Archive for the ‘Supply chain collaboration’ Category

In-Memory Computing for Supply Chain Management: What, Where and How…

Published January 28th, 2015 by Lori Smith 0 Comments

In-Memory Computing for Supply Chain Management: What, Where and How…The recently published Gartner report, The Impact of In-Memory Computing on Supply Chain Management (Payne, T., 21 October 2014), describes the potential of in-memory computing (IMC) for supply chain management (SCM) including supply chain planning (SCP) applications, as follows:

“By 2018, at least 50% of global enterprise companies will use IMC to deliver significant additional benefits from investments in SCM, and especially, SCP.”

As awareness of the potential for transformational benefits from IMC grows, companies are asking tough questions about how, where and what type of IMC-enabled supply chain applications they should deploy. This is important because, according to Gartner’s research, the potential “benefits will vary by organization size, functional domain, industry and supply chain maturity.” So while the list of advantages of IMC technology is significant – and includes performance and scalability improvements, facilitation of advanced analytics, and process innovation – like any technology investment, the impact to your specific environment will depend on the chosen solution approach.

Gartner outlines three styles which include:

  • Native IMC: These applications are “developed from inception on the basis of IMC design principles”
  • Retrofitted for IMC: These applications were “originally designed on traditional technologies (for example, RDBMSs), but are now replatformed on top of an in-memory data store”
  • Hybrid IMC: These applications “use IMC design principles and technologies only in part, usually to store (at times, only temporarily) and process the most performance or scalability sensitive application data, or to support real-time analytics”

Interestingly, the Gartner reports states:

“The maximum transformational benefits will come from native IMC, because this approach allows organizations to leverage IMC to drive completely new ways of working in line with the company’s supply chain transformation efforts.”

Kinaxis RapidResponse uses a Native IMC approach. With RapidResponse, the analytics code is directly compiled into the database engine where it has direct access to the data and the various data relationships. The speed and scale that this provides is valuable because it enables businesses to develop new and improved processes capable of delivering breakthrough performance improvements.

If you’re evaluating IMC-enabled supply chain applications to determine how your organization can get the most benefit this Gartner research report is a must-read! It sheds light on the business value that in-memory computing brings to supply chain management in general and provides key findings and recommendations on the potential of IMC across functional domains, industry verticals and solution types. It’s only available for a limited time, so be sure to read it today.

P.S. With a 25+ year history of developing in-memory computing technology, we’ve talked about this topic before, so be sure to also check out some of our other posts:

 Source: Payne, T., The Impact of In-Memory Computing on Supply Chain Management, Gartner, 21 October 2014.

Posted in Best practices, Gartner Supply Chain Managment, General News, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Will that be automatic or semi-automatic to manage your supply chain?

Published January 16th, 2015 by Christopher Hatcher 1 Comment

semi automatic software blog chris hatcherYears ago when I was in the army, one of the most memorable days of my mostly forgettable BASIC training experience was flipping the switch to automatic. Yes, we’re talking about the M16 rifle standard issue weapon for soldiers. We were trained on this weapon out at the firing range where we learned to hold the weapon steady, breath calmly, and ignore the clamor of dozens of shots ringing out through the earplugs nestled in our ears.

It was cold out in Missouri in the middle of winter, but it was a bit of a thrill to do what I’d done as a kid with toy guns. This was the real thing. Well, sort of the real thing in the sense that the weapon and bullets were real, everyone was dressed in camouflage fatigues with serious looks on their faces, but the targets that popped up anywhere from 50 to 300 meters away were just some special fabric that fell over if a bullet whistled through it.

What we learned was that the cowboys shooting from their hips and hitting their targets was a fantasy of Hollywood. Hitting the targets required patience, focus, and a bit of luck. Like most training in the Army, the thought was that if you do it long enough it would become ingrained in your psyche and muscle response. As it turned out, after months of training out at the firing range I qualified as a Marksman, but that was not the big thrill. The big day was actually at night when we were allowed for the first time in months to flip the little switch on the M16 to automatic. Up until that night, each shot was aimed, the trigger squeezed and the result was immediately apparent.

Either you hit the target and it plopped over or you saw a wisp of dirt fly up in the air a bit to the right or left. With the switch now set to automatic each second of squeezing the trigger spat out 10+ bullets. Even better was every 5th bullet being a tracer round so they glowed red as they buzzed through the air at 3300 feet per second. I can’t remember if I actually hit any targets that night, but it was so cool to try the automatic setting and live the Star Wars experience for a short moment in time. That was 30 years ago.

Now what does this have to do with managing a supply chain?

Or as my old drill sergeant would have said it… “What the f%$*& do you f$#@&*ing think you’re f%^&@#ing doing, son?!

Hear me out. There is so much supply chain related data that we have access to now and even better, we have automated solutions that recommend the best thing to do in a given situation on a given day. That’s a good thing, because we don’t want to go back to managing everything. We need to manage by exception and keep our focus on the big problems. One thing to keep in mind is that many of our automatic solutions turn into black boxes over time. The smart guys that built the solution are long gone and it seems to be working fine, so just let it roll, right? Well, the devil is in the details, and despite the agony of digging through the logic of work done in the past, if the automatic answer is not as good as it could be, there are likely a few tweaks that could be done to the process to make it more fruitful in its results.

An example of this is the automatic pull in messages that can be acted upon when the available date of a sales order improves to earlier than its due date. Well, if no orders are harmed by pulling in the sales order to an earlier date, then why not do it? Remember first, that an automatic solution is based on certain assumptions and filters. Does the Automatic solution consider Priorities on the sales order? Perhaps an earlier low priority order can ship on time while a later high priority order will ship late due to constrained supply? Maybe the high priority order, although later, is for a very important customer so we should honor the priority setting and the supply should be set aside for a few days to ship to our valued customer?

What do we do? Flip the switch back to Semi-Automatic to manage your supply chain? In this case where constrained supply allows only 1 of 2 sales orders to ship on time, a supply planner should be able to intervene and decide which order to ship. Planner A good supply chain software solution must first identify such cases where the semi-automatic (human involvement) approach is recommended, then be able to quantify the appropriate metric, which solution path is better, and finally notify the right individual to intervene quickly enough to make a difference. Software solutions like Kinaxis RapidResponse can provide the filtering, scorecard metrics, and alerting needed to guide the planner to make the right decisions. Over time, as the calculations that drive this semi-automatic approach are in need of fine tuning, the filters and metrics can be easily changed as necessary.

Running most operations in automatic mode is likely a wise choice, but it’s important to understand which parts of the process can trigger the responsible party to intervene when necessary. Automatic sometimes scatters a lot of bullets with a great deal of sound and fury, but semi-automatic usually hits the target every time.

Do you prefer semi-automatic or automatic to manage your supply chain? Or, perhaps a combination of both? How has it benefited you? Comment back and let us know!

 

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


Is There a Third Option for SCM Executives Looking to Revamp their Supply Chain Management Operations?

Published January 15th, 2015 by Melissa Clow 0 Comments

erwin hermans celestica  Is There a Third Option for Supply Chain Management Executives Looking to Revamp their SCM Operations? Our partner Celestica recently published the following article, ‘The Third Option for Supply Chain Management Executives’. The author, Erwin Hermans, vice president of Supply Chain Services, describes the three main areas to consider when revamping your supply chain management operations:

Growing companies often consider two options when implementing or revamping their supply chain management (SCM) operation—hiring a consulting company to work with their in-house SCM team, or buying specialized software and going it alone. Consulting firms deliver strategy and process improvements, but leave the customer to execute and sustain the new process, while software companies sell new supply chain capabilities without executing and driving its adoption.

A new alternative is now possible for companies, especially those looking to gain a competitive advantage with their SCM operations.

The case for working with a strategic partner that can go beyond implementing a new tool and designing new processes to actually drive, execute and sustain a company’s supply chain has arrived. Every company is looking to improve its time to value. The traditional notion of a three- to five-year transformation program is not practical in today’s fast-paced environment.

Improvements need to be achieved in months, not years, a reality that can only be realized through a managed services partnership in which the only measure of success is tied to the operational improvements resulting from the program. While many supply chain executives have never seriously considered managed services as an SCM option due to liability, performance or security risk concerns, this is indeed an economical, efficient and strategically viable solution that supply chain leaders should consider to deliver operational performance.

1. Is SCM a Core Competency?

Many organizations with established SCM operations have been working with third-party logistics firms for decades, largely eliminating the use of in-house transportation fleets. Looking at it today, hiring, training and providing equipment for in-house transportation teams makes little sense as this function is not a core competency of a typical company. A similar trend emerged in the electronics manufacturing sector. In the early ‘90s, high-tech companies sought scale and cost advantages through outsourcing manufacturing. Today, starting up a high-tech manufacturing operation is economically unviable.

Over that same period of time, however, many non-manufacturing supply chain functions, such as inventory management, forecasting and supply planning have remained in-house. Given how rapidly the world of SCM evolves, organizations that maintain an in-house team need to keep up with this pace of change, and add new capabilities to maintain or increase their supply chain performance.

One of the biggest barriers SCM executives face when trying to improve their supply chain performance is up-skilling their talent to maintain the required supply chain expertise in house.  It is often the tribal knowledge of the company, the industry, its products and operations that make refreshing talent a challenging undertaking.  Maintaining this in-house experience is often a trade-off for building and growing core supply chain talent, as they are perceived to be mutually exclusive.

Many companies resort to consultants when they have reached the limits of their own ability to bridge the talent and process gaps. While this has a fair chance of improving the short-term situation, it does not address the longer term question: Is supply chain a core competency?

Supply chain executives need to determine whether these supply chain functions are truly a core competency in their overall business. Take, for example, a typical medical device maker that has a laser focus on research and development (R&D), product design, and the goal of delivering innovative products that meet and exceed the expectations of its customers. Does a company fitting this description have the focus and priority to dedicate the resources they need to inventory management, forecasting and supply planning?

The answer is evident almost immediately when discussing SCM with these firms. They are questioning their core competency as they are challenged to address the perils of supply chain execution, directly or indirectly affecting customer satisfaction.

2. The Talent Make vs. Buy Decision

Partnering with a service provider for core supply chain functions is a decision that should not be taken lightly. Much like in the first waves of outsourcing in logistics and manufacturing, the drivers for outsourcing need to be aligned with the strategy of the business.  First, clearly identify the supply chain strategy, and how supply chain is or needs to be a competitive differentiator. Once this is clearly defined, it is easier to consider the core competency question, or the make vs. buy decision.  The answer leads you down the path of evaluating the three dimensions of people, process and technology.

The emergence of cloud-based technology solutions is providing companies with opportunities to acquire capabilities that may have been too costly before. Rather than having to invest in a hardware and software technology stack, SCM solutions can be virtualized where the physical infrastructure required to manage and use software is no longer required.

Process excellence and continuous improvement have been around for a long time. Process discipline, however, tends to be grounded in the culture of the company. When supply chain performance lags, driving the process improvement from within or looking for an external catalyst is part of the make vs. buy decision.

Lastly, there is the talent question, which is probably the most difficult question to address. There are no shortcuts and no easy answers. And until recently, no real options.

The business process outsourcing (BPO) industry is answering the cost part of the equation. Repeatable, prescriptive, transactional functions can be outsourced to a BPO provider to achieve a lower cost of operation. For more complex functions, such as forecasting, inventory management and supply planning, in which skill and experience are the driving factors for success, the make vs. buy decision centers around the investment in talent. Managed services can be the “buy” answer, and should be considered if the patience and commitment to talent management is not core to the business.

3. What to Look for When Choosing a Partner

To help determine whether it is viable to work with an external third-party service provider to redesign and reengineer your supply chain, executives need to determine whether they can effectively support critical SCM functions in house or whether the resources can be better deployed elsewhere.

If a supply chain executive decides to outsource his or her SCM function to a third-party services provider, he or she should look for a partner that can provide both supply chain expertise and a technology platform that complement each other. A third-party services provider should be able to help supply chain executives manage their SCM operation, from planning functions down to execution.

While the right partner has this end-to-end capability, executives should evaluate which areas of supply chain require the most immediate help to start the engagement with a managed services provider. With a specific focus, improvements can be quantified and a trust-based relationship can be established. The engagement should be focused on achieving operational results with a managed services partner who is responsible for designing and executing the SCM function.

And finally, SCM executives should look to a strategic partner that has demonstrated SCM services across a variety of manufacturing industries. Cross-industry experience is important when choosing any managed services provider, but this is particularly true in the supply chain services realm as companies can greatly benefit from the work and experience already put into practice in other successful supply chain implementations across industries.

More supply chain executives are seeing the potential of working with a SCM services provider to help them manage one or several of their supply chain functions. Just as they would for any area of their business, they need to determine whether SCM is a core competency and how it aligns with their company’s long-term strategic direction.

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


2015 New Year’s Resolutions for the Supply Chain Industry

Published January 2nd, 2015 by CJ Wehlage 3 Comments

2015 New Years Resolutions for the Supply Chain Industry2015 will be my 25th year in the supply chain industry, mostly as a practitioner. I’ve had the benefit of stepping away from the grind for 2 years, spending time at AMR Research, where I visited with many companies and learned about their supply chain practices. As well, these past 2 years at Kinaxis have brought great insight on the operational challenges of supply chain leaders.

Which brings me to today… I was planning out my 2015 supply chain conference schedule, and noticed the conference themes: Digital, Green, Internet of Things and Social. These are what I call “Cool Theme” topics. But after my 25 industry years, I find that the fundamentals of revenue, profitability and service are the still most important themes. It feels like we’ve drifted away from the fundamental supply chain strategies. So, I decided that 2015 needs to be a re-focus on the hard core fundamentals of supply chain success. And change in the New Year begins with resolutions…

 

My 2015 Resolutions for the Supply Chain Industry

Resolution #1 – Stop using the term VISIBILITY

People say that information is power. I beg to differ. I say, an informed decision is power. The visibility term has been over used. I’ve even heard some say that getting visibility to your supply chain is 80% of the challenge. They must not have run a supply chain. I see many supply chain leaders that have visibility, some in excel and some in automated tools. The ones that don’t have visibility can easily call the supplier and get it. Getting visibility isn’t the challenge. The real 80% challenge is “what are you doing with the visibility?”

  • Are you using visibility to eliminate searching for exceptions?
  • Are you setting control limits on your visibility to set planning priorities?
  • Does your visibility provide a proactive view into supply chain challenges?
  • Are you doing the #1 supply chain best practice, simulation, with your visibility?

Most supply chains can actually answer these questions, but with multiple spreadsheets, phone calls, MRP runs, and planning modules; in essence, without having agility. With today’s complexity, these questions need to be answered in seconds, concurrently across multiple exceptions. Yet, supply chain leaders seem to be stuck in the strategy of incremental change. Problem is: supply chain complexity is growing exponentially, customers and competitors are becoming more global, and the time to make decisions is shrinking to minutes instead of days and weeks.

This lack of urgency is driven by the “Supply Chain Anarchists”. This is a group that tries to undermine the best efforts of supply chains.

The Supply Chain Anarchists had a meeting in late 2014, to figure out a way to stop supply chain progress. The first person said, “Let’s tell everyone that there is no Complexity”. The others thought about it, and said, “that’s good, but people will still be on late night conference calls with far off suppliers, and have to travel around the globe for supply chain issues”, so that won’t work.   The next person said, “Let’s tell everyone there is no Risk”.   After a while, the others said, “that’s interesting, but there will be another earthquake, flood, or political event, and people will see the risk”. So, they thought some more, and one person said, “I got it”. “Let’s say there’s no Hurry”… Supply chain leaders don’t need to change their strategy this year.   You can make small, incremental improvements in 2015. It would be difficult to align all your partners. “Things can wait for now.” They all agreed, that’s the ticket. We will stop supply chain progress by making people think “there’s no Hurry”…

My #1 resolution for 2015 is to drive that sense of urgency to change. Informative decisions across your entire end-to-end network are needed now. You need to proactively simulate issues. You need to make your supply chain THE differentiator. The traditional horizontal Plan-Buy-Make-Deliver model is gone. Disintermediation is happening to your supply chain as you read this. Look at what Amazon is doing to the Deliver model. You need to be using visibility to bring value and differentiation.

 

Resolution #2 – Read only ONE “Cool Theme” report

In 2014, I saw the emergence of Cool Themes from all the Analysts. The digital supply chain, green supply chain, internet of things, and the best, social supply chain.   What happened to the core fundamentals of revenue, profitability and service?

In 2015, I resolve to read only one Cool Theme report. I’m tired of research analysts peddling these themes as a means to gain an edge on readership. Yet, I watch the audience during some of these Cool Theme presentations. And, half the people are on their smartphone working core issues back home, while the Analyst is talking about how supply chains should save the Panamanian golden frog, reduce the ozone layer, produce products with plastic wire from 3D printers and generate forecasts from Facebook posts!

 

Resolution #3 – Stop moaning about Bad Data

Let’s face it, everyone has some form of bad data. And, when you include all your tiered suppliers, they have bad data. The one constant is that you will never fix all the internal and external bad data. Yet, I still hear supply chain leaders say they need to focus first on fixing the data. I’ve seen many presentations from “Top 25” supply chains and how they’ve cleaned data, and why they should be considered a top tier supply chain story. This reminds me of my farmer friend…

I needed to borrow an auger from my farmer friend. He has many tools, and I went over to his farm. His wife said he was out in the barn. When I turned the corner to the back side of his barn, I saw him with a Hoyt Spyder Turbo bow and arrow – Top of the line and expensive. I looked at the side of his barn and saw 17 bull’s-eyes. And in the middle of each bull’s-eye was an arrow… dead center! I stuttered to get my words out, and said did you do that. To which he said yes. I turned back around and looked at the side of the barn, and asked him how long he’s had the bow and arrow. He said about 2 weeks. I said, only two weeks? That’s amazing! 17 bulls-eyes, 17 hits in the center of each bulls-eye. You’ve only practiced for 2 weeks. How can you be so accurate? He said it’s easy. I shoot first and they draw the bull’s eye around where the arrow hit!

I’ve seen many supply chain presentations that are like my farmer friend. They appear more on target than they actually are. They may talk about cleaning all the data, but the truth lies in using both good and bad data. The thing leaders should focus on is executing to what data is there and, where there’s bad data, use simulation tools to make up the difference.

And that’s the resolution to make. It’s okay to moan about bad data. But, don’t let bad data dictate your execution. The best simulations I’ve seen have focused on supplementing the bad data. Sort of like the scientists in Jurassic Park – where they supplement frog DNA code to make the dinosaurs.

 

Resolution #4 – Fix the Disruption you can influence, not the Disruption you are concerned with

There are two types of disruptions. That which you are concerned with, and that which you can influence.

Volatility, regulation, geopolitics, economics, energy, and the list goes on. These are in your Circle of Concern. They happen, and you should be concerned. Yet, many supply chain leaders face fail to focus on the Circle of Influence, the area where you can make a difference.

There are two methods to manage your Circle of Influence. The first, and most widely used, is to simulate disruptions before they happen, or quickly after they occur. The second, and not widely used, is called “responsibility based collaboration.” It’s having the right people, with the right information need to make the right decisions, in the right time. Without responsibility based collaboration, too many people are involved. Redundant work is processed. Planners feel dis-empowered. The process of resolving the “disruption” is creating more disruptions.

Core questions to assess your level of responsibility based collaboration:

  1. Are senior managers as close as possible to the decision?
  2. Can the decisions be implemented faster?
  3. Do those making decisions have the detailed understanding?
  4. Does the decision account for “carnage” created elsewhere?
  5. Are all the impacted departments aware of the tradeoff?
  6. Are Planners feeling more empowered to analyze and decide?

Concurrent, responsibility based collaboration is needed in 2015.

 

Resolution #5 – Scrap the Talent Research, Make Planners more Productive

After reading all the Talent Research done in 2014, the topics of attrition, retiring professionals, and university-business alignment, I notice a big gap. The one thing missing in all this Supply Chain Talent research is the concept of being more productive with the talent you already have.

How can every supply chain improve productivity? In every supply chain I’ve seen in my past 25 years, there’s one constant – they all use some form of Excel – mostly to search for exceptions. Planners spend half their day dumping ERP and BI data into Excel, and then search for exceptions.

And that’s not even the biggest problem! Once a Planner finds an exception, they work to resolve it. Yet, 80% of the exceptions found don’t actually break and end-to-end control limit. So, the Planner, after half a day searching, is now working on the wrong exception. And, even worse, that Planner resolves the exception without concurrently understanding how they’ve impacted other areas. That’s called “carnage” – aka “next week’s exceptions”.

This is the main reason I love the Kinaxis solution. Single code, pulling end-to-end data, running all the time, in memory fast, alerting Planners only when control limits break, and providing concurrent understanding of how a resolution impacts all nodes of the network.

The result is that Planners no longer search for exceptions. That’s half the day back = much more productive. Then, Kinaxis customers use that gained productivity to simulate future issues = more proactive planning. In essence, fixing exceptions before they happen. This is the reason Kinaxis customers are “giddy”.

These are my Five Resolutions for 2015. What are your resolutions?

 

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


Transform your supply chain process – don’t just improve it

Published December 18th, 2014 by John Westerveld 0 Comments

transform your supply chain handsawDid you ever hear the joke about the old lumberjack?  The old lumberjack came out of the forest and went for supplies.  He needed a new saw – his old two-man saw had been sharpened so many times there wasn’t much left.  At the store, the salesman showed him the newest tool for cutting trees called a chain saw.  The salesman said that he can cut trees 10 times faster than with the two person hand saw.  The lumberjack was impressed! He bought one.  Several days later he came back and said to the salesman “This saw is no good!  No matter how fast I push and pull it doesn’t cut! What’s worse – my partner keeps cutting his hand because there is no handle at the other end.

Okay… admittedly that was a silly joke.  But if you consider how many people think about supply chain software it’s like the old lumberjack and the chain saw. The chain saw was a revolutionary tool and if used right, could make a single man more effective than a team of two. Advanced supply chain planning software like RapidResponse can do the same thing for supply chain.

In my role, helping the sales team, I’m often asked to reproduce a report that the prospect currently uses to run the business.  I totally understand why this is important – the prospect wants to feel assured that their current business process can be maintained. Creating even the most complex report in RapidResponse is a breeze so it’s not a big deal for us.  The prospect gets value because the report that I’ve just built in RapidResponse replaces an Excel report that takes hours every day to update. In RapidResponse, the update is instantaneous and can show changes with every data update and with every change to the scenario.

The problem when you buy new software like RapidResponse and use it to speed up the old way of doing business, you are missing out on the true revolution that RapidResponse can bring to your supply chain.   One company we were selling to a few years ago wanted us to reproduce a report that alerted the buyer whenever a purchase order was changed by the supplier through the on-line portal.  So, we did that.  We also added a few additional bits of information that they could never get before.  One was how many customers were impacted by that delay.  The other was how much revenue was impacted.  With this new information, the buyer can instantly see the priority in which they need to tackle these late purchase orders; some changes had no impact at all – the orders were just replacing safety stock.  Others drove millions in potential revenue.  This simple addition significantly reduced the time the buyer spent on chasing down late orders that really didn’t matter and allowed them to focus on the ones that did matter!

If I were to offer any advice to those looking at new supply chain software it’s this; your supply chain planning can be (and should be) a competitive advantage for your company.  You are looking for better planning because you recognize the flaws in your current system. By all means, ensure that the candidate software can address your current processes, but then work with the vendor to think outside of the box. You don’t want to do your current processes faster – you want to revolutionize your processes altogether. Only then can you achieve the supply chain transformation you seek.

Are you considering transforming your supply chain?  Have you just gone through the process? What were the results? Comment back and let us know!

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


The Supply Chain “Change” Dilemma!

Published December 15th, 2014 by Prasad Satyavolu 0 Comments

Trevor Miles and I have been having a healthy discussion on the Internet of Things and how these technology changes are shaping the way we work.

This is part 4 in our Internet of Things Series: The Supply Chain “Change” dilemma!

A few weeks ago, Charles Wehlage wrote a blog post on his take on The Innovators Dilemma. I thought his analogies with supply chain strategy and execution were spot on. In this piece, Clayton Christensen specifically focused on why organizations fail. And not just any organization, but the great ones! The key learning is that the individuals who as a team have just witnessed a big win as a result of a hard worked strategy are highly likely to miss the budding wave of disruptive forces and be ready for the next change.

My own experiences witsupply change dilemna Svyantek DeShon System interface and hierarchy of effortsh different large scale transformations certainly point to this valid the hypothesis. An organization’s capability to sustain its innovative streak is largely dependent on the organizational “software” a.k.a. human resource + DNA. Therefore, the dilemma is how to synchronize the “social dynamics” within an organization and lead continuous change as digital technologies evolve and their adoption is a necessity.

The graphic from Svyantek and DeShon’s thoughts on “System interface and hierarchy of efforts required for change in an organization” illustrates the complexity of change. Organizational software comes before process and technology.

 

supply change dilemna organizations as machine or living system

I equate corporates especially the supply chain organizations with living organisms. They evolve as new scenarios emerge, oil prices fluctuate, new suppliers are added, customers are acquired, new markets penetrated and more data and information becomes available. It is wrong to assume that the collective intelligence of a thinking group can be subsumed in the so-perceived “automated Internet of Things (IoT)” world. Also, pushing the organizational supply chain change issues to a set of mere “team building” workshops will not suffice either.

Information flow within an organization plays a critical role in creating a culture of transparency, commitment to shared goals and observable leadership behaviors. The microcosm of the organization is thus formed within each cell of the organization. The information flow through these cells or nodes spread out within and outside the organization’s supply network shall determine the sustainability of change. Can we leverage the IoT paradigm to create a different organizational culture?

For most global organizations, the supply chain as a system can perhaps be best characterized as geographically spread but comprising of interdependent elements guided and orchestrated by thousands of brains. Arguably, these supply chains are highly complex and difficult to change.

As technologies provide new opportunities for disruptive innovation, building a “learning organization”- along the lines of the model proposed by Peter Senge- could perhaps help in not getting caught in its own success. According to Senge:

‘learning organizations’ are those organizations where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning to see the whole together.”

He argues that only those organizations that are able to adapt quickly and effectively will be able to excel in their field or market.

So, when Trevor and I started discussing the impact of Internet of Things on the Supply Chain; it soon became clear that we are looking at a massive opportunity for transformation. The path to realization will require balancing the communication, computing and control with human intervention on one hand and building a continuously learning organization on the other.

What are your thoughts on this matter? Comment and let us know.

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


Your supply chain is costing you money – Reason #9: Relentless pursuit of one metric at the expense of other metrics.

Published December 3rd, 2014 by John Westerveld 0 Comments

supply chain metric

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 posts here:

Reason #9 Relentless pursuit of one supply chain metric at the expense of other metrics

Imagine that your child brings home their report card and it’s a mix of good and fair grades.  You tell them that the only grade that matters is their geography mark.  You tell them that you expect an A in geography – and you don’t care what happens to their Math grade.  History? Don’t care.  Social studies?  Pshaw.  Just focus on geography and forget about anything else.  Sound ridiculous? It should.  Yet, these are similar instructions as what is passed down to the supply chain from executives focused on a specific supply chain metric.

One example that I’ve seen several times is around inventory targets.  The typical example is as follows;

  • A company uses complex software to model the supply chain considering a desired customer service level, lead time data, and statistical analysis of supply and demand variability.
  • This software then calculates the statistically correct, time phased safety stock levels across multiple levels of the supply chain, providing the optimum inventory in the optimum location.
  • If you sum this inventory across all locations, it represents the minimum inventory needed to achieve the desired service level given the current capabilities of the supply chain.
  • The executive team then provides the supply chain planning team with new inventory targets that are (of course) much lower than those values calculated by the inventory optimization tools.
  • The supply chain team then ramps down the inventory to the new target and responds to the inevitable stock-outs by expediting short materials and shipments.
  • The result is a lower inventory level, but much higher expedited costs and reduced customer service.

Why do companies focus on reducing a specific metric?  There can be multiple reasons. Some of the more likely are;

  • A metric (like inventory performance) is monitored by financial analysts and therefore tied to stock valuation.
  • A single metric has been performing poorly and the company wants to focus on improving that metric.
  • For the Dilbert lovers – Someone on the executive team has read an article/book espousing the importance of one metric or another (it happens more often than you’d think!).

The idea of focusing on a specific goal can indeed accelerate progress towards achieving that goal.  The problem is that nothing exists in a vacuum and if you are not careful, other metrics that you are not watching can degrade significantly.   For example, if your goal is improved customer service, the easiest way to achieve that is to a) increase safety stocks and b) increase expediting to ensure orders are delivered on time.  The next time you look at your metrics, you’ll see an improvement in on-time delivery, but you’ll also see an increase in inventory levels and operations costs due to expediting.

Things can get even crazier when individual departments have conflicting goals:

  • One group is rewarded for improved fulfillment rates while another group is rewarded for inventory reduction.
  • One group is increasing safety stocks to improve fulfillment rates while the other is trying to reduce them to cut inventory.

Sometimes laser focus on a specific goal is necessary to turn around a particularly bad metric.  However, for most a more measured approach is suggested.  There are a number of techniques and tools that can help drive improvements across the company;

1)      Systemic continuous improvement tools.  These are many and varied.  CQI, TQM, Six-Sigma, Lean, etc.  They all look at your enterprise as a whole, find waste and eliminate it. As an example, let’s look at lean and more specifically the one-less-at-a-time approach to inventory reduction.  This approach reduces the inventory in a system very gradually.  The idea here is that inventory is used as a buffer and acts to hide problems in the supply chain.  By slowing reducing inventory, you can identify those problems and solve them.  Inventory needed because of long lead time?  Find ways to reduce lead time.  Inventory needed due to sporadic demand? Find ways to reduce demand variability?  Inventory due to large lot sizes?  Find ways to reduce lot sizes through setup reduction on manufactured parts or through different contracts around purchased parts.  In this way, inventory reduction can happen without impacting other metrics like on-time delivery and operations costs.  In fact, by using this approach, on-time delivery and operations metrics often improve, while reducing inventory!

2)      Balanced scorecards.  Balanced scorecards consider multiple metrics, often with weighting and targets.  They report an overall score that considers all of these metrics. With a balanced scorecard, you can emphasize one metric over the others by giving it a higher weighting.  The key difference is that you are aware of the impact you are having on the other metrics because they are shown in the same scorecard.

3)      Balanced scorecards as decision support.  No, I’m not cheating by calling out balanced scorecards twice. (well…. maybe a bit). Here’s the thing.  When you combine balanced scorecards with an advanced planning tool that allows you to create multiple scenarios, some real magic can happen.  Imagine a balanced scorecard where you not only see what your performance has been, but you can see multiple simulation scenarios as well.  Now imagine if this balanced scorecard presented an overall score for each scenario.  Picking a course of action is as simple as looking at the scores for each scenario.  Finally, imagine if anyone in your planning team could have access to this power for each decision they need to make.  Suddenly, decisions are being made that consider the overall impact on the organization, not just against a single metric.

supply chain software balanced scorecards as decision support

A company does not succeed based on a single metric.  It takes a balanced approach and awareness of all aspects of your business to achieve success.   When targeting a specific metric for improvement, look for ways to improve that metric without negatively impacting others. It can be done and when it is, very often you’ll find that you improve the metric you are focused on and the others at the same time. 

Have you see examples where a company has focused on a single metric at the costs of all others?  What was the impact?

Comment back and let us know!

 

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


Kinaxis on the road: 12th American Supply Chain & Logistics Summit

Published November 27th, 2014 by Melissa Clow 1 Comment
SCL Summit

The American Supply Chain and Logistics Summit, now in its 12th year, brings together senior executives from across the Supply Chain and Logistics fields to enjoy an unbeatable mix of networking, expert case studies, interactive debates and master classes over three exceptional days.

Join Benji Green, Director of Global Sales, Operations, Supply and Inventory Planning at Avaya for the Kinaxis supply chain optimization workshop on December 9th. Register using the link below to receive 25% off your registration.

December 8-10, 2014
Dallas, Texas

Learn More and Register for the Summit

Schedule Meeting

 

Posted in General News, Pharma and life sciences supply chain management, Sales and operations planning (S&OP), Supply chain collaboration, Supply Chain Events, Supply chain management