Posts Tagged ‘Enterprise resource planning (ERP)’

The Innovator’s Dilemma: How Does it Apply to Supply Chain?

Published March 26th, 2014 by CJ Wehlage 2 Comments

It has been said that the business book that most influenced Steve Jobs was ‘The Innovator’s Dilemma’. Considering the success Jobs experienced in his lifetime, I’m intrigued as to what he learned from it. We all know Jobs was a highly successful businessman, for example, Apple stock increased nearly 7,000% during the time Steve returned to Apple in August 1997 until passing the reins over to Tim Cook in August 2011.  It made me wonder what this book means to the supply chain business. So I decided to read ‘The Innovator’s Dilemma’. But when I read it, I inserted the word “Supply Chain” where “Product” was mentioned.

I’d like to share some insights I gleaned from the book:

Clayton Christensen, author of “The Innovator’s Dilemma’ said,

“The reason why successful companies fail is they invest in things that provide the most immediate and tangible evidence of achievement.”

In ‘supply chain speak’, that means the inability to link strategy with execution.  Most of us get caught in the day–to-day challenge of running the business. For example, planners spend endless hours on finding and resolving exceptions. There’s just not enough time in the day to focus on strategy and innovation.

A very good method I have used when leading supply chain strategies, is to focus on the decisions, rather than the information.   Asking, “What margin do I need this network to have for the first three months of NPI?” is better than asking “How can we get safety stock data to match between systems?”

Why is this better?  I say because of “critical thinking”. Planning is a combination of systems and human judgment. Too many planning organizations rely only on the system output. Yet, with complexity and volatility in today’s global network, critical thinking is just as important to solve the planning challenge.

I have a saying: ‘Information isn’t Power, Informative Decisions is Power’.  Figure 1 shows a very common supply chain decision flow.

Information isn’t Power, Informative Decisions is Power

Reactive supply chains manage right to left, meaning the majority of their time is driven by the impact (low profitability, excess inventory, shortage, etc).  Predictive supply chains manage left to right, meaning they simulate the plan for desired impact, and then execute.  The majority of their time is doing critical thinking and collaborative scenarios.   All supply chains bounce between reactive and predictive.  However, a heavy focus on reactive makes a more efficient supply chain, and solves today’s issue. However, it doesn’t make for a more effective supply chain or solve forward looking issues such as profitability, total cost to serve and market share.

Another good book to read is ‘Profit Mapping’.  A quote I really like is:

“We see many instances where a company may have become more efficient when viewed through a process improvement lens, but not necessarily more effective as far as the business is concerned.”

Being more effective at operating margins and inventory turns (two very good supply chain metrics) only occurs with predictive planning and critical thinking.  And, while efficient supply chain leaders can improve their KPI’s, most industries find it difficult to sustain that improvement. See the research table from Supply Chain Insights LLC presented at their 2013 Supply Chain Insights Global Summit.

 

 

Pretty much across the board, sustaining growth in turns and operating margin beyond three years is not likely to happen. Typically, progress stalls after two years.

The three reasons found to stall progress

1. Functional leadership

Today’s supply chain continues to focus on functional fixes, such as purchasing, logistics, etc.  With the network so complex, global, and outsourced, the greater impact is on your ability to manage the end-to-end process.   This requires not only visibility of end-to-end, but also, the ability to simulate and collaborate end-to-end.  It has less to do about your ERP system, and more to do with the entire network’s planning capabilities.

2. Complexity of systems used

Many companies have multiple systems, multiple ERP instances, and in many cases, functional systems bought for functional purposes.  Middleware is everywhere, and spreadsheets rule the day.  I’m not talking about the number of systems, because when you think about “end-to-end”, you now include all your 1st and 2nd Tier suppliers, 3PLs, distributors, etc.. Face it, there are a lot of systems.  I’m talking about the justification of the landscape.   It’s difficult to justify a functional system for an end-to-end process.

3.       Lack of a supply chain strategy

Lack of a supply chain strategyI’ve seen many supply chain leaders, while working on a supply chain strategy, get caught in the idea that data needs to be cleaned before innovation.   Don’t get me wrong, clean data is a good thing. But, how you go about getting there is the innovation.  Rather than spending countless hours of data cleanup, look at your most critical end-to-end processes, ask what knowledge is needed to plan and execute, and pareto the data needed to execute and fix.

 

The Roadmap to Sustainable Progress

Clayton has a statement in ‘The Innovator’s Dilemma’, “great managers…must first understand what has caused those circumstances and what forces will affect the feasibility of their solutions.”  I believe there are three core steps a supply chain can take to achieve end-to-end control.

Step 1: Collect end-to-end data, and the policies that drive the data

  • Data is good, but the policies that drive the data, especially when considering the time/events that drove the rules, like beginning of the month, last quarter, etc.
  • With the end-to-end data, set control limits to the policies.  When an issue arises, effective alerts go off, keeping the planners focused on core priorities

Step 2: Improve planning by launching what-if capabilities

  • With end-to-end data, you will have exposed the bad data.  Start your first simulations around what policies are most impacted with that bad data.  This will drive the pareto of what data absolutely needs to be fixed.
  • Yesterday vs today: run what if scenarios that tell you each morning what has changed from yesterday, and what are the most critical actions for today.
  • Informative decisions: simulate what it would take for higher profit, better turns, less excess inventory, better COGS, etc…

Step 3: Segment your end-to-end priorities

  • Segment your products and customers. Simulate various supply chain policies against those segments.  Test the attributes that make up each segment

Great supply chains need to align a strategy with the execution.  Putting an intense focus on simulation in Planning allows you to prepare in advance of the impacts.  And that’s summarized well in the book Profit Mapping:

“a wise manager knows that success only comes with operational excellence that is properly aligned with strategy.  The challenge is knowing what actions to take and when to take them – navigating without knowing the impact of your actions on the bottom line is a risk you can’t afford to take.”

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


Making Connections at Kinexions – Our customers say it all – Part 2

Published November 19th, 2013 by Trevor Miles @milesahead 0 Comments

Reflecting on our user conference at the end of October and the comments from several analysts, which I covered in a previous blog, I failed to mention the excellent 3-part coverage by Bob Ferrari of Supply Chain Matters.

 

 

Bob starts his coverage by noting something about which we are very proud, with my emphasis:

Industry analysts, market influences and invited prospective customers are provided unrestricted access to all of the conference sessions and allowed to mingle with all attendees, something that unfortunately, all software or services vendors do not practice.  Our one restriction as an independent industry analyst and supply chain social media mechanism is to respect the stated confidentiality needs of specific customers or Kinaxis, which is appropriate.

In commenting on the opening remarks by our CEO, Doug Colbeth, Bob comments that:

…at Kinaxis board meetings, the discussions are always focused on ways to add value for customers vs. existing competitor’s [SIC] in the market: 
Why would we want to emulate the competition?
By our view, those comments indeed provide the true descriptor of the unique fabric that makes up Kinaxis and its approach with customers.

Bob is correct. We are forging a new path for supply chain planning that is not stuck in concepts first formulated in the 1980s and realized in solutions dating from the 1990s. We are not your father’s supply chain solutions. We are young, we are hip, and we are different. And, in case you missed it, we are proud of it.

Nothing captures what this means to our customers more than Bob’s observation, again with my emphasis, that:

…one of the consistent and somewhat unique themes that we have consistently and objectively observed at past Kinexions, namely customer’s open articulation of their enthusiasm concerning the value that Kinaxis RapidResponse software has provided in their business and decision-making processes, coupled with the ongoing existence of a positive partnership with a software vendor, one that consistently demonstrates responsiveness to their needs.  Trust me in the statement that while many software and services vendors consistently attempt to achieve this state in a customer focused event, it is something that cannot be consistently scripted or orchestrated.  It has to be organic and living.

Commenting on the many customer presentations at the event, Bob captures the key reasons customers turn to Kinaxis very well:

Constantly changing business and supply chain environments requiring more responsive and more predictive planning.
A realization that the majority of today’s supply chain information exists outside of an organization’s backbone or legacy systems.
Either frustration with attempting to implement an existing ERP based planning application, or current gaps in required planning capabilities needed.
Seeking a trusted partnership with a technology vendor and insuring that the vendor is responsive to ongoing needs.
The critical need to insure user acceptance and adoption of any tool selected, and that the system actually does what it is supposed to do.

Wow. If we had stated this in a brochure no-one would believe us. They would think it was just more Marketing blah-blah. But these are the reasons Bob heard our customers articulate. I love it. All I can say is thank you to our customers that presented – Applied Materials, Cisco, First Solar, Amgen, Flextronics, and NCR – and to all the other customers who chatted to Bob and the other Influencers during the conference.

In closing, when commenting on Kinaxis’ product direction and opportunities, Bob quotes from Robert Frost’s poem “The Road Not Taken”. The part that I believe captures both the Kinaxis spirit and why RapidResponse is so relevant to our customers and prospects is:

Two roads diverged in a wood and I—

I took the one less traveled by,

And that has made all the difference.

Yes Bob, we will continue to take the road less traveled. It has made all the difference to our customers, and it is what makes us able to not only respond to traditional supply chain approaches differently, but also to address different supply chain problems, allowing our customers to Know Sooner and Act Faster by not only Planning, but also Monitoring and Responding quickly and profitably. It is the combination of these 3 complementary capabilities that makes us different.

As Doug, our CEO, said: “Why would we want to emulate the competition?” Vive la différence.

 

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Posted in General News, Milesahead, Supply chain collaboration, Supply chain management


Making Connections at Kinexions – Our customers say it all

Published November 4th, 2013 by Trevor Miles @milesahead 0 Comments

We had our annual user conference, Kinexions (pronounced ‘connections’ – isn’t English a strange and fabulous language?) in late October with record attendance and great feedback. The theme of the conference was our tag line ‘Know Sooner. Act Faster.’ Indulge me while I parse out our strap line.

Know Sooner – The ability to detect market changes quickly and determine whether the changes represent risk or opportunity, as well as identifying and alerting the people impacted by the risks or opportunities.

Act Faster – The ability to determine the best course of action quickly through scenario analysis within a team of people, across functions and even organizations, in a structured manner.

In other words our strap line is all about reducing decision latency through purposeful collaboration driven by responsibilities.

As usual it was the great customer testimonials that drive home the benefits of this theme through:

  • Rapid time to value in the initial deployment
  • Rapid innovation on the part of Kinaxis
  • Consistent value delivery over time as they expand into new BUs, geographies, and business processes
  • Mature into a Planning Control Tower – End-to-end supply chain planning process enablement

Of course that is easy for me to say, so I want to focus on external validation of these points.

We had Christian Titze attend our conference for the first time from Austria. In a short summary of the conference Christian states that:

Client companies at the conference demonstrated several ways in which they are adapting and improving their supply chains. These included speeding up time to value from deploying new software, and using embedded analytics and master data management (MDM). In doing so they showed how they were redefining their supply chain planning (SCP) application portfolios to support an adaptable and capable planning system of record (SOR).

Several client companies showed how they were using RapidResponse as a planning SOR. Some are now decommissioning their other SCP solutions and even moving material requirements planning (MRP) out of their ERP systems. This indicates Stage 3+ IT maturity for planning, whereby a planning SOR is in place and ERP systems are seen solely as transactional SORs.

Titze, C., Payne, T.; Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record; Gartner, Inc.; 31 October 2013 .

Unfortunately Ray Wang had some travel issues meaning he could not attend our analyst/influencer session in which we have open kimono discussions with several customers, but Ray has attended our user conference in the past and knows several of our customers. However we were fortunate to have Holger Mueller on a panel which I moderated. Holger has tons of experience in large ERP vendors so it was great to see him endorse the benefits of our technical architecture in a Twitter stream with Ray, which is of course behind all the value delivery.

KinexionsTweetsHolgerRWang


Lora Cecere has been a consistent voice of the customer in the analyst community for well over 10 years now, often putting the software vendors feet to the fire, including ours. She calls this ‘tough love’. As a consequence any positive statements about a vendor need to be cherished, so it is with great joy that I can report that while at our conference, Lora wrote a blog entitled ‘Applause’ in which she states:

In leaving the Kinaxis user meeting this week, I am struck by three things.

First, their recent work on mobility and defining the user experience on a mobile application is very cool.

Second, the flexibility of the Kinaxis solution makes the product hard to message, but the clients that have figured it out, are very happy.  (Some of the happiest….)

Third, the solution is most often deployed in material-intensive supply chains for what-if simulation and visibility. It is a cloud-based solution that scales easily for hundreds of users. It has helped many clients that were too constrained by the inflexibility of the traditional APS platform.

At the conference, Kinexions, I heard many clients speaking freely about the deployment of Kinaxis and the turning off of Oracle and SAP APS solutions.  Many were almost giddy. The ease-of-use of the Kinaxis system was freeing for their teams.

Our Customers
While I wish I could share details of the customer stories shared with the influencers and as keynotes, these days companies are very reluctant to provide public statements of benefit.  What I can say is that during the influencer session we had three customers speak:

•    Flextronics – Customer since Oct 2001
•    Amgen – Customer since Mar 2009
•    NCR – Customer since Jan 2010

The consistent story across all 3 is how they paid for the initial investment in less than a year and how they have expanded their deployment of Kinaxis ever since, often to adjacent functions such as Finance, R&D, and Regulatory/Control. These stories were repeated in the main stage presentations by Cisco, Applied Materials, and First Solar.

What I love about these customer stories is that they give us purpose. Without tangible business benefits software is nothing but a few bits and bytes.

 

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


Crossing the Pond to Attend Gartner Supply Chain Executive Conference

Published September 20th, 2013 by Melissa Clow 0 Comments

Gartner Supply Chain Executive Conference

We are proud to sponsor next week’s Gartner Supply Chain Executive Conference, September 23 – 24, 2013 at the Lancaster London, in London, UK.

Event Details
Lancaster London, Hyde Park in London, UK

Join us September 23 – 24, 2013 for the Gartner Supply Chain Executive Conference. This conference will focus on how supply networks have reached a critical inflection point that, while unnerving, provides an unprecedented opportunity to rethink the very way supply chains work. The Gartner Supply Chain Executive conference will help you reimagine the supply chain and drive your enterprise to new levels of competitive advantage.

Find out more about the Gartner Supply Chain Executive Conference and this year’s theme of: Re-Imagine Supply Chain: Fast, Forward, Focus.  And, if you’re headed to the conference, we invite you to stop by the Kinaxis booth #S19.

Not attending? Follow the Supply Chain Conference on Twitter at: #GartnerSCC or @Kinaxis to get real-time updates from the event. For more Kinaxis news, follow us on LinkedIn or Facebook.

Happy Friday!

 

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


Hey Software Bullies, Stop Picking on Excel

Published August 26th, 2013 by Bill DuBois 0 Comments

As many supply chain professionals will attest, Excel is a life saver. It picks up most of the analytical slack from ERP, whether planned or as a stopgap measure. So as much as most ERP vendors say they can do everything, users continue to flock to Excel to manage, analyze, and plan their supply chains, or to query data to answer financial or statistical questions. Organizing and displaying data in Excel is a hit with users, with years of training and use, putting the tool squarely in their comfort zones.

With its arsenal of capabilities, some still position Excel as the unspoken ERP module. Even my own colleague, John Westerveld recently published a blog entitled, Yet Another Excel Blooper. When Will We Learn? John sites a column Blooper badges manage sophisticated supply chains with Excelerror on a Eurozone Crisis study that fundamentally changed the results, causing some skewed decisions. John also quoted Forbes, who called it “the most dangerous software on the planet”. These “bloopers” are not a problem with Excel, the software is simply doing what it is told. If there is an error, it’s a human one.

Excel was the first supply chain planning tool I ever used. Although we were only doing some simple demand supply balancing, it was still easier, faster and more effective than our legacy ERP system. I continue to use it today for data analysis and as a measurement system. If you haven’t guessed already, I’m a fan of Excel. It’s a great personal productivity and analytical tool.However, managing a global supply chain may expose areas where Excel just doesn’t fit.

Golf ShotTo use a favorite golf analogy, what club would you rather hit, that expensive driver or your nine iron? The right answer depends on what shot you need to make. If you’re standing on the tee of a short par 3, the answer is obvious. Even the best golfers in the world will have a difficult time making a great shot with the wrong club. It’s the same with your supply chain decisions, and it is critical for a supply chain professional to understand when a challenge requires a more sophisticated tool. John’s blog post offers up some requirements that can’t be met when attempting to manage more sophisticated supply chains with Excel.

Here are some of those common signs:

  • You have multiple data sources, in different locations, coming from different participants including customers and suppliers.
  • You’re looking for a single source of the truth for your planning organization.
  • You spend more time collecting data than working with information.
  • Your supply chain has become more complex beyond simple demand and supply balancing based on due date. You allocate materials based on priority or customer, you aggregate and disaggregated forecasts sometimes with different planning ratios, you use alternative sources, substitutes, materials expire or unchecked inventory policies could cause excess and obsolete conditions. In short, you have a substantial amount of analytic requirements.
  • You react to problems rather than being alerted of future potential shortfalls.
  • You find you can no longer respond to demand variability and supply chain disruptions effectively and profitably.
  • It’s becoming necessary to conduct what-if simulations in minutes or seconds versus hours, days or weeks.
  • Your S&OP cycles are too long and it is difficult to reach consensus before the next cycle starts.
  • Your IT department is resource constrained and thoughts of offering supply chain solutions in the cloud seem attractive.
  • Multiple people need access to the same information, sometimes in locations where it would be better served up on a mobile device.
  • Your supply chain KPIs – on time delivery, margin, revenue and inventory turns – are not where you want them to be

Do any of theseMicrosoft Excel Logo situations sound familiar? If you have applied Excel as a stopgap tool in any of these situations, I think you will agree it can only provide limited value. Back in the early 80′s I don’t think anyone imagined they were getting a global supply chain solution the first time they opened a new spreadsheet, but that’s the pattern many organizations have fallen into. If the symptoms above do sound familiar, you may have outgrown what Excel was intended for. So all you software bullies, stop picking on Excel. It will continue to remain a powerful analytical tool. You may just need to change clubs to tackle the tougher supply chain shots.

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Posted in Demand management, Response Management, Supply chain management


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