Posts Tagged ‘Supply chain risk management’

Companies passionate about Integrated Business Planning. Supply chain risk management…not so much?

Published July 18th, 2013 by John Westerveld 3 Comments

Supply Chain Digest’s graphic of the week last week is from the 2013 Gartner Supply Chain Study.  It shows various initiatives that supply chain leaders feel passionate about like integrated business planning, government mandates, talent management, globalization initiatives, supply chain risk management and supply chain redesign.

Passion Index for the 2013 Supply Chain Top Priorities

Passion Index for the 2013 Gartner Supply Chain Top Priorities supply chain risk management

Two things really stood out to me: Integrated business planning is a very high priority and supply chain risk management is a relatively low priority.

Why does supply chain risk management score so low?

I can certainly understand why integrated business planning would score highly; it is the function within business that identifies strategic corporate objectives and aligns the company in achieving those goals.  What I (and the report author) found confusing is why supply chain risk management scored so low overall.

Perhaps, we have advanced far enough in supply chain risk management that it is no longer a concern (In my opinion, I don’t think so though…). Potentially, we think that there won’t be another Japanese tsunami or floods in Thailand or garment factory disasters in Bangladesh.  It seems to me that these types of disasters are getting more frequent, not less. Every time I turn on the news, it seems there is a story that has a global impact.
The only consolation I take from this is that any good integrated business planning process would include supply chain risk management as one of the factors considered in any decision made.    One can only hope so anyway.

What are your supply chain passions for 2013?

Why do you think supply chain risk management scored so low in this study?

Comment back and let us know!

 

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Posted in Supply chain management, Supply chain risk management


Changes to Apple’s Supply Chain: Reading The Tea Leaves

Published February 11th, 2013 by John Westerveld 0 Comments

Apple's Supply Chain

I saw an interesting article on Fox Business that talked about how Apple has come to the realization that it needs to regain control of its supply chain. “What?” you say. “Apple is known for its fantastic supply chain”. And you’d be right… if the focus is on delivery metrics or even costs.  Instead, in this instance, the focus is on ensuring that the company’s ethical and environmental policies, as described in Apple’s supplier code of ethics, is being followed.

Apple has recently come under fire due to allegations that its suppliers engage in discriminatory working practices, such as underage labor, poor working conditions, long hours etc. While Apple is often singled out in these cases, this isn’t just a problem that is unique to Apple’s supply chain. These contractors’ supply products to many other companies, but Apple fairly or unfairly, gets targeted in news reports because it is one of the largest and most recognized brands.

Despite the fact that the companies perpetrating these infractions are completely independent from Apple, it is Apple’s products they are manufacturing and consumers ultimately see Apple as responsible. The point is that your suppliers are an extension of your company, and as such, can have a major impact on your image.

Just before Christmas, Apple made an interesting move; it announced that it will be bringing a portion of its manufacturing back to the US.  Rumour has it that it will be the Mac Mini production that will be on-shored and that Foxconn will be handling production in the US for Apple. While many have interpreted this as a “marketing” move, I have to wonder if it isn’t intended to address some of the ethical issues that Apple has been struggling with in its supply base.  Even though they will still be outsourcing the production of this product line, making this product in the US will undoubtedly make it easier to monitor production processes.

While the Mac Mini sold 1.4 million units in 2012, its sales are dwarfed by sales of iPhones, iPads and iPods.  Even the MacBook Air sold 4 times what the Mac Mini sold.  So why is Apple reportedly planning on moving the Mac Mini?  Why not something with more sales?  It actually makes sense if you think about it from a supply chain perspective.  Apple makes the point that one of the key reasons they still manufacture in China is because North America has lost the engineering and manufacturing skills required to manufacture complex electronics. If you take this at face value, what product would you choose to manufacture in that environment?  The Mac Mini has no display, no touch technology, simpler assembly (I assume putting a Mac Mini together must be simpler than an iPad or MacBook).  Also the lower volumes will make the complex and risky job of moving production easier.

I’m glad to see that Apple is taking steps to meet their supplier code of ethics. Despite some of Apple’s recent (and probably undeserved) problems in the stock market, they are one of the world’s largest manufacturers, and as such, have a significant influence on what is deemed acceptable. By making this move, it seems that Apple is taking a step to set the example that the unethical treatment of workers is unacceptable.

So, what is next for the Apple supply chain?  I can’t help but think that moving manufacturing of one of the product lines to North America is going to be seen by Apple as a trial. If it is successful, we will likely see the manufacture of more products moving to North America.  If not, we may see production quietly move back overseas.  What will Apple base this decision on?  My guess is that it will be the following factors:

  • How difficult is it to ensure that Apple’s supplier code of ethics is being followed?
  • How much easier is it to manage supply planning given the closer location and shorter lead times?
  • How difficult is it to locate and / or train people to work in these facilities – including manufacturing, engineering, planning and support staff?
  • What additional goodwill does Apple experience by being able to claim “Manufactured in America”…and what impact will this have on sales?
  • And finally, what is the impact on margin?

My hope is that Apple decides to move even more of their product to North America…but I admit, as a (not too) old manufacturing guy, I might be biased.

What do you think?  Is made in America (or Canada…or where ever you live) a factor in your buying decisions?

 

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


On Demand Webcast, Supply Chain Control Tower: Concept and Impact

Published December 3rd, 2012 by Melissa Clow 0 Comments

Last week, Kinaxis participated in a webcast with Aberdeen Group on the topic of “Supply Chain Control TowerOn Demand Webcast, Supply Chain Control Tower: Concept and Impact: Concept and Impact”.

Bryan Ball, Vice President, Supply Chain Management, Aberdeen Group and Kirk Munroe, Vice President of Product, Kinaxis, spoke on the topic of “Supply Chain Control Tower: Concept and Impact” and we were lucky enough to record his presentation.

The recorded presentation is now available; in addition, the slide deck is available for download.

In the presentation you will hear:

This on-demand webcast will address the concept and impact of Control Towers in the context of supply chains. A definition will be offered in terms of obtaining the research data and the findings will be presented utilizing the Aberdeen PACE methodology. In addition to basic findings the metric of “time to problem resolution” is presented as means of measuring the effectiveness of control towers.

A comparison of those with control tower capabilities to those without those capabilities will be made with t he intent of defining a summary list of possible technology elements required to enable a complete control tower solution. The fewer the elements involved in the complete solution the more effective the control will likely be due to the latency removed between separate pieces of the overall solution. Takeaways and recommendations will be made by organizational maturity class along with summary comments and direction.

 

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


Supply chain heroes: Observations from the LogiPharma event

Published October 12th, 2012 by John Westerveld 1 Comment

I spent the last several days in Philadelphia at the LogiPharma 2012 event.

The event was held at the Loews hotel on Market street, a refurbished historic building, which was the former home of the Philadelphia Savings Fund Society (PSFS), the first savings bank in the United States. Many elements of the hotel harken back to the banking heritage including a huge vault door in the lobby.   But this isn’t John’s historic building blog.  What about supply chain you ask?Supply chain heroes:  Observations from the LogiPharma event

We’ve been to several of these over the past years.  One thing that we’ve noticed is that we are seeing more supply chain interest at these events.   As we talked to the various people who came by the booth, it isn’t surprising why.   Pharma has several unique supply chain challenges.  Combine this with more and more government regulation, rules that change with geopolitical borders, and you can understand why we were so busy at our booth.

Cold chain – Many pharmaceutical require that the product be maintained at a specified temperature throughout the manufacturing life of the product.  From API (the active ingredient in the drug) through to delivery into the customer’s hands, the product must maintain a specific temperature –or it is ruined

Expiry – Every drug I’ve seen has an expiry date associated with it. Also each country has different regulations that restrict how close to the expiry date you can sell the product.  One country may allow you to sell a product within 6 months of its expiry date, other countries may be stricter and only allow sales up to  18 months before expiry

Long lead times – Many pharmaceuticals especially biologically derived drugs have extremely long lead times.  The active ingredient must be grown and as such will take months for a batch to be ready.   One company we talked to was telling us of a product that took 6 months to produce, had a 2 year shelf life and had to be sold at least 12 months before expiry. (Yikes!)

Yield –Traditional supply chains consider yield to be a percentage of production.  If I make 100, 3 may be defective.  However, many pharmaceuticals are produced in batches.  If the batch isn’t good, 100% of the batch fails and you have to start from scratch – combine this with a 6 month lead time and you have a scheduling nightmare.

Patent expiry – Imagine that you have a very lucrative product.  Sales are good, you are operating at capacity and are making very good money.  Now imagine that a competitor comes along, uses your design and makes a competing product at ½ the price. This happens all the time to pharmaceutical companies when the patents run out and generic drug companies are allowed to start production.   If not planned for, this event can have a significant impact on capacity utilization and revenues.

FDA approval – Introduction of a new drug is serious business. Every aspect of the design and manufacture of a drug must be approved before a drug can be used.  Even if a company decides to manufacture the drug in a new location, the new location must be approved.    If demand for a drug is higher than anticipated, you can’t simply offload manufacturing to a new supplier – they must be approved for that drug in that country.  Finally, if that approval is delayed, you cannot manufacture that drug until approval is received.

There are more aspects, but I think you can see why pharmaceutical supply chain is complex.   But one thing to remember is that in many cases, these are lifesaving drugs.  If the customer doesn’t get their product, they can become very, very sick and perhaps even die.  Adds a whole new dimension, doesn’t it?

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


Sept. 12th Webcast: “The New Brushstrokes of Supply Chain Planning”

Published September 11th, 2012 by Melissa Clow 0 Comments

webcastI’m really excited to tell you about an upcoming webcast hosted by IE Group “The New Brushstrokes of Supply Chain Planning”. The presenters include Lora Cecere, Founder, Supply Chain Insights and Trevor Miles, vice president, thought leadership, Kinaxis

The New Brushstrokes of Supply Chain Planning
September 12, 2012
10am PST/ 1pm EST/ 6pm GMT

Full details below – register today – less than a day away!

Empowering Supply Chain Leaders to Paint Outside Traditional Lines
Years ago, in an attempt to explain supply chain planning to the potential buyer as well as to identify and rate technology vendors, the analyst community went to work creating supply chain application areas, defining taxonomies, outlining frameworks…

The intent was to provide order and clarity; but what was built ten or more years ago, while still widely used, is far too confining. There is no room for innovation when you are trying to stay within a box.

In this webcast, Lora Cecere —long-time analyst and recent founder of Supply Chain Insights — will outline eight market shifts that are moving us away from the traditional view of supply chain management. Supply chain planning is being redefined. The business problem has changed. And new technologies can enable modern approaches that will:

  • leverage redefined architectures, new forms of analytics and emerging applications;
  • support processes that are constructed from the customer back to the enterprise’s supply chain, and importantly;
  • focus on value-based outcomes.

Join this webcast to understand how and why Lora is challenging the hard and fast lines that defined the traditional functional buyer of enterprise applications. And most notably, learn where Lora thinks we should all be painting next.

Registration: https://theiegroup.webex.com/ec0606l/eventcenter/enroll/register.do?formId=0&formType=0&loadFlag=1&siteurl=theiegroup&confId=661784227

 

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


Engagement Platforms need Responsibilities

Published August 30th, 2012 by Trevor Miles @milesahead 0 Comments

The new hot topic from the proponents of social, of which I am one, is ‘engagement platforms’. In a blog from August 28th titled ‘ The New Engagement Platform Drives The Shift From Transactions’ Ray Wang states that:

If Business Value And Outcomes Are The Goal, Then We Need An Engagement Platform For The Enterprise

The arrival of engagement platforms does not signify time to throw out the transactional systems. In fact, those systems provide the foundation required for engagement. The engagement layer exposes transactions and allow for deeper interaction and richer sources of information. However, the transactional systems lack the ability to support engagement. …While crafting the right strategy should be designed prior to any technology selection, once completed, the technology to support the strategy does not exist out of the box from ANY solution provider. Unfortunately, the technologies to achieve engagement remain disparate and hodge podge.

While I agree with what Ray writes, there are two critical capabilities that are needed to make a solution relevant to the enterprise space. The first is to take social network concepts and convert them into a responsibility network. In business, specific people need to act, so messages/alerts need to be directed, not broadcast to everyone. Secondarily there is the need to separate the urgent from the important, to increase the signal to noise ratio. In other words there is the need to be able to evaluate the business impact of a piece of information. This was captured by @tdeballion in a tweet on Ray’s blog.

engagement platform

It is that ‘why, who, and how’ that is so important in the enterprise, particularly for Operations and Supply Chain. For example, a supplier may decommit from an agreed delivery date. Who needs to know and why? The answer will depend on each person’s responsibility. Clearly the purchasing agent should be notified. Who else? Well, that depends on the impact the late delivery has on the rest of the supply chain. If it is going to mean that a production plan needs to be revised then someone in manufacturing needs to know, but whom? How do you determine the person to tell when your supply chain is outsourced? If the production plan needs to be revised, is there a revenue and customer service issue? Which customers are affected? Who should know about the revenue impact and who should know about the customer service impact? As I commented in 2011 in a blog titled “Who should know?” The key to the use of social networks in the supply chain, tremendous value is added by determining:

  • What are the downstream and upstream impacts?
  • When will these occur?
  • How much do these impact performance metrics such as revenue, customer service, equipment utilization, etc.?
  • Who needs to be informed and what actions do they need to take?

What is also required is a collaborative environment in which the people impacted and responsible for taking action can evaluate different scenarios to determine how to overcome the issues at hand. They need to be able to run rapid what-if analysis to determine the operational and financial impacts of a decision in order to make trade-offs across competing function and organizational metrics.

We call this an Operations Control Tower, in which orchestration across multiple functional boundaries is a requirement.

To be fair to Ray, he does address some of this in his blog. The system capabilities (full descriptions here) Ray identifies are:

1. Multi-channel bi-directional sensors.
2. Decision management and analytics.

3. Context engines.
4. Complex event processing (CEP).
5. P2P architectures.
6. Interaction histories
7. Business process management (BPM) and adaptive case management (ACM).
8. Master data management (MDM).

Reading through my description of the supply decommit you can see how many of the systems capabilities are used to satisfy the business problem, for particularly P2P Architectures, Complex Event Processing, and Adaptive Case Management. In reality probably the only less relevant capability is sentiment analysis, but the closest Ray comes to responsibilities is in his description of P2P Architectures.

I feel that we also need to describe why this is happening and therefore why engagement platforms are of business value. Ray takes it for granted that these are trends without explaining the business context. I am sure he is aware of the underlying trends. He just doesn’t state them in his article. In this context Accenture published a very interesting piece recently called “Corporate Agility: Six Ways to Make Volatility Your Friend” in which they refer to my all-time favorite a Harvard Business Review article by George Stalk of Boston Consulting Group called “Time – The Next Source of Competitive Advantage”. The key passages in the article in terms of business drivers are:

GE’s CEO Jeffrey Immelt nicely summed up his team’s perspective on the need for agility: “When the environment is continuously unstable, it is no longer volatile. Rather, we have entered a new economic era.. . . Nothing is certain except for the need to have strong risk management, a lot of cash, the willingness to invest even when the future is unclear, and great people.”

To be sure, the rise of volatility and market turbulence merits far more attention to getting risk management right. But there is—or should be—more to it than that. Accenture has found that several high performers view ongoing uncertainty as non-stop opportunity.

In other words, increased demand and business volatility is requiring a different way of operating, which in turn makes many of the technology trends Ray highlights attractive as process enablers. Accenture summarizes the process needs, and therefore business needs, as:

    1. The strategic lens: Opening up more options

 

    2. The leadership lens: Ensuring that agility starts at the top

 

    3. The organizational lens: Overcoming “transformation fatigue”

 

    4. The market lens: Sensing fast and responding faster

 

    5. The operational lens: Avoiding the “lean is good, leaner is better” trap

 

    6. The financial lens: Saying goodbye to the annual budget

 

 

Above all else these require the ability to know sooner and act faster, with confidence, all leading to visibility, agility and alignment. More explicitly this requires:

  • Contextual visibility – what does it mean and who should care? In other words, insight.
  • Process agility – every second we give back to the physical supply chain by making
    decisions more quickly provides flexibility that increases exponentially·
  • Value alignment – which is all about trade-offs because if people/functions/orgs cannot see what is in it for them they will undermine the decision.

I’m very excited about all these trends. It is the fruition of so many broken promises over the past 15 years since functional supply chain solutions such as demand planning and factory planning first because popular. Finally there is technology that comes close to matching the vision of end-to-end value chain orchestration. It isn’t correct that, as Ray writes, “the technologies to achieve engagement remain disparate and hodge podge”. Not in the supply chain space anyway.

 

Posted in Supply chain collaboration, Supply chain management, Supply chain risk management


Minimizing the Distraction of a Potential Black Swan

Published August 24th, 2012 by Michael Smith 1 Comment

In today’s day and age we have been conditioned by the media to fear the unexpected. We are bombarded with “Breaking News…” tickers on our tablets and TVs and trending topics on Twitter. A tsunami hits South East Asia. Are you prepared for the next one that might hit North America? A volcanic eruption leaves large parts of Europe covered by a cloud of smoke paralyzing air travel. Which volcano in the world will blow next? A financial meltdown with numerous major financial institutions forced out of business. What lending institutions can you still trust?

I recently read an article by Scott H. Thompson about a term coined by Nassim Nicholas Taleb to represent these unforeseen events. “ The Black Swan ” theory highlighted three main characteristics:

1) It was not predicted, meaning it came as a surprise (to the observer)
2) The event has a huge, widely-felt impact
3) Even though the event was not expected or predicted, human nature causes the observer to believe that the event was perfectly predictable and foreseen.

All of us who work with supply chains for a living are no different. We have been conditioned to fear unpredicted natural disasters and unforeseen events. When in reality the things in a supply chain that can often cause the most damage to financial results, for a business, are the day-to-day challenges of supply and demand balancing that just aren’t managed properly. These may include a labor disruption in a manufacturing plant, a power failure in a supplier’s facility, the rising pricing of fuel and the ever fluctuating currency exchange rate. These less sensational yet complex challenges are often a huge bottleneck in the supply chain.

It’s obvious the probability of identifying these more mainstream events in the supply chain is much higher than trying to predict the next “Black Swan”. How organizations respond to these supply chain challenges or disruptions is important. However, “response management” can also be viewed as passive or too reactive. Companies who balance supply and demand the best usually don’t wait to respond, but are running simulations of various ‘what-if’ scenarios related to high probability events.

black swan

The element of predictive or what-if analysis becomes a powerful capability when evaluating potential disruptions in the supply chain. The concept of a Control Tower to oversee all supply chain processes becomes a powerful asset to assess the situation and compare multiple scenarios to devise the best course of action.

So the next time an over-zealous supply chain software marketing or sales person tries to invoke fear through a “Black Swan” event, tell them you are more interested in learning how they can help you manage the “White Swans” better.

Posted in Control tower, Control Tower Concepts, Miscellanea, Supply chain management, Supply chain risk management


The Late Late Supply Chain Show’s Panel Discussion At The Gartner Supply Chain Conference

Published July 4th, 2012 by Melissa Clow 0 Comments

Gartner held their 2012 Supply Chain Executive Conference in Palm Desert, California a few weeks ago. We were lucky enough to host our “LATE LATE SUPPLY CHAIN SHOW” and record the panel discussion to share with our readers.

We had a special host for the program, renowned supply chain thought leader Roddy Martin, Sr. VP Global Supply Chain at Competitive Capabilities Int.  The expert panelists included, Shellie Molina, VP Global Supply Chain at First Solar, Robert Reinckens, Sr. Partner at Business 1st and Trevor Miles, VP Thought Leadership at Kinaxis.

During the session the panel discussed the emerging trend of supply chain management control towers. In particular, focusing on concepts, components and consequences of investing in these control towers to ensure complete visibility and orchestration across all demand and supply initiatives.

Hear first hand how First Solar’s Shellie Molina discusses how the visibility across their extended supply chain is crucial to the ability to effectively plan, monitor and respond to continuous changes across key processes in the supply chain.

Check out the LATE LATE SUPPLY CHAIN SHOW below or download the presentation slides.

late late supply chain show

 

 

 

 

 

 

 

Posted in Control tower, Control Tower Concepts, Demand management