Posts by Dr. Madhav Durbha

Machine intelligence and human creativity in supply chain planning

Dr. MadhavDurbha

artificial intelligence I am reading this absolutely fascinating book “Deep Thinking: Where machine intelligence ends and human creativity begins” by Garry Kasparov, former world chess champion. As the title suggests, in this book Kasparov shares a highly provocative point of view on artificial intelligence and its implications for the human race, with the backdrop of his 1997 loss in a highly publicized chess match up against IBM’s chess computer Deep Blue. The book did make me reflect on my own experiences and views on the division of labor between the machines and human supply chain planners.

Much has been written and said about how machine intelligence is impacting supply chain planning in the form of automating a human planner’s function, with implications on the future of the profession itself. I would be remiss in stating that automation will have no impact on planning profession. Yes! The focus on automation in planning is increasing and will continue to increase. However, this has to take place in the context of empowering planners and significantly augmenting their productivity to handle activities with larger scope and with higher levels of cognition that can drive strategic value for business. When done in a thoughtful and deliberate manner, automation initiatives can significantly benefit planners who are willing to adapt and change, and organizations as a whole.

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Supply chain agility, the disillusioned data scientist, Amazon effect, and other tales from LogiPharma US 2017

Dr. MadhavDurbha

LogiPharma - Pharmaceutical supply chainI was at the recent LogiPharma US conference for the pharmaceutical supply chain leaders. However, most of the insights and the stories I took away from the event are applicable to other industries as well. Here they are:

1. Personalized medicine demands supply chain agility: During a highly engaging panel discussion on “Building a patient-centric supply chain”, Kevin Cook, VP of North America supply chain at Sandoz (a division of Novartis) talked about the unique nature of the recently approved Kymriah, CAR-T cell therapy for children and young adults with certain types of Leukemia. The therapy showed an 83% remission rate in the patient population studied! In CAR-T cell therapy, every single dose of a treatment is completely personalized, as it involves extracting the patient’s immune cells, bringing them to a production facility, genetically modifying them, transporting them back (at minus 180oF!!), and then reinfusing the patient to fight the cancer cells. So, personalized medicine is here! With it comes several logistical challenges.

While Kymriah is the ultimate example of personalized therapy, there were several attending companies that provided therapies for rare diseases affecting a few hundred to a few thousand patients across the globe. In such a high mix, low volume portfolio, decisions such as how to allocate short supply to patients in case of contamination of a manufactured batch, can be lifesaving. Brad Pawlowski of Accenture said it right during his opening remarks – “Instead of executing one supply chain a thousand times, we should get ready to execute a thousand supply chains, one at a time”.

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Digital supply chains, AI, Blockchain and the future of work – Insights from the Gartner supply chain executive conference

Dr. MadhavDurbha

Gartner 2017The 2017 Gartner supply chain executive conference took place at the O2-Intercontinental Hotel in London on September 20th and 21st. The theme of the conference was ACT (Aspire, Challenge, Transform), same as the Gartner supply chain summit in Phoenix during May of this year. A few of the presentations in London, such as a highly provocative key note by John Philips of PepsiCo are a repeat from this prior event. I covered my observations from the May event in a previous blog. To avoid repetition, I will focus on some net new messages that resonated well with me from this event. Here they are, in no particular order:

1. Tailor your supply chain to cater to diverse businesses: In his keynote, Mourad Tamoud, EVP of Global Supply Chain Operations of Schneider Electric talked about how they are segmenting their supply network based on their customer personas and purchasing behaviors. Based on how Schneider plans, delivers and executes, the following five supply chain models were defined:

a. Collaborative
b. Lean supply chain (for customers who value the economic aspects of their purchases)
c. Agile model (for the customers who value reliability above all else)
d. Project model (for high level of configurability)
e. Fully flexible

Using these different supply chain models, Schneider was able to tailor the service and the overall experience for customers by different personas/groups. The crux of his message was that the overall design and the technological enablers are equally important in enabling “tailored supply chains”.

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Supply chain risks: The knowable unknowns that can hurt your supply chain performance!

Dr. MadhavDurbha

Supply chain riskCSX, one of the only two railroad operators in the USA that handles nearly all the shipments that move by train east of the Mississippi River has been experiencing serious challenges since the month of May. The reasons behind this were well chronicled in a recent Wall Street Journal article. To sum it up, an activist investor caused a major shakeup in the company earlier this year and a new CEO took over in March. The new CEO embarked on several cost reduction initiatives in conjunction with a number of changes (some may argue too fast and too soon) on how the company operates its freight-trains. This has resulted in significant delays and disruptions in shipment deliveries. An extreme example of this is a ride from Chicago to Colesburg, Tennessee taking 18 days, 13 hours, and 57 minutes!

The effects of these delays are being felt by many companies including McDonalds, Kellogg, Kraft-Heinz, and PepsiCo, as the article cites. These companies had to haul expedited shipments by truck so they could keep their production lines running and, in turn, meet the commitments to their customers. This has led to increased costs, not to mention all the inventory stuck in-transit.

Needless to say, such major challenges are visible enough and have significant enough disruptive power that considerable energy gets spent on addressing them, including executive engagement. However, did you know there are enough lead time problems lurking in your current supply chain operations that go completely unnoticed? These are the “knowable unknowns” that can hurt your supply chain performance.

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Career advice: Keeping your edge as a supply chain professional in the face of change!

Dr. MadhavDurbha

Supply chain professional advancementThere is a standalone vehicle emission check shop that I visit to get my car checked prior to the annual tag renewal. For those who are not familiar with the emission check process, you drive your car into the shop. As you wait in your car, a technician hooks your car up to his computer, measures emissions and prints a certificate. The whole process takes about 5 minutes. Just about 4 or 5 years ago the service had cost $25. The aforementioned shop was one of the very few shops providing the service in the vicinity. However, over the next few years, nearly every auto mechanic shop in the area started offering an emission check service. For them, it was simply a loss leader to get the cars in. Then they took advantage of the opportunity to sell higher margin services they offer. Soon, the prices for the service started dropping. The cost of an emission check went down to $20, then $15, and now stands at $10. It wouldn’t take a genius to figure out where the trend will continue to go!

The moral of the story is simple. When a service gets commoditized, the differentiation disappears, and the price that one is willing to pay drops. It doesn’t have to be a service. It can be a product, or even a professional like you and I. We get commoditized, too! Jack Welch said it – “If the rate of change on the outside exceeds the rate of change on the inside, the end is near”. While he said it in the context of organizations, this could very well be true for individuals, as well.

Let’s talk about the implications of this for supply chain professionals. Supply chain management is quickly evolving to be quite an interdisciplinary field. Just recently, I was talking to a youngster studying industrial engineering with specialization in SCM. The curriculum he is going through is quite well rounded with coursework and internships that included industrial engineering, operations research, big data analytics, systems engineering, and programming. Besides majoring in industrial engineering, he is also getting a minor in computer science.

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5 key trends affecting the Consumer Package Goods industry

Dr. MadhavDurbha

CPG supply chainIn my recent conversations with the CPG industry executives, regardless of the company, there are several common themes and trends that bubble up. These trends make the business conditions more challenging, and some may say exciting. I will review some of these in this blog.

1. The assault on brands: The great recession of a few years ago has caused significant shifts in the consumer buying behaviors. Private labels have gotten better with packaging and presentation, in addition to value for money. A recent wall street journal article about Brandless, a company which sells generic CPG with simplified US$3 (three US dollars) pricing for every product on its site is an example of creative business models that are popping up. Competition is using pricing or niche assortments as a means to compete with branded manufacturers. Amidst lessening brand loyalties, CPG brand manufacturers are being forced to become more cost competitive.

2. Increasingly complex and volatile supply chains: There are several trends here that are causing increasing complexity and volatility for CPG supply chains. Here are some:

a) Increased price and promotional actions – Dynamic intraday pricing by the likes of Amazon and increased promotional activity targeted to consumer segments or even to individual consumers are causing more demand volatility, shifting more volume and revenue towards promotional business as compared to turn business. Word of mouth, good or bad, is now spreading much faster in online channels.

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Agility and flexibility in the age of digital supply chains – Insights from the 2017 Supply Chain & Logistics EMEA summit & expo

Dr. MadhavDurbha

2017 Supply Chain & Logistics EMEA summit & expoAs supply chain professionals, we can grow insular in our thinking, as on a day-to-day basis we risk confining ourselves narrowly to our domain of responsibility or solving challenges specific to our regions. However, from time to time, it is important to find opportunities to network with our peers from different regions or from different functional domains and learn from each other. The 2017 Supply Chain & Logistics EMEA summit & expo was one such opportunity. About three hundred supply chain professionals from various pockets of the world representing manufacturers, retailers, logistics providers, and technology vendors took part in the summit. It was a 3 day event with some very provocative content while providing sufficient opportunities for networking and peer-to-peer learning. Here are the key takeaways for me from the event.

1. Innovation in the warehouse: Markus Kückelhaus of DHL trend research, in two separate panels gave very compelling presentations on the innovation DHL is driving in the warehouse. One of them is Augmented Reality (AR). Through the pilots that DHL conducted, AR is showing tremendous productivity gains in the warehouse such as a 25% gain in picking productivity. Through the use of wearables, employees are able to navigate, scan, pick, and put away product. These wearables are eliminating the need for the associates to carry scanners, freeing up both hands to be more productive. There was also some discussion around AR vs VR (Virtual Reality). While VR has some potential in terms of testing out layouts and such, Markus observed that for the most part the potential for VR seems to be fairly minimal in the warehouses as compared to AR.

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The changing role of IT organizations in supply chain management

Dr. MadhavDurbha

Information technology in supply chain managementI recently read this very interesting book, “Be the Business: CIOs in the new era of IT” by Martha Heller. In the book, the author made several very interesting observations about how the role of a Chief Information Officer is changing in the age of cloud computing, personalization of tech, and the rise of shadow IT. As I was reading the book, I couldn’t help but reflect on my own experience of working with IT organizations over the last two decades I have been in the supply chain business. Let us examine the shifts that happened. I will lean on the Supply Chain Planning space as an example and relate to the broader shifts in the role of IT in supply chain management.

1. The disillusionment with the establishment: In the late 90’s, i2 Technologies (the company where I started my career) was blazing a new trail in supply chain planning technology as most companies know it today. Manugistics was a strong contender to i2. However, the market was small enough that it was largely ignored by the big ERP vendors for a while. With the promise of these newer and exciting technologies at the time, IT organizations opted for a “best-of-breed” strategy bringing together the best of the ERP platforms and the specialty supply chain vendor capabilities.

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