Business Making Progress

The role of government in securing supply chains

Governments and nations are in current movement around the world - the Arab spring, presidential elections in France and the US, political upheaveal in the Euro Zone, just to name a few. All these events have had repercussions across supply chains. In a recent statement made by President Obama, US companies were called upon to ensure they come up with a strategy to secure supply chains. What does this mean? What is the role of nation states in our supply chains? 

Reading the statement from the White House, what strikes me is that there is nothing new in what's being asked: responsible governments seek to secure a nation's domestic interest. Without diving too deeply into hegemonic stability theory, the United States carries an additional responsibility in the global economy and with extended supply chains, that responsibility extends to the the safeguarding of global trade and the flow of products. The Obama Adminstration appropriately used more business-oriented and supply chain terminology for an undertaking the US government has assumed since the 1940s. 

Government is not responsible to ensure I have a fresh flow of iPads, bottles of Bandol 2007 red wine, Kobe beef or any other product imported to the United States. The Government is responsible for ensuring that vital items - those which are important to national security - are protected. Energy, medicine, basic sustenance, to name a few.

Governments are also called upon to assist when events impact the supply chains - natural and man-made disasters. For this reason we witness the global community rallying when events such as the Japan tsunami or the floods in Thailand strike. The need to rapidly get these areas back on their feet is important to the global economy.

The video from the Navy is a great piece on the role of an extended government:

 

Governments provide an ecosystem for supply chains to compete. It is up to companies to focus on the fundamentals to achieve their goals. End-to-end visibility and an understanding of the impact of these events on the business are the first steps. Once organizations gain this real-time visibility, they can begin to put in place the executionable means to gain constant business process improvements - in other words, to become more operationally responsive.

Defining the “Responsive Supply Chain Executive”

Earthquakes, political uprisings and unforeseen every-day disruptions are just some of the stressful events that supply chain executives face daily. For any supply chain exec – especially those managing networks that span diverse geographies and markets – having visibility into the extended supply chain is a key component to staying on top of issues, improving responsiveness and meeting SLAs. All told, a lot goes into being a responsive supply chain executive in today’s environment. Here are two main must haves:

 

Real-time Visibility

Many businesses suffer from supply chain blind spots, impeding their ability to quickly recover from unexpected events and efficiently re-sequence their extended supply chain. A responsive supply chain executive must have real-time visibility throughout the entire network. This visibility allows managers to effectively “light up” those blind spots and proactively monitor the entire chain (no matter how dispersed it may be) to ensure that all processes are running smoothly through every touch point along the way. It also empowers executives to spot disruptions early, at any point in the system, and respond to them before they snowball and affect end deliverables and SLAs. Which brings us to our next must have…

 

Actionable Insight 

Being able to see the disruption is all well and good, but if you can’t react to it and address it, all benefit is lost. Responsive supply chain executives must have actionable insight, meaning they must be equipped with the ability to correct disturbances rather than simply acknowledge their existence. The ability to quickly respond to out-of-plan events allows execs to rapidly re-sequence their extended supply chain, meeting every SLA.

Until the day when we can correctly predict the future, supply chains will always be hindered by unexpected, uncontrollable events. When confronted with such an event – whether it be a natural disaster, geo-political issue or simple human error – the ability to quickly identify and respond is critical. In the absence of a crystal ball, advanced technology arms us with the ability to sense trouble and respond so we can keep supply chains active and flowing, despite what the world may throw at them.

 

 

Inventories lag as sales grow - supply chains balancing act

While many on the economic front were drawn to two numbers - the unemployement rate which was lowered to 8.5% the lowest it has been in 3 years and consumer spending/confidence was inching upwards - two signs that the economy is slowly moving upwards. There is another report, less heralded, but just as interesting: inventory levels. The wholesale inventory levels barely grew at the end of 2011, yet the sales for wholesale did well. For the month of November, the inventory level grew by only 0.1%, yet sales in October grew at 0.8% and in November 0.6%. Is there a disconnect there? Clearly the wholesale supply chain did not properly plan the growth of inventories to keep up with demand. Granted, it is not as simple as turning on a faucet and producing more inventories. Add to this the strain on inventory that certain companies such as Toyota suffered due to natural disasters and there is invariably going to be a drop in the availability of inventory.

What it does remind us, is the fact that we are still stuggling to close the loop between planning and execution.The growth in sales in October coupled with the upcoming holiday season, should have been signals that inventories needed to be ramped up. Now maybe the plans did not forecast a continued growth trajectory, but with a better tuned ability to sense, these companies could have done better responding as well.

I am fairly certain that we will see inventory levels grow a more rapid pace over the next few months to catch up with the demand. I also realize that there is a lag time between inventory and demand. The situation remains a good example and reminder of the importance of closing the window between sensing and responding to changes and shifts in demand.

Maybe it is time to buy some stock in manufacturing companies!

Merry Christmas...unless Santa ordered your gifts from an online retailer

Black Friday and Cyber Monday have become just as much a part of the Christmas holidays as stockings, midnight mass, a large man with a white beard in a red suit, candycanes and packed malls. North American retailers look to this season as their...well...Christmas. A time when they will push their finances into positive territory, make profits and fill coffers with cash for the upcoming year. We have all read about the horror stories that are also linked with this shopping season: stock outs, long lines, unruly clients and the list goes on.

Of course now you can avoid these hazards of leaving the safety of your home to do Christmas shopping and instead tackle your entire shopping list in the comfort of your home, while you are at work (take advantage of that high speed connection...I sure hope my boss isn't reading this) and even via your smartphone or tablet. It is so easy - use Google or Bing to find your items, do some price shopping, look for any deals on shipping or discounts, enter your credit card, hit "buy" and voila...your shiny new train set, book, tv, hand knit sweater, box of chocolates, lego city police station, iPad etc etc...will be dispatched to you. Most sites are now so kind as to tell you when is the absolute LAST moment you can order so that Santa will ensure you receive your desired items by Xmas.

But wait, it is not as simple as that. While the user experience has become much easier and truly allows a wide array of choices and prices, the fulfillment that empowers this process is only becoming more complicated. Bah humbug is what is usually muttered from the supply chains that have to fulfill these orders. Retailers start planning early in the year and are positioning inventories, in some cases, as early as August. Warehouses, transportation and store shelves assets have to be planned well in advance: what items will be in high demand, in what geographic locations, at what price...add to this the fact retailers are dealing with multiple suppliers who themselves have...you guessed it...multiple suppliers. Never mind the supply chain processes needed to build an Xbox, or packaging all the pieces for the Lego City Police station, determining the right combination of size and color for the Paul Smith shirt collection, and the list goes on. All these factors render the fulfilment process for all those holiday goodies a challenge to even the best of retailers and supply chains.

So no surprise that certain retailers are not able to fulfull their online orders, companies like Best Buy are finding themselves in a pinch. Looking to aleviate the strain on their brick and mortor stores (as well as push inventory back into distribution centers) they sought to push consumers online for their holiday shopping, however poor visibility and a lack of connection between their plans and execution led them to where they are today: not being able to fulfill client orders! Ouch. Best Buy, themselves, admitted that there were orders from as far back as November that could not be fulfilled.

As I thought about this I remembered a piece done by SC Digest in the spirit of the holiday, click here. The point of this "supply chain christmas carol" is the need for great connectivity between systems and suppliers and improved visibility into your channels. Do you have the inventory in your system but it is in the wrong location? Are demand and POS data showing you that an item you thought might be a good seller is becoming a red-hot item (think of the Furbies or Wii crazes from Xmas past) or is an item you thought would be a hit with 10 year olds a dud? 

During many conversations I have had this year, I get some looks like "I don't need that level of visibilty" when I talk about gaining real time visibility, but as the Best Buy case demonstrates if you are measuring visibilty "success" in terms of months maybe that is not the answer either.

Happy Holidays to all! And if Santa or whomever is bringing you a gift is a few days late, you can always blame their supply chain.

 

The top 10...or make that the top 12 thoughts for supply chain in 2012

Happy Holidays to all! I always enjoyed reading predictions for industries and technologies this time of the year, some times it is even more entertaining to read them years later when we can gasp in awe at our predictions or wonder what were we thinking...so here are some predictions for the supply chain space for 2012. I started writing these as a top 10 which became a top 12, a nice number for the year 2012.I really did not intend to have that many, I guess I was just feeling very "predictive."

Here are my predictions for supply chain in 2012, if you are interested in the more detailed article feel free to drop me a note:

 

1. Planning is dead. Long live planning. Even with the sophisticated planning tools available today, the best supply chain plans yield less than 50% accuracy. While the advances in planning brought the industry some remarkable promises it also proved how difficult it was to predict the future by simply relying on historical data. However, without going through the planning exercise, businesses and their supply chains cannot determine an end goal and path to get them there. So planning is not dead, but organisations should use it for the purpose it serves – setting the end goals and determining the direction in which to head.
2. Bidirectional elasticity a must. For many years the supply chain world has been ‘flat’ and materials are sourced from all corners of the world as organisations chase low cost manufacturing. However, some sacrifice lower costs to be closer to their customers and reduce time to market – for example, manufacturers moving plants from Asia to Mexico to speed the time from the production floor to the shelf in the North American market. Additionally, many of these “low cost” countries have themselves become the end client. To accommodate these changes, supply chains will have to demonstrate a level of bidirectional elasticity to address both the wide reach of production, as well as the growing mix of customers.
3. Floods, earthquakes and war force companies to rethink their supplier strategy, but at what cost? The Thai floods and tsunami in Japan have made organisations recognise the sensitivity and level of risk exposure supply chains have when reliant on a small number of vendors, especially those located in volatile environments. Organisations will attempt to avert risk by on-boarding new suppliers, however this will be a challenge as relationships and business trust are not developed overnight.
4. Predictive time horizons will shorten. With leaner supply chains, being able to understand and react to changing circumstances quickly is vital. Organisations will try to add short window predictive analytics for real-time event processing. Business Intelligence solutions promised the ability to take data, analyse it, understand correlations and provide the user with a deeper understanding of the cause and effect within the business, all that is important, however the speed at which it is done is crucial.
5. Desperately seeking centralised command and control.  The ability to have a seamless view of what is happening across the entire supply chain network will determine the success of organisations, and in 2012 supply chains will continue to seek a centralised system of command and control. Although technology is evolving to make a single view of the supply chain possible, the challenge of disparate parts and siloed systems remains.
6. Successful Companies will build a ‘Touchless’ supply chain. Rather than actually touch the product, large brands will simply orchestrate all the moving parts that comprise their supply chain. Apple is a great example, the company manages all the moving parts of its supply chain without actually “touching” the product at every stage. Companies will continue to gravitate towards this model, with some even outsourcing the management of the supply chain itself.
7. Logistics providers will evolve into information and management hubs. As supply chain managers continue to feel the pressure of a leaner supply chain, they will rely on logistics firms to do more with the information they hold. Logistics providers will be seen as the perfect outsourcer for the supply chain, as they are able to see the movement of inventory at every stage of the supply chain.
8. Finance will become increasingly involved in the supply chain. With the uncertain economic climate it is no surprise that the CFO’s office will become increasingly interested in the day-to-day activities of the supply chain function and interactions between these departments will intensify. Supply chains, at their core, are manipulating and managing inventory or better said – working capital. In many cases they have their foot on the accelerator, and the brake, that controls the velocity of free cash flows.
9. Discrete manufacturers will tackle the service side of the supply chain.  Parties in the supply chain network will continue to clear out carrying costs and leverage service as a competitive advantage. More and more companies, especially high technology manufacturers, are recognising the importance of better managing their services. Organisations will maximise the opportunity by managing inventory and human capital while orchestrating the service level agreements held with the client base. Smart companies will continue to push the knowledge they gain from this end of their supply chain all the way back to the beginning – and enable better forethought and planning.
10. Businesses will be able to tackle the ‘C-A’ in ‘P-D-C-A’ (Plan, Do, Check, Act).  The success of enterprises and their partners across an extended supply chain will depend even more on a manager’s ability to gain even more visibility across their supply chain.  In the iterative four-step ‘PDCA’ (plan-do-check-act) management process used in business for the control and continuous improvement of process and products, this enhanced visibility is only useful if these managers can act instantly on events as they occur. The ability to tackle the ‘checking’ - both on the events themselves and the correlating impact these events have across the supply chain - and to act almost simultaneously on these events will become even more important in 2012.You can read more about my thoughts on the evolution of PDCA in a prior post - click here.

Two more predictions to make it a dozen! 

11. Greater usage of unstructured data, think of social media will act as one of your leading indicators. Much like what AMR Research coined a few years ago – the Demand Driven Supply Chain will creep closer to reality as supply chains leverage increased access to unstructured data coupled with their existing understanding of how to maximize information from structured data. This combination will allow companies such as Best Buy to monitor in real time and anticipate which products will sell, allowing demand to drive their supply chain. The obvious first movers will be retail and CPG companies, but others like Dell and Verizon will continue to leverage these signals to manage the service side of their supply chain. Even life science companies will gravitate to usage of unstructured data as they can look to anticipate where flu breakouts or colds or rashes of sun burn will rise through unstructured data mining. Of course this will only increase the wave of Big Data that will only continue to grow.

12. Finally, that iPad, iPhone, Droid or even yes Blackberry are not just for Angry Bird, eMail and Netflix but will integrate into supply chain. We are all mobile now, whether you choose to embrace it or not. A September report from Forrester Research states that over 50% of all workers today are working either at multiple locations or only remotely. This spills over into the supply chain space.  Mobility will impact supply chains in two ways. First the growth of tablets and smartphones will make the number of nodes where decisions can be made and executed that much greater. The person loading a truck at the receiving dock can instantly update via a tablet, the factory worker can monitor the through put of her assembly line via a smart phone, the person doing inventory in the hospital will be able to scan with an QR code reader from their smart phone and the list goes on. Second, the explosion of mobility will add to the glut of data that can be had. Whether it is communicating directly with clients or positional data, the rise of mobile devices will continue to infuse more data into our systems.

 

What do you think? What do you see for the supply chain space in 2012?

If you like reading these, look for an upcoming podcast series where I sit down with Bruce Richardson, former AMR Research Chief Research Officer, to discuss his views on supply chain trends for 2012 and beyond.

Supply Chain Management in 140 Characters (or less)

A few weeks ago, I took part in a lively Twitter Q&A with our official Twitter feed, @ProgressSW. If you missed out on the real-time action, you can check out the discussion below. Looking forward to doing more of these and, as always, I welcome your thoughts on #scm topics, questions and issues to discuss in the future!

@progresssw
@gcourtin

1. What is supply chain responsiveness? #SCM
1.1.The ability to re-sequence your supply chain in a timely fashion - where timeliness is defined by the customer demand. #SCM

2. What are the pillars of a responsive supply chain? #SCM
2.1.PDCA - Plan, Do, Check, Act. Or having a closed loop process, monitoring and taking appropriate corrective actionswhen necessary. #scm

3. How does being able to predict and react quickly to shifts in the biz environment improve org performance? #SCM
3.1.You can stay ahead of competitors and are more responsive to your clients - leading to greater market share. #SCM

4. What are the simplest and best practices we can put into place to improve supply chain responsiveness?
4.1. A couple of levels
4.2.Simplest: gain end-to-end visibility. #scm
4.3.Best: Get a clear understanding of the impacts and be able to act. #SCM
4.4.One thing that cannot be overlooked is the change management side, your people must be of the mind set of wanting to improve. #SCM

5. What advantages can businesses achieve by improving supply chain visibility? #SCM
5.1. If you cannot see it or measure it, you cannot correct it. Cliché yes, but it's the reality. #SCM
5.2. second - 5. As supply chains get more lean and extended, ability to improve visibility is paramount. #SCM

6. What risks are companies facing if they don’t focus on improving supply chain visibility? #SCM
6.1. First – Relying too heavily on historical data to drive forward means you are flying looking backwards.
6.2. W/o full visibility you're at greater risk for misplaced inventory, unmet client needs, inability to properly meet SLAs. #SCM

7. Can you give some examples of companies that have successfully improved their supply chain processes to great biz benefit? #SCM
7.1. Of course the one we all think about - #Dell and #Apple who are constantly working on gaining thru their SC #SCM
7.2. But also the likes of #BestBuy, #Panasonic and manufactures like #Jabil. #scm

8. How has the role of planning in supply chain changed over the past decade? #SCM
8.1.Planning remains a vital cog in SCM, but it’s fallen short lofty aspirations proclaimed in the late 1990s. #scm
8.2.You need a well crafted plan to provide goals and direction as well as asset need – but its only the 1st step #scm

9. How can we leverage cloud to become more responsive? #SCM
9.1. Cloud impacts all forms of biz, SC being in the middle of this - process, apps and a wide swath of data is accsble #scm

10. How can we leverage #mobility to achieve supply chain responsiveness? #SCM
Mobility is a hot topic across the enterprise and SCM – it does bring a double edge sword #SCM
10.1. 1) a valuable source of real time information (structured and unstructured) #scm
10.2. second - a decision making tool pushed further into the enterprise, empowering a greater swath of the supply chain. #scm

11.What role do flexible applications play in our ability to achieve PDCA?
11.1. Flex and composite apps allow us to gain greater visibility and an ability to act, at a lower cost of ownership. #scm


12. What are the most important trends and shifts in the supply chain environment currently, forecasts for the future? #SCM
12.1. A couple of trends - better closed loop mngmt finally tying in planning and execution – true PDCA #SCM
12.2. Second – an ability to move towards a greater centralization of command and control #SCM
12.3. Finally the infusion of unstructured and structured data. #SCM

13. What are supply chain pros struggling most with today? #SCM
13.1. Lack of other pros! Technology remains a small part of the solution; people and change management is the most important. #SCM

14. What are the key steps we can take to overcomethese obstacles? #SCM
14.1. Education Education Education - Companies must recognize the importance and value of human assets. #scm

15. Why is real-time visibility in supply chains so difficult to achieve? #SCM
15.1. Biz must recognize the value of sharing information, first within their own depts then with partners and sources. #scm
15.2. Technology is only a tool to enable change management. #scm

16. What are the top 5 handles you follow for yoursupply chain news and analysis? #SCM
16.1. @bobferrari, @rwang0, @pjtec, @lcecere, @supplychainNtwk

Merry Christmas! Wait...we need to enjoy Turkey day first - Christmas Creep and the supply chain

For those of us in the United States, we have already been bombarded with holiday promotions and I am not speaking of the Thanksgiving celebration but the Christmas one. Many have deemed this "Christmas creep." (yes it has a wikipedia page...but what doesn't these days?). I am used to the Christmas marketing efforts to start after Thanksgiving, granted it usually started about 5 minutes after the last piece of turkey has been polished off. As a kid, I also felt that somehow the Macy's parade was the official sign that you could transistion from Fall and Halloween/Thanksgiving to Winter and the holiday season. Alas now, at the end of October you start seeing the appearance of Christmas - decorations being sold, the red cups at Starbucks and even Christmas window displays in stores. I knew I was in trouble when I heard Christmas music being pumped over a speaker system at some retail location.

So what does this mean for your supply chain? First of all, retailers tend to start stocking for the Christmas season in September sometimes earlier, so if their planning and forecasts are decent (that is sometimes a stretch) they will have the appopriate amounts and mix of inventory. Rather than trying to flush out the excess inventory as Christmas gets closer or...gasp...discount post Christmas to clear out inventory, the Christmas Creep allows for retailers to extend the window they have to move merchandise. Of course the supply chain needs to be flexible if demand outpaces the inventory, granted on some products this will not be possible if production times are long. From a store shelf perspective, the Christmas creep might not be a bad thing - Christmas provides a greater array of merchandise then either Halloween or Thanksgiving. While Halloween is almost on par with Christmas when it comes to decoration needs, it pales in comparison to the array of merchandise Christmas related. For a retailer this ensures store shelves will be flush with goodies to be purchased.

The supply chain issue that is sometimes overlooked by retailers pushing Christmas Creep is the impact on the consumer, the source of demand. Clearly the desire to extend the Christmas shopping season is to start the shopping engine sooner, get consumers to seperate themselves with cash early and often...but will a longer shopping cycle just render the shoppers numb as well as "train" consumers to ignore some of the marketing and promotional efforts that occur in October? Do consumers enter the holiday season with a set budget and whether they spend it starting in October or November or December 22nd, they will spend that amount. Will consumers expect to get greater discounts as the season draws on, especially if retailers start promoting Christmas season in October and leveraging discounting earlier and earlier into the season to draw customers into their establishments? Basically having an arms race amongst retailers - who can capture the consumers faster than the next - with the weapons of choice being promotions.

So as your push back from the table after your second serving of turkey, think about the fact you should have been making some Christmas purchases since October!

Happy Thanksgiving to all our American readers and friends. To the rest of you, how is your Christmas shopping going?

Plan Do Check Act - getting closer to closing the loop in Supply Chain

I have been fortunate enough to have had worked for some incredible visionaries and leaders during my career. One such person is Sanjiv Sidhu, one of the founders of i2 Technologies. I learned a tremendous amount from my time spent at i2 and much was gained from the passion, intelligence and vision exhibited by Sanjiv. One simple, yet powerful, mantra Sanjiv preached was the notion of “Plan – Do – Check – Act.”

Granted this was not original to Sanjiv but rather a process by which companies can leverage as they strive for continual improvements. The beauty, as in many things, is in the simplicity of this saying for supply chains. The need to be able to plan well – how will I determine my end goal, allocated resources, make investments and distribute my assets. Then being able to do – execute towards the end goal, in a expeditious and profitable manner. Once the execution begins the need to constantly monitor how the process is trending – establishes milestones or alerts to indicate whether or not I will be able to achieve the goals I set. And finally to be capable to act – if and when events impact my ability to achieve my goals, can I take the appropriate actions to re-sequence my supply chain and get back on track. The simple process of PDCA allows enterprises and their supply chains to have a constant feedback loop on where they stand with regards to completing the goals they established.

 When it comes to supply chain management we have spent much treasure and effort in giving solutions for planning and doing – just take a look at the landscape of solution providers that allow you to plan and then execute. The ability to do the check and act has not been as evident within supply chain management. I realize vendors and service providers have tried to bring true visibility to end to end supply chain processes – with minimal success.

Today with flexible applications, the cloud, greater mobility and other advances with our systems and architecture we are closer to being able to finally round out PDCA. As we start to have true extended supply chain visibility coupled with complex event processing – tied to business process management – supply chains can truly check their process, understand the impact of events and act or re-sequence to ensure their end goals are met.

We are getting closer to true closed loop supply chain management.

 

Halloween, Zombies and the Supply Chain

With Halloween rapidly approaching, coupled with continued interest in zombies, I thought to myself: how could we apply some supply chain principles to surviving a potential zombie out break?

First let us make the following assumptions about the zombie outbreak – it mimics the characteristics of the zombies on the poplar show “The Walking Dead.” Yes I admit I am a big fan. So the zombies can smell and hear their prey, they do not see very well but they are attracted by rapid motion, can travel in packs, are always hungry so looking for “food” (maybe they should think about a hunter – farmer model), seem to have varied rates of speed and if they spot a human…look out.

For the humans the rules are fairly simple as well – survival means not being eaten or infected (this can happen either via bites or scratches from a zombie). The only way to incapacitate a zombie – the head/brain of the zombie needs to be disabled, how you do it is a personal choice (bullets, arrows, shovels, blunt objects, screw drivers…really anything that is available).

So let us apply some of our supply chain concepts to surviving a potential zombie infestation.

• Visibility is vital for survival. You must be aware, and with as long a time horizon as possible, as to exactly where the zombies are in relationship to you. Are they lurking the woods you are camped in? Or maybe down the road from where you RV broke down, or in the same building as you. This has to be in real time as well, learning about the presence of zombies in your building the next day is not very useful if you decided to overnight it in that same building. If you cannot see it, you are blind to the threats that could be right in front of you.
• Correlating the actions of the zombies. Okay you now know where they are, but can you assess what they intentions are? Granted you should always assume they are looking to make you their next super size meal, but what if they already fed? Regardless you need to quickly assess the situation and the events presented – do you fight them, if so how are your inventory levels with regards to weapons? Does your personnel have the appropriate technical skills to fend of the threat? At what point would any delay cause irreversible damages to you and your entourage? If you decide to avoid contact do you have the appropriate routes available to achieve this goal? If you do engage what are the potential consequences of that course of action – attracting more of the flesh-eating horde and therefore creating a greater problem?
• Take action, now you know where the zombies are and you have figured out that they are really hungry and active but you are confident in your groups’ skill set and your weapons inventory. You must now be able to coordinate and give direction in real time. Provide instructions and guidance to fend off the threat. Ensure that the proper personnel are undertaking the appropriate tasks in order to ensure success.

Seems fairly straightforward to me! Just make sure you can do this in real time! Learning about a stock out in your weapons inventory 2 days later, or seeing that a horde of the undead are waiting for you in that building after the fact, could be dangerous for your well being. Being able to survive a zombie infestation is similar to being able to dynamically process and manage your supply chain’s events, ensuring a positive outcome.

Supply Chain planning is dead...long live planning!

I was just at the annual North American CSCMP event in Philadelphia. I had the pleasure of spending time with some leading supply chain influencers and friends such as: @bob_ferrari, @lcecere, @arnoldmarkwells, @jeffashcroft to name a few.

What struck me was the absense of supply chain planning was from the event. Well I guess it should not be a real surprise when so many vendors have come and gone trying to provide users with the optimal "plan." Over a decade ago there was an explosion of companies that could provide an optimal planning the likes of i2 , Manugistics, Red Pepper Software or Numetrix to name a few, all looked to plan or schedule or optimize different parts of the extended supply chain. The ERP players did not stand still and created their own supply chain planning and optimization offerings - SAP APO even spelled it out- Advanced Planning and Optimization. But then the tide turned.

Businesses and supply chains realized that all the planning and optimization in the world was not a magic bullet. Companies such as i2 and Manugistics recognized they needed to add execution engines to their offerings to compete. ERP players like SAP and Oracle went about developing or acquiring their own execution engines. The past 5 years has seen an increase in the need for better execution, such as TMS (transportation management systems) solutions. Which brings me to CSCMP where the conference was heavy on the logistics and transportation side of supply chain. So has planning been killed off once and for all? No.

Planning will not go away, it should not be retired. Why? Planning is what allows companies to determine how resources will be allocated, where personnel is needed, the level of investments needed and finally what the goals are for the business. The basis of all plans is to determine a path to achieve a goal. Think about football (the american version), you have plays scripted and practiced, why? To achieve goals. Whether the goal is to score a touchdown, gain 5 yards or run out the clock, there are plays (plans) in place with the intent to reach these goals. Of course once on the field, you must execute this plan. As we all know, "no plan survives the first contact with the enemy." This is where execution kicks in, you need to be able to execute your plan. There is a third element to this - reducing the gap between execution and the plan. What do I mean by this? The ability to rapidly sense out of plan events, determine their impact and take corrective action.

There was some discussion about this on the floor at CSCMP, and many I spoke with were very excited about an ability to do this. The question remains, are we ready to move our focus away from simple execution and planning to the ability to truly correlate the two in such a manner that we can reduce our reaction time to out of plan events?

What do you think? And if you were at CSCMP what were your thoughts?

"Rip & Replace" isn't pleasant, especially in the supply chain world

  
Picture the following: you are on a long haul flight from Sydney to London, because you have status you were able to get a seat in Business Class. You settle down nicely for your flight, stretch out, maybe have a glass of champagne and some mixed nuts. 3 hours into your flight you see the crew exit the plane, walk on the wing and start unscrewing the engine...how would that make you feel? Maybe that someone slipped something into that champagne. However that is what it is like when companies try to replace software systems in the middle of every day business. This is even more apparent when it comes to the supply chain space. The systems that sustain your supply chain have DIRECT impact on either your suppliers, distributors, customers, partners, just to name a few of the entities impacted. Yet, systems constantly evolve, improve and get more powerful. So what to do when it comes to upgrade or replace systems to get the most out of existing infrastructure and applications?

The first option is that you take out the systems and replace them with new systems. Painful, business does not stop while you take the time to take off line your systems and then subsequently have to implement, train and being utilizing the new systems. Your second option is to stick with your existing systems and constantly add new systems, patchwork style, to address your supply chain needs. This also adds complexity and lag to your ability to address your business needs. A recent article in the Supply Chain Management Review, mentions the importance of being flexible in the volatile world we work in. This remains a challenge when you rely on legacy systems and other applications that are not seemless tied together. Invariably, supply chains and enterprises must evolve and add greater functionality to their systems, otherwise they will be passed by more flexible supply chains.

So what to do? Supply chains and enterprises need to seek solutions that enhance their existing infrastructures. Solutions that can starting tieing together all the applications and technology investments they have made over the past decades. The reality is, businesses must continue to lean on their existing systems to ensure business keeps moving forward. In parallel they need to determine if there are applications and systems that can make what they already own better. Applications in the cloud or those that can layer on top of existing infrastructures are two methods of delivery that can allow these organizations to enhance existing systems without the down time and pain of rip and replace.

Can you afford to take down time for systems overhauls?

End to end visibility - coming to a supply chain near you

I have been fortunate to particpate in the 2011 Gartner Supply Chain Executive Conference in London, an assembly of leading supply chain practictioners where we spend 3 days listening to latest thinking for Gartner/AMR Research analysts (I will always think of many the AMR analysts in that light!). The underlying theme for supply chains is that we are moving to a new generation of innovation, a manner for enterprises to build the systems and capabilities to elevate their extended supply chains.

What is one of the building blocks at the heart of this transformation? End to end supply chain visbility of course! Gartner highlights a theme which revolves around the VUCA concept -

• Volatility
• Uncertainty
• Complexity
• Ambiguity

Supply chains need to integrate end to end visibility, supply chain sensing and responsiveness to be able to survive in a world where VUCA lurks at every corner. This ability to successfully weave together these abilities through your technology is paramount to your supply chain achieving a high level. One aspect that we must also consider is that no matter how good the visibility and functions technology brings to the extended supply chain, at some point there must be a human intervention when it comes to make decisions. Companies cannot ignore the need to have the appropriate supply chain leadership within their organizations who can leverage these new tools to their full potential.

Which is another element that Gartner hightlighted - supply chain talent management.

Vendors can provide enterprises with some world class capabilities, but enterprises need to put the right level of talent at the controls.

Want to discuss VUCA, visibility, control towers and other supply chain issues of today? Please send me your comments and if you are at the Gartner conference come by the Progress booth! Or please come to Progress Revolution in Boston next week and we can discuss over a bowl of clam chowder.

Supply chain disruptions...but not the usual suspect

Earthquakes, hurricanes, power outages, SARS outbreak are all examples of external events that can create disruptions to your extended supply chain. What about other events? How about a sporting event? For those of you that are not fans of the oval ball (the rugby ball that is) the Rugby World Cup has kicked off this past week. So what does this mean, why should your extended supply chain care? Simple - late nights watching the matches, too much lager, extended water cooler chats, missing work due to "illness"...to name a few unintended results of the sporting festivities. Think this is a non factor to the work place? Think again!

For those readers in the United States we are all aware that every March comes the NCAA men's collegiate basketball tournament and with it office pools, seemingly non stop games and suspected drop in productivity. Similar impacts occur when it comes to other large scale global sporting events - such as the Olympics or Football World Cups (soccer for North American readers). And if you are not convinced such sporting events can impact your extended supply chain - how many events can cause warring sides to pause during such an event - click here to read about how the World Cup stopped a civil war? With the Rugby World Cup upon us it is a good time to reflect on how such an event can impact your extended supply chain.

• Supply Chain demand impact - during the 1970 Football World Cup, the games were going to be broadcast in color for the first time, creating a lift in color television sales. Same occured during the 2006 World Cup when the matches were in high-definition for the first time. Sales of HDTVs went up (the same cycle occurs in North America prior to the Super Bowl). How will your supply chain react if demand spikes because fans want more HDTVs or if the number of rugby players looking to purchase your boots triples over night?
• Strain on productivity - when you have a large scale sports event that will go on for a few weeks you need to anticipate potential drops in your work effectiveness. As mentioned above, workers from all aspect of your supply chain are fans, how productive will they be if the nation they support plays deep into the tournament or if they reside in the host nation? I recall a story of a CEO of telecomm company being in Mexico in 1986 being told that if business did not get done before the start of the World Cup that he might as well wait until the tournament's completion. Otherwise the entire nation was going to be distracted by the football. If your extended supply chain relies upon nations that are active participants you need to be aware of the potential impact on your work force during the tournament.
• Host nation pop - the host nation will get an economic pop, from infrastracture improvements to influx of tourists and corporations looking for advertising. If your supply chain offers relevant services then you need to be prepared for unexpected demand for your services, on the flip side your business might be negatively impacted as resources and efforts usually pointed in your direction are realigned to support the event.

Large national sporting events ellicity national pride from fans, but they also have supply chain impact. How will your extended supply chain react? Ignore these disruptions at your own peril, while the impact might not be as clear as when a port falls victim to a strike or volcanic ash shuts down airspace, such sporting events can and will impact your extended supply chain. Without visibility into your extended supply chain, the impacts, good or bad, will be magnified through out your business.

So who will win this version of the Rugby World Cup? While I wish I could say my beloved France will somehow pull it together, I fear their run will end in the 1/4 finals againt nemisis England. Semi-finals will look like the Tri Nations: England v Australia and South Africa v New Zealand. Look for the Kiwis to win the title on their home turf.

Want to talk more about how events, such as the sporting events but also more "traditional" supply chain events can create blind spots in your extended supply chain and how to better deal with them? Join us at Progress Revolution in a week, maybe we can also catch a rugby match as well!

 

More extended supply chain variables means greater need for visibility

Companies do not compete, supply chains compete…have you heard that one before? If you have, you probably are well aware of all the factors that go into running your business rely upon a host of partners and service providers that do not have your logo on their business cards. Globalization and competiveness has created a business world where no company can truly “own” all that goes into make their business…their business. We can only succeed in our business if our partner, our supply chain, is successful. In the pursuit of efficiencies, economies of scale and maximizing competitive advantages we have also created the unintended consequences of dilution of control. Even when companies controlled their supply chain they did not enjoy the visibility or ability to react to consumer demands to the level they would like. Remember Henry Ford? He was happy to sell you a Model T in any color you wanted, as long as it was black. Already Ford knew that his assembly line, and by extension his supply chain, could not cope well with diversity, choice and any color other than black. 

Fast-forward to today’s globalized economy. Companies whether they are B2B or B2C, must offer choices to their end customer. Whether those choices are in terms of the color, size, taste, speed or texture of the good or whether it relates to the service level a customer can expect after the sale or the rapidity at which the service is delivered. These all factor into the global extended supply chain and all call for a level of orchestration and visibility not easily attained but constantly demanded by customers. The reality is our extended supply chains and businesses need greater visibility and enhanced real time decision-making functions in order to compete and ensure they meet the constantly evolving demands of the consumer.

At Progress Software we are addressing these needs and this next step in the evolution of supply chain solutions. Come to Revolution to learn from our team and clients how we are able to tackle this issue and join us to take the next steps in the next wave of supply chain solution innovation.

Earthquakes, hurricanes and Steve Jobs - unexpected events...should be expected

So in the past week two regional events and one national (really international) event have captured the headlines. For those of us of that live or have acquaintances on the East Coast, we had an earthquake and a hurricane - those are the regional events I mentioned. The national event was the announcement that Steve Jobs was stepping down as CEO of Apple. So what do these events have to do with one another? Or with supply chain?

These events represent a fundamental aspect of the extended supply chain - out of plan events. Granted one might argue that Apple had know that Jobs' health was not good and that he was destined to having to step down at some point, but it was still a shock to the system. An earthquake, that cannot be predicted, a "bolt out of the blue" that can have different degrees on impact. A hurricane, well we can predict the path, model the damage and prepare for the results. But that requires a certain level of modeling and guess work, what happens when it does not go according to plan, or when some infrastructure survives while others fail?

Just as with these events, it is the speed at which the systems can recover that determines how damaging the impact will be. Apple had visibility into the reality of Steve Jobs' health, they could implement a plan rapidly, ensure that Apple, its employees and customers would not see too drastic an impact on the business. With Hurricane Irene, the East Coast cities and states were able to prepare and respond once the event occurred - some better than others. The quicker the response, the faster cities and states get back to "business as usual." Finally with the earthquake, there was no warning, who would expect an earthquake on the East Coast? While the damage appeared to have been minimal, what had it been more severe? How would cities like New York and Boston reacted and been able to resume business as usual?

What this means for the extended supply chain is you need to think about out of plan events in three buckets:

• Events you know will happen, ones that you can plan for - like Steve Jobs retiring. You might know a product is going to be replaced, how do you plan for the new product introduction while sunsetting the old? You might not know the exact date, but you know it is going to happen.
• External events that you will know will occur (hurricane season) but have no control over. Yet you can prepare some contingency plans for - product recalls or design failures, these are always potential for these to strike, but you can plan for how to handle them if they arise. Or a potential dock worker strike in Long Beach that could cut off your ship bound supply. Much like a hurricane you know that they will occur, just not always the severity.
• Bolt from the Blue events - an earthquake, the SARS outbreak or a volcano. On smaller scale a computer virus attack or power outage - while you can simulate these events, you never know when they will strike or impact your extended supply chain.

With all these events what is key to rapid recovery is real time visibility, your need to be able to see through your extended supply chain to identify where the event is impacting your business and more importantly how to get to the root cause, and therefore implement a solution. The key is - the sooner you can identify the problem the sooner you can recover.

What do you think about the relationship between visibility and recovery? Let us have that conversation at Progress Revolution.