is only one cost factor in margin as discussed in previous blogs. Technology and people create a lean supply chain. Give people the tools required to react to the market, and the supply chain will find its own margin, and adjust accordingly. So the discussion becomes market size versus market margin.

Posted in Products, Supply chain management, Supply chain risk management

Fascinating clash of business models in mobile devices market

Published March 7th, 2012 by Trevor Miles 0 Comments

I find the battle raging in the cell phone handset market to be fascinating. But even as I wrote that sentence, I realized that the sentence is incorrect because the battle is more about the business model than it is between handsets. A recent article by Gartner entitled “Worldwide Smartphone Sales Soared in Fourth Quarter of 2011 With 47 Percent Growth” (subscription may be required) confirms that Q4 2011 was a record-breaking quarter for handset shipments, especially for smartphones.

Worldwide Mobile Device Sales to End Users by Vendor in Q4 2011 (Thousands of Units)
Company Q4’2011 Q4’2010
Units Market Share (%) Units Market Share (%)
Nokia 111,699 23.4 122,278 27.1
Samsung 92,682 19.4 79,169 17.5
Apple 35,456 7.4 16,011 3.5
ZTE 18,915 4.0 9,034 2.0
LG Electronics 16,938 3.6 30,119 6.7
Huawei 13,966 2.9 7,824 1.7
Research In Motion 13,185 2.8 14,762 3.3
HTC 10,837 2.3 8,907 2.0
Motorola 10,075 2.1 10,908 2.4
Alcatel 9,005 1.9 7,998 1.8
Others 143,796 30.2 145,026 32.1
Total 476,555 100 452,037 100
Source: Gartner (February 2012)

What I find fascinating about the discussion is that Nokia still dominates the overall market with a 6% lead over Samsung for all of 2011, but down from 11% in 2010. Yet the brand is tarnished because they have been slow to penetrate the smartphone market. Well, this isn’t quite true since Nokia first tried to create a smartphone market way back in the late 1990s, when one of their bricks cost about $1,000. But they were never able to create the market need with a usability and development ecosystem to drive adoption. Principally the high-end Nokia phones were designed for business users, while the consumers were left with less functional phones. I use the term “phones,” instead of handsets, deliberately because I think this is where the business models diverge.

Enter Apple. Much has been written about Steve Jobs’ brilliance since his passing, and I will not try to recreate any of that discussion here other than to recognize the merging of the hardware, operating systems, and development eco-system into a single platform delivering an unsurpassed user experience and market growth. Apple’s growth has been explosive.

Even if we look at the growth of Samsung in terms of unit sales, their growth of over 13M units is overshadowed by Apple’s growth of over 19M units. Perhaps more interesting is that within the Android camp, Samsung’s gain has been at LG’s expense. By my count, the Android unit sales increased by 18M-20M, depending on how much of the “Others” bucket can be attributed to Android handsets.

At the heart of the matter is the battle over a business model that separates out the hardware from the operating system and the applications that run on the operating system (Android), and a business model that combines all three into a single offering (Apple). Then there is Nokia that is trying to go the Android way though using a different operating system, and RIM that was the originator of the single platform but never really managed to make the transition from business to consumer device.

At first glance it would seem that the Apple model is so much more complex, and it is, but it also provides so many more revenue streams. Apple’s brilliance is in execution at multiple levels: design, marketing, and supply chain. Perhaps its greatest brilliance, which has to be attributed to Jobs, is in creating the coolness factor that has drawn so many developers to its app store. But without the good design, great marketing, and superb supply chain, the developers would have lost interest because the marketplace wouldn’t have been there. So each of the elements is self-reinforcing, almost creating a perpetual motion machine.

On the other hand, there is the Android market in which Google has separated out the hardware from the rest of the business model and has much looser control over the apps “supply chain” and sales, even though Google appears to be trying to gain more control of the hardware and app store.

Of course this is all playing out within the PC/laptop/tablet market too, where again, Apple has the edge because of a combination of design, marketing, and delivery/supply chain.

What I am really interested in following is whether the app store concept will translate into the business app environment. In truth, I’m referring more to iTunes than I am to the app store. Imagine if we could buy and sell a lot more than digital media on iTunes? But going even further, being able to use iTunes as an information brokering platform, truly making the supply chain digital.

I have no idea if Apple is even considering this, but wouldn’t this be the ultimate form of convergence?

Posted in Milesahead, Products, Supply chain management