Posts tagged as 'Enterprise resource planning (ERP)'

Do Supply Chain Planning systems generate any value?

TrevorMiles
  • by Trevor Miles
  • Published

I have been in the advanced planning and scheduling (APS) space since 1995 when I joined i2 Technologies in Europe. Before that I was in management consulting doing what would be called supply chain design or reengineering today.

While MRP and S&OP were defined as early as the 1980s, these provided rough cut analysis at the aggregate level, nowhere near the level of detail that is possible today. The diagram below by Oliver Wight, with some enhancements by me, captures the progression of capabilities since the 1970s. My enhancements were to add the underlying technology and company information at the bottom which gives some context.

Oliver Wright S&OP IBP

The key point is that I have spent a lot of my working life focused on the value generated by more advanced planning solutions.

It has been with some shock, therefore, that over the past few months I have come across a number of prospects, partners, and analysts that question whether any real value has been generated by all the investments in technology over the past 25 years. I have come to the conclusion that this needs some further analysis, which I won’t be able to complete in a single blog.

Let me start with the confusion between planning and execution. I was on a call last week with a large company in the food and beverage space that has spent $100s of millions, and many years, on an ERP deployment. And of course during the deployment their organizational structure has changed and they have gone through some M&A activity in that time. Needless to say they have a continued multi-year deployment of the supply chain planning system provided by the ERP vendor. And they are still a long way from complete from deploying the ERP modules let alone the supply chain planning modules. Now they want to deploy an S&OP process. They have piloted the process in Excel and know that they need an enterprise level solution for a global roll-out of S&OP. The issue is that none of their IT investments in the last 10 years have moved the needle on operational metrics such as inventory levels, case fill rates, and other operational metrics. Their words. As a consequence they are looking for tangible evidence of value before progressing with a global deployment.

paul meyer productivity quoteAbout a week before that I was at dinner with Mo Hajibashi of Accenture. Mo has been around this space about as long as I have and has seen all the changes. We were reminiscing about the trade exchanges that were so much part of the discussion in the late 1990s. Of course these largely went the same way as the rest of the dot com bubble. But Mo went on to say that many companies have struggled to quantify value from their investments in supply chain systems. We were there to discuss other topics so we did not dig too deep into his statement, but it stuck, and came roaring back when I was in discussion with the company I mention above.

In July, Lora Cecere of Supply Chain Insights kicked this all off with a blog on the Forbes web site titled “My Quest to Know …” in which she seemed to question the value of IT in driving value in corporate performance. She states that

As technologies evolved over the course of the last decade, there was a promise that investments in software like Enterprise Resource Planning (ERP), Supply Chain Planning (SCP) or Business Intelligence (BI) would improve corporate performance. I was a research analyst in the throes of this movement, writing article after article on how IT projects will drive corporate performance improvements. I believed it. I was a prolific writer and a committed disciple. I thought it would transform organizational capabilities.

While Lora and my paths are different, our trajectories are the same. I studied Industrial Engineering and Operations Research focusing on Optimization Theory. I lost faith in optimization early when I realized that the uncertainty in our knowledge of true capacity, yield, lead times, and hundreds of other variables drowned out the promise of optimization. And that is assuming that we have a good handle on demand, which we don’t. However, I still believe in the promise of greater productivity through replacement of slow and manual processes with fast and agile digital processes.

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“Storage Wars” Rescues Supply Chain Ignominy

CJWehlage
  • by CJ Wehlage
  • Published

Take a good long look at this picture. That’s my ignominy. That’s my garage.

When we moved to San Diego, we loved the weather, we loved the ocean sunsets and we loved getting rid of our parka coats, gloves, scarves and tossle caps. Roddy Martin, my colleague from AMR Research, often uses the term “ah-ha” moment. Up until this past year, my greatest “ah-ha” moment was watching my Boston neighbor walk away with my Arians Platinum 20-SHO snow blower. I no longer had a need for it and he was a happy camper. Never again was I to wake up at 4am, face the 5 degree temps, and walk up and back my driveway, blowing the snow into the woods… “Ah-Ha!”

But, in Boston, we had this dirty little secret. A secret that I could no longer keep hidden in San Diego. In Boston, we had an “ATTIC”. In San Diego, there’s no attics, no basements. Stuff goes into the garage. For years, we just put boxes into our attics. Never thinking much about what it was, or why we needed it. Occasionally, I would move the attic boxes around, putting labels on some boxes. It made me feel like I had control on the attic. Now, in San Diego, every box we collected for 12+ years, was sitting in the garage.

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

CJWehlage
  • by CJ Wehlage
  • Published

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…

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

TrevorMiles
  • by Trevor Miles
  • Published

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.

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Making Connections at Kinexions – Our customers say it all

TrevorMiles
  • by Trevor Miles
  • Published

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).

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Extending Supply Chain Planning Paradigms Beyond Advanced Planning Solutions

TrevorMiles
  • by Trevor Miles
  • Published

“Many business process directors are under pressure to help make the best possible process-related decisions to ensure desirable business outcomes, business differentiation and continuous innovation.”

supply chain planning - intelligent business operations (IBO)

Sinur J., Schulte R., “Use Intelligent Business Operations to Create Business Advantage”, Gartner Research, 20 March 2013

One can argue that nowhere is this statement more true than in supply chain.

While the inventive concept of Intelligent Business Operations (IBO) is gaining traction in multiple capacities, the applicability and potential is particularly high within supply chain management.

 

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Crossing the Pond to Attend Gartner Supply Chain Executive Conference

MelissaClow
  • by Melissa Clow
  • Published

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!

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Hey Software Bullies, Stop Picking on Excel

BillDuBois
  • by Bill DuBois
  • Published

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…

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