Archive for the ‘Supply chain management’ Category

Best of the Best Supply Chain Blog Posts of 2014

Published December 22nd, 2014 by Melissa Clow 0 Comments

best of the best supply chain blog-posts

As you take time over the holidays to sit back and reflect, here are the top ten excerpts from the best of the best posts on the Kinaxis supply chain blog. They touch on hot topics and industry trends discussed over the past year, so grab a coffee (or a spiked eggnog) and enjoy! We look forward to continuing the conversation in the New Year.

#1 “And much as we have had to rethink the first applications that were simply a digitization of a paper-based paradigm, we need to rethink how we structure our organizations and get work done to get maximum utility out of the digital world.”
FROM SMAC in the Middle of Supply Chain Change

#2 “Visibility is losing its clarity.”
FROM Visibility is Losing Its Clarity

#3 “The ‘ah-ha’ moments are the catalyst to innovation.”
FROM “Storage Wars” Rescues Supply Chain Ignominy

#4 “Many companies have several instances of ERP, each deployed differently. Despite many moving to a single instance of ERP there are still many ‘shadow IT’ required to do what the core ERP solution cannot. And then there is the planning layer, which is even less harmonized or standardized. Most business people consider this an IT problem. Guess what? It isn’t going away until the business makes solving the data issue their issue.”
FROM Gartner Supply Chain Leaders Conference – What Will Be Hot?

#5 “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.”
FROM Poorly Executed or Non-Existent S&OP Is Costing Your Supply Chain Money

#6 “…a supply chain planning system of record should be focused on how it can drive tangible business outcomes not just on how to run the supply chain planning function.”
FROM Gartner’s Magic Quadrant for Supply Chain Planning System of Record

#7 “…Yet my contemporaries are the ones making large decisions about organizational structures, processes, and solutions that are rooted in mental models developed and perfected in the 1970s and 1980s. And far too many of the analysts and management consultants continue to position these mental models as best practice. They are not; they are yesterday’s practice.”
FROM Do Supply Chain Planning Systems Generate Any Value?

#8 “Collaboration is not about ’being social’, it’s about making information available, connecting people and improving business processes.”
FROM Purposeful Collaboration: What It Could Mean for Your S&OP Process

#9 “… even the smartest people can juggle no more than nine variables when making decisions. Since there are a lot more than nine variables that need to be considered when making a cross-functional decision in supply chain, the solution was to eliminate the people and let a machine make an ‘optimal’ decision. It is time that we corrected this imbalance.”
FROM The Eternal Dilemma of Decision Making: Human Judgment or Machine Optimization

#10  “Supply chain visibility alone won’t yield effective supply chain orchestration; it is a prerequisite capability, among others.”
FROM Overcoming the Challenges to Achieving End-to-End Supply Chain Visibility

 

Posted in Control tower, General News, Inventory management, Miscellanea, Supply chain comedy, 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


Top 10 Reasons Why Santa Has The Best Supply Chain

Published December 18th, 2014 by Bill DuBois 0 Comments

Since the Holiday season is upon us, what better way to celebrate than with a top 10 list, which I hope will put everyone in a festive mood!

Here are 10 Reasons Why Santa Has the Best Supply Chain

#1 No ERP system, just a list. Now, he does do some risk assessment… using patented approved simulation. For example, what if Johnny is good this year?

#2 Air freight without the fuel costs. And a big zero on the carbon footprint

#3 No capacity issues, no union, no vacation, no breaks… work is play and play is work for elves.

#4 His forecast is always accurate. Let’s see that forecast!
top 10 reasons why santa has the best supply chain

 

 

 

 

 

 

 

#5 One currency for every country. Milk and cookies.

#6 No customer service issues. If a customer is rude, obnoxious or grumpy they get a rotten egg and a lump of coal and told to stick it where the mistletoe doesn’t grow.

#7 No labor costs… except for room and board.

#8 Free overnight delivery…on everything.

#9 No need for finance or Sarbanes Oxley, Saas70… everyone is honest at the North Pole.

#10 No inventory issues. The perfect Lean, JIT system ever.

Bill Dubois top 10 reasons why santa has the best supply chain
Comment to let us know why you think Santa has the best supply chain!

From everyone at Kinaxis, and the Late Late Supply Chain Show, all the best to you and your families over the holidays.
Merry Christmas and Happy New Year!

 

Posted in General News, Supply chain comedy, 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 #10 Failure to adequately train your supply chain planning staff

Published December 12th, 2014 by John Westerveld 0 Comments

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

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

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

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

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

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

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

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

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

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

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

 

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


On-demand Webcast: Continuous S&OP for Life Sciences – Breaking the Mold

Published December 5th, 2014 by Melissa Clow 0 Comments

Today’s Friday post is to let you know that we have posted the on-demand version of last week’s webcast on “Continuous S&OP for Life Sciences – Breaking the Mold” (registration required). In this webcast, learn about the unique S&OP challenges for Life Sciences companies, the importance of changing S&OP mindsets, and how to break the S&OP mold from both a process and technology perspective.

Webcast: Continuous S&OP for Life Sciences - Breaking the Mold

 

You can also view the slides that we’ve posted to slideshare:

 

Webcast Abstract
Trevor MilesView the recording of Trevor Miles, VP of Thought Leadership, Kinaxis, as he presents on the following topic.

Business realities have changed so tremendously in the last thirty years that the traditional ‘plan then execute’ S&OP model has become highly ineffective. It is unable to facilitate decision making amid acutely complex supply chain networks, or within the time horizons required. This is particularly true for Life Sciences companies faced with varying regulatory requirements and aging product portfolios.

In response, there is an emerging recognition that operational information must be accessed and evaluated on a continuous basis, whereby decisions that may have once only been considered as part of a scheduled S&OP process can be made as needed throughout the cycle. In this capacity, process execution evolves into operational orchestration.

Watch the recording >>

 

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


Overcoming the Challenges to Achieving End-to-End Supply Chain Visibility

Published December 1st, 2014 by Melissa Clow 2 Comments

Supply chain visibility alone won’t yield effective supply chain orchestration; it is a prerequisite capability, among others.

The 2014 Strategic Road Map for Supply Chain Visibility research recently conducted by Gartner (and included in our new Supply Chain Visibility: Envisioning the Broader Need paper), describes the current state of maturity as it relates to visibility, as follows:

“Most supply chain organizations are at Stage 2 or 3 of supply chain maturity, and thus have an inside-out view of supply chain plans, events and data. Their current visibility capabilities are most likely departmental or functional and focus separately on data and processes for planning and execution.”1

Overcoming the Challenges to Achieving End-to-End Supply Chain VisibilityThe defined maturity model consists of five stages, which means there is plenty of opportunity for organizations to make improvements in their supply chains to enhance visibility. The ultimate goal is to have visibility into not just to what is happening within your own company but extended to all areas of your supply chain, including partners. This is the shift from an inside-out to an outside-in focus. Stage 5 also entails achieving visibility across supply chain planning and execution. Attaining this level of visibility is obviously no small feat.

As supply chains get longer and more global, there has been a significant increase in the number of supply chain nodes that need to be connected and the volume of data moving among these nodes. The complexity associated with connecting these nodes – both those internal and external to the organization – is a barrier to end-to-end supply chain visibility. Data harmonization across multiple systems of record also adds another layer of complexity.

Despite these challenges, it is possible for organizations to achieve the higher levels of visibility outlined in Gartner’s model. And the benefits – which many believe include a more agile, resilient, competitive and profitable supply chain – are worth the effort.

If you are looking to establish critical supply chain visibility capabilities and progress towards higher levels in the visibility maturity model, our new paper entitled Supply Chain Visibility: Envisioning the Broader Need, is a worthwhile read. Featuring research from Gartner, the paper sheds more light on the complexities surrounding the attainment of supply chain visibility and provides a strategic roadmap for supply chain visibility initiatives. Download your copy today, as it is only be available for a limited time.

 

1Titze C., Payne T., Sarangdhar V., Devereux, P.; Gartner; 2014 Strategic Road Map for Supply Chain Visibility Initiatives; 8 September 2014

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