Posts Tagged ‘Supply chain management’

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I had the opportunity last week to sit down with Rob Bell, director of service operations at Kinaxis, to talk about our new white paper entitled “Four Essential Requirements for Today’s Supply Chain Management Solutions: On-demand Services Uniquely Qualified to Deliver.”  Rob has an interesting role relative to this topic.  He’s been supporting global manufacturers and their supply chain management processes for years, he runs IT at Kinaxis and he manages our on-demand service operations.

If you’re unable to view the above view, try this link: Essential requirements for today’s SCM solutions.

The Business Courier of Cincinnati has an article entitled “P&G blueprints future supply chain“ that says the company is undergoing the most aggressive expansion in its history, with plans to build 19 production plants over the next four years.  Before you check to see if the date on the article is 2004 or something, I can tell you its current (December 12th to be exact).

Why would a company be doing this in the midst of this potentially historic downturn?  Because P&G takes a long-term view and uses a downturn to strengthen its position in anticipation of renewed growth.  According to P&G, the plan is necessary if they are to reach the additional 1 billion consumers it intends to capture by 2010.  It now reaches 3.5 billion people, of 6.5 billion worldwide.

Here’s a great quote.  “What we’re really creating is a road map,” said Keith Harrison, P&G’s global product supply officer. “What speed we’re driving down that road is a different question.”

This is an excellent insight into what makes P&G P&G.  They have a long-term view and they never take their eye off of those goals.  They may speed up or slow down depending on current conditions, but they never lose sight of that end goal.

Is your company doing the same?  I’ve had the fortune of speaking to some P&G executives in the past, and I can tell you they are an impressive company.  No matter what industry you’re in, I think P&G should be a benchmark company when you look at best-in-class supply chain management practices.

In the “finally some good news” category, LogisticsManager.com has an article entitled “Demand for supply chain managers set to soar.”  The article states that “Supply chain managers will be among the most sought after professionals in 2009 as companies target efficiency savings, according to Wayne Brophy, head of recruitment consultancy Cast UK.”

While the article focuses on the UK, you would have to think the same logic would apply elsewhere…or so we hope.  What is happening in your company?  Are you going to be increasing headcount in supply chain management?

Among the many interesting things that Larry Lapide, demand management research director at MIT, covered at our recent Kinexions user conference, were his comments on balanced strategic supply chain management objectives.   Larry was talking about the critical need to align business objectives and supply chain management objectives when he put up the following graphic.

Larry’s comment was that every company’s supply chain management strategy fits somewhere within this triangle.  For example, WalMart aligns with the supply-side strategy since their goal is clearly to be the low cost provider.  A company with a goal to be the market share leader would align itself with a demand-side strategy and a company who’s goal it was to deliver the highest profitability and return on assets (ROA) would align itself with the supply-demand strategic supply chain management strategy.

But, Larry’s most critical point was that it’s essential that a company’s placement aligns with their business strategy.  You don’t want a business strategy focused on market share leadership but a supply chain management strategy focused on supply-side strategic objectives.  Unfortunately, it happens too frequently.

And, Larry cautions about sitting in the middle.  If you waffle in the middle, you don’t differentiate yourself in the market place.  You must pick a supply chain management strategy to excel at, and one that is aligned with your strategic business objectives.

Are your business and supply chain management strategies aligned?  Which one are you?  I think this is a good tool for company’s to pause and reflect on since the implications of mis-alignment are huge.

There is a very good article entitled “Planning the factory of the future“ at IndustryWeek that highlights the three essential trends that are the driving forces behind tomorrow’s factories – globalization of the supply chain, increasing product complexity, and changing demand patterns.  These trends are working in combination to challenge supply chain management with global operations, multiple partners, complex processes and products, short product lifecycles and demanding consumers.   This requires integration, on a global basis, between functions and entities like never before.  Adaptability and flexibility become key as you try to navigate the NPI process and a high-mix manufacturing model as the consumer market wants ever more choices. 

While I believe companies are becoming wise to the need for a different approach to supply chain management, the technology to enable this change is the fundamental stumbling block.  While traditional supply chain planning (SCP) solutions have made tremendous strides in improving planning, the “real world” challenges of highly volatile demand, shorter product life cycles, unexpected supply disruptions and complex outsourcing & supplier relationships are driving rapid change and increased complexity in supply chain operations. The result is that today’s enterprise applications are often out-of-sync with reality and can’t support the level of agility that companies need  today or in the future.  This is actually the theme of one of our recent white papers “Why you need to re-evaluate your approach to supply chain planning.”    The paper highlights the key capabilities that a “factory of the future” needs (including enterprise-wide supply chain visibility, alerting, what-if analysis and scorecarding.)

Came across this good post entitled “Companies don’t compete; supply chains compete” which attributes this quote to the CIO of Nortel.  I’m not sure you’d get everyone to fully agree with this given how many other pieces there are to the puzzle, but I think it’s more true than not.  Worse yet, I think there are way too many important people that wouldn’t believe this at all.

I think in many companies supply chain management is that essential component of the machinery that makes a company function that is frequently overlooked.  A case in point is Apple.  Apple is justifiably renowned for it’s product innovation/design and marketing prowess.  But, Apple wouldn’t be Apple without excelling at supply chain management.  Yet, nobody talks about that…unless something goes wrong.  In a rare behind-the-scenes look, there was just recently an article published talking about the “operations wonk” that is second in command at Apple and responsible for their supply chain excellence (see Supply chain excellence at Apple).  I’m sure nobody outside of Apple and his direct family knows that Tim Cook is that person.

As more and more companies compete on a global basis and have supply chains that span the globe, your competitive position in the market increasingly does depend on your supply chain management prowess.  Excellence in supply chain management dictates significant aspect of customer satisfaction, operating performance (margin, inventory, etc.) and many other key performance indicators (KPIs) that determine the health of your company.  And these are critically important because they determine the amount of available cash and investments you can make in launching new products, opening new markets, etc.

It’s unfortunate that supply chain management too frequently gets viewed in a tactical way at the most senior levels of many companies.  I think the key to raising the awareness level of the contribution that excellence in supply chain management can deliver is to tie the impact directly to the key performance indicators that the top executives monitor and care about the most.  This is actually a part of the methodology AMR Research uses in determining their annual Supply Chain Top 25 list and they’ve been able to demonstrate the direct correlation between supply chain excellence and these KPIs in both good times and bad.

In case you didn’t see this…

Gartner is conducting a supply chain management survey to understand supply chain dynamics within end-user organizations and, specifically, technology decision making.  Participants that qualify and complete the survey will receive one of five Gartner research reports:

• Evolving to Transportation as a Global Shared Service
• Cost Cutting in Supply Chain Management Applications
• Supply Chain Analytics: Driving Toward Product Performance Management
• Where to Source Technology for Enterprise Planning
• 2007 Supply Chain Management Survey Results

The survey should take between 10 and 15 minutes to complete.  You can access the survey here.

I came across an article entitled “A plan to fix the U.S. auto industry” that I found interesting in large part because it spoke to supply chain management’s role in solving the critical problems the industry faces.  I added a comment to the site and have copied it here as well.

## My Comment ##

I like the fact that you focus on some of the supply chain challenges.  Clearly, the first goal is building products consumers want - high quality, fuel efficient, the right styling, etc.  The Big Three have a long way to go there.  But, as you accurately pointed out, the supply chain is an integral part of the system that can’t be overlooked.

Toyota has revolutionized the automotive industry with their adoption of lean manufacturing practices that reverse the conventional flow and focuses on eliminating waste in the process.  Reversing the flow means that instead of “pushing” products out (you build them and push them out to dealers), you build based on customer “pull” (a customer buys a car and that sends a signal back up the supply chain to build another one, which signals to buy the parts, etc.). 

By “leaning out” their processes they can dramatically reduce inventory throughout the supply chain.  The other thing Toyota (and most Japanese/foreign automakers) has led in is its relationship with suppliers.  Like many industries, automotive manufacturing has become an exceptionally outsourced process with parts coming from many suppliers (years ago, Ford, for example, would make all the parts and do the final assembly.  This has changed radically) that span the globe.  Toyota treats their supply chain partners as just that, partners.  Toyota invests substantially in training their partners on their lean techniques and ensuring that they are fully aligned.  At the end of the day, Toyota knows that their supply chain is only as strong as the weakest link and that, despite heavily outsourcing the manufacturing of key components, it is the Toyota name on the end product and, thus, they are fully accountable for the end result.

The Detroit automakers, on the other hand, have taken a very different approach.  They generally treat suppliers as commodity providers of services and focus first and foremost on the supplier that can provide the part(s) at the lowest cost.  It’s not as much as a partnership as it is a “buyer-seller” relationship at arms length.  The resulting differences are profound.

As your article accurately points out, one aspect of reinvention that the Big Three need to face is how the supply chain fits into their overall strategy.

You can see more on this discussion here: “What’s your relationship with your suppliers?“

This morning we put out a press release announcing that Pioneer has selected Kinaxis RapidResponse for dynamic demand and supply chain management.  Pioneer is a global brand headquartered in Tokyo.  Like many companies, Pioneer is facing a more challenging supply chain management environment that requires them to better align supply and demand while reducing excess inventory and providing early detection of shortages.

######

Pioneer Corporation Deploys Kinaxis RapidResponse for Dynamic Demand and Supply Chain Management
Leading Electronics Manufacturer Chooses RapidResponse to Maximize Customer Responsiveness and Reduce Inventory Risk

Ottawa, Canada, November 18, 2008 – Kinaxis™ Inc., provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with the collaborative and integrated demand-supply planning, monitoring, and response capabilities required in today’s complex and dynamic world, today announced that Pioneer Corporation’s Mobile Entertainment Business Group – the leading electronic manufacturer’s most rapidly growing business unit – will deploy RapidResponse.

Headquartered in Tokyo, Pioneer provides mobile entertainment products to major automotive customers in Japan, Europe and the United States from its primary manufacturing facility in Asia. Pioneer selected RapidResponse in place of an extension to its legacy supply chain planning solution, because of its ability to:

• provide multi-enterprise supply chain visibility,
• perform detailed analysis based on real-time Materials Resource Planning (MRP) calculations and
• support worldwide Sales & Operations Planning (S&OP) initiatives.

Pioneer was looking for a solution that could allow them to better align supply and demand, while reducing excess inventory and providing early detection of shortages. With deep supply chain visibility into manufacturing operations and real-time “what-if” scenario simulation capabilities, RapidResponse empowers Pioneer to determine the impact of changes within the supply chain and respond quickly and confidently, meeting both customer and corporate objectives. RapidResponse is projected to reduce both inventory and expedited shipment costs.

“As the market for mobile entertainment products continues to prosper, the stakes are high to provide on-time delivery and exemplary service to our global leading automotive customers,” said Hiroshi Tatsuta, General Manager, Production Management Department at Pioneer Corporation. “We chose RapidResponse for its unparalleled ability to enable us to keep up with ever-evolving demand patterns and in turn, better serve our customers.”

“The ability to make informed supply chain related decisions on the fly is integral to maintaining the competitiveness of a company – even more so for those industries that are experiencing rapid change,” said Randy Littleson, vice president of marketing at Kinaxis. “RapidResponse uniquely combines supply chain visibility of demand and supply within a single solution, with real-time analysis and simulation capabilities that will help Pioneer to thrive within this fast-growing industry.”

The deployment, which is expected to be completed by early 2009, is being performed in conjunction with Kinaxis partner, and leading Systems Integrator, EXA Corporation. Upon completion of a successful implementation, RapidResponse is expected to be integrated into other Pioneer divisions.

About Kinaxis
Kinaxis™ RapidResponse is a single on-demand service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. RapidResponse embraces human judgment to enable planners and front-line responders to handle unpredictable changes. Global leaders such as Casio, Honeywell, Jabil, Qualcomm, and Raytheon use RapidResponse to achieve breakthroughs in sales and operations planning (S&OP), demand management, supply management, and supply chain risk management. The results are superior customer service, improved operations performance, and a competitive market advantage. For more information, visit the Kinaxis web site at www.kinaxis.com or the company’s blog at www.21stcenturysupplychain.com.

In a recent Supply Chain Management Review article, John Fontanella, Noha Tohamy and Wayne McDonnell of AMR Research articulated the reasons why it is a good time to invest in supply chain management technology.  According to the article, AMR feels “there is no better time than now to invest in technologies that yield greater transparency and control within the supply chain.”  AMR provides recommendations on how to use supply chain management (SCM) technologies to protect and enforce your company’s best interests.  The following are a couple of examples:

• Strive for transparency in all your supply chain activities.
• Prepare your company for the unexpected.
• Measure your company’s performance against goals.

As a vendor of supply chain management solutions, of course we agree! :-)  But, I’ll leave the AMR experts to explain their reasons in the article.

What I will add to the discussion, however, is the huge advantages of selecting an on-demand service to solve your supply chain management problems vs. the traditional legacy on-premises solution.  An on-demand service means there are no hardware and services fees to be paid, you subscribe to an on-demand service instead.  This means the ongoing support and maintenance of that service are taken on by the vendor rather than requiring your IT staff to do these tasks.  Things like upgrades are done by the on-demand service provider rather than your IT staff.  These benefits are summarized here and here.

There’s an opportunity in tough economic times to consolidate custom supply chain management solutions (spreadsheets, custom applications, Access databases, etc.) into a single on-demand service capable of solving your supply chain managemnt business challenges.  The right solution can help address one of the burning priorities today - reducing supply chain costs.