Archive for the ‘Supply chain collaboration’ Category

Your supply chain is costing you money – Reason #2 Poorly executed or non-existent sales and operations planning

Published September 10th, 2014 by John Westerveld 0 Comments

sales and operations planning gears

Reason #2: Poorly executed or non-existent sales and operations planning

Over the years, working for and with numerous manufacturing companies, I’ve seen many supply chain practices that cost companies money.  Over the next several weeks, I’ll outline these issues and discuss some ideas around how to avoid these practices. You can find the previous post here:

Tell me if you’ve heard this one before.  Your company has implemented an S&OP process.  At first it showed some promise, but now it has turned into a blamefest attended if at all by lower level representatives that aren’t empowered to make decisions.  No one trusts the numbers, inputs are late and you aren’t seeing any improvements month over month and people are starting to wonder “why bother”.  Sound familiar?

So how does a poor S&OP process cost money?

  • Excess and obsolete inventory. S&OP is all about aligning manufacturing and sales. When you don’t make what you sell and don’t sell what you make you create inventory.  Lots of it.
  • Lost sales.  This is the corollary to the above.  Typically companies with poor planning don’t have too much of everything.  They have too much of things that aren’t needed and too little of things that are.
  • Lost market opportunities.  Companies without an effective S&OP are typically much slower to react to market changes.  This means that their competitors will beat them into new markets and products.

A well-executed sales and operations planning process can transform a company; allowing them to better control inventory and costs while meeting rapidly changing demand pictures.  It does this by gaining alignment across the sales, demand planning, manufacturing and finance organization.  In effect making sure all areas of the company are working towards the same plan and towards the same goal.  5 years ago, I wrote a blog post in which I discussed the 3 pillars of S&OP. They are;

Process:  Trying to run sales and operations planning without a clearly defined process is like driving in a city where no one obeys the rules of the road….you probably won’t get where you are going.   If there were no process driving S&OP, then there is a very good chance that key information would not be presented (or presented poorly), key people would not be in attendance and that critical decisions would not be made.  It is important that the structure, timing and agenda of S&OP is documented, published and adhered to.   If the process needs to change due to changing business requirements, those changes need to be documented and published.

Executive Commitment:  It is very difficult (bordering on impossible) to implement an effective S&OP process without executive commitment.  Why?  First let’s ask what is the purpose of S&OP?  The purpose of S&OP is to align supply and demand and the various departments contributing to that alignment. Departmental alignment can only occur if the top level department executives are involved in the key decisions…because those top executives have the decision making authority.  Sales and Ops is a failure if the representative at the meeting needs to go back to their executive to get a decision.

Effective S&OP Tools: This includes the tools to analyze the data, present information and make decisions.  Effective S&OP tools also include the ability to integrate the data that drives S&OP.  While Excel can be fine to do the initial S&OP model, moving to the next level of S&OP effectiveness requires a more integrated, responsive and collaborative application.

S&OP is a powerful tool if performed well. Inventory reductions, improved efficiency, improved customer service and reduced expedites are all expected benefits.  However, If there is no buy in, if executive commitment isn’t there, if data isn’t reliable and doesn’t drive action your S&OP process won’t delivery these results.

Have you experienced poor S&OP planning processes?  How about excellent planning?  Comment back and share!

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


Throw Back Thursday: How Can Companies Respond Rapidly to Demand?

Published September 4th, 2014 by Melissa Clow 0 Comments

How Can Companies Respond Rapidly to Demand? Kinexions - Kinaxis & SupplyChainBrain Series

As I’ve mentioned in my last couple of Thursday blogs, we are starting to gear up for this year’s Kinexions (our annual training & user conference). A few weeks ago I began to reminisce about our videos from past conferences and I decided to create a blog series to share. So, on this ‘Throw Back Thursday’, I would like to share this video of Trevor Miles, Vice President of Thought Leadership, speaking about “How Can Companies Respond Rapidly to Demand?”.

In this video, hear Trevor detail industry’s major supply-chain management challenges – in particular, the difficulty of obtaining full visibility of supply and demand, and dealing with the volatility of markets.

Many companies seem wedded to their spreadsheets, even though they’re aware of the format’s shortcomings. Miles says executives have “a very legacy approach” to thinking about business processes. As a result, they’ve created “islands” of automation that do not add up to a coherent, smoothly flowing supply chain.

“People want to get away from that,” he says, “but it’s the manner in which they are trying to enable those different processes that is just lacking.”

If you don’t see the video below, view “How Can Companies Respond Rapidly to Demand?” here.

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


Elephant in the Room: Thoughts on Metrics That Matter in Semiconductor and Hard Disk Drives

Published August 29th, 2014 by CJ Wehlage 0 Comments

Metrics That Matter in Semiconductor and Hard Disk Drives

Supply Chain Insights recently published a Metrics That Matter report covering both the Semiconductor and Hard Disk Drive (HDD) industries. Despite being hit hard by the recent recession, overall the research shows that these two industries have fared well over the last decade and are positioned to continue that success.

Success, provided they monitor the 7 “elephants” in the room.

Consolidation

Notice in the Supply Chain Insights report, there are only two HDD companies.  That industry has already gone through consolidations.  Semiconductor is poised to consolidate, which will have huge impact on the metrics.  It’s already happening with Avago/LSI, RF Micro/TriQuint, Micron/Elpida, MediaTek/MStar and Fujitsu/Panasonic.  Speed to integrate the planning functions during an acquisition is critical.

Profitability

With the OEM’s driving down the price, the semiconductor/HDD companies will have to follow (or innovate new products).  Lower price means lower profitability. This will begin to impact the semi/HDD ability to raise capital and innovate/expand.  Cost pressures and faster time to market in the planning processes will be required.

Global pressure

Consider that the Chinese and India governments are investing in the semiconductor industry.  With China already a source for semiconductor raw materials and the China/India end consumer market growing, there will be pressure to supply chips and hard drives to local China/India OEM’s first.  This could create a shortage in the US/Europe OEM chain.  Understanding inventory planning will take on a new dynamic.

Of course, like any industry, Semiconductor and HDD manufactures are faced with a set of unique challenges in their space that puts their supply chain at risk.  The largest risk being a balance between shrinking product lifecycles in the OEM world versus expensive asset utilization.  We are at a time where consumer electronic brands have a 9 month (that’s 270 days) lifecycle, while Semiconductor & HDD supply chains have 6 month component lead-time, with 3-5 year depreciation of capacity.  After reading the research, I would summarize the main obstacles as follows:

Position in the Supply Chain

As suppliers of technology embedded in more complex products, Semiconductors and HDD manufacturers find themselves further back in the supply chain, often 3-5 levels down. This can make it difficult (compared to those closer to the front of the supply chain) to find balance in what Supply Chain Insights calls the Effective Frontier – growth, profitability, cycle and complexity. The ‘bullwhip effect’ certainly plays a role here, creating wide fluctuations (over and under) of supply and demand – due to disorganization, lack of communication or miscommunication, incorrect demand information, etc. – as information moves down the supply chain to the manufacturer.

Potential for Tightening Margins

Related to their position in the supply chain, competitive and consumer pressures that drive down pricing are often pushed down the supply chain, forcing suppliers to tighten their costs.

Supply Chain Length

Reliance on suppliers beyond the US borders has extended the length of the supply chain, and opened it up to significantly more risk, as demonstrated by the impact of the Thailand flooding on both the Semiconductor and HDD segments.

Growing Complexity

As one of several suppliers contributing to the creation of a single product, Semiconductor and HDD manufacturers are susceptible to issues experienced by others in the supply chain, as explained by Broadcom in the Supply Chain Insights report: “Our products are incorporated into complex devices and systems, creating supply chain cross-dependencies. Accordingly, supply chain disruptions affecting components of our customers’ devices and/or systems could negatively impact the demand for our products, even if the supply of our products is not directly affected.”

Despite these challenges, the Supply Chain Insights dive into financial data shows that these two industries have fared well, thanks to strengths in product innovation and supply chain planning functions. More specifically, the research shows strong year-over-year growth and large (and increasing) operating margins (with minimal impact -so far-on from upstream cost pressures).

On the downside, it appears that these industries are struggling with inventory issues. The research shows the cash-to-cash cycle has increased, as have days of inventory, and inventory turns are on the decline. Supply Chain Insight’s look at four key Semiconductor companies and two key HDD companies indicates these inventory issues are not the result of poor inventory management but rather an industry trend. The research suggests that both product complexity and the length of the supply chain are contributing factors.

Based on the above, it seems clear that putting a focus on optimizing inventory management practices, making risk management initiatives a priority, and building strong collaborative S&OP practices with their customers, will help Semiconductor and HDD manufacturers continue to see success in the coming years.  This comes with a solid planning system of record.  One that will remove manual steps in the process, drive real time information from the semiconductor/HDD testing to the OEM demand, and connecting the end-to-end decisions with the planning model.

P.S. The Supply Chain Insights’ research report covers additional areas than what I’ve summarized here, and supplies comparative financial data. If you’d like to read the Supply Chain Metrics That Matter: Semiconductors and Hard Disk Drives report in its entirety, you can download a copy here, with no registration required.

 

Posted in Demand management, Inventory management, Supply chain collaboration, Supply chain management


An Open Confession – Please Don’t Fire Me, I Promise to Learn Laugh Share and Connect on the Supply Chain Expert Community

Published August 14th, 2014 by Bill DuBois 0 Comments

Before I start let me confess something. I am not a social media guy. I only go on Facebook to see my latest invitations to play Candy Crush and I still think a Twitter is 3 hits away from a no-hitter. However the idea of an online community seemed a bit more appealing since it was all about a group of people with a common interest sharing information on that topic. Obviously one community I pay attention to is the Supply Chain Expert community powered by Kinaxis. That leads me to the second part of my confession. I haven’t been on the community for a little while. Recently I was doing a demonstration of the Dashboard capabilities in RapidResponse. One participant asked about authoring Dashboards and I suggested they visit the Supply Chain Expert Community to check out a short video on authoring dashboards. The third part of my confession is that I had not seen the video for myself. I knew it was there but after making the recommendation I thought I should see it firsthand. The final part of my confession is that I had been taking the content of the community for granted.

The first thing I took for granted is that anyone can get to the dozens of training videos, for free, without having to be a Kinaxis customer. The video I suggested on authoring Dashboards was only one of many. If you look at the 6 menu items below, 5 are open to anyone. Only the support is closed to customers because it deals with specific customer data and use cases.

supply chain expert community header

If you look at the Content section you’ll see everything from ways to better utilize RapidRepsonse to information of key Supply Chain topics and strategies. Sorry, it’s lacking a bit on motivational quotes and links to the latest celebrity wardrobe malfunctions. Notice I’m only in as a guest and still have access to everything from blog posts, discussions and videos.

supply chain expert community content

Next you can see who is participating. This group includes RapidResponse users, Kinaxis customers along with Supply Chain Analysts, consultants and many people just looking to learn more about Supply Chain.

Places and the Supply Chain Hub easily take you to some of the most popular and informative places in the community. One of those places is the Just for Laughs section which includes the most popular Supply Chain show in western Ottawa, the Late Late Supply Chain Show. Some people say it was just a way I could  get free Coronas but it was really a group of employees that wanted to shed light on a vital part of any organization and the opportunities available to radically change the way we manage Supply Chains…while drinking beer.

supply chain expert community places

The RapidResponse section is a goldmine of information for all users and anyone interested in getting into the details of the new generation of Supply Chain tools and processes. I still can’t believe this section isn’t locked down to customers but the Kinaxis team feels that more participation will lead to faster breakthroughs and stronger Supply Chains for their customers.

supply chain expert community RapidResponse

There you have it. The truth will set you free, I feel much better after my confession. So go check out the community or drop me a comment to see if I got fired for my lack of social media savvy.

 

Posted in General News, Supply chain collaboration, Supply chain comedy, Supply chain management


David and Goliath: Lessons for supply chains

Published July 30th, 2014 by Carol McIntosh 0 Comments

David and Goliath | supply chain perspectiveI just finished a great book called ‘David and Goliath’ by Malcolm Gladwell.

The book references the story about two men, Goliath from the Philistines and David from the Israelites in the days of the Old Testament in ancient Palestine.

As most of you know, in the battle of David and Goliath, David, a small man, the underdog, was confronted by a giant, a man so formidable it would have seemed impossible for David to even survive such a fight. But he did. He won using skill and techniques that were not typical for this fight. Goliath was weighed down by his armor. David was flexible, responsive and targeted. He knew that he couldn’t rely on his size if he wanted to win.

Having been in supply chain for so many years, I immediately made a connection.

The correlation I saw is with organizations. I have worked with numerous organizations in multiple industries and it is disappointing to see that quite often the bigger they get the more difficult it is for them to make effective decisions. It is very easy for a large organization to, over time,  apply more and more armor. They develop more guidelines, decision hierarchies, rigid processes which end up making it more difficult for employees to achieve their goals than before. The end result is latent decision making, lack of flexibility, costly errors, and politically charged decisions.  The company may be doing well from a shareholder view but when you peel back the onion you see the issues. What impresses me is the caliber of the employees. They are many intelligent, forward thinking individual contributors tangled up in the armor.

On a positive note, I did recently have the pleasure of working with a very large company who acted like David. At one time I expect that they were the underdog. Their advantage stems from their culture. It is a company with a culture of rewarding innovation, empowering employees, providing a clear line of communication to senior executives, succinct communication in meetings and emails, and the use of process to ensure execution to plan.

As you can see, I am a big believer in the David’s. I work for a David and we are winning many battles. The story of the underdog winning the battle is always appealing to everyone. Just remember that it is with just cause and there is no reason why any company, large or small can’t maintain the skills of a David.

 

Posted in General News, Supply chain collaboration


What the Analysts Are Saying About…A&D Supply Chains

Published July 18th, 2014 by Bill DuBois 0 Comments

What the Supply Chain Analysts Are Saying About A and D

Are you looking for some reading material to pass the time on your next flight? Even if you’re not you should check out Supply Chain Insights, Supply Chain Metrics That Matter. For the past several years, Supply Chain Insights has been delivering this research series.  What caught my eye is that for each report, they do a deep dive on a specific industry and use a mix of financial data, survey research results and interactions with their clients to help get a better understanding of various industries’ supply chains.

I spread my Supply Chain wings at an Aerospace company and since Aerospace and Defense is a key vertical market for Kinaxis, the recent Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report was downloaded on my laptop to read on my next flight. The research benchmarks A&D companies against other industries and looks at the top five A&D companies over the last decade. Although it didn’t give any suggestions on what to do when you find yourself in row 32, you know the one next to the washroom, it did discuss the challenges the industry is facing as well as offering up solid recommendations for areas of improvement.

From a challenges perspective, here are the highlights covered in this report.

The obvious challenge is the complexity in the A&D industry. The report uses the Boeing 747-8 International as an example. It has about 6 million components which are manufactured in 30 countries by 550 unique suppliers. Think about those design, sourcing and delivery challenges. I always thought getting through security these days was complex.

With such a heavy reliance on first, second, third, fourth and fifth tier suppliers and in some cases having only one or two suppliers for specific components, it’s easy to see how delays and budget overages can happen. A supply chain based so heavily on external sources is susceptible to more risk than catching a flight on time out of Newark. As Supply Chain Insights mentions, this is having a significant impact on the company’s bottom line.

Interestingly, to help address the issue of ensuring materials are available when needed; the research indicates that A&D companies have “developed some of the most advanced sourcing techniques and practices.” Companies like Lockheed Martin, are looking at new strategies for materials (raw or otherwise) that are harder to source, especially in the cases where increased Supply Chain volatility have thrown a wrench in their “Just In Time” approach. The challenge is balancing reduced material delays with rising inventory levels and longer Days of Inventory.

To help address these challenges, Supply Chain Insights makes a few recommendations that I think are spot on. Suppliers, in particular of materials that are sole sourced, play such a large and important role in the A&D supply chain, it’s vital that there be a focus on supplier collaboration and communication at every level.  A big part of this is increasing visibility into the supply chains to ensure they can anticipate and plan for potential disruptions. Focusing in these areas will help reduce supply chain risk, and make A&D companies better prepared to deal with inevitable disruptions when they do occur.

Thanks to Metrics That Matter, not only did I get some valuable A&D insights but it took my mind off of sitting in row 32 on a delayed flight out of Newark. The report covers a lot more ground than what I’ve discussed here, so feel free to download a full copy of Supply Chain Metrics That Matter: A Focus on Aerospace & Defense report here. (No registration required.)

Posted in Best practices, Demand management, General News, Supply chain collaboration, Supply chain management


Celestica recognizes suppliers with its 2013 total cost of ownership supplier awards

Published June 16th, 2014 by Melissa Clow 0 Comments

On this Monday morning, we would like to share some good news with our readers: We had the great pleasure of being awarded a 2013 Total Cost of Ownership (TCOO) Supplier Award from Celestica, which recognizes suppliers that support Celestica’s TCOO sourcing strategy and demonstrate excellence in quality, delivery, technology, service, pricing and flexibility.Celestica Recognizes Suppliers With its 2013 Total Cost of Ownership Supplier Awards

Kinaxis is very proud to be awarded “Best IT Technology Partner” by their valued customer.

Celestica’s global network has over 3,000 suppliers making the competition tough. To be recognized as a top partner from all the other candidates is something we are incredibly proud of.

We’d like to congratulate the other winners as well! See the full list here: http://www.celestica.com/News/News.aspx?id=4774

Learn more about Celistica’s supply chain operation, by viewing past blogs and videos:

 

Posted in Awards, General News, Supply chain collaboration


Mentoring, Sponsorship and Quotas: What are their relative merits in bringing more women into supply chain management?

Published May 27th, 2014 by Melissa Clow 0 Comments

Next week, June 5, 2014, we are excited to host a webcast on women in supply chain management.

We have a fantastic panel of accomplished female supply chain practitioners as well as industry expert Lora Cecere serving as the moderator. Register for the webcast to hear them discuss the thorny issues of mentoring, sponsorship, and quotas as mechanisms to get more women into supply chain, and the relative merits and drawbacks of these approaches.

Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?

Event Details:
Mentoring, Sponsorship, & Quotas: What are their relative merits in bringing more women into supply chain management?
Date: Thursday, June 5, 2014
Time: 2:00 PM to 3:00 PM ET

There is a consensus that since women constitute over half of the workforce but just 10% of top supply chain executive positions in Fortune Global 500 companies that something needs to be done to address this imbalance. While a great deal of attention gets placed on the ‘glass ceiling’ concept, there are a lot of women who face barriers and discrimination at mid and entry level positions too.  There is a clear social responsibility need and this panel will focus on the practical advantages to having more women in supply chain including:

  • Do women and men make decisions differently? If so, why does this matter to supply chain?
  • Has supply chain become more relevant to women as a career option?
  • What does a career path look like for women in supply chain?

Reserve your spot!

P A N E L I S T S :
Verda Blythe, Director, Grainger Center for Supply Chain Management, Wisconsin School of Business
Laura Dionne, Director, Worldwide Operations Planning, TriQuint
Elisabeth Kaszas, Director, Supply Chain, Amgen Inc.
Shellie Molina, VP, Global Supply Chain, First Solar

M O D E R A T O R :
Lora Cecere, Founder, Supply Chain Insights

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Posted in General News, Pharma and life sciences supply chain management, Supply chain collaboration, Supply chain management