Archive for the ‘SCM30’ Category

SCM30: Top 10 Supply Chain Worries

Published June 8th, 2012 by Carol McIntosh 0 Comments

In our ongoing series to celebrate the 30th anniversary of the term “supply chain management,” Lori Smith posted the question:

What things do supply chain professionals worry about today that they didn’t worry about 30 years ago?  And what things did we worry about 30 years ago that we don’t worry about today?

First let’s talk about your TOP 10 list that illustrates what you DON’T supply chainhave to worry about today as compared to 30 years ago…

  1. Your massive stack of green line paper doesn’t get delivered to your desk on time
  2. Your secretary is away and can’t mail your supplier’s purchase orders to them
  3. You stock status cards are filed incorrectly
  4. You forget to update your stock status card and you order the wrong amount
  5. There is a bottleneck in printing and you have to wait two weeks for a spec to be printed
  6.  There are dangerous fumes coming from the manufacturing floor into the office
  7. You are burdened with the overhead, cost and space required to support all aspects of your manufacturing
  8. You have to be competent in everything related to manufacturing and selling your product
  9. What is this new thing called MRP?
  10. You don’t know how to promote and market your product globally

Now, this is your TOP 10 list suggesting what you DO worry about today…

  1. How can you support your organization with visibility and planning intelligence across your global footprint?
  2. How do you maintain some level of control of your distributed and outsourced supply chain?
  3. What more can you do to reduce latency across processes and increase your responsiveness?
  4. How can you know sooner and capitalize on market events that drive increased market share penetration?
  5. How are you going to differentiate yourself from your competition knowing that brand loyalty is a thing of the past?
  6. How do you improve customer service and reduce costs at the same time?
  7. How do you take processes like S&OP and modernize them to be more integrated and collaborative?
  8. How do you involve your partners in a more collaborative and win/win business model?
  9. How do you move from a silo approach to supply chain planning to a integrated end to end supply chain approach?
  10. Do you have the right skills in your supply chain organization to effectively execute to a new vision?

Your worry list is rather daunting, but nothing is better than a good challenge. With the right people, processes and tools, organizations are extremely successful in meeting the challenges of the 21st Century Supply Chain.

Posted in SCM30, Supply chain management


“Supply Chain Management 2.0” or Supply Chain “Management 2.0”

Published June 7th, 2012 by Kirk Munroe 1 Comment

At the Gartner Executive Supply Chain Conference last month, one of the key note speakers was Gary Hamel, long-time business guru and currently Author and Director, Management Lab.  I saw Hamel present seven or eight years ago and since then, I have been measuring all management speakers against him as the standard.  Some have come close – no one has raised the bar yet.  That is until this latest presentation where Hamel raised the bar for himself.

The topic was “Management 2.0” – a topic Hamel has been discussing for a few years now, but it was the first time I had the pleasure to hear it in a live setting.  As with any good presentation, the more I reflected on it, it made me think about our ongoing conversation around “If you could re-name SCM today, would you? If so, what would it be?” to commemorate the 30th anniversary of the term SCM.

When I commented on that blog, I didn’t want to do the predictable and:

  • say that the word that should change was “supply.”  Supply is certainly not the ideal word as others pointed out.  It is about supply and demand.  Maybe I should have used the word “value” as Bill Seliger pointed out in his comments to my post.  Value certainly better encompasses the end-to-end process better than just ‘supply’, but it felt predictable to say that.
  • say that the word that should change was “chain.”  Chain has an implication of linear and we know this space is anything but linear.  It is complex and using a word like “network” as Dustin Mattison suggested makes a lot of sense.  I agree, but again, I didn’t want to seem predictable.
  • call it SCM 2.0.  I really, really didn’t want to “2.0” it … seemed like too much of an easy way out.

So, I wanted to focus on the word “management.”  The word is so loaded to me.  It conjures up words like hierarchy, control, rigidity.  So I suggested an “E” for excellence or effectiveness.

Hamel made me come to the realization that I also took an easy way out.  I challenged the word management instead of challenging what management really means (In this context, I mean the act of managing, not of the organizational hierarchy, though of course they are linked.) Basically, if I had it to do over again, I would suggest Supply Chain “Management 2.0” – still not “Supply Chain Management 2.0.”  What do I mean?  The critical piece that we have to address is that the breakthroughs have to come from the discipline of management itself.  Saying to give up, or go beyond, management was the easy way out.  Let’s challenge what it means to manage instead – how best to run and maintain a function, process and even an entire organization.

For those of you who have not seen or heard Hamel on the topic, his assertion is that management is the great technological advancement of the last 100 years, but has basically not changed much in the past 20 years, give or take.  One of the hottest topics that comes up in the business world – in blogs, presentations, business courses – is that the world continues to change more rapidly than it ever has before.  Change is not only growing in velocity, it is growing at an accelerated rate.  Change or die.  Embrace change.  We have not only heard all these things, we have used then.  And rightly so – they are all true.

What Hamel questions is that everyone seems to acknowledge the need to embrace change, the need to be able to respond to change quickly with both the customer and shareholder in mind, the need to be more innovative in general; however, a very small number of companies have embraced a management structure that allows this to happen.  Wemanagement still have rigid hierarchies (which typically lead to organizations growing by tenfold in short bursts – I know I picture Facebook as 30 people in one room and not the 3000 or so reported at IPO time – two bursts of growth, I guess).  We don’t have innovation training programs.   We have employees who do not feel empowered and are generally – to the tune of 80% or so – unhappy in their jobs.   This lead to the most memorable quote of the presentation, “it is not work that sucks, but management that blows.”   Sadly, well put for too many organizations.

For more on Hamel and Management 2.0, his blog is a great place to start.

Now that I am invoking my mulligan for my answer to the question of what I would call SCM, let’s look at the management practices that are (at least should be) different from SCM of 30 years ago, SCM 2.0 and Supply Chain with “Management 2.0” – taking into consideration that I am obviously taking liberties with Dr. Hamel’s work and that I am categorizing each of the three as “SCM 1.0 = Old School Management”, “SCM 2.0 = evolving management but not going all the way to 2.0” and “SC’M2.0’ is incorporating new management practices into the value network”.

In the table below, I am taking a quick view of what the transition from SCM 1.0 through SC”M 2.0” looks like.  Whether or not you want to categorize yourself is up to you, but questions, comments and “are you out of your mind?!” are always welcome.

Posted in Best practices, Sales and operations planning (S&OP), SCM30, Supply chain management


SCM30: If I could change SCM, I would call it…

Published April 20th, 2012 by Kirk Munroe 1 Comment

SCMWelcome to the third blog post in the SCM30 series.

Though supply chain management concepts have been in practice since the turn of the last century, it is widely agreed that the term was created by Keith Oliver in 1982 – 30 years ago.  This post in our series focuses precisely on that – the term ‘supply chain management’.

There is a posting in the Supply Chain Expert Community discussion forum that asks the question: If you could re-name SCM today, would you? If so, what would it be?  While others have weighed in with some interesting thoughts, here are mine…

If I could change SCM, I would call it SCE … Supply Chain Excellence (or Effectiveness – either work for me)

First off, I am not a long standing SCM expert.  Thought we should get that on the table.  However, I do have a long history of working with analytics-based enterprise software to help companies make better business decisions, to better achieve corporate strategy.  With this background, the word “management” carries a connotation that screams “drive out costs at all costs.”

To make sure I am not losing it, I went to my friends at Dictionary.com and found: the act or manner of managing;  handling, direction, or control.  The word “control” jumped out at me, so I following the rabbit to find: to exercise restraint or direction over; dominate; command.   If I am being balanced and fair, there are other definitions of management that are not so dictatorial, but the connotation still holds for me.

In short, I don’t think SCM because management implies execution alone and not strategy.  Execution is certainly a big part of the equation, but I would like to think that supply chains, and the software that enables them, can be so much more.

With that out of the way, if we look at the three real traditional strategies a company can have (leaving out “system lock-in” as a viable option for most businesses).  First, we have lowest cost provider.  Second, product or service innovator.  Third, customer intimacy.

In this first case, it is mostly about managing out costs or optimizing the supply chain, but in the latter two cases, clearly the supply chain has to be thought of as an essential component of the corporate strategy.  It is hard to think about creating innovative products if you think of your supply chain as a low-cost assembly line.  It is even harder to think about delighting your customer without considering product customization, order flexibility, and so many more factors from order to delivery that are key to the supply chain.

I am not going as far as saying we should be calling it SCS (Supply Chain Strategy) because it is equal parts strategy AND execution.  There might be a better word than Excellence or Effectiveness, but I hope the point is clear and why the M in SCM doesn’t work for me.

Would love to hear your thoughts on this topic – either here on the blog or join the discussion on the community.

Posted in SCM30, Supply chain management


SCM30: What Are the 3 Greatest Advancements in Supply Chain Management?

Published April 6th, 2012 by Trevor Miles @milesahead 4 Comments

 

SCM30Welcome to the second blog post in the SCM30 series. Throughout 2012, Kinaxis will be exploring the past 30 years—as well as the future—of supply chain management.

 I have always suffered from “a kid in a candy store” syndrome, and when Lauren Bossers asked me to write about the three greatest advancement in Supply Chain Management over the past 30 years, I was “over the moon.” But in truth, I turn quickly into “a deer in the headlights.” Paralyzed more by choice than by fear in this case. But I guess I am really paralyzed by the fear of making the wrong choice given the wide range of choice. How does one choose just three from a long list, and aren’t many of them interlinked? And If I choose this one rather than that one, what is Lora going to think of me? Also, it is just easier to identify the ones that have failed, because that is a fact. But to choose the three greatest advancements is to predict longevity too, not just past impact. And we all know how well we can forecast demand, don’t we? So in the end, I decided to make this personal—to be less analytical—which is tough for me. So let me take a crack at defining the three greatest advancements of supply chain management, and all of you armchair experts out there are welcome to agree, disagree, or just comment. We still have a long way to go and any and all insights are welcomed.

1: Defining the term

So I started this blog with a bunch of idioms that are a fair, but incomplete, reflection of me. We all need and use acronyms and idioms to encapsulate and convey ideas in in a concise form, but lose something by bounding it tightly in a term. And so it goes with supply chain management. When I first came across the term I was working in Germany, which I am embarrassed to say was only 20 years ago, not 30 years ago, which is when the term SCM was coined. But even at that time there was confusion about the term SCM because the Germans used, and continue to use the term “Logistik,” which is very different from the North American term “logistics,” used to describe the transportation of materials between locations. In fact, a quick search of Wikipedia will show that “logistics” dates back to Roman times:

 

Logistics is considered to have originated in the military’s need to supply themselves with arms, ammunition and rations as they moved from their base to a forward position. In ancient GreekRoman and Byzantine empires, military officers with the title Logistikas were responsible for financial and supply distribution matters.

Searching for supply chain management in Wikipedia comes up with a host of similar yet different definitions, not that dissimilar to logistics. But the whole point of having a name or term to describe something is that now people can study it, debate it, enhance it. Without the term there is no cohesion and therefore little progress. Let’s assume for now that we can locate the origins of SCM in 1982, 30 years ago. What is interesting is that from an academic perspective, little research was published until much later, with only five publications in 1997, 15 years after the term SCM was coined.

Yet the term SCM itself has broad meaning. I have to admit that when I first heard the term “supply chain management,” my attention was drawn to the supply aspect, which limits its applicability to materials management and inbound logistics. But clearly it wasn’t only me that had a limited understanding of the term. Many still do think of supply chain management being limited to the inbound supply of materials.

This confusion of definition can be seen in many articles published by the analysts and is exemplified by AMR Research’s (now part of Gartner) attempts to popularize the term value chain management and the concept of a demand-driven value network (DDVN). But as I pointed out at the start of this blog, a term is very important shorthand for communicating ideas and concepts. And everyone at AMR Research, and now Gartner, needs to be congratulated for promoting the broader concept of value chain management. Even if the term is not gaining much traction, the central themes of demand translation and profitable response are essential in being able to conceptualize how a company’s operations can best be orchestrated to meet their financial goals.

I’d also like to point everyone to a great piece by Lora Cecere on the maturation of supply chain management as a recognized profession and course of study. Lora’s view is that the third generation of practitioners is now in university and will be hitting the streets soon. I look forward to their contribution. They will be the first that will have been born at a time when nearly every household in the Western world had a computer in it. They are the generation that will have learned to use the computer much as they would a telephone or TV. I expect big things from them.

2: Technology to support the process

As I mentioned above, I’m a slow starter, so I’m going to put myself in the second generation of supply chain professionals despite falling into the first generation by Lora’s definition. At the time I came across the term supply chain management I was working for a management consulting company and doing a lot of what I now term supply chain re-engineering, while others call it supply chain network design. To be honest, I don’t think that at the time we had a term for what we did, but it was the aggregate level of analysis of a company’s operations that tries to determine where best to locate facilities and to flow materials through the network based upon historical demand patterns and anticipated changes in the demand patterns. We never did anything as mundane as actually trying to operate the supply chain we had designed. J It was during one of these studies in 1995 that I came across i2 Technologies, which was still a relatively small company at the time, and had only just opened offices in Europe. At the time they had a single product called Factory Planner, which, in itself, is indicative of the level of maturity of the industry. I leapt at the opportunity to join i2 and had over 10 great years working for them at a time when technology was just emerging to support the emerging practice of supply chain management.

Once I joined i2, I came across the likes of Manugistics, Think Systems, Aspen Tech, Numetrics, and a host of others, which have now come and gone. All of these companies tried to add science to how companies were purchasing, manufacturing, and distributing product in order to satisfy customer demand. Of course, before this there had been a lot of work done by Jay Forrester and others, and there was quite a lot of academic study of things like operations research, which were the basis of much of the software that was developed to address the needs of supply chain management. But this was the first time technology had been developed specifically to satisfy the emerging practice of supply chain management. We needed to get beyond the abacuses and spreadsheets being used at the time.

Core to the concept behind the establishment of i2 Technologies was Sanjiv Sidhu’s observation that even the smartest people can juggle no more than nine variables when making decisions. Instead he proposed a design for computer software based on artificial intelligence and advanced simulation techniques, most of which were rooted in Operations Research techniques and Eli Goldratt’s Theory of Constraints. Of course, as I mention above, it wasn’t only i2 that was developing products to satisfy the supply chain management needs. Once SAP and Oracle saw that there was a large market for supply chain management software, and that MRP alone would not satisfy the requirements, they developed the respective Advanced Planning and Optimization (APO) suite and eBusiness Suite (EBS).

There are two major drawbacks, which we are still experiencing today, that resulted from this period. The first is that the software products were developed to satisfy specific supply chain management sub-processes, such as demand planning/forecasting in isolation and with no thought being given to how the different processes are interconnected. The second is that it was assumed that an optimization algorithm could arrive at a better answer than a human being, ignoring the fact that the model itself is an approximation and is based upon assumptions that usually have a fairly short half-life.

Nevertheless, we are considerably further along in the development of supply chain management as a profession than if these companies had not emerged to fill this gap.

3: Supply Chain Management in the C-Suite

I am a technologist—a geek at heart—which is why I studied for a long time and why I have worked mostly for software companies or management consultancies. But I recognize the tremendous importance and value of the people who actually have to put this stuff into practice. It is much easier to analyze than to do, so to all those “doers” out there, thank you. Until recently supply chain management, if such a department even existed, would report into all sorts of functions, often procurement or manufacturing, reflecting again the emphasis on the term supply. Or even into IT, reflecting the perception that supply chain management was mostly technology rather than process.

A couple of years ago, Gartner began using the term “Chief Supply Chain Officer” to describe the emergence of the secondgeneration of supply chain practitioners in the executive ranks of organization. In a blog originally dating from 2008 and titled “Chief Supply Chain Officers are still rising, but what is the job?”, Kevin O’Marah comments that:

On one hand, supply chain looks ready to usurp all kinds of traditional functions from purchasing through shipping; but on the other, the very breadth of this span of control means that most real VPs of supply chain have hard line authority over only a portion of the process and must influence, via dotted lines, the traditional owners of manufacturing or forecasting.

The most obvious example of the emergence of this operations-savvy senior executive is Tim Cook as the CEO of Apple. His official bio, which I have copied below, emphasizes his deep supply chain experience. And what better exemplar can we get that a geeky function such as supply chain has produced the CEO of the hippest company in the world epitomized by the black mock turtleneck and other non-conformist characteristics of Steve Jobs.

Before being named CEO in August 2011, Tim was Apple’s Chief Operating Officer and was responsible for all of the company’s worldwide sales and operations, including end-to-end management of Apple’s supply chain, sales activities, and service and support in all markets and countries. He also headed Apple’s Macintosh division and played a key role in the continued development of strategic reseller and supplier relationships, ensuring flexibility in response to an increasingly demanding marketplace.

Prior to joining Apple, Tim was vice president of Corporate Materials for Compaq and was responsible for procuring and managing all of Compaq’s product inventory. Previous to his work at Compaq, Tim was the chief operating officer of the Reseller Division at Intelligent Electronics.

Tim also spent 12 years with IBM, most recently as director of North American Fulfillment where he led manufacturing and distribution functions for IBM’s Personal Computer Company in North and Latin America.

Tim earned an M.B.A. from Duke University, where he was a Fuqua Scholar, and a Bachelor of Science degree in Industrial Engineering from Auburn University.

But back to Kevin O’Marah’s point about the supply chain function only influencing rather than commanding the traditional functions of manufacturing and forecasting. As recently as two weeks ago I met with a high-tech/electronics company in Silicon Valley in which this is still the case. The supply chain management team is a central function, reporting into the CIO, that can advise but not act. It has little budget and needs to bring a number of budget owners together in order to reach a consensus on how to proceed and motivate each function to contribute toward a budget to purchase and implement supply chain software. We all know how long that takes and how seldom a consensus can be reached. Each head wants to maximize their operational effectiveness of their functional in isolation.

I can only contrast that with another company I have been engaged with lately that has an SVP of Supply Chain that reports directly to the CEO and has direct operational responsibility over the business of getting product into the hands of the customer. Often the people who rise to these positions have a strong analytical background and have worked in many of the functions that make supply chain management. In other words, they understand the interconnectedness of the sub-processes and how optimizing one in isolation may well mean that the overall process is less effective. I believe the emergence of these people at more senior levels is a key reason for the resurgent interest in sales and operations planning (S&OP) over the past 3-5 years. They are laser focused on the cross-functional effectiveness of operations both from a financial and an operational perspective. While S&OP is the mechanism by which they are implementing cross-functional processes, many are interested in supply chain control towers as an enabling technology to support not only the S&OP process but also the translation of that plan into executional effectiveness, what Gartner and Lora Cecere call “demand translation.”

In Conclusion

There were so many items on my list, but I had to come up with three, and I chose the definition of the term supply chain management, followed by technology to support the sub-processes, and the emergence of people in the executive suite who understand the importance of the supply chain to the financial performance of the company. I am sure there are many other options out there and encourage you to either comment directly or email me with your suggestions.

Posted in Milesahead, SCM30, Supply chain management


SCM30: What Can We Learn From Supply Chain Management Mistakes?

Published March 23rd, 2012 by Ray Karaffa 0 Comments

Welcome to the first blog post in the SCM30 series. Throughout 2012, Kinaxis will be exploring the past 30 years—as well as the future—of supply chain management. Though supply chain management concepts have been in practice since the turn of the last century, it is widely agreed that the term was created by Keith Oliver in 1982—you’ll find more details on that in the post below.

SCM30

 

Watch for the SCM30 posts on alternating Fridays over the next few months. These blog posts will be fueled by conversations on the Supply Chain Expert Community discussion forum. Look for the next discussion to start there on Monday, March 26.

This blog article is the result of a compilation of shared insights and observations of experienced practitioners in the supply chain management field. This author regrets that all of the insights could not be published in order to maintain the brevity of this article. The full contributions can be viewed here.

2012 marks the 30th anniversary of the term “Supply Chain Management.” Keith Oliver, as a consultant with Booz Allen Hamilton, coined the term in 1982. The following is his definition as explained by SupplyChainRecruit.com:

Supply chain management as a concept has been widely accredited to a Booz Allen consultant named Keith Oliver who, in 1982, defined the concept as follows: “Supply chain management (SCM) is the process of planning, implementing, and controlling the operations of the supply chain with the purpose to satisfy customer requirements as efficiently as possible. Supply chain management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.”

SCM as defined by Keith Oliver could be construed as Macro Supply Chain Management (Macro-SCM), since it involves the global network processes from the initial raw materials to the ultimate consumption of the finished product linking across supplier-user companies. These functions lie within and outside a company that enable the value chain to make products and provide services to a customer.

Micro Supply Chain Management (Micro-SCM) could then be construed as the non-global activities concerned with planning and controlling the rates of purchasing, production, distribution and related capacity resources to achieve targeted customer service levels within a company. This could be a replacement for the old term of Production and Inventory Management since it is now included within the broad definition of SCM.

Micro-SCM would then also be involved with the body of knowledge relating to the evolutionary progression of Material Requirements Planning (MRP), Manufacturing Resource Planning (MRPII) and Enterprise Resources Planning (ERP). This body of knowledge began back in 1957 when 20 production control managers met in Cleveland, Ohio, to form the American Production and Inventory Control Society (APICS), which is currently referred to as the Association for Operations Management.

Keith Oliver along with Tim Laseter, the co-author of “When Will Supply Chain Management Grow Up?” in the Fall 2003 issue of strategy + business, had a few ideas of their own regarding mistakes made in SCM and their suggested solutions.

The first mistake discussed was the reliance on forecasting. Forecasts are just guesses and are usually wrong. They have a major result on inventory. The resulting inventory could be thought of as good (you are not out of stock) or bad (you have way too much inventory).

In the case of the forecast being wrong, there could be good and bad consequences also: good (we sold out) and bad (lost sales due to out of stock).

Forecasts, since they are merely guesses, require constant vigilance and adjustment to history in order to keep the stock-out wolf away from your door. The good thing about MRP is that you don’t have to guess on every part number like you do with the classic order point formula. MRP has product structure, therefore, you only have to guess at the independent demand level and MRP will derive the rest of the forecast changes from the product structure. This makes it easier to adjust your forecast to current history.

Replenishment frequency was the next mistake discussed. Both Lean and the Theory of Constraints taught us that the replenishment cycles should be as short as possible. That means that one-for-one replenishment is ideal.

We always “talk the talk” of Lean, but seldom “walk the walk” of Lean. Once you leave the Lean seminars and walk out onto the shop floor, you can talk with planners who are not following good Lean MRP principles.

This author believes MRP facilitates Lean very well through the use of discrete, lot-for-lot order quantities with true and accurate lead times. I have seen it and I have done it. All too often, planners join in the mass hysteria of ordering lots and lots of material and parts in fear of stock-out situations.

They also over-inflate lead times in an effort to give suppliers and the shop floor more time to deliver on time. This artificial inflation of lead times in an MRP planning environment only releases orders earlier than needed into sometimes an already overloaded shop floor supplier base.

What we need to do is build the integrity back into the MRP system by following good MRP principles and cutting lead times to the bone and ordering discretely in a lot for lot to achieve Lean manufacturing. Lean manufacturing doesn’t have to be limited to manual kanbans. It can be achieved through the use of sound MRP principles.

Inventory management agility, or lack thereof, is another suggested SCM shortfall. Systems should dynamically adjust for changes in demand via supply chain visibility constantly. Our Kinaxis RapidResponse Control Tower concept would facilitate this functionality.

Inventory managers should be able to respond to simple visual signals indicating the condition of the inventory. Here again, RapidResponse, with its widget capability, could supply managers with tablet inventory graphics beginning at version 11.0.

Systems should be able to rapidly analyze historical data and identify sudden demand changes by simple rules. Our RapidResponse alerts functionality would solve this requirement nicely.

The move toward the outsourcing model in the mid-90s appears to be another major SCM mistake. Determining where to place the manufacturing base has been a constant headache for supply chain managers. The cost base often persuaded these decisions, superseding issues in relation to geography, lead times, time zones, language, market placement, logistics and distribution.

Supply chain people are expert in global management of the product manufacturing movement and less inclined to factor cost. Speed is of the essence. Finance people approach from a balance sheet perspective.

Distance is the main dilemma. How long will it take to move material from one end of the globe to the other, which adds to the lead time of the delivery of the product? Freight charges become a massive headache and an additional ten days can be added for freight lead time. Sea freight is slow.

Expediting costs are unmanageable and are being employed far too often, decimating product margin. Material backlogged in international hubs is awaiting paperwork and duty payments specific to the region.

There are difficulties of trying to run a production line remotely, in a different time zone and off your ERP system where visibility is non-existent. In the United States, the informal system of shortage meetings and hot lists are the actual way things get shipped anywhere close to on time. A lot of companies are finding it next to impossible to run a world-wide shortage meeting to get the job done. These meetings and hot lists work somewhat better locally than halfway around the world.

Inventory costs have increased exponentially through a developed hub system housing geographical locations to reduce lead times and enable faster reaction to changes in customer demand.

The end result of all of this was a lower manufacturing cost base on paper, designed to increase margin but in reality the supply chain had to scramble to react to this decision.

When you look at the Kinaxis RapidResponse Control Tower concept, you can realize that this new approach would have avoided this dilemma 15 years ago.

Another major SCM problem appears to be a constant shift to whatever seems easier instead of focusing on the hard and prolonged work of changing processes and corporate culture. How many times have we heard of companies only implementing partial modules of an ERP solution? The reason is always that the rest of the solution “just doesn’t fit our business. We’re unique and we don’t want to change our processes.” This results in disparate system silos.

We have to move our companies away from departmental system silos and work to a single version of the truth. I’ve been searching for a way to convey this in some of my blog articles for some time now, and it really came to me after watching a video posted on SuppyChainBrain.com. In this video entitled The Control Tower: Breaking Down Enterprise Barriers!, Kinaxis CEO, Doug Colbeth describes tying together all parts of the enterprise and eliminating silos. He describes the Control Tower as a single platform with a single version of the truth. No silos.

Again, in order to limit the length of this blog article, I couldn’t post all of the suggested insights from the online discussion, but if you are interested in reading more on this topic, the full contributions can be viewed here.

Posted in Inventory management, Lean manufacturing, SCM30, Supply chain management