Posts Tagged ‘Operations performance’

SupplyChainBrain attended our annual Kinexions user conference. At our event they completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are loaded with great information and we would like to share it with our readers.

Each week, we have been sharing the clips. The final video in our series is Celestica!

Celestica’s Supply Chain Collaboration Center

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

In October, SupplyChainBrain attended our annual Kinexions user conference. At our event they completed a number of video interviews with some customers, analysts, and Kinaxis executives. These videos are loaded with great information and we would like to share it with our readers.

Each week for the coming weeks, we will be highlighting a clip. Next up, a discussion with Procter & Gamble (now retired), Supply Chain Insights; NCR Corp. and Kinaxis.

Power of One: Collaborative Planning and Execution across the End-to-End Supply Chain

Breaking down functional silos to create transparent and responsive end-to-end supply chains has long been an intractable problem, but many companies are finding success using a Control Tower concept that gets everyone working off the same plan and focused on the same outcome. Discussing this approach, and the Kinaxis solutions that pioneered it, are: Paul Bittinger, former supply chain transformation manager, Procter & Gamble (now retired); Lora Cecere, founder and CEO, Supply Chain Insights; Don Gaspari, director, global materials and inventory, NCR Corp.; and Kirk Munroe, vice president of marketing, Kinaxis.
[Run Time (Min.): 18:21]

A Gartner S&OP MarketScope was recently published (Payne, T., MarketScope for Stage 3 Sales and Operations Planning, Gartner Inc., 23 August 2012). This report focuses on evaluating S&OP vendor solutions in terms of how well they would support a full deployed global Stage 3 maturity S&OP process. Per the report:

Increasingly, companies will look to establish well-designed and effective Stage 3 S&OP processes to help manage more-global and unpredictable operations, as well as revisiting existing, lower-level maturity S&OP processes in a bid to improve their effectiveness. As companies find that their operating environments become more complex and unpredictable, the need for superior supply chain performance increases.

We believe Gartner’s vendor ratings confirms our leadership position in the market for providing customers with a modern-day solution to their modern day S&OP challenges. Today’s reasons for needing S&OP are the very same reasons S&OP needs to evolve — while the end objective of operational and financial alignment remains the same, in an environment of volatility and complexity, how you achieve that alignment (and maintain it) is very different than ever before.

Here is what we think S&OP should look like:

• Demand and supply in a single application. Use a single software solution to tie the highest level demand signals (e.g. product family forecast) to the very lowest level raw material component, while simultaneously supporting near term planning (days & weeks) and long range planning (months & years). Having all demand and supply data in one place (including data from contract manufacturers and suppliers) enables faster and more reliable plan development as well as clearer, quicker insight into the impact of changes. When the whole organization works from one data source, there is increased consensus and fewer surprises.
• Alignment between volume and mix. Make changes to the plan at the volume level and disaggregate it to the mix level, ensuring that execution of the plan is feasible.
• Inclusion of related corporate functions into the S&OP process. Tie adjacent functions like project management, profitability management or workforce optimization to the sales and operations planning process to understand and manage the cross-functional implications of your actions.
• S&OP alignment with corporate and financial goals. Ensure that decisions are made in the context of corporate targets, so when changes happen at the operational level, their impact can be seen and understood at the corporate level.
• Rapid creation of “what-if” scenarios. What-if versions of the entire sales and operations plan can be created in seconds and can be revised as needed during S&OP review meetings, thus accelerating process times. Simulations should be able to be made on any type of change — demand, supply, product, policies or assumptions.
• Continuous S&OP. Continuously monitor plans and act on events that will put the plan at risk. Respond quickly with mid-cycle adjustments as required.
• Parallel planning and collaboration. Fully integrate supply chain planning and operations personnel, so you can bring together people across the organization best able to contribute to the resolution of a particular issue into a collaborative environment. Not only does this greatly speed up the decision process, it also ensures consensus among all stake holders—internal or external to the organization.

Disclaimer:
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

I find the battle raging in the cell phone handset market to be fascinating. But even as I wrote that sentence, I realized that the sentence is incorrect because the battle is more about the business model than it is between handsets. A recent article by Gartner entitled “Worldwide Smartphone Sales Soared in Fourth Quarter of 2011 With 47 Percent Growth” (subscription may be required) confirms that Q4 2011 was a record-breaking quarter for handset shipments, especially for smartphones.

What I find fascinating about the discussion is that Nokia still dominates the overall market with a 6% lead over Samsung for all of 2011, but down from 11% in 2010. Yet the brand is tarnished because they have been slow to penetrate the smartphone market. Well, this isn’t quite true since Nokia first tried to create a smartphone market way back in the late 1990s, when one of their bricks cost about $1,000. But they were never able to create the market need with a usability and development ecosystem to drive adoption. Principally the high-end Nokia phones were designed for business users, while the consumers were left with less functional phones. I use the term “phones,” instead of handsets, deliberately because I think this is where the business models diverge.

Enter Apple. Much has been written about Steve Jobs’ brilliance since his passing, and I will not try to recreate any of that discussion here other than to recognize the merging of the hardware, operating systems, and development eco-system into a single platform delivering an unsurpassed user experience and market growth. Apple’s growth has been explosive.

Even if we look at the growth of Samsung in terms of unit sales, their growth of over 13M units is overshadowed by Apple’s growth of over 19M units. Perhaps more interesting is that within the Android camp, Samsung’s gain has been at LG’s expense. By my count, the Android unit sales increased by 18M-20M, depending on how much of the “Others” bucket can be attributed to Android handsets.

At the heart of the matter is the battle over a business model that separates out the hardware from the operating system and the applications that run on the operating system (Android), and a business model that combines all three into a single offering (Apple). Then there is Nokia that is trying to go the Android way though using a different operating system, and RIM that was the originator of the single platform but never really managed to make the transition from business to consumer device.

At first glance it would seem that the Apple model is so much more complex, and it is, but it also provides so many more revenue streams. Apple’s brilliance is in execution at multiple levels: design, marketing, and supply chain. Perhaps its greatest brilliance, which has to be attributed to Jobs, is in creating the coolness factor that has drawn so many developers to its app store. But without the good design, great marketing, and superb supply chain, the developers would have lost interest because the marketplace wouldn’t have been there. So each of the elements is self-reinforcing, almost creating a perpetual motion machine.

On the other hand, there is the Android market in which Google has separated out the hardware from the rest of the business model and has much looser control over the apps “supply chain” and sales, even though Google appears to be trying to gain more control of the hardware and app store.

Of course this is all playing out within the PC/laptop/tablet market too, where again, Apple has the edge because of a combination of design, marketing, and delivery/supply chain.

What I am really interested in following is whether the app store concept will translate into the business app environment. In truth, I’m referring more to iTunes than I am to the app store. Imagine if we could buy and sell a lot more than digital media on iTunes? But going even further, being able to use iTunes as an information brokering platform, truly making the supply chain digital.

I have no idea if Apple is even considering this, but wouldn’t this be the ultimate form of convergence?

There’s no dispute about the benefits obtainable through use of supply chain management. There’s also no question that during the economic downturn, companies relied on supply chain management to weather the storm. I must admit, however, that I am somewhat surprised by the results of a recent survey, in which respondents reported a drop in the amount of overall cost savings as well as lower increases to revenues as a result of supply chain management initiatives.

The survey, 2010 Global Survey of Supply Chain Progress, was jointly conducted by CSC, Supply Chain Management Review (SCMR), and Michigan State University, with assistance by the Council of Supply Chain Management Professionals (CSCMP) and Supply Chain Europe magazine. Twenty industries were represented in this year’s survey, and respondents included representatives from both large and mid-sized companies, with sales ranging from $250 million to over $1 billion.

One of the surprising—at least to me, anyway—findings was that when asked about the overall impact of supply chain initiatives on cost reduction over the past three years, the number of respondents answering “none” or “don’t know/not sure” grew from 13 percent in 2009 to 20 percent this year. And as a follow-up, when asked about the overall impact of supply chain initiatives on increasing revenue over the past three years, the percentage of respondents indicating “none” or “don’t know/not sure” rose from 30 percent in 2009 to 47 percent in 2010.  How should that be interpreted?  Is it actually a lack of impact, or a lack of direct measurement to understand the impact?

I am encouraged by other results (which, to a degree, are counter-intuitive to the stats above). For instance, supply chain management is largely held to be of considerable importance. In fact, 82 percent of the respondents replied that supply chain management is considered to be a core importance for their organization, and when asked how much influence supply chain management has on running the business, 52 percent replied “to a great degree”–while another 35 percent indicated a “moderate degree.” 

Supply chain management also is a logical operation for companies to use to battle the effects of the economy. Indeed, 78 percent of the participants indicated that their firms increased emphasis on supply chain management this year. Additionally, given the growing emphasis on supply chain management, it only stands to reason that S&OP is increasingly valued as well. For instance, 66 percent of the respondents reported a moderate to high degree of impact using S&OP to improve the company’s agility so it can better respond to changes in customer demand.

I believe this will be a trend that will continue for a long time to come.  SCM and S&OP are sure to grow in importance given that increasing levels of outsourcing, globalization of demand, requirements for product innovation and demand volatility combine to have a profound impact on companies’ business performance.  Supply chain is becoming known as the sweet spot for impacting competitive advantage and operational and financial success.

Reducing waste in Biopharma operations is a key initiative for many supply chain leaders across the industry. High product values, highly regulated operations, limited product shelf-lives, and increasing focus on network effectiveness, make this a skillful balancing act to get right.

Join next week’s live SCMWorld webinar to learn the methodologies and systems that are enabling some of the most advanced Biopharma supply chains to adapt and respond to changing customer demands, reduce inventory and improve financial performance while cutting waste and maintaining high service levels.

This presentation, which includes speakers from Amgen, Aberdeen Group and Kinaxis, will examine all of these issues, and give participants a framework of processes, tools and examples to help drive significant improvements within your global operation.

It’s one week away, sign up today!  Details below:

When: Wednesday September 15th 2010
11:00 (New York), 16:00 (London), 17:00 (Paris)

Speaker: Chris Roth, Director Corporate Planning, Amgen
Speaker: Elisabeth Kaszas, Director Supply Chain, Corporate Planning, Amgen
Moderator: Nari Viswanathan, VP Supply Chain Research, Aberdeen Group
Presenter: Trevor Miles, Director Industry Applications Marketing, Kinaxis

Our very own John Sicard will be joining Angel Mendez, senior vice president, customer value chain management at Cisco Systems for a presentation on Next Generation Value Chain Best-Practices.

As part of the 2010 CSCO Summit, the free-to-attend virtual event taking place on June 15th and 16th, 2010, John and Angel will co-present the track entitled, “Creating the Next Generation Value Chain to Deliver Customer Value,” on June 15th, 2010 at 9:00 EST (14:00 GMT).

Attendees will learn about Cisco’s supply chain transformation from a cost-centre to a competitive advantage. In response to rapidly shifting business demands, Cisco has focused on integrating previously siloed back-to-front end operations into a single global operations group that covers the extended value network, from downstream suppliers through to upstream customers.  This session will provide critical insights on the lessons learned and the key focus areas to consider.

The CSCO Summit, a two-day event consisting of an agenda of 11 presentations, brings together an influential group of global supply chain, operations and procurement leaders to learn and share best practices around the critical factors driving strategic supply chain and operational agendas across multiple industry sectors. 

To register for this free event, please visit:
http://cscosummit.raptureworld.co.uk/register

Most manufacturing enterprises have a formal approach to planning and executing production.  However, it seems that at a practical level, there is some combination of planning and executing as well as expediting (working to recover to meet late or potentially late demand).

I think that most of us would agree that ideally, we would have a sound plan where there is accurate demand (forecast and/or actual), adequate resources and capacities are in place both in-house and at suppliers, and all the supply chain is on board and executing to the plan.  In reality, there is a lot of expediting that occurs, at least in my experience (the extent of which depends on the industry and the complexity of the products and the supply chain.)  A lot of manufacturing companies even have a formal position with a job title something like “Material Expediter” or “Production Expediter” (although the actual job descriptions can differ from what I am describing).

What I have found in working with some customers who do a lot of expediting, is a basic lack of maintaining data accurately in their formal ERP/MRP system.  A lot of the “planning” tends to occur off-line in Excel spreadsheets or other tools.  This may work in some isolated areas, but from an overall enterprise perspective, much of the supply chain does not have visibility into these off-line plans.  I correlate this to Project Management on a large project where there is no up to date project schedule that the entire project team can work to.   Team members work tasks that they are directed based on meetings, phone calls and other types of somewhat ad-hoc communication. 

This can be somewhat effective, but not having the formal MRP system reflecting the current plan disables the capability to orchestrate the entire supply chain and efficiently execute the plan.  This leads to a lot of expediting rather than planning and executing.  Why don’t we always keep the formal MRP system up to date?  There are lots of reasons, including:

1. too time consuming;
2. off-line tools are easier and more flexible; and
3. certain processes or functionality is not supported in the formal system.

An example of # 3 above, is provided in a blog post from a colleague of mine called Do YOU have enough Supply?   This describes a process to allocate limited supply to demands that recently, seems to becoming more prevalent in certain industries.  A process like this may not be supported in the formal MRP system, so it is likely done off-line.  Changing or enhancing the MRP system to support new functionality generally takes some significant time and money, and usually has to compete for priority with other fixes and enhancements needed.

I know that many of you will agree that this expediting approach is far from ideal, and also may say “not us, not me”.  But I also know from experience that this occurs and sometimes with some very practical reasons.  In situations like this, what can help solve the problem is a system with capabilities in a couple of key areas:

1. Detect and report data integrity issues in the MRP system for clean-up
2. Easily configurable to support additional planning functionality
3. Available for sharing and collaboration across the supply chain

I would like to hear any insights, experiences and suggestions you may have regarding this expediting versus planning situation.