Posts Tagged ‘Management’

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


The Gender Divide in Supply Chain – 3 Questions That May Show We Are Looking at the Wrong Issue

Published March 5th, 2014 by Trevor Miles @milesahead 3 Comments

I like to think of myself as a champion for women in all walks of life. And in terms of the supply chain, I believe there are female characteristics that we can and should leverage a lot more, specifically their more collaborative and consensual approach to solving problems. Of course I understand that these are generalizations. Prejudice is devaluing characteristics particular to one group, and assuming that a particular member of a group conforms to the broad generalizations about that group. I hope I do neither.The Gender Divide in Supply Chain

Why do I write about this topic now? Well, it is International Women’s Day for one, but it is also a topic I have written about before when commenting on the HSBC ‘Thank Heaven for Little Girls’ campaign and on a panel about women in supply chain at a John Gattorna conference in Singapore.

Here are some links to other resources for International Women’s Day:

If we understood and valued more the right skills needed in today’s environment, would that naturally translate to more women in the supply chain?

In addition, we sponsored a day during the recent SCM World Live conference devoted to the topic of women in the supply chain. Kevin O’Marah wrote a summary of the day titled ‘Women in supply chain: a bias for action’ in which he comments that his key take-aways from the day were the need for:

  • Quotas
  • Systemic support
  • Structural support
  • Advocacy
  • Fill the front end of the pipeline
  • Look laterally for talentgender divide in supply chain infographic
As you can imagine, this list generated quite a lot of debate, particularly the questions of quotas. Christina De Luca, VP of Procurement and Supply Chain for BP, was very articulate in stating that the quotas of the 1970s, when she started working, were wrong in that all they looked at was filling a certain number of positions with women. In Christina’s view the characteristics that we look for and the criteria we use to select people has to change because these have been skewed towards men. Her view, with which I agree, is that, when compared with the 1970s, or even the 1990s, business is now operating in a much more volatile world. And it’s not going to change. To quote her from the session:

That predictable, stable world which allowed us to make decisions in isolation, hierarchically, is gone.

It requires a way of working, a skill set that is completely different. We need to talk with and collaborate with colleagues and competitors.

I agree whole heartedly. As Kevin Shriver of Land O’Lakes said on a panel, if more than 50% of the population is women and less than 20% of the people in senior supply chain positions are women, then by default we cannot be hiring the most talented people.  This gets us back to the issue of the characteristics that we look for and the criteria we use to select people.

By a show of hands in the room at the SCM World Live event, a very clear majority of the women, which by definition are women who have risen to high positions in a company, had husbands who had stayed at home with the children so that these women could devote the time to climb the corporate ladder.   On a personal note, my wife and I made a more traditional decision, so, given that I am married to a very bright and capable woman, I am more concerned by the reintroduction of women into the workforce after an absence for child rearing, be that 1 year or 18 years. I asked a few women sitting around me about this and they all placed the onus on the women to explain their absence from the work force and articulate the transferable skills gained from their time at home. I disagree. What is required is for HR departments to value the multi-tasking, agenda setting, rapid trade-off analysis, and appeasement skills that are inherent in raising kids and running a household.

Are we labeling by gender when we should be defining by characteristics?

The question is if there is genuinely a difference between men and women. I think it is best to use an approach that focuses on the characteristics desired rather than to label these characteristics particular to women or men. Having said that, I have always been fascinated by the work of Geert Hofstede on ‘cultural dimensions’ dating from the 1970s, but continue even today. His work has its own detractors and adherents, but what I find interesting is his comparison of different ‘cultural dimensions’ across countries, the dimensions being:

Power distance index (PDI): “Power distance is the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally.” Cultures that endorse low power distance expect and accept power relations that are more consultative or democratic.

Individualism (IDV): “The degree to which individuals are integrated into groups”. In individualistic societies, the stress is put on personal achievements and individual rights. People are expected to stand up for themselves and their immediate family, and to choose their own affiliations. In contrast, in collectivist societies, individuals act predominantly as members of a lifelong and cohesive group or organization (note: “The word collectivism in this sense has no political meaning: it refers to the group, not to the state”). People have large extended families, which are used as a protection in exchange for unquestioning loyalty.

Uncertainty avoidance index (UAI): “a society’s tolerance for uncertainty and ambiguity”. It reflects the extent to which members of a society attempt to cope with anxiety by minimizing uncertainty. People in cultures with high uncertainty avoidance tend to be more emotional. They try to minimize the occurrence of unknown and unusual circumstances and to proceed with careful changes step by step planning and by implementing rules, laws and regulations. In contrast, low uncertainty avoidance cultures accept and feel comfortable in unstructured situations or changeable environments and try to have as few rules as possible. People in these cultures tend to be more pragmatic, they are more tolerant of change.

Masculinity (MAS): “The distribution of emotional roles between the genders”. Masculine cultures’ values are competitiveness, assertiveness, materialism, ambition and power, whereas feminine cultures place more value on relationships and quality of life. In masculine cultures, the differences between gender roles are more dramatic and less fluid than in feminine cultures where men and women have the same values emphasizing modesty and caring. As a result of the taboo on sexuality in many cultures, particularly masculine ones, and because of the obvious gender generalizations implied by Hofstede’s terminology, this dimension is often renamed by users of Hofstede’s work, e.g. to Quantity of Life vs. Quality of Life.

Long-term orientation (LTO): First called “Confucian dynamism”, it describes societies’ time horizon. Long term oriented societies attach more importance to the future. They foster pragmatic values oriented towards rewards, including persistence, saving and capacity for adaptation. In short term oriented societies, values promoted are related to the past and the present, including steadiness, respect for tradition, preservation of one’s face, reciprocation and fulfilling social obligations.

Indulgence versus restraint (IVR): The extent to which member in society try to control their desires and impulses. Whereas indulgent societies have a tendency to allow relatively free gratification of basic and natural human desires related to enjoying life and having fun, restrained societies have a conviction that such gratification needs to be curbed and regulated by strict norms.

The Gender Divide in Supply Chain graph1In reality, many of these dimensions are interlinked and, for example, in many cases cultures with a high Masculinity index also have a high Power Distance Index. But the actual values are of little value if not compared to other countries/cultures.

Of course, the most obvious connection to the topic of women in supply chain is the Masculinity dimension, and, by inference, the degree of ‘femininity’ in the culture. As defined by Hofstede, Masculinity is characterized by competitiveness, assertiveness, materialism, ambition and power, which, in my opinion, is at the heart of dysfunction in the supply chain, and precisely not the characteristics described by Christina De Luca as necessary for the modern supply chain.

The Gender Divide in Supply Chain graph2 It bothers me though that Hofstede uses the term Masculine to describe only one dimension.  For example, I would rate Sweden more ‘female’ because by comparison it rates low on Power Distance and Masculinity and high on Pragmatism and Indulgence. Canada is more confusing because it rates high on Individualism, low on Pragmatism, and high on Indulgence.

Eva Wimmers, CPO of Deutsche Telekom, one of the keynote speakers at the SCM World conference used the following diagram to differentiate between female and male leaders. I like the fact that she used quotes around the terms to indicate that these are not gender stereotypes, but rather characteristics of different personality types.

supply chain trevor miles gender blog

 

As you can see, there is a strong similarity between the characteristics Eva Wimmers uses and those promoted by Hofstede, but Eva is closer to my way of thinking that it is the sum of the characteristics that determines the type.

So are quotas the right approach to redress the imbalance of women in the supply chain?

I agree with Christina Da Luca that the approach to quotas needs to be different. On the other hand, there needs to be a goal, an objective against which we can measure success. Whether we call these goals quotas is a matter of semantics.

But quotas without a change in approach is unlikely to yield substantial and sustained improvements. And it is incumbent on us men to be active in this change of approach.  This was a key point Kevin emphasized on a number of occasions during the conference.

 

Posted in Miscellanea


Revolutionize Your Supply Chain for $2.99

Published February 4th, 2014 by Bill DuBois 0 Comments

I’m fortunate to work with a group whose primarily objective is to learn about your business, in particular about your supply chain. As a group we’ve conducted discovery sessions for literally hundreds of companies. In many cases the discovery sessions ultimately lead to supply chain improvements that resulted in millions of dollars’ worth of value, new business, excited customers, reduced costs and even promotions among the supply chain group.

These discovery sessions can be challenging. Many times it feels like a war as there are barrages of questions launched at the participants. Much like a doctor you have to ensure you’re asking the right questions and hope your audience can articulate their complex problems in a manner that you can digest them. It may or may not include all stakeholders. Multiple sessions sometimes have to happen to ensure all inputs are gathered. The struggle then becomes making sense of the pages of notes and then confirming that you’ve got it right. Often when confirming you’re findings you’ve missed something in the translation so getting it right can often take some time. Recently a colleague of mine, Carol, took a different approach to discovery. Let’s call it the “Post-It Note Revolution”. Calling it “Value Stream Mapping” was already taken.

Before I continue, many Lean-Six Sigma practitioners will say this is nothing new and I’ll be the first to agree. The Lean folks have been doing this for years. Unfortunately, at least in Supply Chain, what we’ve observed in the hundreds of discovery sessions we’ve conducted is that lean tools for process improvement aren’t as widely used as one would hope or expect. So for approximately $2.99, the price of a package of post it notes, Carol lead a collaborative session involving all stakeholders where they were able to easily map out the current state of key supply chain processes. A highlight was the visual of the finished “post-it note” process which leant itself to consensus on the current state. Process owners used the post-it notes to document each step along with identifying obvious opportunities for improvement. Every single person in the room had their say and an opportunity to provide input. Carol used some specific “lean brainstorming” techniques to ensure that happened. The visual representation made it easier for the owners to map the processes and much easier for Carol to learn about their business and understand where to take them in the next steps of improving their supply chain.

Identifying the problem in a clear, concise method is half the battle. For $2.99 this company is on its way to making a substantial difference in their supply chain. I’m sure the Lean folks reading this are rolling their eyes at us in Supply Chain but better late than never. There are tons of great Lean improvement tools to identifying and reducing waste, typically associated with manufacturing but other groups including Supply Chain should not forget about them. Just imagine adding millions of dollars’ worth of value to your Supply Chain for only $2.99.

Do you have any improvements you’ve made in your Supply Chain using Lean tools and methods? Would you like to experience the “Post-It Note Revolution”? Let us know.

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Posted in Miscellanea


A response to ‘Is Your Supply Chain Glass Half Full?’

Published November 13th, 2013 by Janice Kakazu 0 Comments

I just recently saw Bill DuBois’ blog post ‘Is Your Supply Chain Glass Half Full?’  It tickled my fancy and a few additional one-liners came to mind:

  • Project manager – I know you want to add cranberry juice to your martini glass, but I’ll need to write a change request for that.
  • Potential customer – I’ll order that drink if I can talk to 3 other customers who’ll tell me how good it is.
  • Supply chain consultant– Tell me about your requirements for filling that glass, and I’ll transform your glass-filling process!
  • Research analysts/Thought leaders – You’re at stage 4 of the maturity curve when you can segment all the glasses by fullness (or emptiness), sense how full each glass is with your eyes closed, and collaborate with the bartender to get a refill in real-time.

Hope you enjoyed that!

Do you have any other supply chain, “is the glass half full” one liners?

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


Jake Barr: The evolution of CPG companies and their supply chains

Published August 23rd, 2013 by Melissa Clow 1 Comment

Recently, we had the privilege of recording three interviews with Jake Barr. In our first video, The evolution of CPG companies and their supply chains, Jake discusses industry dynamics and how supply chains (and the respective technologies to support the supply chain) have changed over the past 10 years. He describes it as “the perfect storm”.  As a result, the need for speed and depth of decision making has dramatically increased.  There has been a drastic time compression in having to react to the marketplace, and that requires a different technology architecture.

In Part 1: An executive’s perspective: The evolution of CPG companies and their supply chains, Jake Barr explores the following questions:

  • How have consumer packaged goods companies changed in the last ten years?
  • How has supply chain management changed for consumer packaged goods companies?
  • How has supply chain management technology changed for consumer packaged goods companies?

Jake, a 32-year employee of the Procter & Gamble Company, directed the Global Supply Network Design efforts for the Company, in addition to being the discipline Director for Supply Network Operations. So, as a former practitioner, he has a lot of insight to share.

… please check it out!

 

Notable quotes:

“The speed of which they need to make business decisions today versus ten years ago is dramatically different. It can be measured in a clock speed of minutes and hours versus days and weeks. You no longer have the luxury of buffering with cash and people. Extra people to make decisions or to catch up for mistakes that you make. So the thing that has dramatically changed is in that time compression of the need to react to what’s going on in the marketplace. So if you are not able to make those business decisions faster, you literally become a victim of a circumstance.”

“Today the ability to lay over decision-making processes that aren’t infrastructure based, that can bring pieces of operational data about your current performance, right now, just in time and make it visible in a very tangible and simple way for executives to make not only decisions about today but pre-emptive decisions about where they want to the operation to run tomorrow and the week after that. That would not have been possible ten years. It is radically possible today.”

 

Happy Friday 21st Century Supply Chain readers!

 

p.s. stay tuned for more in this series…

Part 2: Supply chain transformations: Going after game changing change

Part 3: Insights for today’s business leaders

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


Five Supply Chain Definitions Every Industry Professional Should Know (Part 1)

Published August 6th, 2013 by Lori Smith 1 Comment

Here at Kinaxis we love our lists … Top 10 this, Top 5 that… so when Lora agreed to do a Q&A post with us, it was natural for it to take the form of a list.  Since starting Supply Chain Insights Lora has educated and promoted with great heart and vigor some key concepts that will bring supply chain practices (and corporate practices in general) forward.  Here are 5 distinguishing themes we’ve asked her to define.  (It’s no easy task to distill these sophisticated concepts down to a few lines. Thankfully, Lora was up for the challenge!)

1. The Supply Chain Effective Frontier – I have to admit, I keep hearing the Star Trek intro every time I come across this term ;)   I see this as the overall basis of Supply Chain Insights’ work, born out of your book, Bricks Matter.  Much of what you talk about is inherent to the goal of conquering the supply chain effective frontier.  Is that accurate?  Ultimately, what is that frontier?

Thanks Lori. I appreciate the opportunity to share with Kinaxis readers. 

The concept of the Supply Chain Effective Frontier is based on two years of research. It is founded in three belief statements:

  1. Each Supply Chain has a Different Potential. I feel that it is the role of the supply chain leader to help the organization maximize its potential. The supply chain is a complex system and these changes require careful design and system thinking. 
  2. Supply Chain Leaders need to help Organizations make the Right Trade-offs against the Business Strategy.  This requires balance between growth, profitability, cycles (cash-to-cash and inventory) and complexity. The trade-offs need to be conscious against the business strategy. Over the last decade, supply chains have increased in complexity without increasing the potential of the supply chain to absorb this complexity to drive balance in the other metrics.  As a result, I believe that most organizations are unconsciously operating on the Effective Frontier of supply chain performance.
  3. Supply Chain is not a Function. It is an End-to-End Process. Leadership is Needed to Drive Improvements. I define supply chain excellence as making year-over-year performance against business goals from the customer’s customer to the supplier’s supplier. Over the last year, at Supply Chain Insights, we have been mapping company performance and capabilities to make these trade-offs. What I find is that only 1-3% of companies have made consistent year-over-year improvements in both operating margin and inventory cycles. I also see ‘wild swings’ in the performance and backward movement in more companies than I ever expected. I feel that many companies have not held themselves accountable to balance sheet performance. Instead, they have viewed company performance or improvements on projects.

2. Outside-in Supply Chain Processes – To steal a line you’ve used, you have to “blow up” current supply chain architectures in order to establish new practices in support of the effective frontier.  Much of that lies in orienting organizations with an outside-in mentality.  What exactly does that mean?

Today’s software systems are designed inside out. The center of the supply chain is stronger than the ends. The traditional applications of CRM and SRM are inadequate. The systems need to be redesigned to enable the building of the end-to-end supply chain.

The traditional technologies catch orders and shipments and then translate the demand to the functions. There are three fallacies in this design.

  1. Order Latency: Orders carry latency of weeks and months. The longer the tail of the product portfolio or the more complex the channel, the greater the latency with the order and the more issues companies will have with meeting customer service requirements. The goal is to turn the supply chain outside in to respond to channel demand or usage with minimal latency.
  2. No Place for New Data Types. Demand and supply sensing that enables a better response is very dependent on unstructured data, maps and sensor data. There is no place to put this data in traditional architectures.
  3. Business Models. The original architectures were designed to predict what companies should make, not what they will sell.  As a result, the architectures are very “push-based” with no place for unique solutions like yours to fit into the architectures. You have been fighting these issues for the ten years that I have been covering your applications.

3. Supply Chain Trade-Offs - So the effective frontier is about making the right trade-offs for the end to end network – ultimately, it’s about being able to make profitable decisions for the enterprise.  Can you define for us further the concept of trade-offs: the elements, considerations and capabilities?

The trade-offs are costs, growth, cycles (inventory and cash-to-cash) and complexity. The concept is that each supply chain has a unique potential. And that the goal is manage the supply chain as a complex system to improve the company’s ability to improve the response.

(Conversation continued tomorrow)

Global Supply Chain Insights Summit

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


New Supply Chain Insights Report: Three Techniques to Improve Organization Alignment

Published July 30th, 2013 by Lori Smith 1 Comment

lora cecere's supply chain insights organizational alignmentWe wanted to share a recent report by Supply Chain Insights LLC entitled, “Three Techniques to Improve Organization Alignment“. This complimentary paper explores how supply chain practices can improve organizational alignment and corporate performance courtesy of Lora Cecere of Supply Chain Insights LLC.

Paper Highlights

When teams are aligned, insight to action is quicker, and greater results ensue. However, organizational alignment is easier said than done. Functions have matured in silos.

The goal of this report is to help companies change and improve alignment to build end-to-end value chains. This study found that when companies do three things, and focus on doing them well, they can substantially improve organizational alignment. Find out what those three things are…

DOWNLOAD NOW

If you like the work that Supply Chain Insights does, make sure to check out their upcoming Global Summit — a  focused event with deep content and extensive networking— taking place in September at The Phoenician in Scottsdale, AZ. As one of the conference sponsors, we hope to see you there!

And feel free to check out other third-party research reports offered in the Kinaxis resource center.

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