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21st Century Supply Chain

1,151 posts
by Alexa Cheater

Forecast accuracyThere’s no such thing as 100% when it comes to forecast accuracy. Let me say it again. One hundred percent accuracy does not exist. I don’t care how good your demand sensing is or how sure your sales team is of their market projections. It’s just not possible. Anyone who says differently is either selling something, or a deity. So why are you spending so much time trying to make the impossible real?

 

Time and again I’ve heard how important forecast accuracy is when it comes to improving supply chain operations. It always seems to be a priority no matter where on the maturity scale a company falls. But this practice of chasing perfection is killing your supply chain. Not slowly, over time, but rapidly, like a tsunami sweeping your profits out to sea as that one giant wave recedes. Because that’s all it takes to destroy you. One catastrophic unexpected event.

 

Why forecast accuracy fails

 

It could be a natural disaster, a drastic shift in the political landscape or even the collapse of your only tier one supplier. The unknown is your biggest supply chain weakness, and the one you’ll never see coming, no matter how great you are at forecasting. Pretending otherwise, that forecast accuracy can save you when the unexpected strikes, is foolhardy at best, a death sentence at worst.

 

Forecasting fails because it can’t account for unanticipated supply chain risks. But there is a glimmer of hope in all of this doom and gloom. While you’re never going to perfect your forecast accuracy, you can better prepare for unanticipated events by making sure your supply chain can react and respond. That means enabling:

 

  • End-to-end supply chain visibility—see the impact before you feel it
  • Robust scenario simulations—ask ‘what-if?’ and get an immediate answer
  • Cross-functional collaboration—make better decisions faster

Overcoming the unexpected

 

Developing these capabilities requires concurrent planning, which is the ability to simultaneously and continuously plan, monitor and respond to supply chain changes in a single environment. Concurrent planning bridges functional silos and connects all nodes in the supply chain, enabling cross-functional coordination and rapid, more effective decision-making.

 

You’ll gain immediate, actionable visibility across the extended supply chain. By seamlessly connecting your entire network of data, processes and people, you can conquer the unexpected and make your supply chain more nimble across demand, inventory, supply, manufacturing constraints (across tiers), supplier restrictions and transportation modes.

 

With concurrent planning, you radically shrink supply chain planning cycles and response times. This improves the accuracy of analysis and the profitability of actions. Ultimately, leveraging a central system for supply chain visibility, planning and analysis will enable you to know sooner and act faster when catastrophe strikes.

 

Improving the anticipated

 

While forecast accuracy may not save you from the unexpected, it still has a place in your supply chain. It can help you better understand demand, align it with supply and capacity constraints, and yes, help with that bottom line.

 

The trick is understanding its limitations, i.e. that it can’t predict everything. Once you get past that hurdle (and it’s a big one for many), improving your forecast accuracy goes back to some of the basics of concurrent planning.

 

  1. Connect your data in a single system. This allows better visibility into the current state of your supply chain and means you’re building your forecast from the most up-to-date and complete numbers as possible.
  2. Connect your processes, both within and outside of traditional supply chain roles. This allows you to account for outside inputs like marketing (are they running any promotions?), sales (did they make a big commitment in the field?) and finance (do budget cuts mean no new machines or manpower for added capacity?)
  3. Connect your people, regardless of where they’re located geographically. This allows for faster, more effective collaborative decision-making and makes it easier to have conversations around tradeoffs and impacts.

Striking the right balance

 

Chasing perfection is a lot like trying to reach the end of the rainbow. While you may seem to be getting closer to it at times, you’re never actually going to get there. To prevent the destruction of your supply chain by one unexpected event, find the balance between improving forecast accuracy and enabling a more responsive supply chain. It will bring you a lot closer to reaching that pot of gold.

 

Does your company place a higher value on forecast accuracy or responsiveness? Let us know in the comments area below.

 

The post Chasing perfection is killing your supply chain appeared first on The 21st Century Supply Chain.

 

In pursuit of the right supply chain technology solution

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/07/chasing-perfection-killing-supply-chain/

by Dr. Madhav Durbha

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.

 

b) Commodity price and currency exchange volatility – together they introduce increased unpredictability into the business and make managing shareholder expectations more challenging.

 

c) Channel complexity –online channel is increasing in prominence with eCommerce getting into double digit percentages of the total size of the market in several emerging economies. In addition to on shelf availability (OSA), CPG companies will need to monitor their online availability (OLA). Amazon’s recent acquisition of Whole Foods will increase options for CPG fulfillment models. Also with retailers investing in private brands co-opetition between retailers and manufacturers is growing making collaboration somewhat of a challenge.

 

d) SKU complexity – As the assortments get broader, manufacturing is becoming more complex as the production lines need to handle more changeovers, pressuring OEE (Overall Equipment Effectiveness). This also makes previously unconstrained production lines constrained and managing mix level complexity more challenging.

 

e) Regionalized models are evolving – the regionalized model of CPG manufacturing and distribution is evolving towards an increasingly complex, cross-regional flows of the product. These cross regional flows and increased sourcing options add to supply complexity.

 

3. Emergence of subscription models: Amazon Dash buttons, Dollar Shave club, and HP instant ink are some examples of how the traditional transactional model of buying products when needed is being replaced by newer, stickier subscription models with more predictable demand signals and revenue streams. CPG companies can harness the power of such subscription models to align supply to true consumption, and bring more stability into their operations.

 

4. Shifting consumer demographics: In the mature economies, the middle class is feeling the squeeze with increased healthcare, educational costs and life expectancy. Emerging markets, while proving to be fertile ground for the growth of brands, are more recently under pressure due to softening economies amidst currency weakness and rising nationalism in the western hemisphere. Consumers are becoming increasingly health conscious and are looking for products made of organic, locally produced ingredients as much as possible. Deeper understanding of consumer choices and catering to them will provide topline growth opportunities for CPG brands.

 

5. Rising environmentalism:  Recycling and reusing while reducing the global carbon footprint is not only becoming an imperative, but a competitive differentiation for brands and their social image. Environmental sustainability is near the top of every CPG supply chain executive’s agenda. Biodegradable packaging and retrieval of unconsumed products is becoming critical for CPG companies.

 

All in all, these trends are causing CPG companies to rethink their business strategies and operational models, increasingly making supply chain agility a core enabler. In a future blog, I will discuss some key ideas and practices for CPG in improving their supply chain agility.

 

What trends are you seeing? As always, would love to hear your thoughts.

 

The post 5 key trends affecting the Consumer Package Goods industry appeared first on The 21st Century Supply Chain.

 

In pursuit of the right supply chain technology solution

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2017/07/5-key-trends-affecting-consumer-package-goods-supply-chain/

by Alexa Cheater

CPG supply chainEvery day it seems as if one company or another is touting they’ve just released the next big thing—that new device that will change your life. In reality, all this emerging tech, whether it’s turning your world upside down or not, is having a very real impact on how businesses manage their supply chains. None is feeling the effects more pointedly than those in consumer packaged goods (CPG), as all this new technology has fundamentally altered the way consumers research and shop for products.

 

That in turn is changing how organizations are manufacturing and delivering goods. As John S. Phillips, SVP of Customer Supply Chain & Global Go-To-Market for PepsiCo shared during his keynote presentation at the Gartner Executive Supply Chain Conference, this digital revolution presents enormous challenges and opportunities across the end-to-end consumer value chain.

 

He outlined eight emerging technologies that are most likely to drive dramatic changes across the CPG supply chain.

 

1. Connected home

 

You won’t just find smart devices in futuristic TV shows anymore. Odds are there’s one within arm’s reach of you right now. But smartphones aren’t the only device turning your home into something straight out of The Jetsons. Already on the market, Samsung has released a refrigerator that lets you see its contents in real-time directly from your phone or the in-door display panel. HP has a printer that can order ink and have it shipped directly to your door automatically. Whirlpool has a washing machine that does the same thing with laundry detergent.

 

Key points:

 

  • Evaluate IoT connectivity to gain new insights into your customers
  • Look to consumer and home IoT devices for inspiration on commercial applications
  • Assess your company’s ability to read, warehouse and act on IoT demand signals
  • Leverage new consumer and demand insights to rethink your supply chain

2. IoT at retail

 

Homes aren’t the only thing getting smarter. Retail is upping its game too. With advances like smart shelves that have sensors detecting stock in real-time and cameras in refrigeration coolers to ensure stock, the right product mix and brand display alignment, the race to capture customer data is heating up. Phillips gave an example of how PepsiCo is using cameras in display fridges that send real-time pictures to their team. The team checks for things like stock outs or foreign products, but the crux has been how to take that data and turn it into actionable insights for field teams. That depends on alerts managed autonomously, and Phillips has already seen them in action. He relayed how he saw a demo of true shelf-aware systems at a retail location that sends alerts in real-time when a stock out happens directly to a mobile phone.

 

Key points:

 

  • Take visibility beyond dashboards to true shelf-aware systems
  • Consider infrastructure requirements in store design and within supplier systems
  • Collaborate with trading partners to unlock the full capability of retail IoT
  • Think beyond scorecards and dashboard and work toward autonomous interventions

3. In-store robotics

 

Taking things beyond just smart shelves and cameras, robots are already roaming the aisles of select stores, doing their part in ensuring quality and great customer service. These retail robots can scan and track on-store inventory at rates far exceeding what any human worker could accomplish, capturing data on up to 20,000 products an hour. Simbe Robotics’ Tally is one such retail robot. It traverses large brick and mortar retail environments to capture, report and analyze the state and availability of merchandise, and help ensure compliance with the store’s planogram – the ideal placement of products on shelves in order to maximize sales. Tally performs the repetitive and laborious tasks of auditing shelves for out-of-stock items, low stock items, misplaced items and pricing errors.

 

Key points:

 

  • Create new opportunities to improve customer service with robots
  • Automate manual processes
  • Gain near real-time insights with image recognition and cloud processing technology
  • Evaluate processes within your organization that could benefit from autonomous robots

4. Crowdsourced delivery

 

In the way that Uber has transformed passenger transportation, similar companies are doing the same thing for product and package delivery. Companies like InstaCart and Shipt offer last mile grocery delivery so you don’t ever have to go to the grocery store again. Roadie connects people hitting the road with stuff that needs to get delivered for cheaper, friendlier (according to them) service. The number of websites and apps providing delivery from restaurants seems nearly endless. Manufacturers are getting in on the action as well, splitting shipping costs with competitors to ensure trucks don’t go out half-filled. The gig economy is providing limitless opportunity.

 

Key points:

 

  • Explore crowd sourced delivery capabilities, they’re expanding nationally at a rapid pace
  • Evaluate partnerships to offer delivery of your products to consumers and businesses
  • Create sticky purchasing behavior with customers by offering robust delivery services
  • Expand sales by providing delivery services that increase the size of your trading area

5. Drones

 

Adding to those opportunities is the use of drones. It’s estimated drones could reduce delivery costs by 80-90%. But it isn’t just on goods delivery where drones are having an impact. Remarkably, air passenger drones are already set to take to the skies in Dubai this summer. These driverless, flying taxis are part of Dubai’s plan to have self-driving vehicles (of all kinds) account for a quarter of journeys made in Dubai by 2030. Ground delivery drones are also quietly kicking things into high gear, getting far less publicity than their airborne counterparts, but delivering big innovations for businesses.

 

Key points:

 

  • Realize aerial and ground drones are becoming a reality
  • Recognize drones have the potential to redefine the cost of last-mile logistics
  • Explore how drones can play a role within your international operations in terms of inventory and goods transport
  • Begin testing with key drone partners

6. Autonomous vehicles

 

Companies like OTTO, which produces self-driving vehicles designed to automate material transport and take your intralogistics to the next level, and Urban Aeronautics, which created the AirMule, an unmanned flying car used for search and rescue in areas otherwise too inaccessible to reach, are putting autonomous vehicles on the map. Beyond just driverless cars, autonomous trucks, travelling in convoys, could change the very face of logistics.

 

Key points:

 

  • Be aware autonomous vehicles are maturing globally at a rapid pace
  • Acknowledge aerial and truck formats have the potential to disrupt supply chains
  • Understand autonomous vehicles can improve transportation safety
  • Evaluate how and where autonomous vehicles can play a role in your organization

7. Virtualizing expertise

 

Imagine having all the information you need right at your fingertips—without having to pull out your computer or smartphone. Augmented reality is bridging the gap between humans and machines, letting us experience the real world in entirely new ways. Current real-world examples include service technicians who can use augmented reality to improve their on-the-job performance with full schematics overlaying the physical object they’re working on. Taking things even further, it’s allowing those same service techs to connect and share live what they’re seeing with experts anywhere in the world.

 

Key points:

 

  • Comprehend the impact advanced wearables are enabling new augmented reality capabilities
  • Improve profitability by enabling frontline workers with hands-free access to data
  • Provide transformational capabilities with remote expert tools
  • Identify and test applications and hardware in your environment

8. Artificial intelligence

 

Advancements in augmented reality are paving the way for even further human-machine collaboration. Artificial intelligence has the ability to revolutionize life, and your supply chain, as you know it. Prescriptive analytics and AI are providing the ability to machine learning to take place, ultimately culminating in a reality where AI-equipped machines are making and executing decisions regarding your supply chain.

 

Key points:

 

  • Begin planning your AI data foundation today to leverage emerging capabilities
  • Assess your organization’s data maturity and hygiene
  • Understand AI capabilities by exploring available resources like Google’s AI Experiments
  • Recognize the key to machine learning systems is the training that goes into them

Phillips says it’s time to think about extending your supply chain vision all the way to the consumer. That means identifying and adopting technologies that provide a competitive advantage. What steps is your organization taking to prepare for these digital disruptors? Let us know in the comments area.

 

The post Coming soon to a supply chain near you: 8 big digital disruptors appeared first on The 21st Century Supply Chain.

 

In pursuit of the right supply chain technology solution

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/07/coming-soon-supply-chain-near-8-big-digital-disruptors/

by Alexa Cheater

IoT Supply chain planningThere’s no denying the Internet of Things (IoT) has taken hold of nearly every aspect of our lives. With the number of connected devices estimated to surpass six billion next year and more than 20 billion by 2020, the steady stream of data these devices are providing can easily crowd and clog your supply chain planning processes if you’re not prepared.

 

Gartner Research Director Andrew Downard addressed the issue during his presentation at the Gartner Supply Chain Executive Conference by outlining three macro trends affecting supply chain planning, chief among them IoT.

 

He defined IoT as a system of inanimate internet-connected devices linking the physical and digital worlds, and predicted that retailers engaged in IoT partnerships with major manufacturers will take significant market share from their competitors as early as 2018.

 

When it comes to your supply chain planning, the data sourced from IoT-enabled devices lets you continuously sense, communicate, analyze and act.

 

Real-world examples

Examples of this already exist in the marketspace. Coca Cola’s Freestyle machines, which enable end consumers to select their own unique beverage flavor combination has already inspired the creation of new mainstream and traditionally distributed products. Take the launch of Cherry Sprite. The data coming from the Freestyle machines let Coca Cola see which flavor combinations were most often selected by people across locations and determine if there was any seasonality to it. What they found was a demand for cherry flavoring added to traditional Sprite.

 

HP’s Instant Ink has transformed a section of the printer manufacturer’s business model into a subscription-based revenue model, and transformed part of its supply chain in the process. HP’s new venture uses smart printers that sense each drop of ink being delivered to a page so it can monitor ink levels and order and ship new ink cartridges before you run out. That means better forecast accuracy for HP, but also a change in how and where to handle distribution and logistics.

 

Grocery store Tesco has altered its business by creating virtual grocery stores in subway stations in select regions. Commuters have the option to digitally browse for goods on virtual store shelves, selecting and purchasing products and then scheduling home delivery for a time that’s convenient for them—say 40 minutes later when their commute is over.

 

All of these examples relate to the second of Downard’s macro trends—digital business.

 

Digital business

Digital business is about ideas and models that blend the digital and physical worlds. It creates a convergence of people, business and things. While the above real-world examples of how IoT is affecting supply chain planning were mostly related to retail or business-to-consumer (B2C), there are business-to-business (B2B) examples of digital business, as well.

 

Lockheed Martin is building smarter airplanes, where engines can run self-diagnostics, alert flight crews to any issues and even schedule its own maintenance based on flight schedules and service bay locations. The same is happening in the trucking industry.

 

One trend that is helping shape the reality of digital business is the notion of an IoT order button, the most notable example of which is an Amazon Dash button. Essentially, it overcomes the challenges of abandoned online shopping carts, which have sat at a staggering 70% abandonment rate for the past decade. That means seven out of 10 online orders will never be completed. Regardless of how or why this phenomenon occurs, IoT buttons are finding a way around it.

 

These buttons allow users to order a select item instantaneously without the need to go through an oftentimes-lengthy online checkout process. In many cases, we’re talking about physical buttons. The infamous Staple’s ‘Easy’ button, which started out as a novelty item, will soon be able to actually place orders for you.

 

There are currently close to 300 brands using Amazon Dash buttons, and early reports show they’re driving big business. Amazon estimates that more than 50% of its orders are now coming directly from Dash buttons, and Dash button orders have grown consistently by 70% per quarter.

 

However, this new way of ordering is fundamentally changing how supply chain planning and execution works. In order to fulfill Dash requests quickly and efficiently, manufacturers need to rely on a network of distribution and retail centers to meet the need.

 

That means before you jump into this new reality, make sure your supply chain planning is ready to handle IoT button orders. Downard suggests the following:

 

  • Choose low variability, high volume products with well-defined fulfillment pathways
  • Prepare for direct and indirect demand drivers across multiple channels
  • Use participation in IoT button programs to deepen the retailer relationship in other areas

With the advancement of IoT and digital business comes Downard’s final macro trend—algorithmic planning.

 

Algorithmic planning

Algorithmic business, powered by algorithmic planning, represents a future where supply chains can act and negotiate on their own. It’s the evolution of decision support levels, culminating in non-optional automation where smart machines and AI make the decisions and we abide by them.

 

Here are the levels of decision support as outlined by Downard:

 

  • General information—give me the facts (use historical data)
  • Specific information—give me a suggestion (statistical forecasting)
  • Advisory guidance—help me as I go (automated alerts)
  • Opt-in automation—Do this complex task for me (run multiple forecasting models and recommend the best fit)
  • Automation that can be over-ridden—take responsibility for this task until I tell you otherwise (automatic re-order points for replenishment)
  • Non-optional automation—take responsibility for this task and don’t let me or anyone else interfere

But we’re not ready for machines to take over supply chain planning entirely. There’s still a divide between machine-led algorithmic planning, which at this point in time centers on sensing, analyzing and responding, versus human-led consensus planning. In human-led consensus planning, it’s about testing, learning and experiment. Cause and effect isn’t already known. To further bring machine-led planning to the next level requires a different skillset among your supply chain.

 

IoT supply chain talent impact

All three of these macro trends—IoT, digital business and algorithmic planning—are causing a shift in supply chain talent. More emphasis is being placed on algorithmic skills. That means delegating manual and simpler tasks to robots or machines, and investing in talent with a better blend of supply chain, IT and analytical skills.

 

Downard suggests moving from having five demand planners to three demand planners, one data scientist and one data engineer. Your data scientist should have advanced analytics expertise and be able to solve data science problems. Your data engineer should help build data infrastructure and work to make data consistently accessible.

 

But be aware the demand for these data scientists and engineers is already on the rise. If you want to start prepping your supply chain for the impact of IoT, you’re going to need to start recruiting and training this new mix of talent now.

 

Recommendations

Downard ended his presentation with some recommendations to get you ready for IoT in supply chain planning. They are to:

 

  • Understand the fundamental changes required for digital maturity in supply chain planning
  • Ensure supply chain planning is a strong, recognized player in your company’s decision to build digital business partnerships
  • Identify data that you can leverage in supply chain planning algorithms
  • Balance the skill set of your team to match what’s needed for digital business and algorithmic planning

How has IoT influenced your supply chain planning? Let us know in the comments area below.

 

The post The rise of IoT in supply chain planning appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/07/rise-iot-supply-chain-planning/

by Melissa Clow

Headquartered in Yokohama, Japan, Nissan manufactures vehicles in 20 countries around the world. Nissan offers products and services in more than 160 countries and areas worldwide. As a leading global automotive manufacturer, Nissan Motor Co. operates in a complex and competitive environment.

 

Because of this, the company struggled with disconnected, manual planning processes, which required a concurrent planning platform to enable a more efficient operation. After a competitive evaluation process with multiple vendors, Nissan selected Kinaxis RapidResponse because of its concurrent planning capabilities.

 

“A robust supply and demand balancing system is critical for a global company to drive tangible business outcomes,” said Koichiro Sakakibara, Manufacturing and SCM System Department at Nissan. “As RapidResponse is deployed, we will remove supply chain planning functional boundaries to gain a consolidated view of our entire supply chain. We see this as a long term relationship between our two companies and are convinced of the flexibility and scalability of RapidResponse to support future plans.”

 

Learn more >>

 

The post Nissan Motor Co. to revolutionize S&OP appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/07/nissan-motor-co-revolutionize-sop/

by Bill DuBois

Sears supply chainThe other day I turned on the news to the headline of Sears Canada closing 59 stores. My thoughts went immediately to images of my mother passing around the Sears catalog as she asked us to mark pages with gift suggestions. That tradition continued with my own children as she would sit down with them and shift through the toy section for ideas. What happened to those “good ole days?”

 

Those days of bonding over the Sears catalog were over a decade ago and the strategy of mailing a catalog has long been left in the dust. In the meantime, Sears hasn’t turned an annual profit since 2010, with losses in the billions. The gut reaction for many would be to say Sears, or its Kmart brand, didn’t keep up with the growth of online shopping, but the store’s troubles started long before browser buying became the norm, and can be tied to the brand not planning for the future of their supply chain.

 

Doing things

 

For the most part during all those years of losing money, Sears didn’t change the way it did business. The company just went about the day doing things the way they’d always been done, like mailing catalogs. It did little to invest in its brand and tried to work its way back to profitability by cutting. There was also little done to attract new customers and the Sears clientele remained for the most part late baby boomers. One would have been hard pressed to find a millennial coming out of Sears and pulled aside for an interview on what they thought about the store’s demise.

 

Doing things better

 

By just doing things as is, Sears did little to set itself up to compete with new competitors like the low-priced Walmart or box stores like Home Depot and Costco. These companies built great brand recognition while Sears lost its place in the Dow Jones index of the nation’s most important companies in 1999. Yes, 1999. That’s pushing 20 years to turn things around and re-invent yourself after a huge red flag is thrown your way. Sears took a major punch to the mid-section from the companies doing better but were still in the fight. But is a knockout blow on its way?

 

Doing things differently

 

There’s no question Sears lost ground to the companies doing things better. But will companies doing things differently make it impossible for Sears to come back from the brink of bankruptcy? Amazon and Apple easily come to mind as companies doing things differently. These companies revolutionized how consumers can research, buy and take delivery of product. They know their customers. They figured out how to best service them, and made it easier for customers to buy. On top of that, the brand recognition of these companies dwarves that of Sears, especially with younger generations.

 

It seems the grave is dug and we’re just waiting for the plug to be pulled on Sears. Sears has had recent initiatives to change its course such as its strategy to mix online and in-person shopping, allowing customers to buy online with convenient store pickup, or chatting with in-store experts who have done little to course correct. But wait, is there still a heartbeat?

 

There is if you look at one more company that’s doing things differently, Best Buy. In Kevin O’Marah’s weekly insights, Beyond Supply Chain, (http://www.scmworld.com/best-buy-and-retails-long-road-back/ ) O’Marah highlights how Best Buy, which was also on life support not so many years ago, is staying alive in the growing online economy. He called out the factors that brought Best Buy back from the brink.

 

Best Buy got closer to its manufacturing. Kevin states that “retail’s traditional merchant mentality has an operational flaw: it essentially ignores the supply chain.” Traditional operations are full of silos, with separate teams managing logistics, merchandising and store operations. In this case, it’s build product, ship, stock and wait for purchase. Amazon changed all of that by taking orders first. With that, came the collapse of supply chain silos to support this leaner mode. As a result of that shift in traditional operations, Best Buy now allows brands to operate within its stores, giving them direct links back to factories, new product launch plans and technical support. For Best Buy, the store is now an extension of the supply chain.

 

The other key thing Best Buy did was to view the store from a shipping and logistics standpoint. O’Marah quoted a Wall Street Journal article stating half of Best Buy’s online orders are shipped from a store. With so many stores, ship-to locations are only a few miles away from the majority of customers, making delivery times shorter. This model will only get stronger as in-store operations improves its shipping capabilities.

 

Sears is now trying the same approach Best Buy took with in-store experts and improving the face-to-face experience. But can it learn from the other lessons of investing in the brand and getting closer to the supply chain? Time will tell. There are some lessons learned for supply chains in both Sears and Best Buy’s cases. Are we just doing, or are we doing better, and are we looking at doing things differently?

 

Doing things differently in supply chain

 

It’s difficult for supply chain practitioners to catch their breath while keeping up with the planning and execution of their networks. It’s critical though to dedicate time to preparing for the future. Gartner talks about the bimodal supply chain. With supply chains, we have to keep executing (doing), but in parallel, we need to test for the future to see how we can do things better, and eventually do things differently. Key ingredients for the bimodal supply chain are the flexibility to fail, to test new ideas and quickly move on if they don’t achieve the desired results. To dive a little deeper into this concept of a bimodal supply chain, check out my colleague’s blog post on the topic.

 

There are a number of factors affecting successful bimodal supply chains, including leadership, talent and technology. At the top of the list will be supply chain analytics. Supply Chain Insights highlighted critical analytic techniques we should all be investigating.

 

The post How you doin’? Is your supply chain doing the right thing to prepare for the future? appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Bill DuBois at http://blog.kinaxis.com/2017/07/doin-supply-chain-right-thing-prepare-future/

by Melissa Clow

Recently, Madhav Durbha, Vice President of Industry Strategy at Kinaxis was interviewed by SupplyChainBrain on supply chain planning in the digital age.

 

I wanted to share their fascinating conversation with our readers – check out the video interview and transcript below:

 

Supply chain planning in the digital age

Madhav Drubha, Supply Chain Planning, SupplyChainBrain

 

SupplyChainBrain: What are you hearing from your customers about the biggest challenges they are facing right now in supply chain planning?

 

It’s fairly simple. It’s complexity and volatility are the two themes that I constantly hear from our customers, regardless of the industry, that seems to be the recurring theme.

SupplyChainBrain: And talk about what you mean by that, complexity of what exactly? How are supply chains becoming more complex?

 

Think of yourself as a consumer. There is omni-channel you can buy products anywhere, you can order stuff from your mobile phone and then get delivered to your home, and so on. So as a consumer, you have a lot more channels through which you can engage with the manufacturers. Think about personalization of products. You know, “I want something now, and I want it to suit to my taste.” That’s causing a lot of SKU proliferation amongst the manufacturers and suppliers of these products. Geopolitical factors….. all we need to do is watch the news in terms of all the action that’s happening around the world, that’s introducing more complexity as well. And then, individual targeted promotions. So all these factors put together, they’re increasing the complexity and volatility in terms of supply chains and it’s making planning more challenging than ever.

SupplyChainBrain: Omni-channel, especially, you referenced that. What are some of the trends there in omni-channel that you see going on with regard to what customers are getting or are demanding today?

 

It’s like I said, it’s personalization is one. If I want to order a shirt and it’s not just my size, it’s my name on the shirt, maybe. It’s the ability for me to order the product online and then I can go pick up in store, I can go have it delivered to my home, or elsewhere. When you look at this, earlier it used to be that I walk into a store that’s the source of the demand, that’s where I’m placing the demand, and I’m picking up the product, as well, it’s very linear, right? In today’s world, with buy anywhere, pick up anywhere kind of paradigm, supply chains are a lot more complex.

SupplyChainBrain: You know, it seems like in the past, the biggest dream of supply chain planners was they wanted more information. Now they have the information, but are they making the best use of it? Are they inundated, are they flooded by it, or can they actually turn it into something actionable to create more accurate plans in the supply chain?

 

They are absolutely flooded with lot of information. The data sources and the types of data are exploding, if you look at it. What’s limiting them, from a supply chain planning perspective, is that the technologies and the paradigms under which most of the companies are working today, these paradigms have been around for 20 years. These are typically batch-oriented, you do a demand plan, and then you push it over to supply plan. Then you do capacity planning, so on and so forth. In such a very linear cadence-oriented processes, where there are multiple handoffs, there’s typically a lot of silos in that and a lot of latency in that. But the need of the hour really is the, like I said, the ability to know sooner and act faster, and they’re not able to do that. It’s like engaging in modern warfare, using swords and horses.

SupplyChainBrain: Well, one other one of the big challenges is SKU proliferation. There’s simply more SKUs out there because, as you say, the personalization and the like. Are companies handling that well? How can they decide what SKUs to order, where to stock them, where to ship them? It seems like a tremendous challenge.

 

It is a tremendous challenge if you look at beyond the consumer interactions with the retail channels and so on. If you look back into the supply chain, the number of sourcing options are increasing, outsourcing of manufacturing is on the rise. So we do think some best in class companies handling that fairly well, that kind of complexity. And the way they are doing it is really being able to bring together the data processing people together and connect them all.

SupplyChainBrain: Well, now, let’s throw in geopolitical and regulatory issues. Talk about those complications and how they’re affecting supply chain planning today.

 

Sure, we look at all the talk around the trade agreements between different countries and how that is changing. That is definitely going to impact the flows of the supply of material across the borders. That is one, for sure. You look at some of the terrorist activities and other unpleasant activities that are going on around the world, those could cause disruptions to the flow of materials as well, right? So all these factors need to be considered. And, as information is evolving, changing in real-time, organizations need to have the ability to consume that and being able to respond to that.

SupplyChainBrain: You talk about knowing sooner and acting faster, which is a great way of putting it in a very succinct manner, what companies need to be doing. And, yet, as we have discussed here today, they’re not all managing to do that, so, we’ve talked about some of those barriers. Could you kind of sum up for me what are the reasons why the companies are unable to achieve that goal, at least at this point in time?

 

Like I said, they’re working under the 20-year old paradigms and the technologies of the past, so what that is doing is they need the ability to respond in real-time, but these systems are inherently batch-oriented. You need to run a plan overnight to come back with an answer tomorrow. We live in the world of Uber. When I punch …ask for a ride, 5 minutes later the car shows up. That’s the world we live in today, and it’s exactly the same paradigm that is needed for planning, as well. They’re not able to do that, the planners are exporting the plans from these batch engines into Excel spreadsheets and trying to do as much as they can within these Excel spreadsheets, and that is causing lot of Excel proliferation within organizations as well. And inconsistencies and scope of increased manual errors, that’s part of the challenge.

 

SupplyChainBrain: Things are happening so fast, you have to wonder whether companies should deemphasize the whole idea of planning and instead switch into an agility mode whereby they’re simply responding to current demand. Is that possible to do?

 

Well, theoretically, it sounds like an interesting idea, but the reality is that there are long lead times that companies need to plan for, you know. When they need a product, they get a demand signal, it’s not that immediately they’re in a position to make it and then distribute it and ship it to the point of consumption. So, planning is extremely relevant, in fact, more so in today’s world, as supply chains become more complex and network like, as opposed to simple linear flow of materials.

 

SupplyChainBrain: I’m sure that supply chain planners will be happy to know that they’re still gonna be needed in the future. So based on this state of affairs that you’ve sketched out for us, what’s the fix? Based on your experience and your knowledge of this business, what should companies be doing in order to achieve these goals?

 

So it used to be that companies are still, like I said, the current paradigm is do manufacturing planning, distribution planning, demand planning, etc. But in some of the leading companies, there is an emerging practice called, “Conquer and Planning,” that we’re seeing more and more in practice. So looking at your supply chain end-to-end network, right? Having visibility to your end-to-end network in one place, being able to visualize how your supply chain is performing with all its metrics and KPIs at any point in time, and then being able to layer an intelligence on top of any disruptive events, you know. Or events that are pleasant or unpleasant, for that matter, being able to intelligently respond to those.

 

And the last, but not the least, there is the human element to supply chain planning, right? We are not in a world where supply chain planning is totally touchless, and it’s happening in a touch-free environment. The human planners and the human intelligence is very much needed. And for that, these companies are enabling collaborative capabilities. There’s social media-like collaboration where you’re sharing context, specific information with your colleagues and co-workers, and you’re cooperating that supply chain.

 

SupplyChainBrain: On top of which you’re able to construct the so-called, what if scenarios, you can work out a lot of possibilities before you commit to one, thereby choosing the best course of action.

 

You’re absolutely right. These companies are able to run these what if scenarios in real-time, be able to compare them, and score them, and pick the best possible scenarios to execute against.

SupplyChainBrain: It sounds like there’s some hope for some improvement we are already starting to see in terms of supply chain planning in the digital age. So, Madhav, I want to thank you so much for guiding us through this world a little, telling us how the state of affairs now and how things might shape up in future. Thank you very much for talking to us.

 

Thank you. Glad to be here.

 

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The rise of the digital supply network

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/06/supply-chain-planning-in-the-digital-age/

by Alexa Cheater

Supply chain leadership - footballPro Football Hall of Famer Troy Aikman, who led the Dallas Cowboys to three Super Bowl victories in four years in the early ‘90s, may not be the first person you think of when it comes to giving great supply chain advice. One thing the legendary pro athlete does know is leadership. You can’t be a great quarterback without it and that was the topic of his keynote presentation at the recent Gartner Supply Chain Executive Conference.

 

The wisdom he shared, while not directly related to supply chain leadership, is certainly applicable to that space.

 

Lead from a basis of who you are

There are tons of great leaders out there, and while some have common characteristics, Aikman says ultimately, being a good leader means being true to who you are. He cautions that if your personality naturally tends to swing one way or the other between soft and caring, and tough and demanding, you’re going to need to find a way to strike a better balance. You can’t coach everyone the same way. Learn what works with your team members and be a better leader by motivating them in the way that works best for them.

 

This lesson comes down to gaining a better understanding of how you and your team members work individually, and as a whole. When it comes to your supply chain, understanding cross-functional dynamics, much like the dynamics between the different positions of a football team, becomes critical in overcoming the all too common issue of silos. If you properly manage the team dynamic, you’ll have a team that’s more collaborative, and ultimately a supply chain that’s better equipped to make better, faster decisions.

 

Coach for what you want your team to be, not what they are

Aikman shared a story about a player who wasn’t always the superstar on the field. He knew his job, and tried hard, but just didn’t seem to have the talent of some of the other players. Aikman then explained that this player was transformed by a few inspirational words by the coach—who told him he was the best player he had coached in that position in a very long time. The next time that player started, it was as if he was a completely different athlete. Aikman says the lesson here is that you have to coach your team for what you want them to be—whether that’s an amazing running back or a demand planner who’s taking the time to look at the end-to-end supply chain instead of just node-to-node.

 

Recognizing that your players may not be where you want them to be now, but seeing their potential for the future is critical to the success of your supply chain. As a strong supply chain leader, you’ll be able to guide them into the roles you want them to play—a vital skill, especially during times of change.

 

Don’t discount the importance of locker room skills

Aikman also places a heavy importance on good locker room skills. In a football context, he warns upper management is sometimes too quick to cut players who may not be at the top of the roster in terms of on-field skills. Taking a strict “money ball” approach and not taking the time to see the impact those players have on the rest of the team in terms of morale and motivation, may end up being a big mistake. Certain people emerge as leaders off the field, and the same is true of your supply chain team.

 

If someone on your team isn’t your superstar player (but can still get the job done satisfactory), but helps the rest of the group function better as a whole, it could be worthwhile keeping them on board. There’s something to be said for having soft skills, like conflict resolution and compromise negotiation, especially in supply chain where tradeoff decisions happen daily. Some people just naturally bring out the best in those around them.

 

Be confident in your processes and your people

Stick to your call if you’ve made a decision based on what you believe is the right play to run—even if others are skeptical. Provided you’ve done your due diligence and thoroughly evaluated your course of action, you have to be confident enough to move forward with it. Listen to what others have to say, but if you’re still convinced you’re on track, don’t back down. If you’ve done your job right as a leader, your team will follow you onto the field even against the toughest opponents and give you their all because they believe in you.

 

That confidence is a requirement in supply chain where innovation and change aren’t always easily accepted. You may face pressure from above and below, but remember that without risk there’s no reward.

 

Across all of the lessons Aikman shared, one message always came out on top. It takes more than a quarterback to win the game. Every person on the team has an important role to play, but to truly achieve success, in football or in supply chain leadership, you must surround yourself with good people, make good decisions for the right reasons, work hard and all focus on achieving the same result. Valuable lessons, even if you’re not a Dallas Cowboys fan.

 

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The rise of the digital supply network

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/06/supply-chain-leadership-lessons-dallas-cowboys-legend-troy-aikman/

by Dr. Madhav Durbha

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.

 

In a separate session Markus talked about pilots they are conducting with the Logistics robots. One observation he made was about how different logistics robots need to be compared to manufacturing robots. Manufacturing robots tend to be stationary, focusing on repetitive tasks while logistics robots within a warehouse setting need to be more adaptive and humanlike as they need to move around the warehouse, picking, putting away, and cleaning. To perform such versatile tasks, the robots need to be able to see (through computer vision), have brains (through artificial intelligence) and be willing to be trained (machine learning). Markus said these robots also have an interface to humans, i.e., the face of the robot on which something as simple as a green light to show that the robot understood the instructions, to something more complex, such as a facial expression. Markus mentioned that given the shift to picking of eaches due to omnichannel, logistics robots have challenges picking packages of certain shapes and sizes. But I left with the feeling that in light of the accelerating innovations, this is something that will be addressed in the near future.

 

2. Digital disruption upending the seaports: In quite a fascinating panel discussion with Jordi Torrent of the port of Barcelona and Matthijs van Doorn of the port of Rotterdam, they talked about how the seaport business is turning quite volatile. 3D printing is shifting manufacturing closer to the point of consumption. This will cut down the need to move components and/or finished product around the world. Jodi quoted a pwc study suggesting that 3D printing will result in 41% reduction in air traffic and 37% reduction in sea traffic. One advantage with 3D printing is that there will be more commodities and raw materials being shipped to the points of consumption and these commodities and raw materials cube better than finished products because of their shape. The discussion also included other trends contributing to increased volatility, such as the direct rail transportation from China to deep into Europe, and potential opening of the Arctic shipping way with the melting of polar ice.

 

3. Macroeconomic factors driving supply chain volatility: In a panel discussion on the topic of macroeconomic factors, Peter Roerig of Royal FrieslandCampina talked about the trends/events impacting the dairy supply chain, though these have broader implications to other industries as well. Some of the examples he cited include Russian dairy import ban, Ebola travel ban, Arab spring, oil crisis (lack of foreign currency for oil dependent nations when the price of oil fell), inflation in certain countries such as Mexico and Brazil stripping consumer buying power, Haiti earthquake, terrorism, US elections and increase of protectionism, Brexit etc. All in all Peter’s message was to “expect the unexpected, and be prepared”. An audience member made a very apt observation that why all the macro factors were to do with negative events. It made me pause and reflect. Yes. Positive events can cause supply chain disruptions as well. For example a new large order or a new product or promotional offer performing exceedingly well can be quite disruptive to the supply flow. However, I suppose fear can be a great motivator and hence often times we fall back on negative examples to highlight disruption. I am no exception to this!

 

4. The future of jobs in light of increasing automation: There was plenty of discussion around the future of work and human jobs in light of machine intelligence and automation. One of the attendees told me that they are having trouble finding enough qualified workers in the warehouse due to the rise in omnichannel activity. He viewed automation as a blessing to counter this capacity crunch. However, in general, there was consensus amongst the attendees that as the machines get smarter, humans will need to consciously consider investing in retraining and retooling their skills. In my view, the governments and private sector will need to take some ownership in providing avenues for motivated individuals to retool their skills. There was also some discussion on skills shortage isolated to certain markets, which automation can alleviate. One attendee mentioned that since announcing Brexit, the migrant workforce from eastern Europe to UK dropped by 90%. Quite a challenge indeed!

 

5. Supply chain agility or Supply chain nervousness?: Christoph Glatzel of McKinsey made a very compelling presentation on how planning needs to be touchless and real time in light of the digital disruption. On a related note, in a very energetic panel discussion that I took part in along with Zoltan Pekar of Roland DG, Michael Ginap of APICS Supply Chain Council, and Patrick van Gent of AIMMS, Michael made a very provocative comment that all the talk around “supply chain agility” is turning a bit hysterical. An apt comment! It is easy to get caught up in all the hype and talk about agility and digitalization, and introduce “nervousness” in the name of “responsiveness”. Practices such as supply chain segmentation, inventory target setting, and smoothing of production and distribution schedules and bringing consistency and repeatability into them, are all ways to build shock absorbers into the supply chain systems. Speed of responsiveness driven by real time planning is not about having knee-jerk reactions. It is about having the latest information at the finger tips to decide on whether to act and how to act.

 

2017 Supply Chain & Logistics EMEA summit & expo6. A time to reflect on how far we came: In an evening boat cruise hosted by the Port of Barcelona for the attendees, I couldn’t help but notice the thousands of containers sitting on the port. The shipping container is perhaps one of the most impactful supply chain innovations that stood the test of times. It has truly made supply chains global by providing an efficient and cost effective means of transporting massive amounts of materials and products around the world. With all the talk around drones, AI, 3D printing etc, it is often easy to forget such innovations that may look mundane. This mini excursion gave me an opportunity to reflect on such innovations.

 

All in all it was quite an exciting and engaging event. The camaraderie and the conversation among the attendees served as yet another reminder that regardless of whether one is a practitioner, technology provider, consultant, or an analyst, we are all members of the close-knit supply chain family, with the purpose of making a difference in the world!

 

The post Agility and flexibility in the age of digital supply chains – Insights from the 2017 Supply Chain & Logistics EMEA summit & expo appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2017/06/agility-and-flexibility-in-the-age-of-digital-supply-chains-insights-from-the-2017-supply-chain-logistics-emea-summit-expo/

by Carmen Humplik

Freight transportationEvery year, the city of Ottawa hosts an event called Doors Open Ottawa. Approximately 150 historically, culturally, and functionally significant buildings open their doors to the public. If you’re a resident of the city, it’s a great way to explore your own backyard as it allows you to gain access to buildings that are normally closed to the public.

 

This year, my family and I decided to take advantage of the event and visit National Research Council (NRC), Canada’s 9 m wind tunnel testing facility. This is the third largest wind tunnel testing facility in the world. Their testing spans across many industries including aerospace, automotive, surface transportation, construction, energy, and sports.

 

Our tour guide, one of the researchers at the facility, was speaking about both their past and current projects. I found it interesting to discover that one of their current projects has direct impact on supply chains; more specifically, on freight transportation. They are currently testing the aerodynamics of trucks driving in a peloton formation, which is also known as platooning.

 

Platooning is a technique that is similar to those employed in cycling road races where cyclists ride in close formation to help them conserve energy and reduce drag. When you reduce the distance between trucks (somewhere around 5 to 10 meters), you can also reduce drag, and, as a result, save on fuel and lower C02 emissions. Advocates for truck platooning also claim that it could have the added benefit of improving highway safety because it better controls speed and could help reduce chain collisions.

 

In an article published by the MIT Technology Review on self-driving trucks, “fuel costs account for one third of the cost of operating a long-haul truck.” Studies suggest that platooning could help drive down these operating costs. In the U.S. alone, the American Trucking Associations (ATA) reported that trucks carried 10.49 tons of freight in 2015, accounting for 70.1% of domestic freight tonnage. Therefore, with trucks playing such a dominant role in the freight transportation landscape, reducing fuel consumption could also reduce the carbon footprint of the trucking industry as a whole. However, investments must be made in upgrading truck fleets to enable platooning.

 

Driving safely in a platoon formation leaves little braking distance between trucks and requires a high level of vehicle-to-vehicle communication and automation to be safely executed. Trucks need to be semi-autonomous, but not necessarily fully-autonomous, to drive in a platoon formation. They must, however, be electronically linked so that their acceleration and braking is highly synchronized. Think of it as extreme adaptive cruise control.

 

Various companies such as Scania, Volvo, and Volkswagen have pilot projects underway testing platooning solutions. One Silicon Valley company, Peloton Technology, is also rolling out a truck platooning solution in 2017. Currently, their technology supports a two-truck platoon which still requires drivers to operate the trucks. They claim that their solution enables a combined fuel reduction of 7 percent. The truck at the back of the platoon would see a reduction of 10 percent and the truck at the front would see a reduction of 4.5 percent. According to a report released by Transport Canada, some studies have shown fuel savings as high as 21 percent.

 

Research suggests that truck platooning technology holds much promise for the trucking industry and, ultimately, for supply chains. Investments are currently being made in platooning technologies and lawmakers worldwide are busy trying to legislate them as platooning will have huge impacts on our roads. By all accounts, you may soon be passing a truck platoon on a highway near you.

 

The post Winds of change in freight transportation supply chain: Platooning technology appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Carmen Humplik at http://blog.kinaxis.com/2017/06/winds-change-freight-transportation-supply-chain-platooning-technology/

by Melissa Clow

Santen Pharmaceuticals Santen Pharmaceuticals has begun a significant transformation of its global supply chain environment. Santen is headquartered in Osaka, Japan and the company sells ophthalmic pharmaceutical products in approximately 60 countries. The company was looking for a single end-to-end planning platform that would reduce global planning cycle times and raise efficiency.

 

I’m thrilled to share that Santen Pharmaceuticals has selected Kinaxis RapidResponse for supply chain planning. Following a thorough evaluation, Santen selected Kinaxis RapidResponse because of its concurrent planning capabilities. With the deployment of RapidResponse, Santen will reduce global planning times, manual activity and eliminate the use of multiple disconnected spreadsheets. Having a consolidated view of the entire supply chain, Santen will plan for its expected performance, monitor its progress, and respond to variations to the plan as reality hits.

 

Here’s a quote from Frank Binder, VP, Global Supply Chain Management at Santen:

 

“We chose Kinaxis to develop a consolidated view of our entire supply chain to collapse decision cycle times by connecting all links in our supply chain,” said Frank Binder, PhD, Vice President, Head of Global Supply Chain Management, of Santen Pharmaceutical. “Through RapidResponse, we will remove supply chain planning functional boundaries and gain the critical capabilities to drive tangible business outcomes. We look forward to growing our partnership.”

 

Read more here >>

 

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The rise of the digital supply network

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/06/kinaxis-rapidresponse-selected-santen-supply-chain-planning/

by Alexa Cheater

ChangeIf there’s one thing you can count on in supply chain, it’s that things will change. Often. It could be as relatively small as a last minute order or engineering change, or as big as an industry-wide shift that sends your end-to-end supply chain spinning in an entirely new direction. At the recent Gartner Supply Chain Executive Conference, there was a lot of talk about the latter. As it turns out, that future state we’ve all been speaking about for years isn’t as far off as you might think. It’s already here and the impacts on your supply chain are happening right now—whether you’re aware of them or not.

 

Gartner Research Director Tom Enright gave an enlightening presentation on Future Supply Chains for the Digital Era and Beyond, and shared some unstoppable forces in motion right now that will change the very notion of supply chain. If you haven’t already started to embrace and prepare for this new digital future, you may already be too late.

 

1. The customer

Customers have always been at the heart of supply chain. That much isn’t new. What’s changing is how they want to engage and interact with it. As I mentioned in an earlier blog about the Gartner conference, customers are demanding you deliver an experience, not just a product. They want a continuous, seamless experience that blurs the lines across companies, retailers and partners.

 

The notion of online or offline doesn’t exist for them anymore. It’s all about how, when and where they want it—and the answers to those questions may not reflect how your end-to-end supply chain is setup. Order fulfillment channels are becoming more complex as the possible combinations for purchase and returns explode. Buy online, pickup in store, return via postal service. Buy online, ship direct to consumer, return to brick and mortar store. Buy via mobile, ship to a third party location (like work or a hotel). Buy via IoT buttons (like Amazon dash), deliver via drone, return via courier. Can you see where I’m going with this?

 

You have to start thinking of your supply chain as providing a service, and you must develop a digital strategy, not just an ecommerce one, to deliver it.

 

2. Global purchasing power

Twenty years from now, who will you consider an economic superpower? The current categorization of G7 (Canada, France, Germany, Italy, Japan, UK, USA) won’t be applicable. Realistically, it already isn’t. Emerging economies, those classed as part of the E7 (Brazil, China, India, Indonesia, Mexico, Russia, Turkey), are hitting the leaderboard of the top 10 countries with the most purchasing power. China already tops that list. Since 2015, E7 countries have already been marginally ahead of the G7 nations, and Gartner predicts that gap is only going to grow. It expects by 2045, E7 countries will hold a combined $143 billion in purchasing power to the G8’s $58 billion.

 

This shift in purchasing power means you already need to be thinking about where and to whom you’re distributing your products. Your segmentation and network design have to adapt. Now is the time to reach out into the E7 and determine how you can operate there in the future. Does that mean relocating your distribution hubs? Or changing your logistics channels? What happens to the role of your current mid-tier suppliers, who could become superpowers? These represent just a fraction of the questions you need to be asking today—not tomorrow—if you want to get ahead of the shift.

 

3. Digitization

How ready are you for digital business? Gartner’s research suggests many of you are still a long ways off. Its statistics show that while 70% of companies recognize the importance of things like mitigating cyber risk, building knowledge and roadmaps for emerging technologies, and using digital to execute on a more reliable and profitable supply chain, a mere average of only 15% are actually ready to act on them. What’s even more frightening is the fact the research also shows 65% of the millions of smart devices already available on the market will be hackable by 2019. That’s less than two years away.

 

IoT is here, and with connected devices moving into the billions, you can’t afford to ignore it. The big data it’s providing means more insight into consumer demand, but only if you have the analytics and data structure to support it.

 

4. Uberization

With the emergence of rideshare giant Uber comes a new form of gig economy, and it’s expanding well beyond the confines of individual transportation. The so-called uberization of talent will continue to change the way in which we work. Networks of companies, instead of individual corporations, will be the primary hirers, employing more of us as on-demand experts, jumping from project to project. The notion of staying with a company long-term is already fading, and in the very near future could disappear altogether.

 

The explosion of this sharing economy is also creating the uberization of logistics networks. Last mile delivery will be farmed out to local entities, many of whom will use their own cars, trucks and bikes to do it. It’s already happening, but it’s on the verge of breaking out on a much larger scale. It will extend beyond last mile delivery to companies looking to share resources to eliminate capacity constraints and cut costs on a global scale.

 

While these four forces are already in motion and affecting your supply chains, the good news is Enright has some ideas on ways you can adapt now to prevent that impact from becoming a negative one. He suggests looking at your capabilities in the following areas:

 

Talent resources

With a staggering number of baby boomers retiring every day, the total global workforce is shrinking—particularly in some of those G8 countries. Not only will you have fewer workers to choose from, but many will come into your employment less educated and less technically skilled since they won’t have decades of experience under their belt. They’ll need strong leadership and guidance, so you need to start identifying your future management now, then nurture and develop them. It could also be time to re-examine where you’re hiring to avoid falling further down the hole of today’s already existing talent gap.

 

The bright side is that while human employees are decreasing, robotic ones are on the rise. That means looking for future talent who can teach and train these robots, and ones who are willing to work alongside them, or perhaps even under them.

 

Corporate social responsibility

Social transparency is already driving purchasing decisions by your customers. If you don’t have a corporate social responsibility (CSR) strategy, you’re already behind and potentially losing revenue. Gartner says an estimated 30% of consumers weigh CSR as highly as price when determining which company to buy from.

 

Pretty soon that’s going to extend to how socially responsible your company is, if you’re working with suppliers and partners who also have that same level of commitment to bettering the lives of their works, protecting the environment and being good global citizens.

 

Algorithmic business

More ‘things’ are getting connected every day. From smart refrigerators to toothbrushes to engines. As mentioned earlier, humans and smart machines are already starting to co-exist. With the rise of artificial intelligence (AI) and machine learning (ML), a blended population isn’t far off. You need to start shifting your thinking from big data to big answers.

 

How are you going to incorporate the rapidly growing number of digitally disruptive technologies into your end-to-end supply chain? What kind of impact will it have on your business from a profitability standpoint? A talent standpoint? A resource standpoint? Don’t put off finding out the answers. Start investigating them today.

 

Economies of connections

Looking ahead, one of the key ways to adapt to these forces putting pressure on your supply chain is to increase value through network relationships. We’ve already seen evidence of how successful this type of mindset can be when companies, oftentimes competitors, find ways of working together to find cost savings on both sides. Like when they use the same local delivery truck to re-stock retailers who sell products from both companies. The result is lower transportation costs since trucks aren’t going out partially filled. As an added bonus, it also helps the environment by reducing the carbon footprint of those items.

 

Setting up these mutually beneficial networks or ecosystems will drive efficiency and profitability within your supply chain. Just be aware that for them to succeed, so must all the partners involved.

 

Trying to stop unmovable forces like customers that are more demanding, a shift in global purchasing power, digitation and uberization is an exercise in futility, but by planning ahead and recognizing the future is now, you can adapt, thrive and profit in this emerging new digital world.

 

The post 4 unstoppable forces that WILL change your end-to-end supply chain appeared first on The 21st Century Supply Chain.

 

The rise of the digital supply network

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/06/4-unstoppable-forces-will-change-end-end-supply-chain/

by Dr. Madhav Durbha

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.

 

As the market valuation of these supply chain planning pioneers skyrocketed, the inevitable happened. The giants awoke. With a combination of in-house development and acquisitions, the big ERP vendors followed suit. However, they missed the opportunity to completely change the game, and instead followed the trail set by the pioneers and came up with their own variants of these capabilities. Once they reached a point where the capabilities are “good enough”, the big ERP went to the IT organizations with the “ease of integration” and “one throat to choke” message. The message was very appealing as best of breed technologies brought with them the challenge of integrating disparate technologies and deployment platforms. It was a relatively less risky proposition. Given that these organizations have an existing relation with the ERP vendor in context, layering in advanced planning seemed logical. In other words, no CIO or IT organization as a whole could be blamed for a seemingly safe choice.

 

As organizations moved towards standardization of technology around the big ERP, best of breed vendors felt the squeeze. Consolidation followed and innovation took a back seat. Supply chain planning technology deployments resulted in a certain level of disillusionment. Even as the business complexity and volatility increased manifold, planning paradigms in most organizations are still stuck in the 90’s. While the business is happening in real time, these planning systems run in batch mode, significantly limiting the responsiveness and simulation abilities. The result is that most businesses are left wanting for more. Tired of asking IT for advanced capabilities to help with simulations and such, after spending millions on expensive technologies, planners resort to excel spreadsheets. This point of view was shared by Lora Cecere in her blog Bumps, Cracks, and Opportunities. All in all, this is leading to disillusionment with the establishment vendors of planning solutions.

 

2. The rise of SaaS and Shadow IT: With the rise in bandwidth, computing power, and storage, the last decade witnessed Software-as-a-Service (SaaS) specialty vendors emerge as viable alternatives to the establishment. In pursuit of technology that operates at the speed of business, business started bypassing IT and acquiring needed capabilities through SaaS vendors. This ended up creating “Shadow IT”, rising tensions between business and IT leadership. The self-service capabilities provided by the SaaS vendors put the power in the hands of business. What used to traditionally result in an IT ticket and wait time ended up being a configuration done by a business superuser.

 

Specifically, in the Supply Chain Planning space, this is resulting in a pivot back to the “best of breed” strategy. As bulk of the action in enterprises shifted from within the four walls of the company to outside the company due to increased use of contract manufacturing and third party logistics (3PL), traditional technologies built on ERP foundation came up short. Besides, the new generation of planners growing up in the world of smart devices and apps have very different expectations when it comes to speed of capability enablement. Concurrent Planning focused on real time end-to-end network planning, powered by in-memory architecture, is starting to replace the batch oriented supply chain planning paradigms at large global companies.

 

3. The changing role of IT – the move from enablement to partnership: The smarter CIOs and IT departments see these shifts taking place. They understand the rising risk of a potential IT disintermediation, as the core IT functions such as setting up the stack (hardware, database, middleware, etc), network configuration, and application installation have migrated to the cloud vendor. Yet, they also see the tremendous opportunity to proactively position themselves as the change agents and partners to business, as opposed to mere enablers of capabilities. Instead of the traditional “rip and replace” methods, they are blending together the best of legacy technologies and the emerging technologies to enable faster time to value. As opposed to going with a “one throat to choke” approach, they are spending time in researching the best of breed and open source technologies to offer true systems of differentiation to business.

 

These progressive thinking CIO’s are retooling the skills of the IT organizations by focusing on building techno-business capabilities, staffing up on data science, machine learning skills, and staying abreast of the evolving technologies. They are constantly tuned into the shifting business and technology trends and are focused on bringing capabilities business will benefit from. While traditional metrics such as system up time, response times, and service levels still remain very relevant, the dialog between these progressive IT organizations and the business is starting to focus more on the business metrics such as customer engagement/ loyalty, order fill rates and asset utilization. Large global IT organizations are realizing that “one size fits all” approaches don’t work with regions with varying degrees of maturity. They are opting for technologies that cater to this diversity of maturity amongst the regions they support. They are partnering with and supporting the regions on their maturity progression, as the standard bearers. Business is appreciative of the intelligence these CIO’s and their teams bring to the table. As a lot of physical devices are becoming connected smart devices, these IT organizations are best equipped to advice R&D organizations on the emerging standards with Internet of Things (IoT) and such.

 

While these shifting dynamics in the IT organization’s thinking are happening in select leading organizations with visionary CIO’s, the majority of the IT organizations are still operating in the older paradigms of being “enablers” of business capabilities as opposed to becoming “partners”. The time is now for every IT professional to rethink their role in this rapidly shifting world. Supply chain IT professionals are no exception!

 

The post The changing role of IT organizations in supply chain management appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2017/06/changing-role-organizations-supply-chain-management/

by CJ Wehlage

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.

 

         
Gartner Analysts Top 10 – 2017Peers Top 10 – 2017

 Unilever

 

Cisco Systems

 

Intel

 

McDonald’s

 

PepsiCo

 

Nestlé

 

Inditex

 

Schneider Electric

 

Colgate-Palmolive

 

BASF

Unilever

 

Coca Cola Company

 

Wal-Mart Stores

 

Nike

 

McDonald’s

 

Inditex

 

Nestlé

 

Cisco Systems

 

PepsiCo

 

Samsung Electronics

 

 

Intel is ranked third by Gartner, but 11th by peers. Samsung is 10th according to peers, while Gartner places them in spot 25. As I’ve stated in the past, if Gartner was to see Samsung’s supply chain up-close, they would rank them first. HP is 24th according to peers, but 11th according to Gartner. This is a company that has been separated, had negative revenue growth at -5.4% and changed CEOs many times in the past 10 years.

 

I recommend keeping the peer review and Gartner analyst inputs, but dropping their weighting in the overall rankings from 25% to 5% each. Then, create a new panel (15%) made up of key Gartner analysts, peers and consultants that have actually worked in supply chain and have seen and know how the top 50 operate their supply chains.

 

Somehow, normalize the odd numbers

McDonald’s has an inventory turn of 174.5. That’s 11.6 times higher than the second-ranked supply chain, with Samsung at 15.1. Consider that Samsung has consumer electronics, visual display, semiconductor, heavy industry and biotech divisions. We need to figure out how to normalize this oddity that keeps McDonald’s in the top five every year.

 

For Nokia, I struggle to understand how they were ranked. Microsoft acquired them in 2013, the company then laid off 12,500 people in 2014, then acquired Alcatel Lucent only to sell off a business unit to Foxconn. The magic is in the three year revenue growth. Nokia was tops at 46%. However, when you look at the 2015-2016 revenue growth, Nokia’s networking business grew 90%, while their Nokia Technologies only grew 3%. With life sciences, semiconductors and others making acquisitions, we need to figure out how to normalize the revenue growth created more by an acquisition, rather than supply chain prowess.

 

How does legal and public relations play in supply chain?

Lastly, I just don’t see the value of having the corporate social responsibility (CSR) category. In some companies supply chain doesn’t drive or own the CSR report at all. We have enough categories (like return on assets (ROA)) that already make it difficult for some great supply chains to get ranked.

 

In this area, Gartner should push the metrics benchmark. I recommend Gartner have the top 50 supply chains enter their metrics benchmark data and create a category that uses a combination of these best-in-class benchmarks.

 

I do love the concept of elevating the supply chain through a Top 25 ranking. Gartner does a good job at pulling what data is publicly available. I do worry that a few years ago, the boring comments, which caused the Masters creation, will be replaced with a numbers credibility comment. Two groups, Masters and Top 25, is not a good end state. We need to make the push to get core supply chain data and an expert panel to enhance the Top 25 votes.

 

The post The top 25 supply chains and Survivor appeared first on The 21st Century Supply Chain.

 

 

Originally posted by CJ Wehlage at http://blog.kinaxis.com/2017/06/top-25-supply-chains-survivor/

by Melissa Clow

This blog is part of a video interview series. Check out the video below as well as links to other supply chain practitioner and Kinaxis executive interviews.

 

Even though some traditional forms of learning continue, companies are turning more and more to digital technology and learning tools to collect, analyze and share knowledge, says Sarah Sedgman, Kinaxis chief knowledge officer.

 

While familiar forms, such as instructor-led teaching, continue to some degree, industry is shifting to digital knowledge networks because of the flexibility the technology offers. “Among other things, that flexibility means there is instant access to information when people need it,” says Sedgman.

 

Companies that may once have been slow to invest in such technology see now that they become more efficient and make better decisions, Sedgman says. “It’s important for us to invest in these technologies and become more familiar with them, and that’s true all the way up to the executive team, not just those who are actually using these technologies.”

 

Each level of an enterprise should understand how the supply chain is being transformed, what the impact of the Internet of Things is or what machine learning is all about, Sedgman says. “Everybody should understand why it is important to adopt these technologies, and the value they bring. Often, that piece is forgotten, the change management piece.”

 

The irony is that many employees utilize similar technology in their everyday lives through social media. “When we get to our work lives, we seem to forget how to use them. That’s one of the benefits of RapidResponse — with it, we’re introducing the ability for people to collaborate and share knowledge across the supply chain.”

 

That sharing tops the traditional one-way information transfer model because multiple parties can access a knowledge pool simultaneously. That contributes to tearing down silos within companies and building stronger relationships. It also helps eliminate the “I didn’t know” excuse, Sedgman says.

 

“Adaptive collaboration, which we’ve built right into the tool, enables people to talk to one another as things are happening, to tell each other what decisions they are making that may impact the others, and help them understand what’s happening in real time.”

 

Check out the other video interviews in this series:

 

The post [Video] Digital Technology and Strategies for Effective Knowledge Sharing appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/06/video-digital-technology-and-strategies-for-effective-knowledge-sharing/

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