Posts by John Westerveld

The supply chain planning system crystal ball

JohnWesterveld

supply chain planning crystal ballTwenty-five years ago, I bought my first personal computer. One of the first applications I installed was a cookbook — the killer home PC application of the time. The second application was Quicken to manage my finances. Funds were tight then and I really needed to keep tabs on my spending.

Every transaction was meticulously entered, every statement validated against my records. Then I discovered the calendar function. With the calendar, I was able to schedule my known income (paycheck) and my known expenses (car loan, mortgage, utilities, taxes, groceries, etc.) and Quicken would project my bank balance into the future.

For me, this was game changing!

When making discretionary purchases, I could look at my projection to make sure that if I made that purchase, I would have enough money in the bank, not only now, but at the end of the month when my mortgage and car loan came out. It was my crystal ball, and I regularly asked it questions like:

What if I buy that awesome new 27″ Sony Trinitron television this week, could I still make my mortgage payment? What if I save my money this month? Or don’t go out for supper on the weekend? Then could I buy it?

Today’s supply chain professionals need a crystal ball, too. The only difference is that the decisions are much more complex and far reaching than balancing my finances.

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Supply chain visibility: The key to growth

JohnWesterveld

Supply chain visibility growthI came across a KPMG study last week covering a survey of 360 senior executives Forbes Insights did in 2016. There were a couple of key takeaways from the report:

  1. Manufacturers are planning on growth, but the overall market isn’t likely to grow. This means companies will need to battle for a bigger piece of the pie.
  2. The need for supply chain visibility is greater than ever, yet only half of the executives surveyed say they have the visibility they need to make decisions and mitigate risk.

Let’s dig into both of these highlights a bit more.

Growth within a static market

According to the study, most companies are planning to grow by entering new sectors, new geographic areas or by adding to the products and services on offer. The challenge is that other companies are looking to grow (73 percent of companies say growth in the next two years is a high to extremely high priority).

“Every company wants profitable growth. But according to our data, today’s manufacturers are much more focused on driving new growth than ever before.”

At the same time, baseline growth is expected to be limited. This means that for your company to be successful, you’ll need to outperform the other companies vying for the same market share. Your supply chain plays a key role: getting your product to market with excellent quality, in the quantity needed, at the right price, with the right design.

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Collaboration in supply chain management is key

JohnWesterveld

Collaboration in supply chain managementWhen scrolling through my news feed Friday, I found this article from SCN: Collaboration Key in Creating Competitive Advantages Through Supply Chains“.

The article describes research recently published by the University of Tennessee, Knoxville’s Global Supply Chain Institute. You can download the report here. There were some interesting ideas that came out of this study, like how collaboration in supply chain management is key to success. While some may be obvious to you, others you may find insightful.

“As complexity and consumer and shareholder expectations increase, CEOs and supply chain professionals must retrain their focus on contributing to strategic initiatives instead of solely on fulfilling demand as cheaply as possible.”

I love this concept. So many times we’ve seen what were once excellent companies that focused on customer satisfaction and quality goods, fall prey to the siren call of “cut costs at the expense of all else”. The problem with this approach is that if cost cutting is the only metric, you soon start making decisions that impact the quality of your product and the reliability of your supply chain. For example, choosing the lowest cost supplier over one that provides better quality and delivery guarantees.

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How do you streamline planning for tomorrow’s supply chain?

JohnWesterveld

Planning

What does your planning organization look like? Is it a series of silos? Individual fiefdoms throwing requirements back and forth over the wall? What are they spending their time doing? Are they drudging through the tedious work of placing orders with suppliers? Releasing orders to the factory? How much time are the spending truly adding value to the supply chain and how much time are they spending doing simple, mechanical, yet important activities?

Accenture has just released a white paper titled “Supply chain for a new age” which you can get here. In this paper, the author describes various components of the next generation supply chain and introduces the role of “Network Planners”.

A network planner would have ultimate responsibility for supply chain performance and would oversee all aspects of the supply chain from demand and distribution to detailed component supply for a group of products (a family or region or both).

As you can imagine, traditional supply chain tools and processes would quickly overwhelm any normal human, if they were to try to manage all aspects of the supply chain even for a relatively small set of items. If the network planner is to be realized, as Accenture points out, we need to have a way of automating the basic tasks and allowing the planner to focus on making key decisions and managing the significant exceptions.

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Reduce speed – limited visibility!

JohnWesterveld

Supply Chain Visibility

Here in Canada, major highways are getting new electronic signs that provide warnings to motorists about upcoming road hazards. One foggy morning, I drove by a sign that declared “REDUCE SPEED – LIMITED VISIBILITY”. Sure enough, the fog was so thick in some places that I needed to drive much slower – I couldn’t see anything beyond my own hood. When you think about it, many supply chain companies operate with the same visibility. They can see things happening within their company, but they have no visibility to what’s happening outside the four walls. Unfortunately for them, the pressures of business means that they have to operate at “normal” speeds otherwise they will lose business.

A few months ago, Kinaxis published an infographic titled Supply Chain Visibility: Seeing is Achieving. It focused on why supply chain practitioners need to have better visibility to do their jobs. I won’t go into details on the infographic except to say that it’s worth reviewing. I did want to add some of my own thoughts about why visibility is so important and why today’s traditional ERP systems are doing such a bad job at providing that visibility.

First let’s talk about what supply chain visibility means. If you can imagine the typical supply chain, you would expect it to be comprised of customers, suppliers, and potentially one or more levels of integrated manufacturing facilities. Imagine an environment where your customer could request a demand change and within seconds, you could see the impact of that change on your entire supply chain…including any plant that contributes to the manufacturing of that item or any supplier that provides components. You could assess impacts to inventory, margin, cost of sales, new purchases, capacity…all within seconds, all within a single system. How would that knowledge affect your ability to confidently accept that new order?

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The internet of (supply chain) things

JohnWesterveld

IOT Supply ChainLightbulbs that change colors from a command on your phone and turn on when you enter the room, thermostats that can figure out when you are in the house and adjust accordingly, refrigerators that e-mail you when you are out of milk, garage doors that let you know when they are open, doors that can be unlocked from your phone even when you are across the country, cars that drive themselves, tags you can put on your keys so you will never lose them again. These are all examples of the internet of things. Some of these examples are fluff and likely won’t pan out, others may be real game changers.

Being a bit of a techie nerd, I’ve been following the Internet of Things (IoT) evolution on the consumer device market for a while, but I honestly haven’t given much thought to how the IoT will impact supply chain. This morning, I happened upon a video presentation from MPI and Rockwell Automation titled A deeper dive into the industrial internet of things on the Industry Week website. The video was a report out and analysis of a survey that MPI had done on Internet of Things in the supply chain. There were lots of interesting facts and figures in the report, but one fact that stood out to me was this.

In a 2014 study, 46% of manufacturing executives didn’t know what the internet of things was. A logical extension of this is that they also wouldn’t know how IoT could impact the supply chain. Maybe it’s time to understand how IoT will interact with and ultimately change the Supply Chain.

So what is the Internet of things? The source of all knowledge, Wikipedia, describes the Internet of things as:

“…the network of physical objects—devices, vehicles, buildings and other items—embedded with electronics, software, sensors, and network connectivity that enables these objects to collect and exchange data”

For consumer devices, we’ve seen examples of this at work for a number of years. More and more devices are getting internet connections and are either sending or receiving data. But what about supply chain?

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Change is coming: How will 3D printing affect your Supply Chain?

JohnWesterveld

3D PrintingI recently had the great pleasure of teaching a group of new hires about manufacturing. As I finished describing traditional manufacturing techniques we paused to discuss 3D printing and how 3D printing will change the face of manufacturing (note I said will…not if). It was a great discussion and led me to think further about the impact 3D printing would have on the supply chain and supply chain planning.

3D printing is an additive manufacturing technique for making 3 dimensional solid objects from a digital file. In additive manufacturing, items are created by laying down successive layers of material until the entire object is created. You may have the mistaken impression that 3D printers can only fashion little plastic toys. That couldn’t be further from the truth; in addition to plastic there are 3D printers that can make ceramic, metal, food, resin, glass, medical implants, concrete (there is even a 3D printed house), and electronic components.

Currently, 3D printing is being used to create items for aviation and for NASA, prototype items for the automotive industry and approaches are being studied to use 3D printing in the medical space to create body parts such as noses and ears. Recently, a team of researchers have even created a 3D printed organ.

I’m not the first to discuss the impact of 3D printing on supply chain. You can find other Kinaxis discussions here and here.

So, let’s think about how 3D printing can impact your supply chain…

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Confessions of a 50-Year-Old Hacker

JohnWesterveld

Hackathon judgesLast week was the Kinaxis solutions development hackathon. In a hackathon, people form up into groups and within a one-week time frame, identify a market need, develop an approach to addressing that need – in many cases prototype solutions – then present those ideas to a leadership team. This year was extra fun because we used a “Shark Tank” (or “Dragons Den” for us Canadians) approach (without the snarkiness that makes the TV version so popular).

As I sat and watched the presentations, I was blown away by the depth of supply chain knowledge and the amount of creativity on display. I wouldn’t be surprised if one or more of the ideas eventually becomes another of the features that make RapidResponse great.

Our team put together some ideas around supply chain risk management. We addressed supply chain risk in two ways; the leading indicators that show when you are at risk, and a simulation to see how well your supply chain can respond to a major event. The leading indicators range from single sourcing risk to global supply risk, with a number of other factors included as well. Each of these metrics help you identify where you could potentially be at risk.

The other part of our project was based on a concept I wrote about a year ago or so; the Chaos Monkey. The concept here is to go beyond the typical metrics and indexes and to prove how resilient your supply chain is to an actual disruption.

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