Archive for the ‘Supply chain management’ Category

Throw Back Thursday: Remembering ‘Meeting Customer Demand in a Complex Industry’ from Kinexions

Published October 2nd, 2014 by Melissa Clow 0 Comments

Kinexions is in 26 days! As we countdown the days, I’m remembering our fascinating customer videos. Today I’d like to share the interview on ‘Meeting Customer Demand in a Complex Industry’ at Kinexions.

In this video hear, Gary Dietz, Manager, Global Logistics and Supply Integrated Supply Chain and Logistics, Kennametal, as he discusses the challenges his company faces in gaining full visibility of supply and demand, and in dealing with increasing supply chain volatility.

This global manufacturer of surface-cutting tools, with headquarters in western Pennsylvania. Customers include the aerospace, surface mining, oil and gas and machine-tool industries. Dietz says the company operates in “a very demanding industry,” characterized by highly unpredictable demand. The challenge is becoming even more daunting as Kennametal moves into the developing world, its most promising source of new business.

The company’s biggest pain point, he says, is managing assets. Kennametal strives to meet customer demand for customized products, while also manufacturing to stock. Accuracy in the making and placement of items is essential, says Dietz.

To view the video in its entirety, watch it below or here.

Kennametal realized that their past supply chain capabilities were not sufficient to support growth, he says. “We’re looking for flexibility in our supply chain to adapt.” The company needs to be able to perform “what-if” analyses of future demand, while possessing the ability to quickly scale up in line with demand.

Dietz says the company is currently implementing systems to provide it with more visibility to supply and demand. The effort requires cooperation from planning, production, marketing and sales.

Among the biggest challenges associated with the initiative is the management of “big data.” Kennametal produces some 12,000 combinations of products and SKUs, “so moving data between systems is a major challenge,” according to Dietz.

Like most companies, Kennametal had been highly dependent on spreadsheets to drive its planning function. With its business topping $3bn in revenues, it can no longer depend on that capability to handle future demand, Dietz says. The company has embraced technology that will allow it to improve both customer service and internal processes.

 

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


Your supply chain is costing you money – Reason #5 Not having a supply chain risk management process

Published October 1st, 2014 by John Westerveld 0 Comments

supply chain risk management Reason #5: Not having a supply chain risk management process

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:

In today’s society, unless you are rich enough that you can afford to replace your possessions, pay for your health care, and cover your liabilities, you have insurance (unless you are poor enough that you can’t afford the premiums).  Insurance is a form of risk mitigation. Insurance protects us against theft, fire, accidents, and health emergencies and if this were to happen, it can provide for our family when we pass.   Yet, a surprising number of companies (while they have traditional insurance) do not have a supply chain risk management “insurance” aka a supply chain risk management process. To put it another way, they have insurance to protect them if someone trips on their property and sues, but don’t have a risk management process to mitigate against their top supplier going out of business.  The insurance covers what could be a million dollar risk, supply chain risk management protects against what could be a MULTI-BILLION dollar risk.

Supply chain risk can be broken out into multiple different types;

  • Geographic:  This includes natural disasters and political unrest. These are the types of issues that impact supply for an entire region.  We saw this type of issue over the past several years with the Japan earthquake / Tsunami in and with the Thailand floods.  Political issues can also have a significant impact on supply. Conflicts, government policy changes, regulatory changes and coups can mean that supply is suddenly turned off or that a market is no longer available.
  • Supplier issues: This includes quality issues, delivery reliability, financial stability, reputation, strikes, and pricing changes.  We talked about many of these issues in the first post of this series – “Offshoring without getting the full picture”. The key point here is that in today’s connected supply chain, your suppliers are an extension of your own business.  If your supplier fails financially, it will impact your business.  If your supplier goes on strike or can’t deliver for some other reason, it will impact your business. If your supplier has had a shaky human rights record, your business’s reputation can get tarnished.  If your supplier decides that you need to pay more or global currency exchange rates drive up the cost of a component (and you have no alternatives ready to go) your margins can be significantly impacted.
  • Customer Demand: Interestingly, this is often ignored when people think about supply chain risk however, it can be one of the biggest factors.  If your demand decreases, you have excess inventory or idle capacity.  If your demand disappears completely you are out of business.  If your demand increases significantly, your supply chain can be overwhelmed and delivery becomes an issue.

IT  security: This is also often ignored when thinking about Supply Chain risk.  If you’ve been watching the news lately, you know that hackers seemingly are able to access corporate records at will.  Imagine now, if hackers accessed your design systems…. Your customer records, your accounts payables / accounts receivables.  Imagine if your proprietary designs and customer records were sold to your competitors.  Not a pleasant idea to think about but something that is happening every day despite the billions of dollars spent on IT security.

In the post “Innovate approaches to Supply Chain Risk”  I describe 4 key action areas that companies developing a more systematic, focused and proactive supply chain risk management approach need to address as outlined in a report by SCM World;

  • Identifying and assessing risk – This includes visibility across the supply chain including a good understanding of the companies involved.  Leaders like Cisco and IBM utilize dialog with suppliers and customers as well as visual risk mapping and scenario planning techniques
  • Quantifying and prioritizing risk – Given that all companies operate on limited resources, focus on those areas that will deliver the biggest benefits. One way is to plot likelihood of occurrence against business impact. While this approach can work well for recurring operational risks like supplier performance, it doesn’t work as well for hard to predict incidents like natural disasters.  One approach suggested in the article is that supply chain managers assign financial impact and time to recover factors at a site and component level.  This tends to identify critical but low-spend suppliers that may otherwise be overlooked.
  • Mitigating Risk – inventory tracking and dual sourcing are considered to be the most effective risk mitigation strategies.  Also increasing use of standard components, segmented and regionalized supply chain strategies and business continuity plans
  • Speeding Recovery – Business continuity plans that have been developed and tested with suppliers are key to rapid recovery

Supply chain risk management is like insurance.  You hope you never need it, but if you do, you consider it the best investment you ever made.

Do you have a supply chain risk management process in place? What risks worry you and how do you mitigate against them? Comment back and let us know!

 

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


Unleash Pixar-like Creativity in Your Supply Chain Management Organization

Published September 30th, 2014 by Jonathan Lofton 1 Comment

pixer creativity in your supply chain management organizationI recently read “Creativity, Inc.: Overcoming the Unseen Forces That Stand in the Way of True Inspiration” and it got me wondering about creativity within supply chain management organizations. There’s obviously a level of ‘magic’ at Pixar, for them to be able to create 14 No. 1 movies in a row.  Evidence that the principles they’ve developed has merit is easy to see as Disney Animation Studios, led by Pixar’s Ed Catmull (President) and John Lasseter (Chief Creative Officer), has now started producing blockbusters again (e.g.  Frozen, the top-grossing animated film of all time, surpassing the $1.063 billion earned by Toy Story 3) after a long period of so-so animation movies.

I’m always curious if success in one area/industry can be translated to generate similar success in other areas/industries. In this case I do believe there are learnings that can be applied to supply chain management.

So what makes Pixar so creatively successful?  How do they get from a movie that “sucks” to a blockbuster?  And more importantly, can supply chain management leverage these learnings?

“What I’ve learned running Pixar applies to all businesses.  I apply the term ‘creativity’ broadly … it’s problem solving. We are all faced with problems and we have to address them and think of something new and that’s where creativity comes in.”

 – Ed Catmull, FastCompany article, “Pixar President Ed Catmull On How To Run A Creative Business”

At the back of the book Catmull has a lot of bullet points around thoughts for managing a creative culture, which at the end of the day isn’t exclusive to ‘creative’ businesses, including:

  • Give a good idea to a mediocre team, and they will screw it up.  Give a mediocre idea to a great team, and they will either fix it or come up with something better.
  • Failure is a necessary consequence of doing something new.
  • The healthiest organizations are made up of departments whose agendas differ but whose goals are interdependent.  If one agenda wins, we all lose.
  • The process of problem-solving often bonds people together and keeps the culture in the present.
  • A company’s communication structure should not mirror its organizational structure.  Everybody should be able to talk to anybody.
  • Imposing limits can encourage a creative response.
  • Engaging with exceptionally hard problems forces us to think differently.

What stands out foremost in the book as the underlying factor of Pixar’s success is what they call the “Braintrust”.  The Braintrust brings together a bunch of smart, passionate people to review a movie as it goes through its lifecycle.  The folks that make up this group naturally include directors, producers, writers, and animators but it could also include individuals outside the typical ‘creative’ areas.  They use this Braintrust to create a healthy culture where people feel free to share ideas and to constructively criticize.  There are a few principles of the Braintrust that are vitally important:  The individuals must be sharp and passionate; the team has to put a lot of solutions out in a short amount of time; there has to be absolute candor – this is the premier guiding principle.   I think the ‘magic’ comes via another key tenant of the Braintrust – this group has no authority.  The group can’t make the director change the movie.  It’s their job to get to the essence of what’s wrong (Catmull says all Pixar movies “suck” at some point); it’s the director’s job to figure out how to address the feedback.

OK, so how does this relate to supply chain management?

Well, these periodic Braintrust sessions remind me a lot of Consensus Demand Planning and Sales & Operation Planning (S&OP).  Consensus Demand Planning incorporates various organizational views and possible biases on what the forecast looks like.  Others in the organization are required to collaborate and creatively determine how to best balance supply & demand while optimizing company objectives (margin, inventory, revenue, etc.).  At the end of the day, the S&OP team may have several suggestions on what to do … but it’s the Executive S&OP (the “movie’s director”) that has the ultimate responsibility for absorbing the options and deciding how best to drive the company forward.  So what if Consensus Demand Planning and S&OP looked and felt more like a group reviewing a movie’s “dailies” using Pixar Braintrust-like principles to collaboratively solve problems?

I tend to subscribe to “The Wisdom of Crowds” and believe that if we can leverage tools that give end-to-end visibility to the strong, passionate professionals in our supply chain organizations and break down walls to encourage & support real-time collaboration, we can also unleash Pixar-like creativity (and success).  In support of the Braintrust principles, below is what I currently see on the creatively collaborative SCM continuum.

creative braintrust supply chain collaboration
I’d appreciate additional wisdom from the supply chain crowd out there (I’m sure there are other applications, approaches and principles out there that are really creative and bleeding edge). Do you have a formalized ‘Braintrust’ type process and the supporting tools for creative SCM? What are you doing (or seeing) in terms of SCM creativity!?

 

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


Top 10 Movie Quotes from Kinexions! The Kinaxis Training & User Conference

Published September 26th, 2014 by Bill DuBois 0 Comments

Film poster for Top Gun (film) - Copyright 198...It’s an exciting time of the year at Kinaxis as we gear up for another user conference. Kinexions will take place this year in San Diego with the theme set as Innovation at Mach Speed (with some Top Gun references), a keynote from Navy SEAL Robert O’Neill and Afterburner (actual fighter pilots), along with a unique Customer Appreciation event.

The last couple of years we did parodies on movies, like “The Hangover” and “Back to the Future” so with the movie theme continuing, here are the…

Top 10 movie quotes from Kinexions that were also heard in famous movies.

10. Exchange between a customer and developer after seeing the capabilities in the next release: “Surely you can’t be serious?!” “I am serious…and don’t call me Shirley.”

9. Customer sharing ERP deployment horror stories: “ERP deployment is like a tense episode of ‘Everybody Loves Raymond’…only it doesn’t last 22 minutes. It lasts a lifetime.”

8. Customer talking to his Account Executive: “Keith, since I’ve met you I’ve noticed things I never knew were there before…birds singing, dew glistening on a newly formed leaf, stoplights….(scorecards, dashboards…).”

7. Customer after hearing Doug Colbeth’s opening remarks: “He’s the sweetest guy. Have you ever looked into his eyes? I swear it was like the first time I heard the Beatles.”

6. Prospect after seeing a Customer presentation: “I’ll have what she’s having.”

5. Customer before the Product Management presentation: “Go ahead, make my day.”

4.  Product Management after their presentation: “How’d ya like those apples?”

3. CIO to VP of Supply Chain: With great power comes great responsibility.”

2. Customer running a “what-if” in a training class: “I feel the need. I feel the need for speed.”

1. Attendee leaving Kinexions: “I’ll Be Back”.

 

Can you guess the movies? Hope to see you at Kinexions.

kinexions 2014

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


Your supply chain is costing you money – Reason #4 Making key decisions by modelling the supply chain in Excel

Published September 24th, 2014 by John Westerveld 5 Comments

Reason #4 Making key decisions by modelling the supply chain in Excel

Making key decisions by modelling the supply chain in Excel

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:

In my career, I’ve had the pleasure of working with several top tier supply chain companies. Companies that are household names. Companies that have been in business for decades. Companies worth billions of dollars.  Companies that are forced to use Excel to manage large swaths of their advanced supply chain planning.  Companies that are starting to realize that while Excel is a powerful tool and can be used for lots of things, it isn’t the tool to use to run your supply chain.

Excel excels (if you’ll pardon the pun) at many things.  But modelling complex supply chain relationships isn’t one of them. There are many issues with using excel that have been written about numerous times in this blog.  A sampling are here, and here.

I can briefly summarize the main points;

Companies use Excel because their traditional planning systems don’t allow them to view and understand aggregate data and more importantly, don’t allow them to effectively react quickly to change.  However, because people need this information and because people (especially those in supply chain) are very smart and come up with ingenious ways to solve problems, they extract data from their ERP systems and build complex models in Excel.

So we understand why companies turn to Excel; they can’t get what they need from ERP.  Now let’s look at why Excel shouldn’t be used to run your supply chain.

Errors – Excel is a free form modelling tool – which means anyone can build a spreadsheet for just about anything.  Many of these spreadsheets are not validated or tested, meaning that the model is only as good as the persons that create the model.  Millions of dollars have been lost to Excel errors.

Everyone has their own version – While you can password protect and lockdown Excel spreadsheets it is difficult to do effectively and many companies simply don’t do it.  This means that often there are multiple copies of the same spreadsheet, all slightly different.  I’ve been in meetings where what appears to be the same spreadsheet tell different tales because someone made a data or formula change.  Eventually everyone has their own version and are all going off in different directions.

Excel is not supply chain software – it doesn’t matter how good your Excel model is, you simply cannot model the complexity of the supply chain in Excel. This means that the best you can do is build an approximation of your supply chain in Excel.  As we know, in supply chain, details do matter and the small detail that is approximated in your model might be the detail that costs you.

So if ERP can’t do it and Excel isn’t the tool, what tool can help you make supply chain decisions?  This tool needs to have the following characteristics;

End to end visibility – To make supply chain decisions, you need to have visibility across your supply chain. You need to be able to see where inventory exists, what capacity is available and what the issues are.

Simulation – The ability to create a scenario, make a change and instantly see the impact of what that change means that you can try things out and know with confidence that it’s going to work.

Full supply chain analytic model – Supply chain planning is very complex and while most vendors have similar basic logic there are many differences between systems, even within implementations of a given system.  To effectively model this logic, you need a tool that can simultaneously model the supply chain logic from all these different systems.

Collaboration - No one person has knowledge of the entire supply chain in their head.  You need to be able to work with others to resolve complex issues.  So an effective supply chain decision tool will need to allow you to quickly identify who you need to work with and then share your scenario with those people.

How do you make your major supply chain decisions? Comment back and let us know!

 

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


Purposeful Collaboration: What It Could Mean for Your S&OP Process

Published September 22nd, 2014 by Melissa Clow 0 Comments

Purposeful Collaboration What It Could Mean for Your S and OP Process

Just a quick post to let our readers know of an upcoming webcast “Purposeful Collaboration:  What It Could Mean for Your S&OP Process” on Wednesday, October 8th at 2:00pm ET.

Even with heavy investments in Sales and Operations Planning (S&OP), many organizations are not achieving material or sustainable breakthroughs. This is often because they are executing a sequential, disjointed process with contributors operating in their narrow functional box.

In this webcast, learn how purposeful collaboration can connect content, conversations, colleagues and communities to drive improved business outcomes.

Topics covered:

  • Harnessing and capitalizing on “working social” in a B2B environment
  • Using the key tenets of purposeful collaboration to enable effective decision-making, resolution and consensus building
  • Capabilities required to facilitate purposeful collaboration in S&OP
  • Changing the mindset away from the individual supply chain / S&OP functions to connecting functions and most importantly, people

register now

 

 

Speakers:

Alan Lepofsky, VP and Principal Analyst, Constellation Research
With almost two decades of experience in the software industry, Alan helps organizations understand how to develop, purchase and implement collaboration solutions. Rather than evangelizing how social software can change the way people work, he instead focuses on how organizations can improve their existing business processes by providing access to the colleagues, content and communities that can help people get their work done more effectively.

Trevor Miles, VP Thought Leadership, Kinaxis
As vice president of Thought Leadership, Trevor serves as an expert source for Kinaxis customers, prospects, industry analysts and journalists. Known throughout the supply chain field, he has published many articles, presented at various industry events, and is a contributor to the Kinaxis 21st Century Supply Chain blog.

 

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


Your supply chain is costing you money – Reason #3 Not having end-to-end supply chain visibility

Published September 17th, 2014 by John Westerveld 0 Comments

LA freeway is like complex streets of supply chain

Not having end-to-end supply chain visibility

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:

Imagine this scenario.  You are a supply chain leader. It’s Friday afternoon and your thoughts are turning to the upcoming weekend with your family.  The phone rings – it’s your VP of sales. A prospect that your company has been chasing for years has finally agreed to place an order.  It’s a big one and they need it fast.  Really fast.  Inside cumulative lead-time fast.  The question is can you do it.  Can you commit to this order with confidence that you can deliver?

Traditional ERP offers a couple possible options.  1) Load and pray. Accept the order and hope / pray that everything aligns and you actually can deliver on time… maybe event at a profit. The problem with this approach is that very often, you can’t deliver and you lose a customer and worse your reputation.  2) Fire drill (I knew a company that actually called it that). This is where you e-mail each node in the supply chain with the order requirements, have everyone do a feasibility analysis on accepting the order and then wait for the results. The results, however may take several days / weeks to come in.  By that time the customer and their lucrative order have moved on.

Why are there only these two options with traditional ERP systems? It comes down to the disconnected nature of these systems. Companies that have grown through acquisition typically have multiple ERP systems distributed throughout the enterprise. Even if systems are from the same vendor, they will often be at different versions and are not interconnected.  So a scheduler at one plant has no visibility as to the inventory position, capacity or material supplies at another plant.   The only recourse is to pick up the phone or pound out an email to find out…or guess.

There is a third option, one where you can commit to a customer order with confidence. This new approach enables you to simulate the addition of the new order, see the impact across the entire supply chain, try out different options to resolve any shortages and most importantly know that you can commit to and actually deliver this order…and respond in hours not days or weeks.

This option requires a new tool and a new way of thinking. This approach requires lightning fast simulation and, most importantly, visibility to all the nodes of your supply chain. Let’s look at these one by one;

  • Simulation – To simulate the impact of a major supply chain change like a large order you need to have several things; 1) Analytics that model the results from each of the ERP systems involved in your supply chain.  2) An in-memory data model that bypasses the slow read/write cycles used by disk based systems resulting in lightning fast supply chain calculations and 3) the ability to instantly create scenarios – effectively a copy of the entire database within which you can try out multiple approaches to resolve supply chain issues 4) the ability to share and collaborate with other members of your team.
  • Visibility– Imagine trying to drive a car where you have no visibility to the side, none behind nothing out front except through a little 4” by 5” window.  Yes, you might be able to successfully navigate but the chances of you making a very expensive mistake is pretty high. The sad thing is that this is how many of us navigate the complex streets of supply chain. Traditional ERP often are siloes of information locking off other nodes because they are using different versions or worse, entirely different versions. In our drop in situation, you could have sufficient inventory at a different site but never know it because you can’t see it. But visibility goes beyond the raw data.  Many traditional ERP systems limit visibility because they are designed to show one part, one order at a time.  You cannot look at aggregated data without running specialized reports or extracting the data and loading it into a BI tool.Visibility also means understanding the impact of your decisions on key corporate metrics. Knowing that when you make a decision, that it make sense not only from the context of your department, but also for the company as a whole.

How do achieve supply chain visibility?  Comment back and let us know.

 

Posted in Demand management, General News, Supply chain management


Top 15 Supply Chains to Admire from the Supply Chain Insights Conference

Published September 16th, 2014 by CJ Wehlage 1 Comment

CJ supply chain insights conferenceThe Supply Chain Insights annual conference was held on September 10-11, 2014 at the Phoenician in Scottsdale, Arizona. As an ex-AMR Research analyst, this was my favorite venue. Great memories here, as so much has changed in the supply chain research world these past 5+ years. Reliving the old days was made even more rich, as there was a panel session at the conference with Lora Cecere, Roddy Martin, Mickey North-Rizza and myself. All ex-AMR analysts on the stage, talking about the ‘Top 15 Supply Chains we Admire’.

CJ supply chain insights boardThere has been so much discussion on the “top” supply chain lists.  When we did the Top 25 list at AMR, we mixed a bit of science, art and influence.  While there was always passionate discussions on companies and metrics, the end goal was to raise awareness of supply chain as a practice.  I know the Sales and Marketing folks have lots of elaborate events to celebrate their achievements, and we in supply chain needed to pause from our 17 hour flights to far off places to negotiate a 2% reduction in cost, and celebrate our industry. 

The panel discussed the Top 15 Supply Chains we Admire, as built off the Supply Chain Index.  While other “lists” use ROA, Inventory Turns and Revenue Growth, I find Lora’s science very objective.  She is analyzing growth, inventory turns, operating margin, and return on invested capital, performance and improvement over time. 

The Supply Chain Index methodology was built on the belief that the supply chain is a complex system with increasing complexity. We believe it is the supply chain leader’s role to build and manage supply chain performance to drive year-over-year improvements which are balanced, strong and resilient. We find that most companies throw the system out balance and are able to only drive progress on a single metric, not the metrics portfolio.”

-          Lora Cecere, Founder and CEO, Supply Chain Insights LLC and Abby Mayer, Research Associate, Supply Chain Insights LLC

So, drum roll please…

The Top Supply Chain We Admire are:

  1.  TSMC (Taiwan Semiconductor)
  2.  Intel
  3.  EMC
  4.  Cisco
  5.  Apple
  6.  Seagate
  7.  Colgate
  8.  General Mills
  9. BASF
  10.  Eastman Chemical
  11.  TRW
  12.  Audi
  13.  Nike
  14.  Ralph Lauren
  15.  AB Inbev

Very happy to see two of my prior employers, EMC and Apple, make the list. I would highly recommend you read the Supply Chain Insights report,.  This provides the depth of analysis that created these rankings. With some AMR history on this, I have to say this is a great step in a more objective and mathematical measurement of supply chains. I find it more objective because it is broken down by industry.  I’ve always believed it’s too unfair to compare a life science supply chain (whose primary goal is to manage profitability across the drug lifecycle) against a consumer electronic supply chain (who’s primary goal is market share). 

At the conference, Lora held a session, “The Math Behind the Supply Chain Index” with Dr. George Runger, Arizona State, and Abby Mayer, Supply Chain Insights. This made it fun for us ex-AMR analysts, as we got to talk about our viewpoints and opinions, and Dr. Runger & Abby Mayer had the tough task of going through the methodology.

Some interesting insights:

  •  There were 0 companies from Retail, Paper & Packaging, Pharmaceutical, or Medical Devices.
  • ·Some “big” names from other lists, like P&G, Toyota, Samsung and Walmart didn’t make the lists.

During the panel, I shared my thoughts on Samsung.  They are a supply chain that I very much like, especially from an S&OP practice.  However, they seem to fall under the conglomerate issue, where multiple business units may skew the summary metrics.  Samsung has Visual Displays, Appliances, Semiconductor, Digital Imaging, Networks, PC/Laptop/Printer, Mobile Communications, and LCD panels.  Their S&OP is great across these business units.

  • Demand and supply volatility makes the supply chain “tough”.  And when the going gets tough, the tough get going.  Industrial networks rank highest, followed by consumer.   No healthcare networks made the list.
  • While 12 out of 13 improved resilience, 11 out of 13 lost ground at the intersection of operating margin and inventory turns.

CJ supply chain index

During the Panel, I was asked to comment on the 5 leading factors that make a difference:

  1.  A clear definition of supply chain excellence by leadership
  2.  Strong horizontal processes
  3.  Intentional design
  4.  Value of supply chain planning and analytics
  5.  Development of organizational capabilities

The one that stands out the most is strong horizontal processes.  For years, supply chains have evolved from the Plan, Buy, Make, Deliver model, building Functional processes, with Functional systems.  Each Functional area built “middleware” to bridge the gaps. Most of this middleware was Excel and Meetings.  As we made the supply chain more global and complex (see Supply Chain Insights findings on how we describe our supply chain today), we keep thinking functionally when we should transform to an end-to-end solution. 

supply chain insights lora cecere

 

Speed and Agility will improve dramatically when the process AND solution is focused end-to-end. 

You can see it with the high tech companies on the list.  Each has a story, or driving force behind their transformation to an end-to-end network.

TSMC: driven by a desire to manage the cost and sustainability at their nth tier suppliers, as well as TSMC and their customers, they continually are recognized as a strong partner from both their network as well as external organizations.  Tracking and optimizing costs at all your supply chain nodes requires an end-to-end strategy.

Cisco: for many years, Cisco has led the charge for raising the awareness of supply chain, through their risk management focus as well as their leadership and educational programs. Having a highly outsourced supply chain and managing the risks requires an end-to-end strategy.

EMC: while EMC’s product line is not as complex as, say, Samsung, they are strong at aligning end customers with supply chain with engineering.  One of the best tours is the EMC factory.  You will see how their supply chain is in lock step with test engineering.  This end-to-end focus allows EMC to manage the end customer environment, using manufacturing results to predict customer installed product events, and EMC pre-event resolutions.  It also allows EMC to drive detailed new product introduction success, aligning NPI dates with supply chain plans. 

Seagate: it took a big external event, the Thailand floods, to force Seagate to an end-to-end strategy.  Existence as a company was at stake, and Seagate had to support their suppliers financially.  During this crisis, Seagate leadership rose to the occasion, and created the journey as an end-to-end supply chain.

And, Apple: Having worked there, I would say their strongest ability is leverage. From cash, to product, to dates, to future business, they align end-to-end very tightly to leverage their supply chain network.  Some would call this “demand shaping”.   There’s been many views on the Apple supply chain.  They’ve ranked #1 in the AMR/Gartner list for 7 straight years, since 2008.

Trivia question: Who was the #1 Supply Chain prior to Apple’s 7 Year run?

Answer: Nokia

This brings me to a perfect conclusion: The Supply Chain needs to transform to an end-to-end, business leader role.

Nokia had a great supply chain, focused on the mobile phone hardware.  They failed to integrate software and watched other brands leverage digital content.  They failed to transition to the smart phone era, thinking their brand in mobile will allow them to “catch up”. 

“The high tech era has taught people to expect constant innovation; when companies fall behind, consumers are quick to punish them. Late and inadequate: for Nokia, it was a deadly combination.” The New Yorker, James Surowiecki, September 3, 2013.

Functional excellence is no longer good enough.  Supply Chains are in danger of being punished by consumers, who have the balance of power, if they don’t establish end-to-end control. And, not just for agility & speed, but to leverage the business strategy.


Posted in Demand management, Gartner Supply Chain Managment, General News, Sales and operations planning (S&OP), Supply Chain Events, Supply chain management