Posts Tagged ‘Enterprise resource planning (ERP)’

Virtual Vertical Integration: The best of all worlds

Published August 20th, 2013 by Trevor Miles @milesahead 1 Comment

Virtual Vertical Integration: The best of all worldsIn a recent article titled “Virtual vertical integration is the future of supply chain” SupplyChainManagement.com reported that Flextronics’ CPO and CSCO, Tom Linton, said that virtual vertical integration is:

“… managed alignment of external supply chain capabilities that leverages multiple levels of those capabilities to improve profitability and cash flow”, where the suppliers are seen as an extended enterprise that behaves as if internal to the company.”

While Flextronics is referring to highly outsourced supply chains, the key message is just as applicable to multi-stage insourced supply chains, and to the planning process itself.  The question is how do you get “an extended enterprise that behaves as if internal to the company”. It most certainly isn’t through overnight Electronic Data Interchange (EDI) messages flowing between ERP systems.

Linton went on to state that:

“Transparency is difficult. It is one of the things we have to get over. We have to have it, because it defeats complexity and minimizes risk. … As complex as some of this sounds. It’s about fundamentally looking at the multiple tiers of your supply chain and figuring out how to connect it in a way that gives you greater control and therefore your financials have greater results, whether it be cash, operating profit or revenue growth,” he concluded.

I don’t think complexity needs to be ‘defeated’, but if by ‘defeated’ Linton means ‘absorbed’ then I am in complete agreement.  As Linton states, it isn’t just ‘transparency’, but ‘connectedness’ that is important. Undoubtedly transparency or visibility is a good place to start, but it is connectedness that makes a substantial difference to operating performance. Transparency only tells you the state of something, such as inventory, and whether or not it satisfies predefined targets. It is connectedness that tells you whether or not that something is of operational or financial importance.

Let’s take two examples.

  1. The inventory targets of a key component have been set at 75-100, and the projected inventory is fluctuating around 80 for the next few periods.  Sounds okay, right? Well, what if you are experiencing a demand spike for a finished good that normally only represents a demand of 5 per period for this key component, but now will represent 25 per period. Transparency isn’t going to tell you that you have a problem with raw material supply.  Connectedness will.
  2. A supplier decommits on a delivery date by one week, which is well outside of the agreed service level conditions, but the supplier can expedite the shipment to meet expected delivery dates, at your expense.  Transparency would say that you should expedite the shipment. Connectedness may tell you that you may be violating safety stock levels but that no demand will be impacted, so why expedite?

Some would say that they have ‘sufficient’ connectedness through daily MRP runs and overnight EDI messages. I don’t think this is good enough, and Gary Godfrey and Mark Pearson from Accenture don’t think so either. In a podcast entitled, “Why ‘dynamic’ is as crucial as ‘efficient’” they state that:

I was just talking about the fact of organizations in-ability to sense the market, capture the insight and then be able to disseminate and make decisions very rapidly so one of the core capabilities that we talk a lot about is this idea of insight to action, the ability to capture real time insight from the market and from sensing engines that you have. The ability to then be able to understand how do I want to respond to those changing market conditions and then be able to disseminate that into action across the organization.

It is well worth listening to the full podcast. Again, the emphasis is on translating the external signal across the entire organization, even the network, in as little time as possible.  But, transmitting the signal through the network is only the first part of the ‘insight to action’ duo. Accenture then emphasizes the need for a cross-functional response, what they call ‘action across the organization’. This is what I call Concurrent Planning, which is the capability to plan and respond across the network, not in isolated functions. If you are trying to respond in a timely manner using a cascaded process supported by disparate functional applications you will fail. Accenture’s description also captures the idea of Plan + Monitor + Respond, which is the ability to put in place a plan, in reality an intent, to sense true demand and the current state of the supply network, and then be able to respond rapidly and profitably to true demand. These need to be three equal and complementary capabilities. The overall effectiveness of your supply chain will be determined by the weakest of these capabilities.

Speed is quality.

What about Virtual Vertical Integration?

As long ago as 1998 Michael Dell, the founder of Dell computers, at the time the company leading the charge on both outsourcing of manufacturing and direct-to-customer distribution, in an interview in the Harvard Business Review titled, “The Power of Virtual Integration”, said that:

Virtual integration harnesses the economic benefits of two very different business models. It offers the advantages of a tightly coordinated supply chain that have traditionally come through vertical integration. At the same time, it benefits from the focus and specialization that drive virtual corporations. Virtual integration, as Michael Dell envisions it, has the potential to achieve both coordination and focus. If it delivers on that promise, it may well become a new organizational model for the information age.

What is clear is that Michael Dell was trying to regain the control over the supply chain Dell lost when they outsourced manufacturing. As Dell says, they were balancing the financial advantages of outsourcing with the operational benefits of vertical integration.

  Moving Beyond Multi-Enterprise Orchestration Agilent case study

To achieve Dell’s vision requires a capability that goes well beyond visibility across tiers. There is too much decision latency embedded in a cascaded planning process that relies on daily MRP runs followed by overnight EDI transfers between MRP systems. This is what Linton was getting at with Virtual Vertical Integration, and what Accenture was getting at with the comparison of ‘dynamic’ and ‘efficient’.

Speed is quality.

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


An S&OP Barrier: Understanding material needs/availability across projects

Published August 19th, 2013 by Dan Nowicki 0 Comments

An S&OP Barrier: Understanding material needs/availability across projects

I recently read the blog ‘Have you crossed a silo lately’ revealing how organizational silos continue to hinder implementing S&OP.  Eliminating roadblocks isn’t easy and is multifaceted.  Once some of the tough questions suggested in the article are asked and answered, barriers can be eliminated one by one.

One such silo that hinders an S&OP implementation may be found in project centric environments where two conditions exist (Aerospace is one such environment these conditions can be found).

  1. Multiple projects require common material/sub-assemblies from the same facility(ies).
  2. Shared common materials and assemblies are expensive and/or have long lead times.

Such an environment can lead to unhealthy competition between project managers for materials/sub-assemblies needed to support their projects.  To mitigate this, material/sub-assemblies that typically meet requirements to be configured as “Common” stock are often configured as “Project” stock instead.  This simplifies financial reporting within projects and enables material planning within project silos.  Unfortunately, it also reduces the motivation to communicate across project lines and can lead to unnecessary project material surpluses and delays since ERP engines commonly don’t look for materials across project boundaries.

How does one eliminate this S&OP roadblock?

The key is to automate evaluation of material availability across projects for material not configured as ‘Common’ stock.  This evaluation must become part of standard daily practice and occur as spot checks within the formal S&OP process as a final check.  In most systems, such evaluation can be performed but it’s often a time consuming manual process.  To evaluate cross-project supply and demand you need the equivalent of a mini MRP check for components that would otherwise be silo planned within their ‘Project’ (within their ‘Pool’ in RapidResponse terms).  This cross-project material availability evaluation should be an automated daily task (requiring no planning analyst labor).  The output could be a warning if opportunities to improve project schedules or reduce/eliminate surplus material exist by re-assigning inventory/Orders/WIP to another project.  In RapidResponse, this would be facilitated through the use of a daily alert based on a special cross-project evaluation resource built to meet the customer needs.

With such a strategy, the key question arises, “How automated (if at all automated) should the decision to act on such an alert be?”  At one end of the spectrum is a primarily manual process.  An alert that project A needs material from project B to meet schedule is generated.  The analyst would then review the situation (through the use of a simulation scenario in RapidResponse) identifying positive/negative impact on both projects and request sign off on desired manual transfers of inventory/Orders/WIP across project groups.  In an automated solution, specific conditions could be defined where Inventory/Orders/WIP would automatically be re-assigned from one project to another to minimize analyst evaluation time.  Requirements for auto-transfer of inventory/WIP/Orders across projects could be set up with a wide variety of conditions to meet customer needs.  Examples could include allowing automatic transfers only if……

  1. The surplus material in project A to be auto-moved to project B is less than x dollars. Or
  2. Project A inventory/WIP/Orders re-assigned to meet project B needs can be replaced within existing system lead times +20% to meet the next scheduled project A demand for the part.

There are a whole  host of possibilities/conditions that can be identified and built.

As further food for thought, one could go one step further in the S&OP process evolution and directly link Project Management activities with the supply chain to see the immediate impact of proposed re-assignment of inventory/WIP/Orders project task schedules further down the project chain.

For more information on RapidResponse Integrated Project Management, check out this blog by Andrew Bell entitled: First Solar Shines the Light on Integrated Project Management

…or a few of my past posts:
Another Link In The Chain: Using Project Management to Drive the Supply Chain
Another Link In The Chain: Connecting Project Management to the Supply Chain

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


Just When You Thought School Was Out, Here’s Another Supply Chain Lesson

Published July 22nd, 2013 by Bill DuBois 2 Comments

supply chain lessons graduating studentsAs a supply chain professional attending a recent graduation ceremony, I couldn’t help but think of the state of our industry as I listened to the commencement speaker challenge the graduating seniors to pursue lifelong learning, challenge the status quo, and never stop searching for the “paradigm shift”.

Working in a supply chain environment creates opportunities to help our organizations grow and adapt to massive changes in the global economy. To really have a continuing positive impact, we need to acknowledge the increased complexity and velocity of today’s business climate.

Despite the fact that  globalization and other market trends have redefined the way businesses operate, the conventional structure of the supply chain has not strayed far from its origins. To many in the field, it still means:

  • we plan and then execute;
  • organizations and their respective processes operate as silos of people, data and applications;
  • collaboration and coordination is limited in scope and speed as a result of the disconnected nature of operations;
  • And, planning processes, like S&OP, are largely sequential and therefore can take weeks or months to complete.

The status quo might have been good enough if the world around us had not changed since those early days of supply chain, with its vertically integrated, build-to-stock model. The biggest change is most likely the amount of volatility and complexity one must deal with, as a result of such things as shortened product life cycles, outsourcing, and unexpected supply chain disruptions, such as natural disasters. This list could go on. I would recommend a number of my colleague, Trevor Miles’ posts on the 21st century supply chain blog including “Embrace Complexity – Revisited” and  “Visibility, Agility and Alignment“.  Trevor touches on the organizational and technology “status quo” and the results of managing the supply chain with an eye toward change.

I called out the latter post from Trevor because it deals with the loss of visibility and coordination across global operations. That brings us to our esteemed commencement speaker’s suggestion to look for the paradigm shift. I think the paradigm shift for the supply chain is that the ‘plan and then execute’ model is killing business, and has given rise to a different approach.

Let’s face it, while we’re in the midst of planning (or executing), stuff happens. Like the football coach who throws his game plan out after the first whistle blows, we tend to start dealing with a variance to the plan as soon as that plan is approved. Instead of “plan and execute” the paradigm has shifted to “plan, monitor and respond”, with the expectation that all three have equal importance and occur concurrently through a collective, integrated effort.

Planning, monitoring, and responding can’t happen in isolation or in succession. People, data and applications that make up an organizational team can no longer be segregated, even when they are spread across the globe. One group can no longer wait for another to finish their activities before they start theirs. Today, companies are competing against time.  So the paradigm shift is concurrent planning, where decision makers are able to see impact and risk across the organization instantly and work as a team to maintain the demand supply balance over both the short and long term. Importantly, this means understanding who is impacted by a change (or  the subsequent course correction) is just as important as the products, parts, resources and KPIs impacted. The new paradigm of parallel planning, monitoring, and responding must include the human collaboration element.

ERP systems are not designed or implemented in a way that provides immediate visibility to key data and the projected impact of events across roles. With a rigid ERP system, an organization can experience inferior and sluggish decision making.  The traditional options of ERP and its bolt-on modules; or standalone software applications that solve point agendas; or, alternatively, a proliferating collection of Excel spreadsheets that offer flexibility but suffer from serious limitations in reliability, scalability, and collaboration, are no longer sufficient.  The information flow latency-and therefore decision latency-in these environments is enormous. In today’s dynamic market, you must be able to evaluate situations in seconds, not hours or days. When analysis is too difficult to perform and takes too long, it simply doesn’t happen. The end result is that you struggle to get alignment of demand and supply, because agility and adaptability are nearly impossible to achieve.

Business success depends on how quickly companies adjust plans to maintain the demand and supply balance. When issues arise, as they always will, there is no time to dig for data, wait for reports to run, or perform ad hoc, informal analysis using spreadsheets. What is required is fast, accurate and comprehensive analysis. And that is what Kinaxis RapidResponse provides.

Most manufacturers we work with have standardized on an ERP system as their execution-backbone. Yet, they all face growing volatility, increasing supply chain complexity, and the realization that they have entered a new era of surprise and compromise. As a result, forward thinking organizations are now placing a high priority on enterprise-wide planning, monitoring and response coordination. Their core needs typically include increasing agility and analytical capabilities, improving operational flexibility, and investing in long term scalability of their execution platform.

Leveraging their investments in ERP, companies that adopt RapidResponse do so to:

  • gain new and agile supply chain planning and analytical capabilities not possible otherwise
  • increase flexibility to better support varying corporate, functional, and user specific needs
  • establish a platform that can scale with the organization over the long term
  • drive tangible business outcomes by both improving and accelerating planning and execution within and across supply chain functions

Hopefully the next commencement address you hear provides a bit of inspiration, no matter when you last put on a cap and gown. For both the new graduate and the veteran supply chain professional, some lessons shouldn’t go out of style: never stop learning; challenge the status quo; and look for the paradigm shift. As our supply chains continue to get more complex, this advice won’t just be a passing remark, but a key factor for long term success.

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Posted in Miscellanea, Supply chain comedy, Supply chain management


More than half surveyed chose RapidResponse over SAP and custom solutions

Published July 5th, 2013 by Melissa Clow 0 Comments

As we described in our first blog of the series, we recently completed a customer survey project with TechValidate and are very pleased with the over 150 survey responses and the many stories we can share. And so, for our Friday posts, we have been featuring the different customer results on how they are using RapidResponse in their supply chain and the benefits they are realizing.

In this series, we will explore the following topics:

Voice of the customer part 1: Supply Chain Flexibility

Voice of the customer part 2: Supply Chain Visibility

Voice of the customer part 3: Supply Chain Planning

Voice of the customer part 4: What-if Analysis

Voice of the customer Part 5: Response Management

Voice of the customer part 6: Alternative Technologies

Voice of the customer part 7: Competitive Advantage

If you are eager to check out all the results, simply go to our TechValidate page. If you wish to use or share any of the content we’ve published to-date, click on the asset you wish to use and then select the download button to save. You can also choose the share button to distribute through various social media channels.

We asked our customers, what alternative technology did you use or evaluate when your were looking for a supply chain management solution? And, how does it compare to competitive solutions? From our results, it is clear that investing in a patchwork approach for integrated demand and supply chain management is a gamble, at best, and the industry as a whole is questioning the merit of ERP supply chain suites. With a growing focus on sales and operations planning (S&OP) as a means to ensuring agility, alignment and adaptability, the limitations of ERP systems and their associated modules are becoming very apparent.

more than half of survey organizations chose rapidresponse over sap and customer solutions

better planning capabilities

quick supply chain visibility

displaced SAP APO

better response times

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Posted in Control tower, Demand management, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


Another Link In The Chain: Using Project Management to Drive the Supply Chain

Published June 24th, 2013 by Dan Nowicki 1 Comment

At Kinaxis, I help our customers develop solutions to supply chain and project management challenges using RapidResponse. You may remember in my last blog entitled, “Another Link in the Chain: Connecting Project Management to the Supply Chain”, I discussed how changes in material, supply, demand, and resources can significantly impact project schedules. In this blog I want to continue that conversation.

Before integrated project management (IPM) came along, direct links between the supply chain and project management didn’t exist.  Such relationships led to project management features where supply and demand can directly link to and impact project tasks.In one of our first IPM implementations a question was raised resulting in another “link” in the supply chain.  In this situation, the construction industry was our focus. The client managed most elements of the project from project management software.

The ability to directly link the supply chain and project tasks was a great step forward.  However, after adding such links, independent demand still had to be manually updated and re-linked to tasks when a related project schedule or material requirement changed.  This naturally led to brainstorming on how such linking could be simpler.

Another Link In The Chain: Using Project Management to Drive the Supply ChainThe brainstorming raised an interesting question, “If we automatically link independent demand to a project task, why not also use automation to utilize project task data to generate, modify or delete independent demand?”

Ultimately, the result of the brainstorming killed two birds with one stone through the use of RapidResponse.  Now, two previously manual tasks (entering, maintaining independent demand and linking independent demand to the project) are automated.

Project Management Currently

With RapidResponse’s integrated project management (IPM), individual project tasks can be directly linked to supply chain independent demand or orders.  When material availability doesn’t support a project task, the discrepancy is immediately flagged.  Standard configuration options allows one to automatically re-schedule tasks based on the availability of independent demand and the orders they are linked to.  In either case, RapidResponse IPM provides visibility into the supply chain’s impact on a project, in order to identify and respond to conflicts.

Another Project Management Approach

When setting up IPM for use at a site, one could also use RapidResponse as the primary source to create project specific forecasts or actual independent demand.  The opportunity exists to populate independent demand orders and forecasts based on material requirements entered into a RapidResponse project plan using RapidResponse.  The quantity and timing of these independent demands would be defined and automatically adjusted based on the project tasks they are linked to.

When

When would it be most advantageous to drive forecasted and actual customer requirements directly from the project management tool?
Such a strategy is excellent for large, long projects that take months or years to complete and have one of a kind deliverables.  Examples of such projects exist in:

  • Construction
  • Ship building
  • High-tech projects for one-of-a-kind machines
  • Design and development phases of high-tech products before shifting to repetitive manufacturing

Often, in such projects, the key is to have the material on site at the time needed (i.e. build the foundation, clear land, prepare dry dock, utilize specialized materials in design experiments etc).  Managing the materials required for such projects can be managed within an ERP system, but this is often not the optimal tool, given that it was built primarily with repetitive manufacturing in mind.  Even more important, the ERP system is not linked into a project management tool.

Advantages

Organizations can consolidate project supply planning into a single source of record.  By generating independent demand from the project plan, there is no longer any need for the project management tool to operate in parallel with (as opposed to being integrated with) the entry of forecasted and actual independent demand entered in the ERP system.  This reduces/eliminates effort to manage, maintain, and audit forecasted and actual independent demand in the ERP System vs. the project management tool.

Teams can reduce or eliminate the need to build, manage, maintain special part numbers, BoM’s and routing to drive project material needs.  Without the existence of these specialized parts in an ERP system, a significant amount of cross-department coordination and management of the Engineering and Manufacturing groups who often own part, BoM and routing data could disappear.  This could be especially important if project demands on these departments are minor (and often 2nd priority) relative to the standard production work that may be their primary priority to support.

How

Convert IPM material requirements into independent demand by building commands in RapidResponse, IPM can become the data entry and maintenance point to enter material forecasts or orders required to support a project.

Such a strategy is facilitated by creating RapidResponse command(s) to:

  • Translate IPM task material requirements into independent demand orders or forecast orders
  • Link the newly generated independent demand order’s to the appropriate tasks

An important design consideration for any company taking such an approach is to determine if project based independent demand created in RapidResponse will be translated into independent demand in the host ERP system. Depending on customer needs it may not even be necessary to use independent demand in the host ERP system.  In such a case, independent demand satisfaction can be modeled in RapidResponse based on material receipt and consumption logic.   If, on the other hand, project independent demand is created/maintained within the host ERP system AND RapidResponse, a strategy must be developed defining how it will be they be maintained to be in sync across both systems.

Organizations can use tasks in a project with material requirements as one would a production order, Routing/BoM in a traditional ERP configuration to drive quantity/timing of independent demand.

Just as re-scheduling a production order or planned order can result in shifts in the timing of the material that is needed so do shifts in the timing of a Project Plan’s tasks.  In repetitive production environments scheduling of operations needed to build product is facilitated through a production order, routing and BoM.  In a RapidResponse project based environment, these variables are analogs to a project, task, and task material requirement (for those tasks with assigned material requirements).

Repetitive Mfg. RapidResponse IPM
Production Order Project
Routing Project Tasks
BoM Lines Task Material Requirements

A production order has a routing where each operation represents certain production operations that can either have specific material requirements linked to it.  In a RapidResponse, the project is analogous to a production order.  Individual tasks, within the project, serve a similar purpose of operations in a routing, albeit with a much broader variety of activities which must occur.  In RapidResponse, material requirements are linked with specific tasks in a project plan just as material requirements from a BoM for a production order can be linked to any step in a routing (though often in many industries all material in a production order are linked and kitted in step 1 due to the relatively short life cycle of a production order).

Implementation considerations

  • Volatility in a project plan could lead to fluctuating material requirement schedules that could be difficult and frustrating to react to by purchasing and within the production MES system.  This could be mitigated by a number of strategies.  One possibility would be to selectively deciding if/when particular tasks will result in forecasted or actual demands.  The commands to create independent demand could be conditionally based on such things as the timing of the resulting independent demand or the status of the task.
  • New business processes/responsibilities may need to be defined since the trigger to buy/build material for a project shifts to data entry made directly into the project plan.
  • Others are dependent on the unique requirements of the adopter.

In conclusion, integrating project management to the supply chain can reduce the number of manual project management and supply chain steps required for maintaining and meeting project timelines and budgets.

As I mentioned in my last blog, if you are interested in reading more about this topic, we published a white paper on this subject. The paper describes an integrated approach to project management which enables an organization to model all their projects and their entire supply chain together in one environment. I recommend checking it out to understand the business case for linking project management to the supply chain and to understand the specific capabilities that should be included.

 

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Posted in Control tower, Demand management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management


The Effective Supply Chain Frontier – Fact or Fiction?

Published May 27th, 2013 by Trevor Miles @milesahead 1 Comment

Lora Cecere over at Supply Chain Insights has been writing for some time about Conquering the Supply Chain Effective Frontier. Lora characterizes this as a focus on long term resiliency of the supply chain, not just short term cost efficiency. She is right.

Supply Chain Frontier

Lora writes that

As shown in the Supply Chain Effective Frontier framework it needs to recognize the impact of corporate trade-offs, business investment strategies, supply chain trade-offs and the degree of complexity in business policies. These together form the system definition of the Supply Chain Effective Frontier. … While students of economics might caution that this is the efficient frontier, we have consciously chosen not to define this as the “Efficient Frontier.” Companies have traditionally defined the most efficient supply chain as the most effective supply chain with the lowest cost per unit. It is our belief that the most effective supply chain is not always the most efficient.

In other words the primary focus of the supply chain function should be the conscious trade-offs between customer service and cost-to-serve. These trade-offs can only be made horizontally, across multiple functions and even trading partners. This becomes more obvious when discussing the trade-offs needed by, for example, a pharmaceutical manufacturer when trying to determine how to respond to a tender. This requires the evaluation of long term profitability of the tender considering the costs associated with non-conformance, both immediate and long term. These need to be balanced against satisfying non-tender business, which is both a lot more uncertain and more profitable over the life span of the tender. How does accepting the offer impact capacity needs? Will the capacity be required beyond the life span of the tender? Will inventory need to be placed closer to the market?  How will planning introductions of the same into new markets be impacted?  These are not decisions that can be made in isolation by Demand Planning, or Marketing, or Sales, or Inventory Management, or Manufacturing, or Purchasing. These are decisions that have to be made horizontally, across these vertical functions, and often in conjunction with Contract Manufacturing Organizations (CMOs) and Third-Part Operators (TPOs).

The tender process is only one example of the increasing need to focus on horizontal process enablement in order to make the conscious, risk adjusted trade-offs Lora is writing about.  It is time that the ‘war room’ concept – a co-located cross-function team which is often used to deal with crisis – became standard operating practice. We have to look beyond the ‘divide and conquer’ concepts dating from the 1980s, which broke up planning into multiple function and time horizons, such as in the diagram below. Many of us may feel uncomfortable with this idea because it challenges our pre-conceived notions, how we were taught to view supply chain as a practice. Change can be difficult, even when it is good for you.

Source: http://www.partnersforexcellence.com/toptenlist.htm

Change starts by recognizing that an approach that puts horizontal process effectiveness first is far superior to an approach that only focuses on functional excellence. It starts by recognizing that harnessing and harmonizing human ingenuity and imagination across functions trumps functional optimization every time. It starts with the recognition that the ‘divide and conquer’ approach that guided the development of all legacy APS solutions is no longer enabling, but limiting progress. Yesterday’s approach fails todays dilemma.

All the APS suites were developed in this ‘divide-and-conquer’ paradigm with individual applications being developed for Demand Planning, Inventory Planning, Distribution Planning, Capacity Panning, Master Production Planning, …  To be fair, technology in the 80’s and 90’s was not able to support the data scale, speed, and analytics required to connect horizontal business processes in real-time. In fact, the only partially successful attempt to do so was ERP, but with a batch oriented computational engine that took hours, often days, to run. Technology limitations are no longer an excuse with the advent of the internet, social, and in-memory computing.

And it isn’t all the fault of the vendors. There is a great article just published in Modern Materials Handling titled “JDA Focus Challenges Attendees to Think Outside the Silos” which comments on the first conference of the joint JDA/Red Prairie operation.  According to Modern Materials Handling Tom Kozenski of JDA states that

“Optimization is a funny word,” he says. “You can optimize a WMS. You can optimize a TMS. But if you optimize a platform that sits above them, it might be one plus one equals three. We love to pitch the platform approach [such as in JDA eight], but the customer buys by silo. They think the platform is interesting, but only as long as it solves the problem in the silo. For many of them, siloed behaviors, thinking and budgets are hard to get away from.”

While I praise JDA for raising this issue of silo buying, solving it from a solution perspective will take much more than simply integrating the functionally focused applications through an integration framework. This approach will do little to address Lora’s Effective Frontier of providing horizontal conscious trade-offs, which is the fundamental reason for connecting these processes in the first place.  Connecting the data without connecting the people still promotes a siloed decision making approach focused at functional expertise. Unfortunately, in many cases the people do not want to be connected, which is the point being made by JDA about siloed behaviors, thinking, and budgets in the user community. Only strong executive leadership will drive an organization to conquer the supply chain Effective Frontier with a strong emphasis on horizontal processes supported by functional excellence.

It isn’t just the so-called East-West, or horizontal, integration that has been lacking in processes and technology, it is also the North-South integration between financial and operational plans. Executives have long experienced the side-effects that result from trusting a thin S&OP process disconnected from its deeper operational implications, namely misalignment between objectives and achievements.  Leaders are now expecting full and deep alignment between their highest level plans, and their lowest level operational constraints. Far too many companies believe that they cannot operationalize the S&OP plan, let alone the Annual Operating Plan (AOP), because it can only be developed at a corporate level in aggregate form and in chunky monthly buckets, at best at a Business Unit level. The net effect is an AOP that is, at best, a very loose statement of intent rather than an alignment between intent and feasibility.

I’d like to see all of us in supply chain management – executives, practitioners, analysts, commentators, and vendors – lift our heads to focus on the art of the possible. We have the opportunity to rewrite how supply chain management is conceived, enabled, and performed by focusing on the Effective Frontier.

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Posted in Control tower, Demand management, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management, Supply chain risk management


SupplyChainBrain Video Series Part 8: Celestica’s Supply Chain Collaboration Center

Published May 16th, 2013 by Melissa Clow 0 Comments

SupplyChainBrain attended our annual Kinexions user conference.

At our event they completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are loaded with great information and we would like to share it with our readers.
Each week, we have been sharing the clips. The final video in our series is Celestica!

Celestica’s Supply Chain Collaboration Center

Celestica’s collaborative initiative comprises three elements – inventory visibility, much closer relations with suppliers, and optimized inventory management, says Erwin Hermans, vice president of supply chain solutions at the contract manufacturer. [Run Time (Min.): 12:22]

 

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


Webcast: Frank Scavo of Constellation Research Presents: “7 Recommendations for Gaining Positive ROI and Strategic Benefits from SCM Technology”

Published May 2nd, 2013 by Melissa Clow 0 Comments

Frank ScavoI’m excited to tell you about our upcoming webcast with Frank Scavo of Constellation Research entitled, “Seven Recommendations for Gaining Positive ROI and Strategic Benefits from SCM Technology”.

Register now for this May 7th webcast exploring investment trends and solution needs for midsize organizations.
Event Details:
Research indicates small and midsize organizations are investing in SCM technology at a slightly higher rate than are large organizations, signifying that SCM solutions are moving down market. With pervasive industry trends such as globalization and outsourcing, midsize organizations are facing similar planning challenges as larger enterprises, and thus are experiencing ever-increasing SCM and S&OP solution needs. Supply chain management systems can deliver concrete results and measurable financial benefits; however, it is important to recognize the challenges and plan accordingly.

Reserve your spot for this complimentary webcast.

Presenter
Frank Scavo, CFPIM
Vice President and Principal Analyst, Constellation Research

Frank Scavo has over 20 years of experience in IT strategy, IT management metrics, enterprise applications and business process improvement in a broad range of industries, including process and discrete manufacturing, medical devices, pharmaceuticals, consumer products, high-tech, wholesale and retail distribution and information services. He is especially skilled at aligning business and IT strategy, developing the business case for new systems and facilitating the selection of enterprise systems, such as ERP, CRM and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations.

 

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Posted in Control tower, Demand management, Inventory management, Response Management, Sales and operations planning (S&OP), Supply chain collaboration, Supply chain management, Supply chain risk management