Taylor, while highlighting the growing importance of supply chain management positions in global companies, noted the creation of new C-Level Supply Chain positions in these same companies.  However, she quoted William Verdini, an associate professor and chairman of the Supply Chain Management Dept. at Arizona State University’s Carey School of Business, who pointed out that, “Many of the current supply chain managers are transplants from other parts of their companies, with no formal schooling in the discipline.”

So what are the potential risks of filling these roles with managers from other parts of the business?

To understand the potential risks, one must understand the key ingredients which make C-Level Supply Chain Executives successful.  A good white-paper written by William V. Fello and Peter Everaert for Korn/Ferry International, “The New Supply Chain Executive: Using the Integrated Supply Chain as a Competitive Weapon” lists five ingredients:

1) A seat at the strategic decision-making table

2) Cross-functional expertise and relationships

3) Strong customer and supplier relationships

4) A global mindset

5)  Demonstrated success as a change-agent

When you examine the list, two items stand out as the greatest potential risks: Cross-functional expertise and relationships and strong customer and supplier relationships. The reason is that it would be extremely difficult for someone who hasn’t spent significant time managing the supply chain to have a deep understanding of the supply chain processes and the internal motivations and politics of various customers and suppliers alike. The risk would be a supply chain strategy that lacked cohesion, recognized critical challenges, and lacked the commitment of sufficient resources. Often this results in a supply chain strategy that is nothing more than a disparate list of key initiatives.

So what are the potential rewards of filling these roles with managers from other parts of the business?

Back to the previous five ingredients, the very last one, demonstrated success as a change-agent combined the first ingredient, a seat at the strategic decision-making table can bring in a fresh approach and, with it, the commitment to see that approach to completion. Typically change-agents are self-described students. They study the problem, they take input, the examine alternatives, they weigh consequences, and then they create a vision. The vision is simple but it focuses the efforts of the team and prioritizes the commitment of resources. When you combine this with executive support, positive change is almost always the result.

An excellent example of a change-agent coming from another business (though not a C-Level supply chain one) is Steve Jobs when he took over The Graphics Group which later became known as Pixar.  His initial intent was for it to become a high-end graphics hardware company. Not that much of a stretch for a hardware guy. However, here was a smart, creative, driven technology change-agent who pointed his company in a new direction. What he needed to know, he learned. What he didn’t need to know, he appreciated the complexity and how it impacted his success. The people talent he needed, he found. If something didn’t work, he understood why and then went in a different direction. He established a vision and then changed the computer animation world forever. He was a change-agent who was also the head of the dtrategic decision-making table.

My own entry into supply chain management is another example of taking a job without being grounded in the fundamental concepts. My formal schooling was in Engineering Physics and, after serving four years as an Army Officer, my first civilian job was two years of hands-on manufacturing management experience. At the time, I felt more than prepared for a new challenge when my Plant Operations manager asked me to take the newly created Inventory Control manager position. The reality, however, was that I didn’t have a clue as to what I was doing or what I was getting myself into. Even worse, I was trying to establish inventory control in a factory that didn’t understand the meaning of the word ‘control.’ Fortunately for me, my boss had confidence in me and gave me time to learn and fill the void.  What followed were countless hours of APICs training, materials management conferences, reading books on materials and supply chain management, trial and error in the real world, and, most importantly, understanding the fundamentals of the processes and how ingredients are needed to effect change.

Fortunately for me and my boss, his gamble paid off.  I had dramatically transformed the way that inventory was managed in that factory and in-turn dramatically stabilized the ability to plan production due to the accuracy of the inventory.  Assigning me the position was a risk, but from his perspective, small and manageable since the factory was going from nothing to something.  Fifteen years later, that very same company and plant, could ill afford to have someone so under-qualified in such a key role without jeopardizing their ability to consistently produce and meet financial expectations.  A young smart guy with a lot of passion is no substitute for a highly qualified practitioner of supply chain management.

In my nearly 20 years in the industry, I have met a few supply chain managers that have not made the same investment in educating themselves.  Sadly, some do just enough to survive and become masters at managing up.  They feel they can ‘task manage’, conference call, and brow beat their way through the problem without educating themselves in the fundamental concepts, the process intricacies, and the drivers of risk in their supply chain.  They focus on the near term and rarely make investments for the long run.  At best, they will be able to continue to steer the ship in the same direction.  At worst, they will not be able to course-correct and the ship will run aground.  More often than not, they tend to blame the crew and the ship itself.

Personally, I welcome more formally educated practitioners into the profession.  My hope is that upon a strong formal educational, with time and additional experiences in the trenches, they will have the foundation needed to be in the next generation of C-Level supply chain positions.  They will focus on substance and see through the smoke and mirrors. They will lead and innovate instead of turning the same levers and expecting a different result.

What caught my attention, and made me late for an appointment, was when the discussion turned to what was right or wrong about Newton’s Laws of Motion and Law of Gravity, which are so apparent in our everyday lives. I am an engineer by training and therefore I have a greater interest in the pragmatic than the theoretical, so when Prof Randall challenged the interviewer’s comment that Newton’s Laws have been proven to be wrong I was very interested. Prof Randall’s comment was that it isn’t so much that Newton’s Laws are wrong, but rather that they do not apply in all circumstances. In the scale of everyday life – time, size, distance – they are extremely good at predicting, for example, the flight of a football out of Tom Brady’s arm, to the distance a car will take to stop given its speed and the surface area of its tires on the road.

Prof Randall went on to explain that it is at large distances (universe scale distances), high speeds (approaching the speed of light), and very small distances (micro-atomic sizes) that Newton’s Laws fall apart. The pragmatic engineer in me scoffed “who cares?!”  But she had a really interesting point that at high speeds, the more fundamental theory that emerges is Einstein Law of General Relativity. And if we go to really small distances, the more fundamental theory that emerges is Quantum Mechanics. She went on to say that while we wouldn’t ever calculate the trajectory of a ball using anything other than Newton’s Laws, these other theories are more fundamental. Of these, Prof Randall says that Quantum Mechanics is “…more violating to our intuition…the idea that there are probabilities rather than definite predictive statements.”  Perhaps most intriguing to me is “dark matter”, which Prof Randall says is “…defined by the property that it interacts weakly. It interacts gravitationally, but it doesn’t interact with light…so it can’t be detected.”

So what has this all to do with supply chains?  Well little directly, but there are analogies that bring out concepts that aren’t necessarily new, but are not that well understood.

First and foremost is that for the most part, we treat the supply chain as if it conforms to the APICS definition of Manufacturing Resource Planning (MRP II), which I see as the equivalent of Newton’s Laws, meaning that MRP II certainly has merit but does not necessarily apply or is sufficient for all circumstances, and I contend that the number of circumstances in which MRP II is relevant is diminishing. I include the Oliver Wight standard supply chain planning processes in this perspective. For the most part MRP II can be used to generate a good plan.  But, and it is a big but, the business context in which we operate supply chains has changed sufficiently so that we need to reevaluate some of our approaches to the topic.

So what is different?

• Large Distances/Dark Matter
  Globalization and outsourcing have extended supply chains to the point that many products have circled the world several times by the time we buy them from a retail shelf.  And the full effects and costs of moving materials such large distances are only recently being understood with concepts such as Total Landed Costs (TLC), but as the article referenced points out, TLC is not easy to calculate because of constantly changing fuel prices and labor costs, but more importantly because there are so many factors that go into getting an accurate measure of TLC that the author states “I wondered if it was even possible to accurately calculate a company’s true landed costs.”

  If you can’t measure it, you can’t manage it.

  Well, not to the degree to which we would like to think we can manage it.  And I contend that the degree to which we can measure and manage TLC decreases exponentially with an increase in globalization and outsourcing, which is consistent with Complexity Theory. This is because not only is it difficult to get a good initial/annual measure of TLC, but also that the variables that go into calculating TLC are changing constantly and, in some cases, are barely recognizable from the assumptions made a year ago during a budgetary cycle.

• High Speed/Relativity
  Ok, so I am a late Boomer, and every generation has thought that life progresses more quickly, but few can argue with the fact that especially since 2008 we have seen huge and frequent swings in business cycles compounded by natural disasters.  In fact, we can extend this observation to the mid-1990’s as the internet began to take root.  As an aside, I had a great-grandmother who died at the age of 98 in 1974, so she would have been born in 1876.  In her life time, she experienced the advent of electricity, cars, steam ships, television, telephone, x-ray, penicillin, … Wow.  Back in modern life, we see the ever shrinking product lifecycles coupled with the ever shrinking dominance of companies.  Who would have predicted in 2005 that by 2010 Microsoft would be a “has been” in terms of driving innovation and change?  Oh, I know there are lots of people that will raise their hands now and say “I did. I did.” But these voices were few and far between in 2005.

  Perhaps we haven’t reached the point of warping the time and space continuum, but it does feel to me that we have reached the point that the speed of business has increased to the point that we need to examine the processes and manner by which we operate companies.  I am definitely hearing a lot more about rolling budgets, quarterly budgetary cycles, and even ad hoc or continuous budgetary cycles. I am definitely hearing and reading a lot about the merging of Financial Planning & Analysis (FP&A) with Sales & Operations Planning (S&OP). Perhaps I am hearing about these two processes being executed in lock-step whereas in the past there was minimal interaction.

  By warping, I mean changing processes to accommodate the speed of business. We cannot accommodate new scales of speed using organizational structures and business processes designed in the mid-1900’s.

• Small Distances/Quantum Mechanics
  This is the one that is really near and dear to my heart, because, as Prof Randal says, this is the one that challenges our intuition because of “…the idea that there are probabilities rather than definite predictive statements.” Most of us who work in supply chain management or operations are engineers, if not by training, then at least by nature.  We believe in things that are tangible, measurable, predictable.  So what do we do with systems that are not fully predictable?  We assume that they are predictable, and, even worse, we act as if they are predictable. The most obvious of this phenomenon in business is the uncertainty related to the revenue/sales forecast.  We use terms such as demand variability or demand volatility instead because they imply that yes, demand is variable/volatile, but it is predictable, if only we knew all the variables required to predict demand exactly. But the term uncertainty makes us feel, well, uncertain. How can we have confidence in our models if we are uncertain about a key input variable?

  But uncertainty permeates supply chains and operations. From yield uncertainty, to cycle time uncertainty, to transportation lead time uncertainty, to new product adoption uncertainty.  And many more. I contend that we are far better advised to focus on the skills and processes required to be agile in the face of uncertainty than in the effort to understand “all” the causes of uncertainty and, by extension, to try to remove all uncertainty from our understanding of the market conditions in which we operate.

  Planning is important, but the skills and processes for early detection of discrepancies between reality and what we predicted, and the agility to respond quickly and profitably to these discrepancies should be equivalent skills.

  Let us learn how to absorb and respond to uncertainty rather than thinking we can design it out of our operations and processes.

My take is that each of the concepts that Prof Randall described as challenging Newton’s Laws have an equivalent not only in supply chain management, but more importantly in the more general concept of Business Operations, which, in Wikipedia, is defined as:

The outcome of business operations is the harvesting of value from assets owned by a business. Assets can be either physical or intangible. An example of value derived from a physical asset like a building is rent. An example of value derived from an intangible asset like an idea is a royalty. The effort involved in “harvesting” this value is what constitutes business operations cycles.

As we can see from this definition, supply chain management is a more specific definition of Operations applied to companies that have physical products, but even in these companies Operations is a broader concept that relates to the business activities that even manufacturing organizations carry out in order to satisfy customer demand and, hopefully, make a profit, including Marketing, Product Design, etc.

In other words, balancing supply and demand of anything is everything.

As always I welcome comments, arguments, and contrary opinions.  They drive our collective learning.

So…what’s wrong with using a spreadsheet?  I’ve approached this issue in an earlier blog post where I linked to a study that shows that 80-90 percent of spreadsheets contain serious errors.  The article on SDC Exec gives some real life examples;

1. A high-volume software company unwittingly threw $20 million annually into the scrap bin. The culprit was a hidden, and devastating, spreadsheet logical error that systematically triggered over-ordering seasonal printed materials.
2. A financial services firm underestimated support center demand by over 250 agents, roughly 25 percent of total demand. Only very fast action was able to turn around customer comments like, “I can’t get tech support and I hate your company!” Formula errors and inappropriate assumptions had negated demand associated with deploying a new service platform.’
3. The national build-out of a digital service network was beset with months of delays and millions of dollars in lost revenue. Spreadsheet-based material planning and execution tools were overwhelmed with the size and complexity of the job.

I’m not anti-spreadsheet.  In fact, I consider myself to be an Excel wonk. I’ve built some honkin’ big spreadsheets in my day, including pages of VB script.   In retrospect, many of these would have been much better suited for a proper enterprise application.

So how do companies get into a position where decisions worth millions of dollars are based on some guy’s error-prone spreadsheet?  It certainly doesn’t start out this way (I can’t imagine an IT organization when asked to source a planning system would propose a spreadsheet written by the guy down the hall…)  No, what typically happens is that some creative individual, tasked with a small but challenging problem that their ERP system can’t handle, creates a simple spreadsheet that solves the problem.  Then, as the company grows, and challenges change, the simple spreadsheet expands, evolves, becomes more complex until eventually, you have a multi-headed Hydra lurking in your business processes.

The SDC Exec article has some tips to mitigate some of the risk associated with using spreadsheets…but I think the most important advice is to review your processes.  For each key process that is spreadsheet based, plot the business process and the complexity of the spreadsheet (Execution Risk) on the matrix shown.

If your process approaches the top-right, then it should not use a spreadsheet. Obviously a simplification but it gets the idea across.

There will always be a need for spreadsheets. They offer a fast way to model simple processes.  However, complex, high impact decisions need more robust tools. What do you think? Are spreadsheets a risk? Comment back and let us know.

• Create a new demand plan (or several) and instantly see how this new plan would impact your supply chain down to the smallest component?
• Drive your supply plan from any forecast stream (Sales, statistical, marketing, customer, pessimistic, optimistic) or combination of streams?
• Change which forecast drove your supply chain and evaluate the impacts?
• Visualize these plans against the same key corporate metrics you use to run your business?
• Compare various plans against each other AND against your annual targets?
• See a problem at the sales and operations level, and were able to drill down until you found the problem, no matter how far down the supply chain the problem exists?

Sounds pretty good right?  Let’s see what it takes to get this kind of functionality:

1. You need a system that allows you to create “what-if” scenarios instantly, and provides the ability to collaborate with these scenarios.
2. You need to have both collaborative demand planning and complete supply planning in the same tool.  The supply planning tool needs to accurately emulate the planning done by your ERP system.
3. You need to be able to drive the supply planning system from the demand plan.
4. Further, you need to be able to configure which forecast stream (or combination of streams) forms the demand plan (and therefore drives the supply planning process). This combined with #1 will allow you to evaluate and compare different demand planning scenarios.
5. You need excellent reporting tools that allow you to understand supply issues, their cause, and potential resolutions.
6. You need excellent reporting tools that allow you to present the recommended S&OP plan, the issues, and alternative resolutions to the executive team.

What does this do for your S&OP process?
Two things:

1. Your S&OP planning process will be faster – supply planning and demand planning are in the same tool, collaboration is enabled between supply planner and demand planner, and resources allow you to quickly identify and resolve issues.
2. Your S&OP plan will be more accurate – powerful collaborative forecasting tools are combined with the ability to understand at a detailed component level how a given demand plan impacts supply.

So, why are speed and accuracy so important?  I think accuracy is self-explanatory, but what about speed? We do S&OP on a monthly cadence, so why should I worry if my S&OP process takes several weeks? There are two key drivers for faster S&OP processes:

1. Timeliness of data – remember that the first step in any S&OP process is data gathering.  If your S&OP process takes three weeks, then the data you are basing your decisions on is at least three weeks old! I talked to one company that had a six week S&OP process to support a monthly cycle. I don’t know how they came to any useful decisions with that data.
2. Ability to respond – Imagine the following scenario: You just finished your S&OP process and have an approved plan. You come in Monday morning to discover that one of your key suppliers has had a major problem and has cut production in half and this has impacted items across multiple product lines. The response is going to require coordination across sales, marketing, procurement, and manufacturing. Sounds like an S&OP level problem right?  If it takes you three weeks to pull the plan together, you may as well not bother…decisions will be made on little or no data because they need to be.  If, however, you can pull a plan together in days or hours, you can base your response on current, accurate data.

When I presented my workshops at the Kinexions user conference, I polled the room asking how many participants had an active S&OP process at their companies. In each case, the vast majority of participants had an active S&OP process. Those that didn’t were planning on implementing one soon. What this means is that S&OP itself is no longer a differentiator. To step above the competition requires that S&OP be a more agile, responsive tool. Traditional S&OP systems simply are not capable of being this tool because the supply plan and demand plan are not connected, they don’t allow easy simulation and they don’t allow you go drill from the high level to the detailed in a single tool. It’s time for a new way of looking at S&OP. What do you think? Comment back and let us know.

Let’s think about the traditional S&OP world. Most companies have a demand planning system where they create statistical forecasts, maybe the marketing team creates a forecast, perhaps the sales team…. they may even bring in customer forecasts. Through some process or another, they create a single demand plan and these demand requirements are then pushed over to the supply side. The supply planning team then start developing what they hope is an achievable supply plan.

In traditional ERP systems, they gauge doability by using end item build rates and bills of resources to “estimate” supply needs against a small number of key components, resources, and suppliers. Eventually, through give and take negotiations, the supply planning team and the demand planning team can achieve agreement on the plan and this is presented to senior management. Once approved, the production plan is entered into ERP, requirements are exploded through the “real” BOMs and a true picture of what is needed and what is available can now be seen.

Sounds reasonable, right?  We’ve been doing it this way for years! Let’s take a look at where things can go wrong;

The first area of concern is that the bill of resources approach to rough cut capacity planning is just that…rough. By definition, you are looking at just a subset of your resources and components. Look at your own key resources and components. Have you ever had issues with non-key items? Of course you have! Also, how accurate is your bill of resources? BOMs change all the time. Does your bill of resources keep up with these changes? So while your S&OP plan may appear doable at the high level, once you actually start detailed planning, you often find that your plan isn’t doable after all.

The other problem is that traditional S&OP processes assume that you will only need to evaluate a single demand plan. This is probably fine for very simple supply chains, however, what if you have two demand plans that you need to evaluate? What if your executive team wants to see a supply plan that supports a demand plan both with and without a sales promotion? Some companies will plan three scenarios; a baseline (what is likely), an optimistic, and a pessimistic view.  All of which require a doable supply plan.

So what’s the answer?  Let’s play a little “what-if.” What if you could….

• Create a new demand plan (or several) and instantly see how this new plan would impact your supply chain down to the smallest component?
• Drive your supply plan from any forecast stream (sales, statistical, marketing, customer, pessimistic, optimistic) or combination of streams?
• Change which forecast drove your supply chain and evaluate the impacts?
• Visualize these plans against the same key corporate metrics you use to run your business?
• Compare various plans against each other AND against your annual targets?
• See a problem at the sales and operations level, and were able to drill down until you found the problem, no matter how far down the supply chain the problem exists?

Got you interested?  Keep a lookout for my next post where we explore what is needed to make this happen.

This is me early on Day 16, or is that late on Day 15?

Well, I was announced yesterday (http://tiny.cc/w6m8l), so if you are reading the blog for the first time … Welcome!

Back on topic … as I mentioned in my last post, I am asking for your indulgence for these next few weeks as I set up for our launch in October.  To begin this process, I am going to start with my take on what I broadly think of as the two uber-categories for busines/enterprise software:  software for running the business and software for managing the business.  Certainly each of these has many sub-categories, but for the purpose of setup, let’s keep it simple and look at these two large “buckets” of software.

Software for running the business (a.k.a. business automation).  I include a lot of software in this category.  Everything from retail point-of-sale systems to call center systems to sales force automation to e-commerce to … name an ERP module.  The two main purposes that I think of with this category are – “enforcing” operation business processes and recording transactions.

Software for managing the business (a.k.a. business optimization).  This space has less categories, but there are certainly more than a few.  The recent trend has been to consolidate a lot of these categories under the Business Analytics umbrella.  In any case, the main purpose of this category is to optimize business opportunities.

In terms of revenue and customer spend, without worrying about IDC-like market numbers, companies have traditionally spent much more money on software to run the business but are increasing shifting spend to software to manage the business.  That is, the growth is in software to manage the business.

Let’s now look at author bias.  Although I have some history with software for automation, including point-of-sale software and quality tracking software for pharm companies, my passion has always been on software to help companies better manage themselves.  Having said that, if I company does not have a strong set of automation software across all major functions, it is going to be hard to make solid management decisions for the two reasons I mention above.  The company needs a solid and predictable operating model, otherwise, how can you know if it is working or not when it isn’t even defined?  In addition, unless a company captures transactions across all functions, what can it analyze to make better decisions?  All that to say that I don’t have a real bias – both categories of software are essential to “good business.”

Wow! That took more words than I intended to use. In my next post, I will go into the main differences in characteristics for ideal software between these categories.  This conversation will not be about obvious differences like, one is for management the other is for front-line workers, one is tactical/operational the other is strategic, and so on.  In addition, these differences are from my observations and not always – ok, rarely – the convention thinking.

’til next time … Kirk

Another great week – we’re working on some really exciting stuff! Don’t forget to check out my blog regularly to follow me during my first 90 days at Kinaxis. Here’s a post from Day 9:

Had a great conversation today with Duncan Klett, one of our founders and our current VP of Analytics.

Duncan shared the story about working at Mitel in the mid-1980′s and how the MRP system they used took 40 hours or so to run one cycle.  The MRP would run the cycle over the weekend and they were only running off a weekly snapshot because of the time it took to do the necessary calculations.  Imagine the challenges if someone entered bad/incorrect data late on a Friday.  On Monday, the company would be faced with the decision of running with a view into the business that was almost two weeks old (the one run the previous weekend) or decide to shut down production for two days and wait for the MRP to run.

Duncan, along with a small team, developed a solution to address the need to be more nimble in the manufacturing and supply chain process.  As hardware and software were much more closely coupled in those days, the solution was a piece of hardware that allowed the processing to occur 1000 times faster than the MRP system.  You can imagine the breakthroughs in how nimble the supply chain management became between MRP runs!

Fast forward through over 25 years of technology development, the decoupling of software from hardware, the certification on IA64 almost ten years ago, through today’s software which scales to over 1 TB – in memory!  Combine this with the experience of helping hundreds of companies become more responsive in both the supply and demand sides of their supply chain, working both inside and outside the walls of their own enterprises, combining data and process from not only different sites, but different corporations and you have a solution in RapidResponse that is very unique.  These technology and business process advances, learning from both successes and stumbles, are a big part of what makes our secret sauce so special.

It is easy to forget or disregard the past in the high tech, fast paced world in which we live, but the past is often the biggest factor in predicting the future.  Looking at our past, I am confidently predicting a very successful future, one that other companies are not going to be able to duplicate.

In my opinion, it all starts with a business case.Most companies need to produce a business case in order to get a project approved, but this can be difficult as many companies still are feeling the pain from past failed SCM projects.But I postulate that the reason they have a list of failed SCM projects is that they lacked a solid business case that outlined the expected realized value of the SCM project (e.g. reduced inventory, better procurement, improved product availability, etc.). As a software vendor, one of the steps my company goes through when working with a prospect is to go through an expected Value Assessment as input into the prospect’s business case.The Value Assessment would define the specific measurements that would improve a company’s corporate performance.

Some of the best business benefits/business cases I have seen are:

1) Reduce expedite costs — I worked with a customer who had insanely high expedited freight costs because they paid very high penalties if product was not delivered on time. Not only did the SCM technology project help lower the freight costs and improve profitability, but it also helped improve customer satisfaction and contract renewals.

2) Improve employee throughput — Many companies still manage their supply chain on spreadsheets.One company I worked with is a very fast growing electronics company who did everything on spreadsheets.The result was employees had to work nights and weekends just to keep up and therefore the company had high employee dissatisfaction and high attrition rates. Their SCM project allowed the workers not only be more efficient and make better decisions about getting product out on time which helped their bottom line, but it also improved employee morale and decreased attrition and those associated costs.

3) Decrease inventory — One of the most common business benefits from an SCM project is a decrease in inventory and their associated costs.Most large companies are global with a complex supply chain map; they’ve typically done acquisitions and therefore have many disparate systems.They could also have a completely outsourced supply chain and therefore have no visibility into the key data required to manage inventory costs.The first step is global inventory visibility, this helps manage what inventory exists currently, what needs to exist and where it needs to exist.

There of course are many other examples of true business benefits. Some of the other business benefits that impact corporate results that should be considered in any business case are:

• Reduction in excess and obsolete inventory
• Fill rate improvements
• Fewer stock-outs
• Improved inventory accuracy
• Decreased cycle time
• Increased customer service levels
• Etc….

All of these can impact financial and operational measures such as:

• Revenue
• Asset utilization
• Cash-to-cash cycle time
• Inventory
• Cost of goods sold
• Revenue per fixed assets
• Etc…

So, companies should consider these types of business benefits when building the business case for an SCM technology project. The definition of success should be measurable and impact corporate results.

One more thought to ponder…wouldn’t it be ideal if a company’s supply chain system was integrated with their corporate financial system and the system had the ability model “what-if” scenarios in the supply chain and see their immediate impact on the corporate results?Wouldn’t that allow the company to make better SCM decisions which ultimately improve the corporate results?

I’ll be posting regularly on my blog, but every Friday I’ll be submitting one blog post from the week to this blog. Follow me as I jump feet first into my role and learn what Kinaxis, the people, and product are all about. Here’s my post from Day 4:

The power of a single product

Think about it. The power of a single product. Not a unified, fused together, platform. Not a suite of bundled up components — developed by many companies and sold under one brand.

One single product. One instance of the data, one instance of business rules, one place for everyone to go in the organization. RapidResponse creates multiple, interlinked applications off a single instance of a single product.

Why is this so important?

Well, there is certainly some dissent about what the next big thing will be in the enterprise software space. However, almost everyone from consultants, analysts, software vendors, and the enterprises with real business pains, looking for breakthrough business results, will likely agree on a few common threads. Breaking down the silosbetween departments, functions and even between enterprisesis one key attribute. Another is linking together processes that have key dependencies on one another — key dependencies that have been mainly ignored until now because they are too hard to tie together. A single view of the business is another common thread. I could go on, but I think you get the point.

Let’s take a moment to think about these now. How can I realistically link people together if I have to stitch together several pieces of software whether they are linked together through a “platform” or no? How can I have process integration with many different process and rules engines? How can I have a single view of my business if the data is spread out everywhere? (Data warehouses are not the sole solution here — the problem is also about running scenarios and simulations for a single view of future state. Certainly something data warehouses are not up for today.)

Again, not to bash other software vendors, and SAP certainly has their place in enterprise software, but they releasedsix new mobile applications this week. Six! Like it is something to be proud of. In the extreme, as a single “user”, I might have to go to six different applications just on my iPad to work with SAP. One user — six apps. Draw me the line to single, integrated process and one view of the business from there.

So, RapidResponse must be very innovative? Let’s also step back from that statement. Innovative has a connotation of new and unproven for many people. If you associate those attributes to innovative, then no, frankly, RapidResponse WAS innovative many years ago — it has long been proven in production environments. If your definition of innovative is more like, “theonlyright product at the right time in the market”, then pardon my language, but “Hell’s Yeah!”

As Doug Colbeth, our CEO, has said, “We are going to be the first really big software company that did it with ONE product!”

Man, to be associated with this product and company is a blast.

Before signing off, a comment on “First 90 days.” It has become clear that the interpretation of first 90 days means a blog post everyday for 90 days to some people. This is not such a good idea for YOU the reader. Clearly, I am proving that I can knock out one of these a day as the WRITER.

Look ahead to this weekend.

Wait, first a digression. Earlier this year, I had the joy of playing a round of golf at TPC Boston. This prompted my Father’s Day gift of family tickets for the Deutsche Bank Championship of the PGA Tour (and Fedex Cup) this weekend. I am looking forward to watching the pros add1500 yards and take 15 strokes off my experience.

With this background, I am now off for four days. You don’t want me blogging about me blogging about golf for four days and my family doesn’t want me staring blankly at big drives and clutch putts thinking about the next PowerPoint deck that I have to put together. So, you get some break from me this weekend. Likely not ALL weekend.

My blog posts might also lose some steam in September, but only because of the big things that we are announcing in October. It makes no sense to steal our own thunder. No fears though. I will still blog a lot in September and during the week of Kinexions and for the days and weeks after, expect the software version of War and Peace.

’til next time … Kirk

The effectiveness of the executive S&OP meeting is limited by the capabilities of the tool used to present the plan. Many companies use Excel to drive the S&OP meeting, but is that the best tool? Let’s take a quick look at what is needed to effectively present the S&OP plan to the executive team.

1) If there is one thing to remember it’s that the executive team is very busy and don’t have the patience or the time to try to understand mounds of data. They need the issues and resolutions laid out clearly and visually, with supporting data at hand if necessary. As we’ve all seen, a picture is worth a thousand words (or a thousand columns of numbers) so make sure that the presentation software supports multiple charting modes.

2) When we change the demand plan, make supply changes, set constraint levels, we base these changes on a set of assumptions.These assumptions must be captured and presented to the executive S&OP team so that they understand the assumptions that these plans are based on. Hopefully, the executives will confirm the assumptions made, but it is possible that the executive team may disagree with an assumption (or simply have better information).It’s much better to make this discovery before you execute the plan.

3) Often, an executive will need to look at the next level of detail in order to better understand an issue or opportunity. If the information isn’t at hand, the team may not be able to make a decision, or if they do, may be making the decision based on incomplete data. Neither situation is good. Make sure that the tool you use to present the S&OP meeting includes the ability to drill down through multiple levels of detail, so that you have the answers when your executive team asks.

4) In many cases, the pre-S&OP team will present a recommended S&OP plan, but may have alternative resolutions for discussions. This means that the executive team needs to be able to clearly see the differences between the various resolution alternatives against the key corporate metrics so that they can make an informed decision.

How successful has your Executive S&OP meetings been? What tool(s) do you use to present the S&OP plan? How do you keep the executive team engaged? Comment back and let us know!