Posts by CJ Wehlage

Supply chain data: Bad data delivered faster is still bad data, and leads to bad decisions

CJWehlage

Supply chain dataWhen approaching the concept of knowing sooner and acting faster, and the value of concurrent planning, the most common feedback I get from supply chain executives is:

“But my data is bad… I mean, really bad.”

It doesn’t matter if they’re high tech, consumer packaged goods, aerospace, automotive, or life science. The answer is so often the same. And trust me, I’ve seen some companies whose data is worthy of a top 10 list of the worst data around, including companies where:

  • A bill of material is only 10% accurate
  • The only inventory records are ‘inventory receipt date’ and ‘inventory ship date’
  • Routings are done in 20+ Excel spreadsheets

At Kinexions ’17, our annual user conference, we’ll have a customer examine this trend of bad supply chain data in its presentation, Seeing the Light at the End of the Data Tunnel, and showcase how it changed its bad data into good. Instead of turning back to fix data first, this customer went after the gaps and process breakdowns that had previously been a black hole.

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The top 25 supply chains and Survivor

CJWehlage

Gartner top 25 supply chainA few years ago, Kevin O’Marah said Gartner’s Top 25 Supply Chains was getting increasingly boring. Apple and P&G were annually #1 and #2. So Gartner looked at the numbers and created the Masters category. The criteria in qualifying for the Masters category is any company who has been in the top five rankings for at least seven out of the past 10 years. This year, Amazon was voted off the regular list, and joins Apple and P&G in this Masters category. In 2019, it’s likely both Unilever and McDonald’s will also be voted off the island and move into the Masters category, as well.

Gartner’s Top 25 Supply Chains has become like watching Survivor, the reality TV show that places people on a remote location, where they outwit, outplay and outlast the others. I laugh when they vote out the Navy Seal or the Triathlete. Then, they have no food and lose the following week’s challenge. At tribal council, they wonder why they lost. Easy answer here – vote out the best and the tribe gets weaker. Or, as Nature Boy Ric Flair says, “If you want to be the man, you gotta beat the man.” Something needs to be done differently in the Masters category if Gartner wants to avoid simply having two lists.

Once again – Peer vs Gartner

Another change needed is the vast difference between how the 169 peers vs the 38 Gartner analysts rank the companies.

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Balance and Segmentation – What the Election Can Teach Supply Chain

CJWehlage

supply chain balanceIf you haven’t already, please read Bill Dubois’s blog, “Latest Polls Show We’ve Lost Faith in Polls”. Bill speaks to three factors, unpredictability, high randomness and variability. In my opinion, these are factors that led to the pollsters being so far off on the 2016 US election, and how supply chain practitioners can help these pollsters to improve.

Multi-tasking, I was reading Bill’s blog while I was watching the 2014 movie Godzilla. The general plot, if there ever is one in the Godzilla movies, is that Godzilla is awakened by nature to restore balance, and defeat the MUTO (Massive Unidentified Terrestrial Organism). I have to admit, it was cool to see the MUTO walk down the Las Vegas strip and knock down the casinos.

Thinking about Bill’s comments on teaching pollsters, and combining with Godzilla restoring balance, it hit me. Regardless of where you stand, left or right, agree or disagree, we hope that balance will reset itself, sometimes incrementally and sometimes shockingly. When Godzilla and the MUTO’s final battle occurred, half of San Francisco was destroyed. The results of that ‘ReSetting” was shocking, and cool to see them battle along the Embarcadero.

Balance is also critical for supply chains. We must have an ability to monitor the supply chain, and detect when it goes out of balance. This is why mature S&OP’s are needed. I say mature, as most supply chains can detect the cost based – unit demand vs unit supply imbalance. The more difficult, and mature S&OP, is the value based, where, profit, opportunity, risk, and market share, are balanced. See Figure 1.

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And I thought last year’s Top 25 Supply Chain was a surprise

CJWehlage

On the bus ride back to the McDowell Marriott after the 2016 Gartner Top 25 Supply Chain event, I plugged my ear phones into my cell and listened to some Pearl Jam. Their classic hit, Last Kiss, the song summed up my thoughts about the 2016 rankings. So, the supply chain version of Last Kiss would go something like this…

“Oh where, oh where, can my supply chain be?

The trends took her away from me

She’s gone peripheral, so I’ve got to think Core

So I can get my supply chain back to reality”

The “Green Washing” of the Top 25

If you take out the new CSR ranking from 2016, your Top 25 rankings would be:

Actual 2016 Rank Without CSR Rank Wehlage Bold Predictions
1 Unilever Amazon Amazon
2 McDonald’s McDonald’s Unilever
3 Amazon Unilever Inditex
4 Intel Intel Intel
5 H&M Cisco Samsung
6 Inditex H&M Cisco
7 Cisco Inditex McDonald’s
8 Samsung Nike H&M
9 Coca Cola Starbucks Nike
10 Nestle Colgate Palmolive Starbucks

 

Three pieces of edgy insights from this:

a. My Bold Predictions were not far off. I did call the Nike and Starbucks entry into the Top 10. I am bolder on Samsung, simply because they had the highest 2016 Inventory Turns aside from McDonalds. As well, Samsung was 7th in Peer Voting rank, so the other “185” Peer voters agree with me.

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The 2016 Top 25 Supply Chains – Three Bold Predictions

CJWehlage

Future PredicitionsTwo years ago, I made some very bold predictions on the 2014 Top 25 Supply Chains, and about 80% of them were true. Last year, I made the not-so bold predictions, as the Gartner 2015 Top 25 Supply Chain rankings were pretty much unchanged. That is, except for the new “Masters” category. I sure hope the Gartner gang will keep a focus on the Masters (Apple and P&G), as these two supply chains continue provide best practice learnings. Which leads me to my first Bold Prediction…

Bold Prediction #1: The Master’s category will be, more or less, forgotten this year.

Apple and P&G were put in a Master’s category in 2015. I’m still a bit confused about this move as I’m not sure if this was a way to clear these two perennials out and make room for others, or a means to focus on their unique capabilities. Having worked at AMR Research, I understand the need to showcase other companies – helps readership. But, like Ric Flair would say, “if you want to be the man, you gotta beat the man….”

Next year (2017), by the rules of “those companies that have consistently had top five composite scores for at least seven out of the last 10 years”, Amazon will be moved into the Master’s. However, I predict in next month’s Top 25 Gala, that both Apple and P&G will not have much airtime. Unfortunate, as I believe Apple and P&G can still share some significant strategies on supply chain. So, I will state one thing each of the Master’s can teach us.

Apple = Leverage
This starts with product simplification. Supply chain leaders talk about SKU rationalization, but rarely achieve it. Apple has. With a succinct variety, you can leverage common parts, and more precisely optimize the supply chain network. Apple’s supply chain also has a small amount of suppliers, allowing them to leverage relationships, price and volumes. The result being higher profit margins, something Apple could use to leverage exclusivity agreements (such as booking out UPS and DHL shipment capacities).

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Top 25 Supply Chains Pt. 2: Epiphany About Speed

CJWehlage

Amazon utilizes speed to become top supply chainIn part one of this blog series, I noted the changes, or lack thereof, to Gartner’s list of the Top 25 Supply Chains. After realizing little has changed, with the exception of creating a new “Masters” category, which doesn’t really fix anything in the rankings, I had two important thoughts and an epiphany.

Amazon’s #1 Position makes me think of two things:

Where in the world is Google?

Amazon is a software company that built expertise around services and distribution. That distribution model is fantastic for getting fast delivery. In the same light, I would advocate FedEx, UPS and DHL be in at least the Top 50 ranks.

Google is an internet company. Sure, they are known as a search engine, maps, communications, advertising, and services company. However, the key message from Gartner this year was the “digital” aspect of supply chains.

We tend to think of a traditional hardware company adding digital to its product and supply chain. However, let’s take direction from Guy Kawasaki (the Keynote speaker at the conference), and “Jump to the Next Curve”. What about a digital company that adds hardware? Google is adding cars, glasses, mobile, tablets, and even contact lens. And I believe Google should be added to the list.

Put Apple (and P&G) back in the Top 25

This isn’t because I used to work at Apple. I get it. People are tired of seeing Apple there every year. But, the problem isn’t fixed.

As I said in my May 2014 blog, where I predicted Amazon to be #1, Amazon has done everything great, except pull a profit. There’s been a lot spending on assets these past few years at Amazon. And soon that asset spending will be seen in their significant revenue growth. They’ve already finished in the top five, five years in a row, even with 0.0% ROA in 2015! My bet is that Amazon will be #1 for 2016 and 2017 (and then placed in the Masters category). Yet, the problem that left Apple at #1 for seven years, and potentially place Amazon at #1 for three years, will not have been fixed.

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Top 25 Supply Chains Pt. 1: Masters category

CJWehlage

Top 25 supply chains all utilize global networksOn May 29, 2014, I posted a blog about the Top 25 Supply Chains predictions for 2015.

“All that being said, here’s my early 2015 “Not So” Bold Predictions: #5 P&G, #4 Unilever, #3 McDonald’s, #2 Amazon, #1 Apple.”

Almost a year later, that was 100% correct. Ok, here’s my reasoning. The 2015 Top Supply Chains were #1 Amazon, #2 McDonald’s, #3 Unilever. What about my Apple and P&G prediction, you say? They were surprisingly put into a “Masters” category. As it is explained in the Gartner report, a “Master” is a supply chain that “consistently had top five composite scores for at least seven out of the last 10 years”. It’s bizarre to me, since a “hall of fame” category is reserved for someone who has retired. Plus, there was no explanation as to why seven out of the last 10 years was chosen. To me it felt more like a common thread between Apple & P&G was found first, then the Masters category was created.

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The Good, the Bad and the Ugly at the High Tech Supply & Demand Summit

CJWehlage

a vehicle break-in was part of the ugly at the High Tech Supply & Demand SummitThe first words foretold the upcoming days. When I checked into the hotel at the High Tech Supply & Demand Summit in San Francisco, the front desk person, as she was handing me the room card, pointed to the right, and said, “if you go for a walk, don’t go that way, that’s the Tenderloin district. It’s a very dangerous place.”

Those initial words rang true to what happened the next two days. Having spent two years at AMR Research, I’ve seen the type of analyst that will be so direct, the message comes across harsh. I’ve leaned towards the concept of writing the positives, with some humor, and based on practical, business-based supply chain knowledge. Today, for this blog post, that changes.

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