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21st Century Supply Chain

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by Alexa Cheater

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Join us on July 7 at 1pm EDT as we sit down with “The Dean of Innovation” Jeff DeGraff for a live Q&A.

 

Jeff’s creative and direct take on innovation has made him a world-renowned thought leader and helped him earn the title of “The Dean of Innovation.” Putting his practices into action, he advises Fortune 500 companies on how to grow, change and ultimately move forward to see positive results.

 

An enthralling and inspirational speaker, this is an amazing opportunity to learn a bit about Jeff’s unorthodox view of innovation as he shares his ideas on combining theory and practice to instill the mindset needed to make innovation truly happen.

 

Who: Jeff DeGraff “The Dean of Innovation”

 

What: Live Q&A

 

When: July 7 at 1pm EDT

 

Where: Live Online Streaming Event

 

Save the Date!

The post Live Q&A with Jeff DeGraff “The Dean of Innovation” appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2015/06/live-qa-with-jeff-degraff-the-dean-of-innovation/

by Andrew Dunbar

Woman touching a virtual screenThe modern day inventory manager described in this series is the backbone of your company’s inventory planning process. She has a strong understanding of supply chain fundamentals and is an expert at controlling the key levers impacting the inventory company’s investment in inventory. All that’s left is to add a planning system that enables her to work effectively. If you leave her to build reports and metrics that she needs in excel then she’ll spend all her time crunching numbers instead of planning your company’s largest asset. So, what features should you look for in a good planning system?

 

  1. All your data’s in one place. Your planning system should combine all your company’s data in one system. It should be up-to-date (daily at a minimum), and include all the input data required to make your inventory planning decisions.
  2. Closed Loop. If you don’t execute with your planning system, there should at least be a closed loop between the systems so you don’t spend all your time transcribing after making a decision.
  3. Built in reporting systems should immediately alert your inventory manager to changes requiring response. Agile response can make all the difference.
  4. Your inventory manager needs a dashboard that can give her a clear picture of the current status of the inventory plan and provide insight that guides her actions each day. It’s also useful to have more in-depth tools that provide a visual representation of a wide array of metrics simultaneously to help identify concerning trends and improvement opportunities across all the levers in her toolbox. While it can be hard to find time for it, exploratory analysis often pays big dividends.
  5. I covered this last week, but I really can’t stress enough how important it is to select metrics that support all of your business goals. It’s important that the impact of you planning decisions are visible across all parts of your organization. These metrics should be using live data, and you should instantly see the results of the changes you make.
  6. Interactive charts and graphs. The metrics on your dashboard should be interactive to enhance their analysis value. You should be able to hover your mouse over charts to read key figures, and you should be able to drill into the details with a single click. Metrics should update immediately when you make changes and you should be able to filter the input data to dig in to areas of concern.
  7. Hierarchies. Data hierarchies allow you to see your data at various levels of aggregation. Imagine being able to see your metrics at a global, regional, country, or site specific level with a click of the button. Hierarchies can be built into dashboard and reports to allow instant filtering to look at key details.
  8. What-if scenarios allow you to immediately calculate the results of changes you make so you can evaluate the results before committing the changes to your master data. You can easily lose a whole day if you have to wait for your ERP system to refresh overnight before you can understand the impact of a settings change.
  9. When you see something wrong in your metrics that requires collaboration, you should be able to quickly send a message to the person responsible for that part. If you’ve created a what-if scenario, you should be able to share that with your colleagues to get their input or buy-in.
  10. Task flows. Standard business processes save time and can help educate new employees. Many common inventory task are repetitive and best practices should be captured in task flows to maximize the efficiency of these tasks.

The tools described above enable the inventory manager to respond to changes when they happen, not when her phone rings. It allows her to visualize their inventory plan, predict the impacts of her actions, and effectively collaborate with her colleagues. It allows her to redefine the role of the inventory manager and add new value to the company’s bottom line.

 

Interested in learning more about advanced supply chain systems of record? Check out this blog series by my colleague Carol McIntosh. Stay tuned for the final post of this series on inventory management where I’ll share some results from our recent inventory management survey and share my final thoughts on the role of the modern inventory manager.

Interested in learning more about inventory management? Check out the rest of the blogs in this series.

 

The post Inventory Management: Technology Enablers appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/inventory-management-technology-enablers/

by Matt Benson

A woman reviews an S&OP related documentAs I was presenting at the European Supply Chain and Logistics Summit last week, the overriding memory I’ll take away was the number of people that were nodding and pointing at the screen when I talked about how unplanned supply chain events that occur need to be addressed immediately and that they cannot wait to be included as part of a new S&OP cycle.

 

Traditionally, an S&OP cycle is a process geared towards taking a medium/long-term forecast, balancing with aggregate level resources and generating questions/answers to establish preventative action. Usually it’s seen as a monthly process that follows this cycle:

 

  1. Collate actual data and perform performance analysis
  2. Start demand planning cycle
  3. Establish supply status
  4. Perform balancing and establish variances
  5. Agree on corrective action and present solutions
  6. Executive decision and commit to the business

However, this process makes several broad assumptions:

 

  •  Is your forecast accurate? The industry average is approximately 65%. What’s yours?
  • Are your ‘optimization’ based balancing engines up to the job? Many companies establish a large number of unchecked, rarely revised and estimated parameters that accompany many ‘black box’ solutions. That means very often an ‘optimized’ solution is far from that and often unfathomable in terms of interpreting the results. How believable is your result and can you explain it?
  • The monthly S&OP also assumes that supply chains are stable! Really? In today’s environment?

What about the following possible events:

 

  • Chaos management and large scale firefighting?
  • Volume of orders changing?
  • Supply variability?
  • Rogue marketing teams?
  • Things break!
  • Things get lost!
  • Resources fail!
  • Product mix changes?
  • Reacting and responding to competitor strategy?
  • Acts of god!

Sure, some of these events could be categorized as ‘daily operational planning issues.’ If these issues are relatively small and within permitted boundaries of acceptability that’s fine. For example, it’s unlikely that if a supplier delivers one short on a delivery of a million units that it will have much impact. But what about the events listed above that would normally be considered during an S&OP cycle? What happens if they occur midway through a monthly S&OP cycle?

 

Before the event, I took a look at the top 25 Gartner Supply Chain Planning companies and saw some commonality and overriding statements from these organizations:

 

“…improving speed to response…” – Unilever

 

“…designed and brought to market in a week…” – Inditex

 

“…end to end visibility…” – Samsung

 

“…using what-if simulations and real time analytics…” – Colgate

 

“…driving waste out of supply chain operations…” – Nike

 

“…improving forecast collaboration…” – Coca Cola

 

“…collaborative…” – Seagate technology

 

“…accelerating time to market…” – 3M

 

These guys are ‘Planning in the NOW’ – they’re not waiting for the next S&OP cycle to make operational and tactical decisions that influence event results. They’re responding to supply chain events collaboratively and as quickly as possible.

 

In fact, DRK Research recently published a paper that directly linked the impact of a supply chain unplanned event to the amount of time taken to discover it, respond to it and correct it. Those companies that react quickest, see much less disruptive impact.

 

So, if your competition is doing this – could you be doing it too? Is the traditional S&OP cycle now defunct?

 

Well, at Kinaxis, we think that having a single end-to-end planning engine allows you to run your operational business, establish tactical and strategic aggregate S&OP for demand forecasting and inventory optimization and also have a system to be able to respond and react to S&OP level events as they occur. Kinaxis is unique in that it can handle all of this planning, using a single data model with all planning applications dynamically linked and generating ‘what-if’ scenarios to consider unplanned events, establish a corrective action and then commit the response back to the operational business model.

 

Want to learn more about S&OP in the now? You can see my full presentation here, or ask me a question in the comments section below!

The post Sales and Operations Planning (S&OP) in the NOW, is happening NOW! appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Matt Benson at http://blog.kinaxis.com/2015/06/sop-in-the-now-is-happening-now/

by Carol McIntosh

Connecting the dots like in the game Simon is step three to stage five SCP SORStep Three – Connecting the Dots

How many of you are familiar with the game Simon? While Simon is really a memory game, what I really want to emphasize is that it is unpredictable. You start by pressing on one color and with every selection you are presented with a random sequence of colors that you must remember and repeat. It is random; not sequential and your decisions have to be made quickly as the game speeds up at every turn. It is just like your supply chain.

 

So how do you manage an integrated supply chain when you don’t know the sequence of events from day-to-day and any decision you make can impact your next action and also others in the organization?

 

I like to call this ‘Connecting the Dots’.

 

I remember starting in supply chain many years ago in procurement, negotiating pricing and managing suppliers. At the beginning, about a month after I had placed a large purchase order I was approached by accounting. It turns out that the supplier didn’t acknowledge the price and invoiced differently than the purchase order. This is one example of many accounting issues that we all know can occur but it taught me very early that everything I do can potentially impact some other part of the business and often you find out much later, often too late.

 

Have you ever made a bad decision?

 

How many of you have made quick decisions on meeting forecasts only to find out that you lost a good part of your margin on expedited freight, overtime and premium material costs?

 

Connecting the dots is very important for a SCP SOR because everything is related to cause and effect – understanding the impact of your decisions before you execute.

 

The siloed approach

 

This is where the traditional SCP SOR vendors have failed. Many organizations are working with the siloed approach with separately integrated modules. The concept of demand understanding how they have impacted supply or vice versa is unheard of.

 

How to achieve transparency

 

Achieving transparency within and outside your four walls is going to require the following:

 

  •  A truly integrated system where you have everyone working with the same data and the moment someone pulls a lever it is possible to identify everyone affected and alert them to any risk or opportunity.
  • Full representation of the supply chain in one system. This includes your vertical and horizontal supply chain, including key suppliers.
  • Speed of information. If the data is not recalculating fast enough users will revert back to old means, that typically being their favorite personal productivity tool “Excel” which is often the risky backbone for many mission critical supply chain processes.
  • How common is it for you to know all the people in your supply chain that you affect or that affect you? The SCP SOR must be intelligent enough to help you connect with the right people and facilitate collaboration. Technology is an enabler to making the best decisions. People, and human judgement will always be required.
  • Flow of data to and from the ERP data source. The data must flow to the SCP SOR and any planning changes need to flow back to the ERP for timely execution

In the next blog I will speak more about collaboration. Look for Step Four to Stage Five SCP SOR ‘Collaborative Management’.

 

The post Step Three: Stage Five Supply Chain Planning System of Record (SCP SOR) appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Carol McIntosh at http://blog.kinaxis.com/2015/06/step-three-stage-five-supply-chain-planning-system-of-record-scp-sor/

by Andrew Dunbar

Abstract depiction of metricsOver the last several weeks, this blog series on Inventory Management has explored the objectives and roles of inventory managers and outlined several of the improvement levers available to them. This post will discuss some of the metrics and analysis tools that an inventory manager needs to identify risk and opportunities and to make intelligent decisions to optimize the performance of their inventory.

 

When determining the metrics required for any business process, the first question you need to ask yourself is, “What are the business goals of the process?” Once you can answer that, you need to understand where the business process fits into the organization. What processes are upstream of your current process? Who relies on the outputs, and what are their priorities? These are all important questions to help you select metrics that facilitate a balanced decision making process and allow you to understand the trade-offs between proposed scenarios.

 

The metrics you choose should answer the questions your organization is asking, without requiring additional analysis. If you find your organization spending too much time completing repetitive ad-hoc analyses, you may want to re-evaluate your metrics. Each metric requires context. This could be a target level, or simply historical data that allows the reader to understand how the current situation compares to the ideal. Your dashboard metrics should highlight issues requiring immediate action and should be supported by details that can tell the whole story. If your organization wants advice on data visualization techniques for dashboard design, communication, or analysis purposes, I highly recommend checking out the work of Stephen Few.

 

So, what do you need to measure to manage your inventory?

 

  • Inventory vs. targets: This one is a no-brainer, but how to report it often isn’t. Ideally, this metric would provide a historical look as well as a prediction of the future. It should be possible to break down the details into various segments, like ABC classification, make vs. buy parts, or by categories specific to your organization. This will help you understand the driving forces behind the data trends and identify key opportunities.

    It’s also important to understand what portion of your inventory is active, slow-moving, excess, and obsolete. I recommend the inventory quality ratio for this one. Depending on your industry, it can also be valuable to understand your inventory picture by customer or by supplier.

 

 

  • Customer service level vs. targets: Your big investment in inventory has one purpose: to provide your customers with exceptional service. It’s important to understand the relationship between your inventory levels and customer service levels. Your targets should be high enough to satisfy your customers without being too high that it cuts into your margins by driving your inventory up. I’d consider graphing this as a % variance from target as the first thing most people would do is a comparison between the actual and target lines anyways. Another way to look at this would be to measure stock-out performance.

 

 

  • Total Inventory Cost: Inventory management is all about finding the right balance. Inventory transfers, small lot sizes, and short supply periods all help you keep you inventory levels low, but can increase your total inventory cost. Similarly, high safety stock can give you great customer service levels, but can send your costs skyrocketing. Some of these costs can be hard to nail down, but the closer you can get, the easier it will be to optimize your inventory performance. Another major component of your total costs is the opportunity costs of lost business caused by not having enough inventory. If you’re turning customers away because you can’t meet their requirements you may need to rethink your inventory plan.

 

 

  • Cash-to-cash cycle time: This can be thought of as a measurement of how long it takes for your inventory investment to pay itself back with a profit. The shorter the cycle time, the more often you collect. Another way of looking at this is to measure inventory turns, but turns doesn’t help you measure all aspects of the rate of return as it doesn’t account for things like payment terms. This may be the number one metric for companies looking to make the most of tight profit margins.

 

 

  • Measure your input processes: It’s impossible for an inventory manager to succeed unless he understands the performance of all the upstream processes. Inventory records accuracy, supply action management, quality, supply variability, and engineering change management all play an important role in keeping the organization on track with the inventory plan. The inventory manager needs to know where he needs to collaborate with other managers to keep his plan on the rails.

 

 

This isn’t a complete list, but is a good start to help keep your inventory plan on target. What metrics does your organization use that aren’t mentioned here? Next week’s post will focus on technology enablers that facilitate the inventory management process and will offer some tips on how to make these and other metrics come alive to drive actions.

Interested in learning more about inventory management? Check out the rest of the blogs in this series.

 

The post Inventory Metrics: From Insight to Action appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/inventory-metrics-from-insight-to-action/

by Andrew Dunbar

Co-author: Alvaro Fernandez

 

Dads can teach you a lot about supply chainHappy Father’s Day to all those hardworking dads out there! Ever notice how your dad’s advice always seems to come from a place of experience? He’ll always let you make your own mistakes, unless he’s already made those same mistakes himself. In honor of these dads’ accomplishments in the field of trial and error, I’ve compiled a list of the top 10 lessons your dad can teach you about supply chain.

 

10. First pants, then shoes – Whether you’re getting dressed for work or increasing your supply chain maturity, it’s important not to get too far ahead of yourself. Make sure your supply chain solutions help you excel at each capability as you progress through the maturity model.

 

9. Know the risk – Ex. In principle, just-in-time processes are very efficient. You get to hold on to your hard earned money for longer, you don’t have to store extra inventory, and your workspace isn’t cluttered with things you don’t need yet. In practice, these high rewards comes with high risk. Dads have learned this the hard way by applying this approach to things like anniversary gifts, anniversary cards, and sorry-I-missed-our-anniversary flowers. It’s important to understand the risks in your supply chain, and to have the right mitigation strategies in place.

 

8. Never trust the salesman – As the saying goes, if it looks too good to be true, it probably is. Save yourself the hassle and choose proven and recognized solutions.

 

7. Waste-not, want-not – Have you ever seen dad eating that leftover turkey sandwich piled up with layers of creamed-onions, roast potatoes, Brussels sprouts and cranberry sauce? Or finding inventive ways to use up that bulk purchase of 200 cans of tomato soup? He’s treating that excess inventory as delicious opportunity instead of a liability.

 

6. Always use the right tool for the job – You wouldn’t put a screw in with a hammer, so why would you plan with an execution system? Hacksaws are great for small jobs, and the same goes for spreadsheets! Know the limitations of your supply chain solutions, and make sure you invest in the right tools for the job.

 

5. Don’t waste time fixing lemons – Sometimes replacement is the best option. Don’t hesitate to abandon projects that have failed, as some problems just can’t be fixed. Maybe you’ve inherited a clunky planning system? You’ve got the talent to fix the problems you see, but it’s going to take years, and your company just doesn’t have that kind of time. Good bet you haven’t found all the problems yet either…

 

4. Know what you need – How many times have you gotten partway through a home improvement project and realized you don’t have the materials you need for the next step. You make a quick trip the hardware store, get home, and realize you forgot the glue! Combining supply chain planning with integrated project management tools can save you time and money by ensuring you make one trip to the hardware store instead of seven!

 

3. Don’t rely on the instructions – Just like your dad, you learn way more from your mistakes than from doing things by the book. While it’s important to know and understand industry best practices, they’re not always going to be tailored to suit your particular needs. If an industry recognized ‘best practice’ feels like a step backwards for you, don’t hesitate to use your experience to build something configured for your requirements.

 

2. Measure twice, cut once – Wouldn’t it be nice to know that board will fit before making your cut? The best planning systems allow you to simulate your changes before committing them, so you can see exactly what impact they’ll have. Something looks wrong? Back to the drawing board before making the final decision.

 

1. And finally, what’s the number one lesson your dad can teach you about supply chain? Go ask mom!

 

 I’d like to thank fellow dad Alvaro Fernandez for sharing his failures experience while co-authoring this post. What can you or your dad teach us about supply chain? Please share in the comments below.

The post What your Dad can teach you about effective supply chain appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/what-your-dad-can-teach-you-about-effective-supply-chain/

by Carol McIntosh

Excellene is step two of a stage five SCP SOR

 

In my first blog I wrote about the first step to reaching a Stage Five Supply Chain Planning System of Record (SCP SOR) which was securing the right talent.

 

Step Two is about achieving functional excellence (or is it?).

 

 

SCP SOR Building Blocks

 

What is the necessary foundational planning layer required to support demand/supply planning for your industry?

 

There are specific functional requirements necessary for supply chain planning. The short list includes:

 

In more detail this can include:

 

Over the years, you have likely evaluated multiple vendors on their functional capability. However is this enough? Is it really about evaluating and optimizing each individual process?

 

And if everyone has the same building blocks what makes you unique? The maturity of your supply planning processes will differentiate you.

 

From my experience, the more mature supply chain organizations are focused on the integration of the functional capabilities, rather than solely on the individual function itself. They recognize that the whole is greater than the sum of the parts.

 

They often have differentiated and cohesive processes that they incorporate into their planning platform. This requires a SCP SOR that is configurable.

 

The Technology vendors all sound the same!

 

Finding the right SCP SOR technology solution is not easy especially when numerous vendors claim to provide all of the functional capabilities.

 

Having been in management positions in supply chain in my former life, I encourage you to ask vendors to prove it. Proof of concept workshops provide you the confidence you need to make the right decision.

 

I have always believed that it isn’t WHAT these vendors can do but rather HOW they do it.

 

The complexity, volatility and global nature of the supply chain require unique approaches to the HOW.

 

Make the right SCP SOR selection

 

A wise man once told me that the supply chain is the bank of the company. I agree! Supply chain leaders can drive breakthroughs in corporate performance – growth, productivity, profitability and overall shareholder value. Choosing the right SCP SOR can transform your company.

 

I also encourage you to consider every individual contributor in your organization. What do they personally need to be successful? If you provide your people with what they need when they need it and in a format that they can easily work with, good things will happen. Empower the many, not just the few.

 

I recall a Site Director once asking me how I was reducing inventory so quickly. What new initiative had I implemented? My reply was simple. I empowered my team with the right information to effectively do their job. They were able to make decisions quickly and effectively. People inherently want to do good work and are often crippled with technology.

 

Call to Action

 

Much of what I am writing is common sense. Unfortunately for many years I have seen executives bow to political pressure or take the ‘follower’ approach with the big name vendors. Today’s supply chain challenges require disruptive leaders selecting disruptive (but proven) technology.

 

Lora Cecere wrote a great article Reflections on Integrated Supply Chain Planning where she has collected data validating that companies are deploying solutions from industry leaders and they are not delivering results. Perception is not reality. It is a great read.

 

In the next blog I will elaborate on the point I made above ‘The whole is greater than the sum of the parts’. Look for Step Three to Stage Five SCP SOR ‘Connecting the dots’.

 

 

The post Step Two: Stage Five Supply Chain Planning System of Record (SCP SOR) appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Carol McIntosh at http://blog.kinaxis.com/2015/06/step-two-stage-five-supply-chain-planning-system-of-record-scp-sor/

by Andrew Dunbar

Inventory management requires a collaborative effortSo you’re an inventory manager, and your CFO just asked you to reduce inventory by 10% before year end to free up some capital for next year’s big investment in R&D. At first glance, it’s not so bad; you’ve got nine months to do it. But then you look at historical trends and see that lately, your inventory has been growing by 3% each quarter. Suddenly, you need to be about 20% below your current year end plan! That’s a big challenge! On top of that, you know you’d better do it without negatively impacting your customer service levels, because you can’t afford to spend all your time fighting fires for your customer service representatives.

 

So, what improvement levers can you pull to accomplish this goal? Do you have the authority to act on your own? Even if you don’t, you can be sure that you’ll be held accountable anyway!

 

Below are five levers that I believe should be available to an inventory manager to help them effectively plan and manage inventory. I’ll refer to Figure 1 below, a simple representation of the inventory of over time for a single part with safety stock, to explain the impact that each lever can have on your inventory levels.

 

Inventory management graph showing stock quantity vs lead time
Figure 1: The theoretical on hand inventory level of a single item. This curve represents a part with a constant demand pattern, a fixed lead time, and a fixed safety stock quantity. The re-order point is indicated based on the part’s lead time.

 

 

  1. Safety stock settings—safety stock is used achieve high customer service levels by acting as a buffer to overcome supply variability (internal and external schedule performance), quality (internal and external) and inventory records errors. It can also be used to lower lead times for your customers and buffer against highly variable demand patterns. In Figure 1, the safety stock setting is modeled as a horizontal line and represents the minimum inventory that your planning system will keep on hand. Your inventory levels would be directly proportional to this setting.There are numerous ways to apply safety stock policies. They can be fixed or time-phased, they can be dynamic based on demand forecasts, and they can even be recommended by advanced systems using single-echelon inventory planning or multi-echelon inventory optimization techniques. Whatever method you choose, just make sure it’s based on more than gut instinct! Your safety stock should allow you to achieve your customer service targets without breaking the bank.
  1. Order policies—order policies allow you to tell your planning system how to calculate your supply requirements based on the current demand picture. The following are some key order policy modifiers that can have a major impact on the quality of your inventory.  Lot size modifiers, such as minimums, multiples, and maximums, all affect the size of the orders that will be placed. They also impact the difference between your minimum and maximum inventory levels. These modifiers help improve cost efficiency through batching, but they can also increase the rigidity of the planning system. It’s important to ensure that you are striking the right balance between part cost and inventory carrying costs.

    Cycle time buffers are the back-offs that allow your planning system to account for things like the time that it takes to place an order and dock-to-stock time (especially where there’s an incoming quality inspection). Minimizing these back-offs by improving the efficiency of those processes can decrease the inventory’s dwell-time within your facility. In Figure 1, reducing these back-offs would increase the rate of consumption, so inventory levels would return to the minimum level faster.Periods of supply settings impact how often you make your orders, and therefore how large your orders are. You must find the balance between total order costs (every extra order adds processing costs) and inventory carrying costs. If you can reduce your periods of supply, then you can reduce the size of your orders and tighten the band between your minimum and maximum inventory levels.Once you’ve exhausted the opportunities with these traditional order policy settings, you might find additional opportunities by increasing the granularity of your planning. For example, you can use your planning system to recommend splitting purchase orders to tighten your supply-demand balance, or you can try to break up bills of material that have long cycle times to ensure that your parts are arriving at the right stage of the manufacturing process. These techniques can have significant pay-offs, but they require a deep understanding of your manufacturing and supply chain processes.
  1. Lead-time and cycle-time reduction—long supplier lead times require you to maintain higher safety stock levels, and they often drive larger order quantities. Looking back to Figure 1, shortening supplier lead times could shift the inventory curve down relative to the vertical axis, and therefore reduce the average inventory level required to maintain high customer service levels. Vendor managed inventory programs can play a big role to reduce supplier lead times and variability by providing better information to the supplier. Combining VMI programs with a consignment program can also go a long way to reducing total on hand inventory and cash-to-cash cycle times.Cycle time refers to how long the inventory is in house. Long and complex manufacturing processes often have long cycle times. There may be opportunities for an inventory manager to collaborate with manufacturing and industrial engineers to improve the velocity of inventory through the manufacturing process. This accelerates the rate of consumption, so inventory stays at its max level for less time.
  1. Reduce variability—variability is introduced by many different factors. Primarily, it comes from supplier lead time variability, internal cycle time variability, demand forecast variability, inventory record errors, engineering changes, and quality issues. All of these factors contribute to higher safety stock levels (the minimum inventory level in Figure 1).For an inventory manager to be successful, he needs to know these variability measurements, identify root causes, and collaborate to resolve these issues. This might mean rescheduling an engineering change, upgrading a manufacturing process, implementing a VMI program, or tightening inventory controls to improve accuracy.
  1. Increase agility—change is inevitable. A recent article from APICS suggests that chronic disruption impacts over 70% of supply chain managers. They identify the cause often stems from internal issues, including lack of qualified personnel and inadequate information technology. The inventory manager should be empowered to drive significant change in their organization to improve inventory results.

Early results of our survey on inventory management (details below) indicate that many of these levers aren’t controlled by the inventory manager. This makes sense, as the changes to these levers can have significant impacts on other parts of the company. This means that to effectively manage inventory it is critical that inventory managers can collaborate effectively with other teams in their organization. This includes material planners, buyers, business management, master schedulers, demand planners, customer service, finance, sales, and marketing. It often takes a company-wide effort to achieve success. The inventory manager should have the tools to drive this collaboration and, where needed, increase awareness of inventory issues to promote understanding.

 

What else do you do at your company to improve the performance of your investment in inventory? Are there others key levers at your company? Please share them with me in the comments below.

 

If you’re an inventory manager and you haven’t yet completed our survey on inventory management, please take a few minutes to do it now. It doesn’t take long to complete, and I’ll be sharing your feedback in a blog post soon.

This series on inventory management continues next week with a post on the key metrics that can help you get the most out of your inventory management process.

 

Interested in learning more about inventory management? Check out the rest of the blogs in this series.

 

The post Inventory Management Levers – Success Through Collaboration appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/inventory-management-levers-success-through-collaboration/

by Trevor Miles

A group of smiling kids just like Trevor Miles was all smiles at the Gartner Supply Chain Executive ConferenceI love attending the Gartner Supply Chain Executive Conference. Much has changed in supply chain over the past 25 years, though there are many that date from that time, many of whom I run into at the conference, who would deny this. For me it is like a summer camp I have attended for many years. One of my younger colleagues walked with me through the hallways to a meeting and remarked afterwards that he thought we would be late because of the number of times I stopped to talk to people. What he doesn’t realize is that this is due to familiarity, as much as I wish it were true that his assumption of stardom was correct.

 

What continued presence at the conference has given me is the long view of how supply chain management, and my focus area, supply chain planning has evolved. When I first started attending the Gartner Supply Chain Executive Conference no one had a degree in supply chain management and vendors were not welcome. Most business people were in fact very unfamiliar with computers and the majority of the vendors had advanced degrees in Operations Research. Nevertheless the core focus was on process, with people (skills) coming second, and technology excluded from the conference. This year there must have been 50 exhibitors at the conference, some of whom were more focused on people and process, the majority of whom were focused on planning.

 

What I find strange in all of this is that almost always the central theme of the Gartner Supply Executive Chain Conference is about technological changes that will drive process changes and the need for skills development. This was as true this year as it was last year, and the years before. And yet within the community of supply chain practitioners the three horsemen of people, process, and technology are often portrayed as being in conflict. In fact the usual mantra is that you have to get the process right first, recruit/train to fill the roles, and then buy technology to satisfy the process. Hogwash.

 

The ice trade evolution was discussed at the Gartner Executive Supply Chain ConferenceSo it was with great interest that I listened to the keynote by Guy Kawasaki in which he told the anecdote about refrigeration. Initially people would go out on the lakes during the depths of winter and saw out big blocks of ice and drag them into town. The limitation being that when you most needed the ice, during the summer, it wasn’t available, and that for much of the U.S., the south, ice was never available. Nevertheless a thriving industry developed. Along came someone with the technology to manufacture ice in factories in towns. Very few of the businesses that had thrived in harvesting ice from lakes survived this shift in technology. Why? They continued to use the processes and people familiar with harvesting ice rather than manufacturing ice. The ice manufacturers thrived because they used different processes. A couple of decades later the refrigerator was developed which meant people could make cold air – people mostly used ice to cool the air – and as much ice as they wanted at home. Guess what? None of the ice manufacturers survived because none of them adapted their process and people to the manufacture of refrigerators rather than manufacture of ice.

 

In other words we should be talking about symbiotic relationships between people, process, and technology, not a confrontational relationship. So it is with great pleasure that over the years I have seen a greater presence of technology in the presentations at the Gartner Supply Chain Executive Conference in both the end user and analyst presentations. I am still waiting for it to permeate the discussion to the point that people acknowledge the benefits could not have been achieved without the application of technology. What I find encouraging is that several larger companies are blurring the lines between business and IT, especially as the Millennials and Digital Natives come through the ranks displacing the Baby Boomers and Digital Immigrants. It’s not about the Digital Natives being tech savvy. It’s about the Digital Natives understanding that processes don’t have to be performed the ‘old’ way because technology enables different processes.

 

As the anecdote provided by Guy Kawasaki illustrates this has been true for some time, and the companies that did not adapt went out of business. And the stakes have always been high no matter the technology change. Of course Kawasaki’s focus was on the technology embedded in the product sold to consumers whereas my focus is on the technology that is embedded in processes used to manufacture and deliver the product. After all, that is the focus of supply chain. However Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology have been writing and talking for some time about the jobless recovery, which is the direct result of a lot of work being automated through the adoption of technology. Brynjolfsson gave a brilliant TED talk titled “The Key to Growth? Race with the Machines” in which he addresses this issue of a combative approach toward technology. He states that the first electric motors did not result in much of a productivity gain because all we did was replace the old steam engines. It wasn’t until 30 years later, when people who had grown up with the electric motor were now in power, that a complete redesign of the factory took place to enable new work processes that made the factories much more flexible and productive.

 

Of course the arrival of new technology is always a threat to people accustomed to doing things in a manner consistent with a prior generation of technology. Brynjolfsson gives a stirring call to action though. In his closing remarks he comments that since Garry Kasporov lost a chess match to a computer in 1997, no chess grand master has beaten a computer. This is what Brynjolfsson refers to as racing against the machine. He goes on to say that no chess computer has beaten a group of people playing as a team. This Brynjolfsson calls racing with the machine. What is the key ingredient provided by the humans? Team work, collaboration.

 

Which brings me back full circle to the long view of the Gartner Supply Chain Executive Conference. There are still some of the technology diehards that believe in hard numbers and optimization. But my sense is that there are fewer and fewer of them. They believe in racing against the machine in the sense that they believe that a computer can be programmed to produce a better result than humans under all circumstances. There are those in the Gartner analyst ranks who hold to this view. What I see in industry is much closer to Brynjolfsson’s concept of racing with the machine. The evidence of this is the adoption of scenario planning as a core tenet of planning systems. The machine is used to calculate the likely outcomes of certain actions under human guidance. The human is used to evaluate the trade-offs between alternatives. Team work, collaboration, nuance, and human judgment.

 

I look forward to next year’s Gartner Supply Chain Executive Conference very much. Undoubtedly there will be quite a bit of ‘rinse and repeat’. But each year the average age of the attendees stays fairly constant meaning there is new blood coming into the industry, and they are bring new ideas with them. Hopefully the ‘rinse and repeat’ will give them enough grounding to challenge and change the status quo. They need to because the stakes are too high to maintain the status quo.

 

The post Gartner Supply Chain Executive Conference – High Stakes in the Desert appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Trevor Miles at http://blog.kinaxis.com/2015/06/gartner-supply-chain-executive-conference-high-stakes-in-the-desert/

by Carol McIntosh

Talent is key for supply chain planning system of recordReaching best in class. Stage Five of a five stage supply chain model. You all want to get there. Let’s discuss this from a practitioner’s view point.

 

Yes, we are talking about the supply chain planning system of record. The market is confused with terms; end-to-end, control tower, IBP, concurrent planning, integrated supply chain and planning systems of record. What really matters is what we are trying to achieve.

 

It has to start with the people.

 

Step One: The Right Talent

There has been a lot of discussion on this topic. It can’t be overlooked. In my years of experience in the industry and working with software, people are still the difference makers. The supply chain has changed. Increased volatility, more complex supply chains, more competition, and big data.

 

Supply chain talent must understand and be able to interpret big data but solving problems still requires people collaborating to evaluate tradeoffs. Today’s unpredictability is less deterministic.

 

Collaboration is at the Core of the Talent Requirement

 

Morten Hansen, who wrote the book ‘Collaboration’, refers to T-shaped managers. People who can perform their own individual work very well (the vertical part of the T) and also contribute effectively across the organization (the horizontal part of the T). In the supply chain world I translate that to mean T-shaped people have the ability to collaborate across the vertical silos (order fulfillment, demand planning, supply planning, inventory planning, logistics, S&OP) to ensure that decisions made are directionally correct. Thinking deep and broad.

 

Leaders Need a Good Vision

 

Also required are visionary leaders. An overused term, but they are truly distinguishable and required for any company to reach stage five in any maturity model. Visionary leaders encourage innovative people, processes and tools.

 

They recognize that the supply chain has changed. There is an opportunity now to:

 

  • assimilate mass amounts of data
  • problem solve through tradeoff analysis across the globe
  • empower their people with configurable software than encourages innovation

What about company culture?

 

Over the years I have worked with literally hundreds of companies and have had the privilege of meeting hundreds of supply chain leaders. Those that have been most successful in their supply chain transformation are those that are well informed, not afraid to take calculated risk, they encourage input, dialog and collaboration but provide direction. They are able to find the fine line between collaboration and decision making. They make the complex look simple.

 

There Has to Be a Healthy Balance Between Business and IT Leaders

 

The best supply chain transformations involve a healthy, respectful collaboration between Business and IT. Weak supply chain leaders cite IT as a barrier to success and weak IT leaders think they know what is best for the business.

 

I’ll never forget the time when an account executive I was working with felt like his life was in danger because the CIO of this multinational company was SO SO angry that the business was unhappy with their existing software and the CIO couldn’t accept the fact that it wasn’t working. It was definitely transferred aggression!

 

Employee Satisfaction Must Part of the Supply Chain Goals

 

I am fortunate to have worked with many successful companies. I met Avaya many years ago when they were still struggling with fulfilling orders to quoted leadtimes. They are much more demand driven now and have recently had some great success in their supply chain transformation. It is not a coincidence that they are just as much focused on employee satisfaction as they are on bottom line improvement. If you’d like to learn more about Avaya’s supply chain transformation, check out this recent case study published by Aberdeen Group.

 

You are probably wondering when I am going to more specifically discuss the supply chain planning system of record. Stay tuned for step two.

The post Step One: Stage Five Supply Chain Planning System of Record (SCP SOR) appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Carol McIntosh at http://blog.kinaxis.com/2015/06/step-one-stage-five-supply-chain-planning-system-of-record-scp-sor/

by Andrew Dunbar

This is the second blog in my series on Inventory Management. You can find the first one ‘Are you getting the most out of your inventory management process?‘ is available here.

 

An Inventory Manager uses a tablet to check stock can be a challenging job! Inventory managers have to balance multiple conflicting priorities, support multiple internal and external customers, and are typically responsible for millions of dollars spread across multiple sites. They often manage their company’s single largest asset and receive little thanks for their efforts.

 

Unfortunately, many inventory managers don’t have the tools necessary to meet these responsibilities effectively. Supply chain complexity is increasing as companies find new ways to provide value to their customers. The inventory manager needs tools to exploit this complexity to get the most out of your inventory investment. All too often inventory managers are stuck spending all their time building reports and urgently responding to the latest shortage. They become experts at transferring and reallocating inventory to put out the latest fire, but can’t always track the true impact of their actions on the organization. Training and professional development is often sidelined to maintain focus on daily issues.

 

As companies increase the maturity of their inventory management process, the role of the inventory manager often evolves. The best planning systems provide users the ability to visualize and plan their inventory, monitor their inventory performance, predict issues before they happen, and prescribe improvements to maximize the benefits of your inventory. Once a plan is set, the system should alert the inventory manager so they can effectively respond where adjustments are required. With the right tools and training the inventory manager can evolve from a firefighter to an air traffic controller and become an expert at manipulating the levers that set a company up for success, not just today, but 3, 6, and 12 months from today.

 

The inventory manager’s dashboard should provide insight into things like historical, current, and projected inventory levels, customer service levels, predicted shortages, and risk of excess and obsolescence. It should also provide insight into the business processes that impact inventory. For example, excess and obsolete inventory is often the result of things not happening as planned, so the inventory manager needs to understand how well planners are balancing supply with demand and how much variability exists in the demand forecast. This information needs to be provided in a way that provides insight and facilitates collaboration so the inventory manager doesn’t have to rely on that last minute phone call to respond to change. Once the opportunities are identified, the planning system should support analysis, simulation, and collaboration to facilitate intelligent changes to the inventory plan with a complete understanding of the trade-offs involved in each decision.

 

The inventory management role varies widely between companies. Without a defined inventory manager, responsibility for inventory could fall on master schedulers, demand planners, material planners, buyers, or even finance and business management. We’d like to hear from you. Who manages inventory at your company? What are their goals and responsibilities? How do they collaborate with other groups? Please help us to define this complex role by completing this short survey. I’ll be sharing your feedback over the coming weeks and sharing my thoughts on how to improve the performance of your inventory. Don’t have time for a survey? Share your comments with me below.

Stay tuned for the next blog on the improvement levers available to inventory managers.

 

The post Is your inventory manager a firefighter or an air traffic controller? appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/is-your-inventory-manager-a-firefighter-or-an-air-traffic-controller/

by Alexa Cheater

A new survey shows most aren't confident in their supply chainIt’s a simple question really. How confident are you in your organization’s supply chain, and its ability to actually perform in a way that supports your business needs? If you answered ‘not very’ you may be surprised to learn you aren’t alone.

 

According to the results of Deloitte’s third annual supply chain survey, a measly 38% percent of executives claim to be ‘extremely’ or ‘very’ confident their current supply chain has the competencies required to meet their needs. To me, that number seems frightening. It means almost two-thirds of executives aren’t confident about their supply chain’s capabilities!

 

What’s more, just 43% consider their supply chain organization to be ‘excellent’ or ‘very good’ when it comes to strategic thinking and problem solving.

 

But it’s not all bad news. Most of those surveyed recognize the rapidly changing landscape means they need to start increasing their supply chain’s capabilities. Deloitte asked respondents about what it calls 13 fast-evolving technical capabilities:

 

The vast majority, 94%, said they are currently using or expect to use Integrated Business Planning in the future, while nearly half have already implemented Supplier Collaboration and Risk Analytics. Of the 13 capabilities, Deloitte’s survey found just 27% of respondents are currently using Control Tower Analytics, but 53% they expect to use them in the future, while 37% are utilizing In-Memory Computing, with another 52% saying it’s something they’re planning on implementing.

 

In addition to adding new technical capabilities, respondents were also asked about the likelihood of making changes to their supply chain operating model over the next five years.

 

“Locating high-value added activities into Centers of Excellence” is a move that 48% say they’re ‘extremely’ or ‘very’ likely to make in the next five years. The survey gives Gartner’s definition of what exactly a ‘center of excellence’ is – “a physical or virtual center of knowledge concentrating existing expertise and resources in a discipline or capability to attain and sustain world-class performance and value across the supply chain.”

 

Many others expect to increase outsourcing of low value-added activities (44%), segment supply chain strategies and offerings with customer/product segments (42%) and align their physical network with an evolving customer footprint (41%).

 

Roughly one-third of executives also said their company plans to increase the span of control of their supply chain function over the next five years. Deloitte believes these changes aren’t just being undertaken for the sake of change, but rather, are in response to “a business environment of ongoing globalization, waves of disruptive innovation, and rising consumer expectations for “anytime, anywhere” service.”

 

So I’ll ask again, how confident are you in your supply chain? Let us know in the comments!

The post How Confident Are You in Your Supply Chain? appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2015/06/how-confident-are-you-in-your-supply-chain/

by Dominic Thomas

supply chain planning means knowing todayMy wife and I just moved into our new home that we spent a good deal of our lifesavings building.  We worked with our builder on every detail—windows, floors, paint, lighting—you name it. We met with so many of the tradespeople who invested so much time with us making everything just right—under my wife’s watchful eye I might add.  Shortly after we moved in, one key decision that we were left with was which company to use to install and monitor our alarm system. You see, I travel a lot for work and knowing that all is well at home is something that’s pretty important to me.

 

These days there are so many security companies to pick from, each one trumping the other with the latest and greatest innovation. From controlling access from your mobile device, to motion detecting camera systems, the common thread is “innovation”. When securing your family and the things you cherish most, would you rely on old technology?  Would “Hey, if we detect a burglar in your house, we will let you know tomorrow morning after our next batch run” make you feel good about your security company?

 

Shouldn’t the same go for your supply chain? Companies have invested hundreds of millions of dollars, pounds, euros and yen in supply chain planning systems since the late eighties. For a few, planning may have improved. For most, however, smart users have figured out ways of working around each of their disparate ERP and planning systems to make their businesses work. It is no secret that Microsoft Excel still remains the number one supply chain planning system in the world today.

 

So why not stay with the status quo, you ask? It has worked for me thus far, hasn’t it? Sure, your Excel worksheets are nice, but do they scale to the evolving needs of your business? By scale, I don’t just mean the amount of data it can handle – Microsoft fixed that issue by going to 1M rows with Office 2007. What I’m referring to is business process synchronization across different departments, geographies and groups in your organization. Are they all using the same planning processes? Are the KPI’s used by one department calculated differently for another? Do you have multiple versions of the truth when it comes to inventory? Are you capturing the vital qualitative data—assumptions, risks and opportunities—that went into past decisions? More importantly, is the historical information available to you when you need it? If you need to mine through your archive folder in Outlook to find the right revision of your worksheet, is that ideal?

 

Finally, what about Bob? Bob lives in every office. He’s that guy everyone on the planning team goes to for help. Bob knows every calculation in the spreadsheet and knows how it all works – what data comes from which ERP system, which macro needs to execute, and what broke in last night’s batch run. Bob’s the guy everyone is worried for when he crosses a busy street. Well let’s paint a more positive outcome for Bob. What if Bob wins the lottery tomorrow and decides that his golf swing needs some work… in Hawaii? Then what? I’m always amazed when I see large businesses—household names whose products we use every day—that rely on their own Bob or Jane. Do you identify with any or all of these issues in your organization today?

 

So how much would a system that can help you know sooner and act faster be worth to your business? In my world, it’s mandatory that the appropriate user be alerted the very instant a supply chain event occurs, and be allowed to take action. After tonight’s batch run, the information available tomorrow morning is stale and quite literally, yesterday’s news. Does anybody rely solely on newspapers these days to know what’s going on in the world?  Sorry… I digress.

 

To offer customers superb service and maintain a competitive edge, planners need to know NOW. A supplier is going to be late with a delivery; a customer doubles the quantity of an order; a recall of a key component of a marquis product; I would want to know now. But not only do I want to know about the problem, I want my planning system to allow me to develop scenarios and take action… now! Shouldn’t this be expected in today’s world of Google and iPhone? Without this, aren’t we essentially stepping into our DeLorean—yes the one with the flux capacitor—and taking a trip back to the 90’s with Marty and Doc?

 

So, do you run a response ready supply chain or do you still rely on a batch system that gives you the answer for today’s problem… tomorrow?

The post Is knowing tomorrow “good enough”? appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Dominic Thomas at http://blog.kinaxis.com/2015/06/is-knowing-tomorrow-good-enough/

by Andrew Dunbar

Inventory Management ManagerInventory is often the single largest asset on a company’s balance sheet and your inventory management process can have a huge impact on your organization’s bottom line. Understandably, the inventory management process is getting a lot of attention by organizations looking to squeeze out some extra profit in a challenging marketplace.

 

When you think about the priorities of your inventory management process, what’s the first thing that comes to mind? Is it reducing excess and obsolete? Improving on time delivery performance? Balancing stock between distribution centers? Strategic reduction of your lead times to help obtain and fulfill more customer orders? Now what’s your next priority? And the one after that? Your first answer is likely dependent on your industry, the size of your organization, your role, and your company’s corporate strategies. Your second answer, if you have one, is typically dependent on the maturity of your inventory management process. Finance and business management will prioritize inventory reduction to increase profitability. Customer service representatives prioritize stock-out reductions to improve customer satisfaction. Manufacturing operations needs just the right parts available at just the right time. The inventory manager is often caught between multiple groups with conflicting priorities and becomes an expert firefighter, skilled at supporting whoever complains the loudest. It’s easy for an inventory manager to get tunnel vision and give one metric too high a priority over others.

 

More mature companies will help the inventory manager out and define some clear corporate priorities, e.g. target inventory turns and customer service levels, to facilitate better inventory decisions. This can complicate things further as inventory decisions often require balance between these conflicting goals. The inventory quality ratio is emerging as a powerful tool to combine these priorities into a single measurement. Is that enough to find the right balance? Does your planning system help you analyze the trade-offs between competing priorities when making policy changes? Do your metrics and KPIs provide insight that help you improve the quality of your inventory investment?

 

We want your feedback. What does an inventory manager need to know on a daily basis? How does an inventory manager collaborate with colleagues? What business goals does an inventory manager have to meet? Help us to understand the complex role by completing our short survey:

 

Take the Survey

 

This is the first of a multi-part blog series focused on the inventory management process. Over the coming weeks we’ll share your feedback and my thoughts on the key improvement levers, metrics, and technology enablers that can help you see your inventory as an asset, rather than a liability. Stay tuned for the next post on the roles and responsibilities of an inventory manager.

The post Are you getting the most out of your inventory management process? appeared first on The 21st Century Supply Chain.

 

Kinaxis Positioned in the

 

Originally posted by Andrew Dunbar at http://blog.kinaxis.com/2015/06/are-you-getting-the-most-out-of-your-inventory-management-process/

by CJ Wehlage

Amazon utilizes speed to become top supply chainIn part one of this blog series, I noted the changes, or lack thereof, to Gartner’s list of the Top 25 Supply Chains. After realizing little has changed, with the exception of creating a new “Masters” category, which doesn’t really fix anything in the rankings, I had two important thoughts and an epiphany.

 

Amazon’s #1 Position makes me think of two things:

 

Where in the world is Google?

 

Amazon is a software company that built expertise around services and distribution. That distribution model is fantastic for getting fast delivery. In the same light, I would advocate FedEx, UPS and DHL be in at least the Top 50 ranks.

 

Google is an internet company. Sure, they are known as a search engine, maps, communications, advertising, and services company. However, the key message from Gartner this year was the “digital” aspect of supply chains.

 

We tend to think of a traditional hardware company adding digital to its product and supply chain. However, let’s take direction from Guy Kawasaki (the Keynote speaker at the conference), and “Jump to the Next Curve”. What about a digital company that adds hardware? Google is adding cars, glasses, mobile, tablets, and even contact lens. And I believe Google should be added to the list.

 

Put Apple (and P&G) back in the Top 25

 

This isn’t because I used to work at Apple. I get it. People are tired of seeing Apple there every year. But, the problem isn’t fixed.

 

As I said in my May 2014 blog, where I predicted Amazon to be #1, Amazon has done everything great, except pull a profit. There’s been a lot spending on assets these past few years at Amazon. And soon that asset spending will be seen in their significant revenue growth. They’ve already finished in the top five, five years in a row, even with 0.0% ROA in 2015! My bet is that Amazon will be #1 for 2016 and 2017 (and then placed in the Masters category). Yet, the problem that left Apple at #1 for seven years, and potentially place Amazon at #1 for three years, will not have been fixed.

 

Which leads me to my epiphany!

 

What Apple did for eight years, and now Amazon has done for five years in supply chain is SPEED. They exhibit speed in three core areas: Agility in demand/supply, Adapting to change, and Aligning the interests of partners. All three with incredible speed.

 

People say Apple has been #1 for seven straight year because of the enticement of the products. I beg to differ. Apple is #1 because they figured out and mastered SPEED. They used China to enable speed that the U.S. could not deliver. This speed allowed them to change the iPhone screen from plastic to glass in the last six weeks before launch. The Chinese facility where Apple builds iPhones employs 230k people. Of the U.S. cities, only 83 have a population larger than that iPhone facility! Apple can get Foxconn to hire 3000 people overnight. Something that would take a U.S. company 9+ months to do. Foxconn hired 8700 Industrial Engineers in 15 days. That is SPEED, especially in agility, adaptability and alignment.

 

However, with global consumer demand, new products, and competition, Apple will be hard pressed to leverage this speed, and will need to innovate its supply chain yet again.

 

Amazon has figured out this SPEED. Same day delivery with drones! That’s speed. Kiva Systems to pick and pack orders. That’s speed.

 

Both Apple and Amazon can balance demand and supply with great agility. They also can quickly adapt their supply chain when the model changes. And, both are great at aligning (some would say leveraging) their partners to enable exponentially better SPEED.

 

Going forward, I, personally, would love to see how Apple, Amazon, Google, as well as the traditional product companies building digital supply chains, battle it out in the coming years. Do you agree that speed will play an important factor?

 

 

The post Top 25 Supply Chains Pt. 2: Epiphany About Speed appeared first on The 21st Century Supply Chain.

 

Kinaxis Positioned in the

 

Originally posted by CJ Wehlage at http://blog.kinaxis.com/2015/05/top-25-supply-chains-pt-2-speed/

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