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21st Century Supply Chain

1,102 posts
by Bill DuBois

Financial crisis. Check. Environmental catastrophes. Check. What’s next? Is this the year of political disruption?

Supply chain risk managementWorking in supply chain is like starring in a Rocky movie. You keep getting knocked down and you have to keep getting back up.

 

You don’t need to go back any further than a decade to understand the many challenges supply chains have endured over the years. Interestingly enough, the first episode of Breaking Bad that aired in 2008 reflected what it was like being in supply chain risk management at the time: “Hey, a science teacher is cooking meth, how much worse could it get?”

 

If you were a fan of the series, you were on the edge of your seat amazed at the plot’s crazy twists and turns. My guess is people who didn’t see the show were the supply chain practitioners too busy trying to ride the storm of the 2008 financial crash.

 

Supply chains had to deal with squeezing margins and dramatically cut costs, which included significant downsizing. Doing more with less wasn’t an option; it was a necessity. Maybe the one good thing to come out of it was some companies figured out how they could survive with lower inventories. Some suppliers weren’t so lucky. In 2009, I’m sure most we’re thinking, “How much worse could it get?”

 

Well, it got a lot worse.

 

The 2010 volcanic eruption in Iceland. The 2011 Tōhoku Earthquake and Tsunami. Yes, there have been natural disasters before. But these specific disruptions not only resulted in significant human and personal loss, but also had a major impact on supply chains.

 

For example, travel was halted all together as a result of the 2010 Eyjafjallajökull volcano. Inventories were stranded as supply chains scrambled to understand the impact on their customers. While there may have been an uptick in video conferencing from executives stuck in airports and others eager to catch up on Breaking Bad episodes, supply chains would take weeks, if not longer, to recover.

 

There were many lessons learned from these unexpected global events and, although we don’t know when the unexpected will happen, supply chains are now generally better prepared for unplanned events.

 

So, it couldn’t get any worse, could it?

 

Is the global political landscape the next unknown? Take Brexit as an example. There are so many questions still left unanswered: What will the impact be on supply chains when goods do not move as freely as before? Will the pound take a hit causing a strain on suppliers and imports? What will the impact be on the UK if they are no longer part of current free trade agreements?

 

To avoid the risk of becoming political and losing the focus on supply chain, there’s only one other question to ask: Where else in the world is there political uncertainty? When you answer that question, you can look at it through the supply chain lens.

 

Like our science teacher turned meth cooker in Breaking Bad, the real enemy for supply chain risk management is uncertainty. The political landscape of today sure would make for a great mini-series, but the folks in supply chain likely wouldn’t have time to watch. Rather, they would be too busy keeping their networks as agile as possible so they are prepared for the uncertainly of the future.

 

What do you think the next big risk to supply chain will be? Please let us know in the comments section below. I’m sure we’ll all benefit from our collective insights.

 

The post Supply chain risk management in 2017 appeared first on The 21st Century Supply Chain.

 

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Originally posted by Bill DuBois at http://blog.kinaxis.com/2017/02/supply-chain-risk-management-2017/

by Dr. Madhav Durbha

Supply chain planning systemIt was in 1965 that Dr. Gordon Moore made a prediction that changed the pace of tech. His prediction, popularly known as Moore’s law, was with regards to doubling of the number of transistors per square inch on an integrated circuit every 18 months or so. As a result of the innovations attributable to the endurance of Moore’s law over the last 50+ years, we have seen significant accelerations in processing power, storage, and connectivity. These advances continue to have major implications on how companies plan their supply chains. In my nearly two decades as a supply chain professional, I have seen quite a few changes.

 

Let’s look at some of the big shifts that have taken place in the supply chain planning space.

 

1. Planning community gets bolder in tackling scale:

Early on in my career, I remember working with a large global company who had to take their interconnected global supply chain model and slice it up into distinct independent supply chain models. This was because the processing power at the time was simply not enough to plan their supply chain in a single instance. This surgical separation of supply chains required a high degree of ingenuity and identifying the portions of supply network with the least amount of interconnections, and partition them. This was not the most optimal way to build a supply chain model, but they did what they could within the limitations of the technology then. With the advent of better processing power, they were able to consolidate these multiple instances into a single global instance leading to a better model of their business. This is just one of many such examples.

 

As the hardware side of the solution benefited from Moore’s law, in parallel, developers of the supply chain applications continued to make conscious efforts to better utilize the storage, processing, and network resources available to them. This multi-pronged approach resulted in squeezing further efficiencies and bringing better scalability. Now companies are getting more adventurous with their planning and are getting planning down to the point of consumption. While there is enough debate within the supply chain community as to whether the data at more atomic levels is clean, trustworthy, and dense enough, and whether the extra effort needed to model down to the granular levels is worth it, the fact that we are seeing technology scale to such levels of granularity is illustrative of the power of Moore’s law.

 

2. Planning moves to the Cloud:

In a traditional packaged planning software deployment, the vendor sells a perpetual license for the software, helps the customer with sizing the hardware, waits for the hardware to be setup and configured at the customer’s premises, then installs the software and the middleware components needed before the software configurations can begin. This whole process can take several weeks or in many cases, months. With Moore’s law holding its power over the decades, and resulting gains in processing, storage, and network speeds, newer delivery models prevailed. Supply Chain Planning capability is now being provided in a Software as a Service (SaaS) model. Immediately upon executing the necessary contracts, customers can start accessing the software, so the project can begin in earnest. This is shifting the focus from “Technology enablement” to “Business capability enablement”. I remember the days when prospects approached Cloud with skepticism, specifically around the security of cloud based systems. Now, while I still see a number of prospects asking questions around security as part of the RFP (Request for Proposal) process, it is fair to say that the security discussion in most instances is turning out to be a set of quick conversations with the customer’s IT teams. There is in general, a growing acknowledgement that a SaaS vendor catering to many customers is better equipped to handle security vulnerabilities than any one company’s IT organization.

 

One added advantage of the move to the cloud is accessibility. Until a few years ago, every RFP looking for global deployment of supply chain planning systems used to contain questions around accessibility on dial up lines and such in developing nations. Now it is not as often that I see questions around speed of networks and accessibility. With tech becoming accessible across the globe and with increasing availability of the bandwidth, I am seeing fewer companies query about accessibility from different geographies. Instead, the questions are more geared around access from various mobile devices, which is becoming a core requirement. The SaaS model renders itself very well to such support across varied devices and form factors. SaaS is illustrative of the symbiotic progress between hardware and software delivery models powered by Moore’s law.

 

3. Planning can happen at the speed of business:

While there is enough talk about the rise of the machines and autonomous supply chains, the newer forms of planning technology is in fact helping get the best of bringing together the humans and machines, rather than making humans redundant. The previous generations of planning technology was very much waterfall oriented with Demand Planning, followed by Supply Planning, followed by Capacity Planning, and so on. It severely undermined the role of human intelligence in supply chain planning. The well intentioned users of such systems spend more time in data gathering, preparation, and piece together information on outdated data using excel macros and such. Also, building an S&OP capability with such underlying technology is turning out to be an expensive band aid for several organizations.

 

Such batch, waterfall-oriented planning is giving way to near real-time concurrent planning supported by what-if scenarios and social collaboration. Supported by technologies such as in memory computing, concurrent planning can happen at a scale like we have not seen before. Such advances in planning at the speed of business can also better leverage advances in IoT, Machine Learning, and Data science. Batch oriented supply chain planning capabilities of the previous generation are not fit to consume the real time digital signals from smart, connected devices, and course correct as needed. Having a system that can supplement human intelligence so planners can make decisions at the speed of business can be very empowering.

 

Now it is becoming very realistic and affordable to represent the model of an end to end network of a large corporation with all its assumptions and parameters, and simulate the response strategies to the various stimuli the supply chain receives. Linear approximations of highly non-linear supply chains are giving way to more realistic modeling of supply networks.

 

The impact

All in all, Moore’s law did have a major impact on the supply chain planning capabilities. Significant gaps still exist between the “art of the possible” with a new way of concurrent planning, as compared to how many organizations run their supply chain planning processes in a batch oriented manner today. My advice to the companies embarking on supply chain transformation – the future is here! Challenge yourself on if the old ways of planning will meet the needs of the organizations of the present day. If Moore’s law helped get unprecedented computing power right in your pocket in the form of a smart phone, what can it do to your supply chain? The possibilities are limitless. You just need to be open to explore!

 

The post Moore’s Law and supply chain planning systems appeared first on The 21st Century Supply Chain.

 

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Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2017/02/moores-law-supply-chain-planning-systems/

by Alexa Cheater

End-to-end supply chainEliminating silos from any company’s supply chain planning processes comes with challenges. And those challenges are only amplified the bigger your supply chain is. When you’re a large global pharmaceutical company operating in more than 100 markets across four geographical regions, overcoming operational silos in the end-to-end supply chain  may seem like an insurmountable feat. That’s how MSD ’s supply chain planning story began.

 

Supply chain planning challenges

Known as Merck & Co., Inc. in the US and Canada, MSD was desperately seeking a way to connect its end-to-end supply chain, which spans four planning hubs, over 80 distribution centers and more than 20 internal and external sites. Setting out on a journey to standardize its enterprise resource planning (ERP) platform meant finding a way to sync its supply chain data and enable access across all those divisions and locations to support better business decisions.

 

Henrik Frojdh, Supply Chain Planning Lead at MSD, quickly realized the only way to elevate supply chain planning capabilities to support that level of synchronization and at the same time optimize inventory levels, was the adoption of an integrated solution – one that enabled end-to-end supply chain planning, visibility and decision-making.

 

Concurrent planning was also a key capability of MSD’s new supply chain planning vision. By connecting people, process and data in a way that allowed Frojdh’s team to continuously plan, monitor and respond meant they could plan all supply chain nodes simultaneously. An always-on, in-memory planning engine was a vital component to this, and would mean creating plans would only take seconds. The improved visibility and insight into action provided by an integrated supply chain planning solution would allow MSD to plan more proactively and by exception, better understanding where demand was at risk, and ultimately aligning to the company’s first priority – its patients.

 

The journey to success

MSD’s vision is more effective supply chain planning, which in turn allows it to supply high-quality products to its customers at the lowest cost and with the shortest lead-time. To meet these goals, the company has undertaken a supply chain transformation initiative spanning global demand planning, global supply planning, distribution requirements planning (DRP) and sales and operations planning (S&OP).

 

From a demand perspective, MSD now generates a consensus forecast that’s aligned with the financial plan. That forecast drives the fulfillment processes, leading to a more demand-driven supply chain and more effective asset utilization. This makes them a leader in the pharmaceutical industry, where most other companies still use a push planning model.

 

On the supply side, MSD is differentiating inventory policies through segmentation analysis based on constant make, inventory replenishment levels and re-order point, while still respecting rhythms within its various sites.

 

Changes to S&OP enabled MSD to make better decisions more aligned with commercial and financial needs. The company now models scenarios to assess alternatives and does deep dives on top products using the same data that drives everyday decision-making in its supply chain. Everything is connected.

 

Transformational results

While MSD is still in the early phases of its supply chain planning transformation, it has already achieved results. For the first time ever, the company now has:

 

  • Global visibility of its inventory for all finished goods
  • Exception-based planning for min/max inventory levels
  • Replenishment strategies implemented across sites and hubs
  • A governance structured with designated work stream leaders from across the company

Want to learn more about MSD’s supply chain planning transformation? Read our complete MSD case study, Removing Silos in End-to-End Supply Chain Planning.

 

The post MSD’s journey to remove silos in its end-to-end supply chain appeared first on The 21st Century Supply Chain.

 

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Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/02/msds-journey-remove-silos-end-end-supply-chain/

by Teresa Chiykowski

Sustainable supply chainChocolates, wine, flowers, jewelry? What will you buy for the special person in your life this Valentine’s Day? Not planning to buy anything at all? You might want to seriously rethink that decision before you show up empty-handed.

 

Over the years, Valentine’s Day has become big business.

 

As you know, Valentine’s Day is an annual holiday, celebrated on February 14. It originated as a Western Christian liturgical feast day honoring one or more early saints named Valentinus. Today, Valentine’s Day is recognized as a significant cultural and commercial celebration in many regions around the world.

 

Commercial celebration is right.

 

According to the National Retail Federation, Americans are poised to spend more than $18 billion on Valentine’s Day gifts in 2017. That comes to about $137.57 per person. I’d really love a $137.57 box of chocolates. Heck, let’s round it up to $140 and skip the sentimental greeting card.

 

Consumers’ changing expectations

In a recent infographic, How to get your supply chain ready for the future, we highlighted three factors driving the need for supply chain change. One of those factors is sustainability and accountability. This means, in addition to growth and profitability goals, companies must pursue sustainable development, including environment protection, social justice and equity, and economic development. It’s what today’s consumers expect. In a February 2017 article, SCM World Chief Content Officer Kevin O’Marah underscored the importance of meeting consumers’ expectations, saying, “Shoppers believe their buying decisions make a difference and are increasingly willing to drop brands who fail to deliver on sustainability and climate change promises.”

 

So, if we look at some of the sustainable supply chains behind a few Valentine’s Day favorites, what are these companies doing to demonstrate their commitment to sustainable supply chain management and development? I did some digging and found out some interesting things.

 

Say “yes” to chocolatey goodness

Hershey’s business practices affect everyone in its supply chain, from cocoa farmers and their communities to employees, shareholders and customers. When Hershey’s says an ingredient is sustainably sourced, it is farmed in a responsible manner so the land, people and community that produced it can continue to thrive. Hershey Company is also a founding member of CocoaAction, which helps build educational and community resources, and improve labor practices in West Africa, where improving cocoa sustainability is critical.

 

Raise a glass to land conservation

E&J Gallo Winery’s commitment to the environment began in the 1930s when co-founders Ernest and Julio Gallo introduced an innovative approach to land conservation in the North Coast known as the “50/50 Give Back” plan. For every acre of land planted in a vineyard, one acre of property was set aside for wildlife habitat — a practice that continues today. I’ll toast to that!

 

Show the love with fair trade flowers

Although not a manufacturer or procurer of fresh cut flowers, Green America has a mission when it comes to the planet: “harness economic power — the strength of consumers, investors, businesses, and the marketplace — to create a socially just and environmentally sustainable society.”  In addition to fair wages and labor practices, Green America’s Fair Trade flower certification ensures that farms comply with rigorous environmental standards governing the use of pesticides, conservation of water, treatment of wastewater, protection of ecosystems and more.

 

Beware of diamonds in the rough

In 2002, the UN adopted the Kimberley Process — a joint governments, industry and civil society to stem the flow of conflict diamonds (rough diamonds used by rebel movements to finance wars against legitimate governments). How do you ensure you’re buying a conflict-free diamond when that special moment comes? One article I read recommends asking to see the diamond’s System of Warranties statement. It’s a notice on all invoices for the sale of rough diamonds, polished diamonds and jewelry containing diamonds stating the diamonds in question have been purchased from legitimate sources and that the seller guarantees they are conflict free.

 

Wrapping it all up

Consumers’ growing expectations for companies to do the right thing, are making organizations rethink the supply chain. Greater transparency, corporate social responsibility, and environmental sustainability aren’t just nice-to-haves anymore; rather, they’re imperatives for capturing the hearts and wallets of consumers.

 

Do you have any stories to share about exemplary supply chains? We’d love to hear from you.

 

The post Looking at the sustainable supply chains behind some classic Valentine’s Day favorites appeared first on The 21st Century Supply Chain.

 

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Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2017/02/looking-sustainable-supply-chains-behind-classic-valentines-day-favorites/

by Teresa Chiykowski

This is the final blog post in our three-part series discussing ways to improve supply chain collaboration.

 

Supply chain collaborationIf you’ve read the first blog posts in this series, you should have a pretty good idea of two main reasons why supply chain collaboration is failing – fundamental . You should also have a better understanding how to fix what’s “broke” when it comes to data and processes.

 

Today, I’m going to tackle a third fundamental reason collaboration is failing: the disconnect between the people overseeing the supply chain.

 

The challenge: Disconnected people

Supply chains don’t run themselves – not yet anyway.

 

From demand and supply planners, to inventory managers and capacity planners, humans play a pivotal role in keeping the supply chain moving and customers happy and loyal.

 

But there’s a problem. Not everyone in the supply chain talks to each other.

 

Stakeholders are often distributed globally. As a result, they make decisions with little understanding of or visibility into their cross-functional impact. Without collaboration, critical decisions can’t be made quickly, which can lead to supply chain disruption and the inability to mitigate risks before they turn into disasters.

 

Streamlining the supply chain requires close collaboration among all partners, whether they’re located in the building, across the country or around the world. The speed at which organizations can connect internally with other business units and externally with select manufacturers, suppliers and customers is critical to success.

 

So the question is, “How can you get people connecting, communicating and collaborating in real time to make optimal decisions faster?” Good question.

 

The solution: Connecting stakeholders, data and processes

If the lag time to share planning decision results can be eliminated and people have a way to concurrently assess impact, conversations related to tradeoffs and compromises can flow seamlessly across the supply chain. Making critical decisions in time to drive value requires everyone to see their data and planning process results in the moment at exactly the same time.

 

When you enable this level of connecting people, supply chains become more responsive to their customers and have a greater ability to navigate through unexpected events. Add instant access to related supply chain data, plus the ability to run processes in one place, and what do you get? The kind of collaboration that can drive supply chain excellence.

 

With that in mind, how does supply chain collaboration stack up in your organization?

 

If you want to learn more about how to connect supply chain data, processes and people to pave the way to better collaboration, check out the eBook: 3 Ways to Improve Supply Chain Collaboration.

 

The post Improving Supply Chain Collaboration: Connecting People appeared first on The 21st Century Supply Chain.

 

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Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2017/02/improving-supply-chain-collaboration-connecting-people/

by Alexa Cheater

supply chain glocalNope, that’s not a typo. I really did mean glocal. In case the term is new to you, glocal, in a supply chain context, is the blending of global integration with local responsiveness. I first heard the term only a few months ago during Zoltan Pekar’s presentation at our annual training and user conference, Kinexions. Pekar, the VP of Roland DG’s Global SCM Division, gave some interesting insights on the changing role of IT in supply chain. You can check out a recap of his presentation in my blog The Changing Role of IT in End-to-End Supply Chain Management or check out his presentation yourself on our YouTube channel.

 

What really jumped out for me during his session was this idea of glocalization. As defined by the source of all knowledge, Wikipedia, “glocalization is the adaptation of globally marketed products and services to local markets.” And apparently the term has been around since the late 1980s, first appearing in print in the Harvard Business Review.

 

Global companies have been using glocalization for years when it comes to products and services. Restaurant mega chain McDonald’s is an example easily identified by most. Their regional menus offer things like the Chicken Maharaja Mac in India, the Croque McDo in Belgium and the KiwiBurger in New Zealand. Automotive manufacturers are another great example, although many of the differences between European and North American car models are due to specific regulations, with the most obvious being which side the steering wheel is on and whether the speedometers show miles per hour of kilometers per hour.

 

But what are the supply chain implications of glocalization? And, how do supply chains actually become glocal themselves?

 

Well the answer to the first questions is probably pretty obvious. Global companies need to account for regional variances in product preferences. As mentioned, this isn’t anything new or particularly Earth shattering (although it might have been when the concept was first introduced – as I was still in diapers, I can’t really attest to that). That means supply chains need end-to-end visibility across all nodes of the value chain, regardless of geographic location.

 

They also need the flexibility to respond to changing regional supply and demands quickly and efficiently. There needs to be an effective system in place to manage demand across multiple global and regional locations, as well as across product hierarchies. That means generating demand plans with input from all stakeholders – including sales, marketing, operations and finance. And optimizing inventory. You must balance market and customer needs against supply chain capabilities and risk. Planning, monitoring and responding concurrently is a critical factor in a company’s ability to know sooner and act faster.

 

It’s those same characteristics that help supply chains become glocal themselves, blending global integration with local responsiveness. But there are certainly challenges when it comes to glocal supply chains. The first is overcoming the multitude of disparate systems used across each location. It’s not uncommon for companies to have numerous ERPs systems, a smattering of Excel spreadsheets and dozens of other archaic systems in place – especially if they’ve grown through acquisitions, which is often the case these days.

 

Harmonizing all that data requires an overlaying supply chain management solution that can collect and analyze information from all sources, all while using advanced analytics to output multiple scenario options when changes need to be made.

 

Disparate processes also present a problem when tackling a glocal supply chain. Decentralized authority, which can accompany regionalization, results in each location working toward its own goals and objectives, instead of focusing on company-wide metrics and KPIs. The focus needs to be on the company as a whole, not its individual parts. Now I’m not saying each region can’t operate slightly differently – holidays, working hours and cultural differences are to be expected. But the overall processes and measurements need to stay consistent.

 

Bringing together the people involved in your supply chain is also a necessity. Overcoming this supply chain obstacle means finding a way to foster better company-wide collaboration, regardless of where employees and operations are based.

 

By connecting data, process and people, you’ll be able to successfully manage a glocal supply chain, one that’s globally integrated and functioning as a holistic whole, but still provides the responsiveness required to meet local and regional requirements.

 

What do you think about glocal supply chains? Let us know in the comments section. We’d love to hear your thoughts on if this is a supply chain trend you’re interested in following.

 

The post Is it time to take your supply chain glocal? appeared first on The 21st Century Supply Chain.

 

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Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/02/time-take-supply-chain-glocal/

by Melissa Clow

For Xilinx Inc., a supplier of programmable logic devices, the focus is more on speed than optimization, says Alex Brown, vice president of supply chain.

 

That’s not to say the latter is unimportant. After all, Brown was trained in the area of optimization, but he says data, always uncertain, changes every day. “We want to make decisions quickly, we want to be able to run things quickly, we want to know as fast as we can the sensitivity of a problem and what the key parameters are that affect decisions. Then, too, we focus on speed because it allows us to focus on problems other than just planning. It’s the data management problem, for example, where we make mistakes.”

 

Alex Brown shared a great quote by Steve Jobs who shares his philosophy:

 

Steve Jobs Philosophy

 

Fight the urge to be precise. Try to think about solving the business problem not the price mathematical issue. Their lesson was you have to get your core infrastructure straight so that you can model your core complexity well. And what allows Xillinx to embrace and tame this complexity is their supply chain planning technology.

 

In one platform, Xilinx receives signals continuously across the supply chain – because of the depth of its integration with its suppliers and customers, Brown says. How those signals are processed is extremely important. “That goes back to speed, about the speed of being able to process those signals quickly. When you have a signal, you have to know right away how that affects your output decision.”

 

It’s one of the key reasons, he says, why Xilinx became a Kinaxis customer to leverage its supply chain management software. “I like the Kinaxis heuristics because they are transparent and make it easy to understand that when input change occurs, the output changes as well.”

 

Kinaxis RapidResponse is used for all planning across the board at Xilinx. “It’s used everywhere in the organization now. People wouldn’t think to not have it anymore. It’s like having a computer or Excel. It’s become like that.”

 

Specifically, the platform has helped solve a fundamental semiconductor problem related to performance binning. “If I was not able to solve that, and we couldn’t with just a simple MRP system and a bunch of very smart planners, there would be tens of millions of dollars in excess and obsolete inventory that would happen every quarter. So it has major value for us.”

 

Upper management buy-in and subject matter expertise ensured that implementation would be relatively pain-free, Brown says. Before the product was selected, key users from each function and supply chain were tasked with a two-week pilot to test the usability of the system. “Obviously, they all came back and said RapidResponse was the right tool.”

 

Xilinx: Taming Supply Chain Complexity

 

The post Xilinx: Fight the urge to be precise – How supply chain technology is helping Xilinx appeared first on The 21st Century Supply Chain.

 

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Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/02/xilinx-fight-urge-precise-supply-chain-technology-helping-xilinx/

by Justin King

Supply chain technology questions

 

For most humans, the fear of public speaking ranks #1 on the list of ‘things most feared’ – often scoring higher than death. Apparently my genes were cross-connected at some point and I actually enjoy opportunities to speak. In my role as a Technology Evangelist for Kinaxis, I jump at any opportunity to talk to our customers or prospects about their technology needs. A typical day might have us sitting down with those who are evaluating the solution and walking through the planning process. The business team would show the capabilities live in the tool and then at the end of the session we will often open up the floor for questions. Usually I’ll get very thought-provoking questions that are quite relevant to the conversation . Occasionally I’ll get “that guy” who wants to sound smart, asking what color network cables we use or why we don’t use 8,192-bit keys rotated on an hourly basis. Recently, I was asked a question that really took me by surprise. The prospect asked, “What questions should we be asking, but aren’t?”

 

At the time, I was taken by surprise and probably didn’t come up with a good answer; however, I’ve given this much thought and now have compiled a list of questions that I think every organization should ask their technology vendor – regardless of what they are buying.

 

1. How many products are you offering?

In a past life, I spent many years selling supply chain software where at times I had to try to convince the prospect that the five products, each with their own technical stacks, databases, coding standards, and heritages were somehow going to magically work well together. Every inter-module integration adds latency to the process and creates a batch-oriented supply chain planning solution. Concurrent Planning demands the opposite – a single view of data across the entire Supply Chain – with supply and demand that are connected together such that a change in one instantly reflects a change in the other. This is not possible without a single product sitting on a single database.

 

2. Is the vendor at the forefront of innovation?

This one can be a bit difficult – because ‘marketecture’ can make even the oldest, most convoluted mashing together of multiple platforms to look great. I get a good laugh every now and then watching product release announcements or videos where concepts like in-memory computing are touted as ‘cutting edge’ or the next ‘wave of innovation.’ If a software company is just now catching on…well, you’re late to the party. Look for a vendor who has solid experience in in-memory technology and ideally who has a purpose-built architecture for Supply Chain.

 

Here at Kinaxis, we caught the wave about 15 years ago, and that’s why our purpose-built in-memory model can out-perform every other solution in the space.

 

3. Can you show me all the tools/files/schedulers that I need to touch to evolve the solution?

This one will make most demo guys cringe. It’s really hard to show the inner workings without airing the dirty laundry! A lot of this came from the migration to Cloud. While early adopters of Cloud built their solutions to Cloud-native, latecomers found themselves scrambling to make their solutions work in a hosted environment. Often this meant the adoption of third-party schedulers, source-control for configuration files, and Citrix for rendering legacy UI’s. Ask the tough questions and see how well the solution was built for the Cloud.

 

Here, we welcome the question…because it’s all in the standard UI.

 

4. What independent audits prove your cloud security works?

Make sure you find a vendor that has gone through the rigors of becoming SOC 2 Type II certified and is maintaining compliance. It is important that both data center and internal operations are audited on an annual basis to ensure that compliance is maintained over a period of time. Remember, this is more than just ensuring that the data center facility provider is certified, but the software company itself as well. Look for both audits and make sure they are in compliance.

 

5. Can you create new scenarios live in the software?

Getting scenario planning right is very difficult – that’s why designing the capability into the database code is critical. This approach is unique to Kinaxis, and is yet another reason why our planning engine speed is unrivaled. Many solutions can show the semblance of scenario planning with pre-defined ‘buckets’ where certain what-if planning can occur… but can it be done on the fly? How long does it take to create or setup? Is it limited to certain metrics or views? We hope you’ll ask all vendors to show you how it works.

 

6. Can you show me some live real-time integration?

I have to admit – I would never want you to ask me this question in my past. Integration using a demo environment can be very difficult…but if it’s difficult in a demo environment, how much harder must it be in a production environment? Any solution that is capable of connecting to SAP using a standard template should be able to be demoed. Any solution that is capable of receiving real-time data, such as with Web Services, should be able to be demoed. Ask to see it live during your next meeting.

 

If I were you, these are the questions that I would be asking. Sure, meeting the business functionality is key…but don’t forget that the underlying technology will be the real make-or-break when it comes to the ongoing evolution of your supply chain. Does the platform have what it takes to make you successful? These questions will help you find out.

 

So, the next time a prospect asks me “what questions should we be asking” I’ll be ready. As for you – you’re one step ahead. You already know what questions to ask… and we hope you will.

 

The post Technology questions YOU should be asking appeared first on The 21st Century Supply Chain.

 

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Originally posted by Justin King at http://blog.kinaxis.com/2017/02/technology-questions-asking/

by Melissa Clow

Concurrency: The New Era of Supply Chain PlanningI’m happy to share that the following recorded webcast is now available: Concurrency: The new era of supply chain planning with Kevin O’Marah, Chief Content Officer, SCM World and Trevor Miles, Vice President of Thought Leadership, Kinaxis.

 

Future supply chain leaders will look back at 2016 as the end of an era. Spurred by unprecedented disruption, volatility and technology evolution, leading organizations are abandoning outdated, overly rigid supply chain planning processes and moving towards the future of planning: concurrency.

 

In this webcast hear O’Marah’s predictions, insights and best practices for bringing concurrent planning to your supply chain operations, including:

 

  • Defining concurrent planning, the factors driving it and the three foundational capabilities it’s built on
  • Discussing the magnitude and pace of change expected in supply chain strategy, planning and decision-making; and
  • Sharing the most innovative strategy and planning case study examples from leading supply chain organizations

View now

 

The post On-demand SCM World webcast – Concurrency: The new era of supply chain planning appeared first on The 21st Century Supply Chain.

 

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Originally posted by Melissa Clow at http://blog.kinaxis.com/2017/01/demand-scm-world-webcast-concurrency-new-era-supply-chain-planning/

by Iman Niroomand

optimization in supply chainSupply chain processes and transactions have been captured and automated by IT solutions. The process automation will help the supply chain planners and practitioners to do and track the operation tasks easily.  While these innovations would reduce the planners daily job hassle significantly but not necessary would help planners to get the most efficient and optimal solutions.

 

The planner requires a way to translate operational requirements and constraints into something that computer can understand and use to produce not just a solution but an effective solution. Let’s call this requirement, an operational model.  For example, the shipment of products into loads of a truck is an example of loading model. A very simple model uses product’s weight and volume as a loading requirement and produces an efficient load profile for shipment. One might ask, why this efficiency is matter and how we could gain this efficiency.

 

For a company that ships billions of pounds of material each year to thousands of customers, shipping costs are a significant components to the cost of finished goods. Thus, small improvement on the shipment efficiency easily will add up to a significant cost saving and provides strong competitive advantage for the company. Now, let’s see through a small example how the shipment could be improved.

 

Let’s assume a transportation manager currently deals with a constraint of weight and volume. He loads one truck to max weight and load another to maximum number of pallets. Although this load profile is OK when considering one truck at a time, since we reached to one of our constraints, but in reality the first one has more room and second one could take more weight. It is apparent that the loading profile could be improved and by doing so more items could be shipped in one order.

 

The calculation of the best loading profile is non-trivial, assume one shipment and loading requires several trucks, the planner could spend enormous amount of time to come up with the best plan or close to the best plan, however, a computer through a model could solve this complex problem easily and provides the solution to the planner in manner of seconds.

 

The model development needs a special attention. In supply chain, there are a lot’s of variability which often leads to errors in model result and poor supply chain decisions and easily could disappoint the decision makers. Therefore, there are some crucial elements in developing a model that must be observed. First the data must be accurate and comprehensive. For example the weight and volume of the items for given example must be accurate and up to date. Second the process must support optimization and ability to improve continuously. It simply means the process requires systematic monitoring of data, models and algorithm performance to support and continuously improve supply chain and logistics optimization.

 

Nonetheless, if the optimization models are developed according to the operation requirement and integrated with supply chain operational process then it would provide an opportunity to reduce the operation cost by 10% to 40% through an efficient and better decisions.

 

 

 

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Originally posted by Iman Niroomand at http://blog.kinaxis.com/2017/01/essence-optimization-supply-chain-logistics/

by Duncan Klett

End-to-end supply chainSupplying products to customers is clearly important. If you can’t satisfy the needs of a prospective customer, that prospect can easily buy from someone else who can deliver what they want, when they want it. Lost sales and additional expediting costs hit your bottom line.

 

At one level, end-to-end supply chain success is simple: get the right stuff to the right place at the right time. So, what’s hard about that?

 

The answer is “lots”. Products change. Customers order at the last minute and change their orders. On-line customers expect their product to be shipped, if not delivered, on the day they place the order. Supplies don’t arrive as expected. Supply chains typically use several layers of companies, manufacturing sites, and warehouses between raw materials and customer delivery. The number of products and the number of units of those products produced are enormous: 5 million integrated circuits a day, 35,000 vehicles per day, 3,000 major appliances per day.

 

I recall a visit to an electronics manufacturing facility in Juarez, Mexico. Every week, amongst other products, they made about 200,000 units of a consumer electronics product. They did this despite having to manage an average of 30 production changes to that product every day! How did they do it?

 

1. Communication

Every insight you can gain regarding potential changes and disruptions will help you manage your supply chain to accommodate them:

 

  • Be sure your staff knows what to do and how to do it in order to keep product moving smoothly.
  • Establish relationships with your internal or partner staff responsible for developing product and production methods. Seek advance notice of any changes you might need to handle.
  • Establish relationships with your suppliers and their suppliers through as many layers as possible. Track projected supply availability and limitations. Collaborate with them so they also know what you are likely to need.
  • Establish relationships with your customers and their customers through as many layers as possible. Collaborate with them so you are more prepared for demand changes and other drivers which might change your requirements.

2. Focus on Flow

Keep material flowing. Items sitting on a shelf are not making you any money. Stock only helps you to the extent you need it to cover variations in your supply or demand. Everything else should be progressing towards delivery to your customer. This is one of the basic concepts of a “Lean” process.

 

3. Invest in Data Quality

As your operation grows, the volume of data you rely on grows exponentially. That data can be your key to success. It can also lead to disaster unless it is accurate and consistent. For example, if the name for a part in your supply data is ABC but A_BC in your demand or customer’s data, or worse, XYZ, then you will have more and more trouble recognizing which supply you can actually use to satisfy which demand. This might seem to be obvious and unlikely. However, it is common for large (and even small) companies to have different part numbers for the same part. As you migrate towards being a digital operation, that system can only operate if you have accurate and consistent data.

 

4. Segment Your Products and Processes

Recognize that different products have different characteristics within their supply chains. Often, even the same product sold into different markets will require different supply chain strategies. Therefore, although management principles are the same, actual execution practice should be quite different. Categorize your products and then align your supply chain management processes to match the characteristics of those products. For example, some of your products might have steady demand over long periods of time. Others might have ready supply on short notice. On the other hand, some of your products, such as seeds, might only be produced over a short time frame, yet might have demand over a similarly short time frame – but at different times of the year. Clearly, your strategy for managing these products must be different.

 

Segmentation ties back to the Mexican factory I mentioned earlier. Production in the Juarez plant was allocated to products with highly volatile demand and rapidly changing designs so the company could respond immediately to changes for the North American market. A sister plant, in the Far East, produced steady volumes of stable products where seven weeks crossing the ocean would not be a problem.

 

People, Processes and Tools

These four steps might sound simple. In reality, they are anything but simple! Supply chains are difficult to manage because they must operate despite constant change.

 

Your challenge is to establish a team of supply chain professionals who can navigate the changing environment. You then need to equip them with tools and processes so they can execute strategies to deliver products while handling all manner of changes and still keep your costs under control.

 

The post Four Steps to End-to-End Supply Chain Success appeared first on The 21st Century Supply Chain.

 

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Originally posted by Duncan Klett at http://blog.kinaxis.com/2017/01/four-steps-to-end-to-end-supply-chain-success/

by Teresa Chiykowski

Closed Today. Fresh out of Supply Chain Talent.

Future of supply chain management

There’s no time like the present to talk about the future of supply chain management. That was the perfect lead-in for a great Supply Chain Insights webinar I attended recently – Journey to Supply Chain 2030.

 

Admittedly, 2030 is a few years out. Sometimes it’s difficult to predict what’s going to happen next week let alone 14 or 15 years down the road. But here’s the thing about supply chains: Today’s supply chains are the result of what we’ve done in the past; tomorrow’s supply chain will be the result of what we’re doing today. So it’s time to get planning.

 

Technology, digitization and automation are dramatically changing the supply chain. The cloud and massive streams and lakes of data are making for a vastly different way of managing operations. The manufacturing firms that continue (successfully) into the future must possess the “talent” with the right competencies, and the “strategic thinking and problem solving” abilities to deal with the new and increasingly more complex supply chain.

 

But, how confident are firms that they’ll have this workforce at the ready? Not very. In Deloitte’s 2015 Supply Chain survey of 400 executives, only 38% of respondents say they have the competencies they need today. And that doesn’t even consider the future.

 

The shifting talent landscape

As uncertain as the future is, we are aware of some of the realities reshaping the talent landscape. Seasoned and experienced workers (the baby boomer generation) are leaving the workforce in droves, while millennials are entering the workforce en masse. According to Pew Research Center analysis of U.S. Census Bureau data, more than one-in-three American workers today are millennials (adults ages 18 to 34 in 2015). In 2015, Millennials surpassed Generation X to become the largest share of the American workforce.

 

What does this mean for the supply chain?

 

Once you’ve got the talent, baby, you’ve got to do everything to keep it.

 

This is a tall order when looking at the youngest members of the workforce who have a high propensity for job hopping. The 2015 Millennial Majority Workforce Study underscores this some compelling stat: 53% of managers say it’s difficult to find and retain millennials. 58% of millennials expect to leave their jobs in 3 years or less.

 

Gone fishing: Dealing with the talent gap

With baby boomers trading in office desks for the golf course, fishing, scrapbooking, woodworking or some other past time of choice, what will become of the middle-to-senior supply chain? Answer: There will be a gaping whole.

 

How do we create the great managers and leaders running the rapidly changing and exponentially more complex supply chain environment?

 

Good question.

 

It’s a challenge that many institutions, professional societies and universities are struggling with. Learning institutions are good at delivering the “functional” expert (i.e. the solver), but who will be the strategist and critical thinker who asks the right questions?  Charles Kettering (1876-1958), inventor and head of research for GM said, “A problem well-stated is a problem half-solved.” Who will be the supply chain people asking the questions and stating the problems in your organization?

 

That brings us back to millennials.

 

Suffice it to say, companies can be proactive today with strategies that align with millennials as well as business goals. Here are a few of them.

 

Make supply chain sound really, really cool

The supply chain profession tends to get a bad rap. You don’t hear kids saying, “Mom, when I grow up, I want a career in supply chain planning.” You don’t hear parents bragging that, “My daughter married a supply planner.”

 

Organizations need to work collectively with colleges, universities and high schools to educate students on the benefits of working in the supply chain profession. For example, tout the fact that many of today’s supply chains use leading-edge technology to make the world’s best and most recognized products (including all those electronic devices millennials are so attached to). Traditional enterprise resource planning systems are giving way to cloud-based supply chain planning software to drive unprecedented collaboration, cooperation and innovation. Now, you can’t tell me that doesn’t sound sexy.

 

Why am I here? Give millennials a sense of purpose

Millennials are purposeful peeps. Once you get them, you want to keep them. Interestingly, money isn’t the be all and end all to them. Have you heard of the purpose gap?  Deloitte defines it as the difference between what millennials want out of business and what business offers them. In its Millennial Survey 2016, Deloitte reveals that millennials believe businesses are focused on their own agenda rather than helping to improve society. That’s simply not the type of purpose that will attract and retain talented and high-potential millennials.

 

What that sense of purpose is will vary from individual to individual. It could be making the world a better place or understanding how their contributions impact the company.

 

Is purpose clear and well-articulated internally and externally in your organization? If you want to attract and hang on to millennials, purpose should be an integral part of your culture – and captured in your mission, vision and values, and then linked to individual and organizational goals.

 

Provide opportunities for new experience and growth

If millennials are to become tomorrow’s successful senior managers and leaders, they need experience –not just in one functional area, but across the organization.

 

Through job rotations, millennials can get valuable exposure to every part of the supply chain, from procurement and sales to logistics and operations. By understanding all facets of the supply chain environment, they can become more strategic and able to take a holistic view of how things are run. It’s the stuff great leaders are made of. As an effective HR strategy, job rotations also help managers explore hidden talent and employees explore their interests (which is great for employee satisfaction and retention).

 

What’s another way to close the skill gap and make a well-rounded supply chain expert? Implement cross-training programs with seasoned supply chain veterans – those experienced individuals who have come up through the ranks of the organization helping to sustain the lifeblood and vitality of the organization.

 

Communicate that failure isn’t necessarily a bad thing

Now for some final words. Don’t punish failure. Let’s be clear here. I’m talking smart failures not dumb ones. Dumb is being told something will fail and then doing it anyway. Smart failures are those times when you take a risk, it fails and you learn from it. If millennials aren’t given the freedom to explore, spread their wings and try new things, they’ll fly the coop. And with them will fly all the great potential, enthusiasm and innovation that can fuel your journey to the supply chain of future.

 

What are your strategies for building a workforce for the future? We’d love to hear your thoughts.

 

The post The Future of Supply Chain Management appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2017/01/future-supply-chain-management-2/

by Teresa Chiykowski

This is the second blog post in our three-part series discussing ways to improve supply chain collaboration.

 

S&OP processIn my first blog post in this series, I touched upon one of the biggest challenges companies operating global supply chains face today. I’m talking about the disconnect between the data, processes and people in the supply chain and how it inhibits collaboration and the ability to make the best decisions quickly.

 

My last post focused on connecting data. So today, I’m going to do a deeper dive into connecting S&OP processes.

 

The challenge: Disconnected sales and operations planning processes

Today’s supply chain processes and functions operate in silos.

 

What I mean by “silos” is that, across organizations, managers are responsible for one specific department, each with different priorities, responsibilities and objectives. As a result, managers aren’t aware of what other departments are doing in terms of their goals and priorities.

 

When operations are siloed, there’s an absence of communication and collaboration between departments, divisions and business units. Each takes a vertical approach to reporting. Individual, functional metrics are tracked, instead of taking a horizontal view that gives insight into the health of the supply chain network and interdependencies of the individual functions.

 

Consider these questions…

 

  • How many companies would commit to a demand plan creating a 50% overload on a critical resource?
  • How many organizations would take steps to deliver an order on time at the expense of margin?

Making these kinds of decisions requires easy access to demand, supply, capacity and inventory data. But having the right data is only one part of the equation; having the right processes in place is another. If organizations spend too much time firefighting and too little on exception management, their decision-making abilities will be hindered.

 

The solution: Cloud-based planning and response systems

Continuously planning, monitoring, and responding within a single environment increases collaboration across business functions. Companies that achieve this level of cooperation cut risks and make faster and better decisions. According to a recent TechValidate survey of supply chain stakeholders, 66% of respondents were able to achieve these benefits using a cloud-based planning and response system.1

 

Cloud-based solutions support the supply chain with the process orchestration and task flow capabilities organizations need to document and monitor processes. With data and analytics brought together in a single place, organizations have the ability to plan concurrently. There’s no need to pass data from one silo to the next to get the right answer. All the analytics to support demand and supply balancing are always “on”, enabling stakeholders to immediately see the impact of any change or decision.

 

If you want to learn more about how to connect supply chain processes to drive better collaboration, have a read through the eBook: 3 Ways to Improve Supply Chain Collaboration.

 

Stay tuned for our next post about disconnected people are inhibiting supply chain collaboration.

 

1 Kinaxis TechValidate Survey, October 2015

 

The post Improving Supply Chain Collaboration: Connecting Processes appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2017/01/improving-supply-chain-collaboration-connecting-processes/

by Palvashah Durrani

supply chain communicationIn our digitally connected world – information is easy to access, available on demand, and of varying levels of quality and veracity. While being connected means it might be difficult to escape the latest zeitgeist, it also means that you are aware of your current context and fragments of the world around it. And, if you want to step out of what you passively receive – you can actively chase down countless threads of inquiry to learn more.

 

Integrated supply chains take advantage of these multi-threaded inquiry patterns by coordinating across supply chain functions, however, how interconnected is communication in your processes? Can you reach across your supply chain to achieve diverse and innovative solutions in just six steps or less?

 

One way to enhance your communication channels is to engage in group problem-solving. Yes, you might do that currently across teams; you might even engage external stakeholders such as suppliers or distributors when resolving a shipping challenge or similar issue. To truly integrate communication across your supply chain, consider involving both internal and external stakeholders at other stages—not just when there’s a problem to resolve. For example, engaging a supplier in prototype design can ensure a more effective and feasible design with a tighter price point. Or involving marketing at the production stage can provide them with a better understanding on the product’s strengths and thereby help them to improve their messaging to customers. With differing experiences, knowledge, and points of view—these fully integrated teams can synthesize novel solutions and initiatives that might not have been born in isolation.

 

Another way to improve communication across your supply chain is establish parallel views of data and real-time communication for stakeholders. When everyone is looking at the same data at the same time, they’re all the same starting line together. Less time is spent on clarification and more times can be spent on picking apart the issue, proposing solutions, and synchronizing strategies.

 

A third way to weave communication tighter into an integrated supply chain is to actively collect and catalogue tribal knowledge. This encourages free information flow while at the same time assuring that that knowledge is readily available outside of any silos and that it can be used as an effective learning tool for your organization.

 

And so, six degrees of separation, where solutions, people, and processes in your supply chain are six or fewer steps away from one another in an interconnected chain, is achievable with strong and targeted set of communication channels.

 

The post Six Degrees of Separation in your Supply Chain appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Palvashah Durrani at http://blog.kinaxis.com/2017/01/six-degrees-separation-supply-chain/

Kinaxis

Running on autopilot

Posted by Kinaxis Jan 16, 2017
by Alexa Cheater

The growing role of AI in supply chain management

artificial intelligenceRapidly evolving technology and a digitally focused world have opened the door for a new wave of automation to enter the workforce. Robots already stand side-by-side with their human counterparts on many manufacturing floors, adding efficiency, capacity (robots don’t need to sleep!) and dependability. Add in drones and self-driving vehicles and it’s no wonder many are questioning the role of humans going forward.

 

Supply chains, although automated to a degree, still face challenges brought about by the amount of slow, manual tasks required, and the daily management of a complex web of interdependent parts. The next generation of process efficiency gains and visibility could be on your doorstep with artificial intelligence in supply chain management, if only you’d let the robots automatically open it for you.

 

History of automation

Mankind and machines have worked in harmony for decades, with some citing Henry Ford’s adoption of the assembly line way back in 1913 as its early beginnings. Fittingly, D.S. Harder, an engineering manager at the Ford Motor Company, officially coined the term ‘automation’ in 1946, using it to describe the increased use of automatic devices and controls in mechanized production lines.

 

The race for automation supremacy set off a race for the ‘lights out’ factory among many rival automobile companies. The idea was to automate all tasks with no human presence required on-site. Production could happen continuously 24 hours a day. It is still the dream of many manufacturers today.

 

Thanks to automation’s roots in the industrial revolution, many associated the term with mechanical production lines and warehouse floors. But more recently a number of significant developments in various other fields have led to an expanded definition. The digital computer, improvements in data-storage technology and software, advances in sensor technology and the derivation of a mathematical control theory – all have contributed to progress in automation technology outside traditional manufacturing.

 

Driving further advancements in automation was the development of integrated circuits in the 1960s, which propelled a trend toward miniaturization in computer technology. That led to smaller, less expensive machines also capable of performing calculations much faster, providing a major advantage to those companies able to implement these new automation technologies.

 

As Robert Bowman from SupplyChainBrain points out, “The focus up to now has been largely on repetitive, transactional processes, in warehouses as well as on the production line.” But that’s beginning to change. We’ve entered an era where automation is extending to processes. It’s no longer just a case of swapping out humans for machines.

 

Robotics process automation

Robotics process automation (RPA), as defined by Wikipedia is, “an emerging form of clerical process automation technology based on the notion of software robots or artificial intelligence (AI) workers.” It goes beyond physical systems and provides the glue that when looked at from a supply chain perspective integrates multiple systems dedicated to order taking and fulfillment.

 

RPA works by automating the end-to-end supply chain, enabling the management of all tasks and sections in tandem. It allows you to spend less time on low value, high frequency activities like managing day-to-day processes, and provides more time to work on high value, exception-based requirements, which ultimately drives value for the entire business.

 

PwC estimates businesses could automate up to 45% of current work, saving $2 trillion in annual wages. “In addition to the cost and efficiency advantages, RPA can take a business to the next level of productivity optimization,” the firm says. Those ‘lights out’ factories and warehouses are becoming closer to a reality.

 

Four key elements need to be in place for you to take full advantage of robotic process automation in your supply chain:

 

  • robots for picking orders and moving them through the facility;
  • sensors to ensure product quality and stock;
  • cognitive learning systems;
  • and, artificial intelligence to turn processes into algorithms to guide the entire operation.

In addition, you’ll need strong collaboration internally and among suppliers and customers to tie all management systems back to order management and enterprise resource planning platforms.

 

Driving the competitive edge

A study by MHI and Deloitte found more than half (51%) of supply chain and logistics professionals believe robotics and automation will provide a competitive advantage. That’s up from 39% last year. While only 35% of the respondents said they’ve already adopted robotics, 74% plan to do so within the next 10 years. And that’s likely in part to keep up with key players like Amazon, who have been leading the robotics charge for the past few years.

 

Global Annual Investment in RoboticsIn advance of Cyber Monday, the online retail giant threw open the warehouse doors to provide an inside look at the robots helping to automate the most mundane parts of filling online orders. It’s been four years since Amazon spent $775 million to acquire Kiva Systems, a Massachusetts-based startup that makes warehouse robots and software. Now more than 30,000 Kiva robots roam the aisles of 13 Amazon fulfillment centers to help speed up warehouse operations and decrease labor costs. It’s no wonder smaller players are looking to get in the game and apply these same benefits to their own supply chains.

 

As outlined in a Business Insiders article, the growing investment in automation and robotics only provides further proof it is the way forward.

 

Robots are becoming cheaper and easier to deploy thanks to less expensive sensors and free open source software. They’re also becoming safer for humans to work alongside, improving safety with the rise of real-time data processing to “see” their environment and avoid any collisions that could injure someone nearby.

 

Benefits of automation

Robots don’t slow. They don’t tire. They don’t get injured, distracted or sick. And they don’t require paychecks. They increase efficiency, reduce downtime and improve accuracy. Provided of course they’re calibrated correctly. RPA allows stakeholders to collaborate and simplifies the flow of products and related information. It can ultimately improve working capital and lower the cost to serve across the entire supply chain.

 

Smart machines are already capable of self-diagnostics, and with added connectivity features can now report on when they need service, estimated life spans and more. Imagine the possibilities. Your equipment could soon be able to tell you exactly when it needs servicing, how long the downtime would be, and provide an estimate as to when end of life will become a factor. Improvements to AI also mean these smart machines could take things a step further, seeking ways to improve their own efficiency and making recommendations on how best to manage day-to-day operations.

 

When it comes to supply chain, the possible role of automation extends well beyond manufacturing and logistics. Automation could eventually be the brain behind your supply chain – the autopilot who navigates planning and fulfillment activities, monitors inventory levels and adjusts safety stock. Thanks to advanced algorithms, we may not be far off. Some supply chain software already has the capability to compare multiple scenarios side-by-side and make recommendations on which course of action may be the best. Add in the ability for that same software to connect and share data with the smart machines on the manufacturing floor, and you may be left wondering if your role in supply chain is about to become obsolete.

 

Where’s the humanity?

Automation should be embraced, not feared, but if you’re concerned about job safety, that’s a whole lot easier said than done. While roles and responsibilities within your supply chain are likely to shift, we’re not at a place where automation can eliminate the human element, and I’m not just talking about engineers required to maintain and repair any faulty robots.

 

“Kiva’s doing the part that’s not that complicated. It’s just moving inventory around,” says Dave Clark, Amazon’s vice president of worldwide operation. “The person is doing the complicated work, which is reaching in, identifying the right product, making sure it’s the right quality, making sure it’s good enough to be a holiday gift for somebody.”

 

That’s where humanity still plays a vital role. Currently, machines can only base decisions and recommendations based on programed algorithms. But there’s something to be said for gut feeling, and knowing soft information not included in the data set. When you consider things like how an order change will alter the sentiment of your relationship with a customer when you factor in soft skills, it becomes evident you still need human judgement in your supply chain. At least for now.

 

Automation in supply chain planning

As noted earlier, the focus of automation in supply chain has largely been on the execution side – manufacturing, logistics, order fulfillment. But the practical application of automation in supply chain planning has largely been overlooked. Once again, Amazon is on the cutting edge. The company reportedly already employs 1,000 people in artificial intelligence, with many likely working on Echo, a wireless speaker that listens to you and speaks back. It can turn off the lights, report on traffic and order things, but backed by artificial intelligence could become something far more than a novelty device.

 

As Kevin O’Marah, the chief content officer at SCM World, explains, “What Amazon is positioning itself to do is far more ambitious and involves what AI experts call ‘contextual awareness’. This means knowing not only the what, but also the when, why, where and how of consumer need. The long game is all about selling us not just what we want, but what we need, and probably before we realize we need it.”

 

Amazon has moved well beyond just sensing and responding to demand. It’s developing a complete picture of each customer, and the personal data collected will help future AI applications to know the difference between what you want, and what you need.

 

AI and prescriptive analytics in supply chain could lead to revolutionary breakthroughs, including automating the decision process. This concept goes far beyond just having software that runs scenarios and shows you ranked results of their outcomes, but lets the machines (in this case computers) actually make the decision entirely, and then filter that control command down through the rest of the supply chain. It’s opening the door for a conversation around optimization versus human judgement.

 

The rise of AI

According to Amazon’s CEO Jeff Bezos, advancements in AI require three technology foundations:

 

  • Algorithms
  • Compute power
  • Training data

The first two have been around for decades, but the third is where Amazon sees the most value. And that training data is coming directly from consumers who purchase through the online retailer. It’s where the idea of contextual awareness comes into play. Combine that with technology able to sense and respond, and you have AI that’s capable of understanding complex cause and effect, and taking appropriate actions to reach a desired outcome. Ironically, as is the basis for so many sci-fi movies, machines equipped with AI are also heading down the path of being able to determine what those desired outcomes should be.

 

From personal assistants like Siri to stock trading to medical diagnosis, AI is able to learn from seemingly unstructured data, take decisions and perform actions in a way previously unimagined. With the endless possibilities of learning from the 2.5 quintillion bytes of data generated every day, it’s well on course to making the implausible a reality. That could be why more supply chain executives are starting to take note.

 

artificial intelligence impact on supply chain strategy

 

With the growing trend toward digitization in supply chain, AI could be the next arena where organizations can look to differentiate and drive revenue growth. According to Accenture’s digital operations survey, 85% of organizations have adopted or will adopt digital technologies in their supply chain in the next year.

 

AI is how companies will analyze all the big data associated with digital technologies in order to gain a better understanding of their end-to-end supply chains. That analysis will drive anticipation of future scenarios, effectively reducing time to market and driving more agile supply chains capable of dealing with uncertainties.

 

As Manish Chandra and Anand Darvbhe of Accenture Strategy point out, “The use of AI in supply chains will ultimately result in spawning an ecosystem where supply chains link themselves with each other, enabling seamless flow of products and information from one end to the other.”

 

Automation and AI in your supply chain is an important evolutionary next step you can’t ignore. It’s what will allow you to spend less time on repetitive processes, such as planning, monitoring and coordinating, and focus more on innovation, growth and those unexpected exceptions.

 

What role do robotics, automation and AI play in your supply chain? Let us know in the comments area.

 

The post Running on autopilot appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/01/artificial-intelligence-in-supply-chain-management/

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