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21st Century Supply Chain

1,077 posts
by Dr. Madhav Durbha

Digital supply chainDigital supply chain is the “in” thing! Don’t take my word for it, though. Just google the term. You will come across many articles talking about how supply chains are being remade by industry 4.0, internet of things (IoT), 3D printing, big data analytics, cloud computing and so on. But what most of these articles focus on are the means rather than the ends for the digital supply chain. On a day-to-day basis I speak to a number of supply chain practitioners. Most of them tell me they are at some stage of evolution with their digitization strategy. However, much confusion exists in terms of what constitutes a digital supply chain. So, I decided to write this blog to share my point of view on the topic.

 

Supply chain digitization is not simply taking existing information and capturing it in a digital format. It is not about automating your existing SCM processes. It is not about layering in Sales & Operations Planning (S&OP) as a band aid to connect disjointed processes. It is about having the most current information to run your supply chain effectively, available on demand, so you can service your customers and grow profitably. In other words, think of a Google search for supply chain. You ask questions and you get answers!

 

Here, I will introduce 6 design principles that make up a digital supply chain. I will lean on the example of Uber, how it digitized the taxi experience, and draw parallels to digital supply chain. Let us take a look at these design principles:

 

  1. Connect the supply chain data: The strength of Uber is providing a platform to easily onboard drivers and riders, and establish connections between them as needed. When I signed up for Uber, all it took was to set up my name, contact, and credit card information. I was up and running in two minutes. The biggest impediment to digital supply chains is siloed information in disparate systems that needs to be surfaced for consumption. A digital supply chain should provide the ease of onboarding of relevant data and draw connections. These connections will help transform the data into information.
  2. Match demand and supply at the point of need: When I call for a ride on Uber, it matches me to the nearest driver and sends him my way. It does this by knowing my geolocation and the kind of ride I need (e.g., UberX vs UberXL). In other words, it understands my context. Likewise, a digital supply chain should understand the context of the demand (where it needs to be filled, when, priority of the customer placing the demand, etc.) and match supply in the most profitable manner. This calls for visibility into not just finished goods inventory, but all the way to raw materials, available capacities, and into suppliers’ worlds if it makes business sense. Also, just as Uber notifies me of an estimate time of arrival (ETA) the moment I call for a ride, a digital supply chain should provide an immediate reliable match to demand with an ETA.
  3. Effectively utilize assets by elevating visibility: Through providing visibility to an asset that can be shared (i.e., a ride share vehicle), Uber significantly increases the utilization of the asset. Likewise, a digital supply chain should fully make visible all the available assets, their current utilization, effective run rate, and availability to process additional work content. Such visibility enables better utilization of enterprise assets. In some cases, available capacity can be made visible to external parties for consumption (e.g., available capacity on trucks for transportation), taking shared economies in supply chain to the next level. Visibility to on hand and projected inventory is also enabled by the digital supply chain to ensure pull from upstream nodes after factoring in inventory.
  4. Expose and remove non-value added links: Uber completely disintermediated the human taxi dispatchers, relegating those functions to the platform. If we take the supply chain planning example, many organizations are significantly hampered by siloed, batch oriented processes. In such environments, demand planners plan a promotion and throw it over the fence to the supply planners to figure out the material and capacity availability. Material and capacity availability checks are done in their own silos. This causes latency of information, delayed decisions with a lot of non-value added human touch along the way. A fully digital supply chain should cut across the functional silos, and concurrently plan for demand, supply (materials and capacity), inventory, and financials in real time, eliminating the need for batch oriented, latency ridden, error prone communications and associated spreadsheets.
  5. Enable instant collaboration: Before the Uber driver gets to me, at the touch of a button, I have the option of calling the driver to let him know of my whereabouts. I find this particularly useful when I get ride from an airport. The driver can do the same. In essence we are able to collaborate and cooperate instantaneously, on demand! Why should supply chain collaboration be any less? In today’s complex and volatile world, collaboration across the various actors is a must for the smooth functioning of a supply chain. A digital supply chain should allow users to instantaneously collaborate, run scenarios, and resolve problems.
  6. Enable transparent and frictionless supply chains: Through its mapping and frictionless financial settlement, Uber provides a truly transparent experience. A digital supply chain should provide such transparency by enabling end to end visibility. If there is a supply disruption, the digital supply chain should immediately propagate the effects end to end and show the impact on order book or in meeting the forecast. Likewise, if there is a spike or drop in demand, the digital supply chain should allow for the business community to understand the effects on inventories, capacity utilization, and supplier schedules.

In essence, the power of Uber lies in its platform. Similarly, a digital supply chain effort should be supported by strong supply chain platform capability that can connect data, process, and people. In this day and age of smart phones, shared economies, and social networks, why should the supply chain community settle for antiquated, batch oriented, non-transparent supply chain processes? Take a hard look at your digital supply chain efforts. Make sure the above 6 design principles are integral to your digital supply chain strategy!

 

The post How Uber Parallels the 6 Design Principles of Digital Supply Chain appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2016/12/uber-parallels-6-design-principles-digital-supply-chain/

by Alexa Cheater

Supply Chain RiskIn a world where everything is changing, staying in one place is the fastest way to find yourself falling further behind. The same is true when it comes to your supply chain. Remaining stationary in your processes, relying on inefficient technology, and refusing to keep pace is how successful companies find themselves lagging behind the competition.

 

It’s not just about who does it better anymore. It’s about doing things differently. That’s when breakthroughs happen. Unfortunately, many companies are still looking at their supply chains with a lens focused solely on efficiency and the bottom line. That strategy alone won’t yield long-term success. There has to be the opportunity for innovation, as well. It’s what drives new products and pushes companies into new markets.

 

Hence the industry’s latest buzzword – bimodal. Most often credited with coining the term ‘bimodal supply chain’, research firm Gartner describes it as a supply chain made up of two distinct modes. Mode one is about cost-saving measures and efficiency and appeals to a need for predictability, accuracy and reliability. It’s focused on maintaining the status quo and managing day-to-day operations.

 

Mode two is all about experimentation and driving revolutionary changes in how supply chains adapt to new risks and opportunities.

 

The Supply Chain Risks of Staying Stationary

The risks of ignoring this shift and keeping your supply chain stationary in a single mode are rising. If you’re not also innovating within your supply chain and continually looking for ways to combat the risks outlined below (and more!), you’re going to be left behind.

 

  1. Consumers’ demands are rising
    Companies like Walmart, McDonald’s, Panera and Chipotle are already changing the way their supply chains work to keep up with growing consumer demands. From free shipping to 24/7 ordering to ensuring sustainable, environmentally friendly goods – customers’ requests are driving businesses into new processes and practices.
  2. Talent shortages looming
    According to the American Association of Retired Persons (AARP), it is estimated that more than 10,000 baby boomers a day are turning 65, a pattern that will continue for the next 19 years. Industry veterans are beginning to retire without suitable replacements to succeed them. This problem is relevant across all industries, and compounded by the fact that many organizations’ current supply chain technologies and processes don’t support the new level of risk and response management required to address all of the threats facing supply chains. You have an experienced workforce leaving, with the need to not only replace those vacancies, but also drive supply chain process improvements at the same time.
  3. Unexpected global events are increasing
    From 2014 to 2015 there was a 118% increase in disruptive supply chain events according to data from Resilinc, a leading provider of supply chain resilience and supply chain risk management intelligence and analytics. Resilinc named Typhoon Soudelor, which hit Taiwan in August 2015, the most disruptive supply chain event in this timeframe in terms of lost revenue. The estimated impact was more than $20 billion, with total recovery time lasting 29 weeks and impacting 2,401 sites. This is just one example of increasing supply chain risk that has made fast response time a critical success factor.

Combining stable best practices with innovation-seeking behaviors will help keep your supply chain competitive in the face of mounting supply chain complexities. Focusing only on cost and operating efficiency doesn’t allow for continued and sustainable growth. Combating stagnation in your supply chain is essential to moving forward.

 

Interested in learning more about bimodal supply chains? Read our white paper Building a Bimodal Supply Chain, to explore how you can combine growth and efficiency successfully in your supply chain.

 

The post Three Supply Chain Risks that Will Get You Thinking Bimodal appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2016/11/three-supply-chain-risks-will-get-thinking-bimodal/

by Bill DuBois

Supply Chain Polls“What happened to the polls?” next to “What now?” was likely the most frequently asked question as soon as the first results started to roll in back on Election Day. The results shocked everyone as the polls, both national and state, had Hillary consistently pegged to take her seat in the Oval Office. So what went wrong? How could the polls be so far off? What’s the likelihood of getting Canadian citizenship before January? All valid questions but let’s focus on the first two.

 

What’s fascinating about this is that so many polls, or let’s call them what they are, forecasts, were off the mark. All the different polling methodologies used by all the different polling organizations missed calling what was the biggest electoral spectacle in all of U.S. history. There are a number of theories floating around but all would agree the future is tough to predict. This is something supply chain practitioners live every day and not just during the election process.

 

Like the pollsters, demand planners in particular, model the future. However, many planners are well versed in expecting the unexpected, considering multiple variables, modeling and comparing multiple scenario outcomes and quickly adjusting plans when needed. Unfortunately for the popular vote there’s nothing we can do about 2016 but here are three lessons for the pollsters come 2020.

 

The lessons are actually borrowed from a post written by my colleague, Trevor Miles, from 2013 called Truth, Lies and Statistical Modelling in Supply Chain. I would recommend everyone, especially the pollsters, check out this three-part blog series where Trevor concludes “we model all of our manufacturing and supply chain systems using deterministic models, when in fact everything around us is stochastic.” You’ll quickly understand what he means when we get into the lessons.

 

Lesson 1: “Most systems that run our supply chain use precise mathematical models that assume complete identification and prediction of variables (Deterministic), yet we operate in a highly unpredictable environment (Stochastic).”

Statisticians like Nate Silver did a great job predicting the number of electoral votes President Obama would pick up in 2012 and this may have given the pollsters an edge of confidence and even arrogance going into the 2016 election. Taking a supply chain perspective, planners know that even if you were accurate once, future demand patterns, in this case an appetite for one side or the other of the political fence, remain highly volatile. Supply chains deal every day with new product proliferation, emerging technologies and the challenges of promoting dated supply in order to avoid excess and obsolete inventories. Supply chains with the ability to build multiple forecast streams, experiment with different demand patterns, and quickly sense and respond to variation in demand become the leaders in their fields.

 

Imagine if the pollsters could simulate in seconds different demand scenarios and at least start the “what if” conversation. What if Obama’s supporters don’t’ show up at the polls for Hillary? How do we model respondents who don’t know how they’re going to vote? Can we model optimistic and pessimistic views for consideration? What if respondents don’t want to admit they’re voting for a “socially undesirable” candidate? Supply chain folks simply call this unexpected demand and are getting really good at managing it. The lesson is to take the unpredictable seriously.

 

Lesson 2: “Many supply chain models act as if events, over time, are evenly distributed (Normal Distribution), yet most incidents and their respective magnitude (e.g. demand spikes, supply delays) are highly random (LogNormal Distribution).”

Another factor the pollsters are now losing sleep over is what they call nonresponse bias. In this case people for one reason or another just don’t respond to surveys even though there’s equal opportunity across all parts of the electorate. As Trump has said, “I love the uneducated.” Some have speculated that groups like the less educated voter are hard to reach for polling but showed up when it was time to cast a ballot. In other words, the supply of respondents wasn’t as expected. For the supply chain participants this is what they would call a supply disruption.

 

The human race has been dealing with the impact of supply disruptions since we began slicing bread, but it’s the supply chain community that has studied it and began to manage the effect of disruptions. From late deliveries to machine breakdowns, contamination and more catastrophic events like earthquakes and tsunamis, the best supply chains have been able to quickly understand impact and determine how to respond. As Trevor would say, if there’s a fire, the faster you can contain the fire the more you can minimize the damage.

 

The best supply chains can quickly respond so material on allocation is distributed in a way to maximize customer service, revenue and profits in the face of difficult situations. I believe the pollsters knew the possible “supply disruption” was there. I’m not sure how many of them decided to conduct “what ifs” on multiple nonresponse bias scenarios. Imagine if the pollsters could quickly simulate optimistic and pessimistic views on who’ll show up to the polls or “supply” rather than just talk about it on CNN. I wonder if the political strategies may have been different for either party if there were more meaningful “what if” conversations. The lesson is to expect the unexpected.

 

Lesson 3: “The more variable the elements, the less effective the standard models are (the proof is in the math!)”

Similar to other problems with polling, there is still the issue of figuring out who will actually show up to vote. Pollsters develop models around who people will vote for as well as who will show up to vote. I wonder though how much consideration went into the number of Obama supporters that either didn’t support Hillary or simply didn’t vote. One reason Nate Silver may have been more accurate in 2012 is that the candidates themselves were more predictable. The 2016 race was so tight with two candidates that carried so much “unpredictability” with them. Were there democrats that didn’t vote for Clinton because they didn’t trust her? Are there republicans that didn’t vote for Trump because of what he said about [insert first thing that comes to mind]?

 

Not too long ago it was easier for supply chain people to predict demand and align supply. For example, when I was a kid and the choices for a television were colored or black and white, some models would remain relevant for a few years. Now with product life cycles what they are, your new phone, tablet, television or computer feels like its obsolete the day after you purchase it. And on the supply side we’re getting hit with disruptions we’ve never expected before. It’s becoming even more challenging to manage because of globally distributed networks. For the pollsters, they got hit with more unpredictability than they’ve ever experienced during an election cycle and as Trevor so eloquently stated, this level of unpredictability means the standard models are less effective. The lesson is to think outside the standard models.

 

Pollsters seem to be decades behind supply chain planners when it comes to planning, monitoring and responding to change. They will likely be spending months trying to figure out what went so wrong this time around. That being said polling and the pollsters still have an important place during the election process, in research and reflecting on public opinion. It may be time though that they take some supply chain lessons and look to experts outside their field for the innovation they need in their field.

 

Let us know if you agree or disagree with the lessons in the comments section.

 

The post Latest Polls Show We’ve Lost Faith in Polls: 3 Lessons Election Pollsters Can Learn from Supply Chain appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Bill DuBois at http://blog.kinaxis.com/2016/11/3-lessons-election-pollsters-can-learn-supply-chain/

by Meranda Powers

Supply Chain PlanningLet’s face it. Current supply chain planning systems have plateaued. They’re not fast enough or agile enough to keep pace with today’s rapidly shifting digital landscape. Companies are struggling, unable to get ahead of increasing complexity and mounting risks.

 

But how did we get here? The truth is, we’ve been here for decades. We’re still using processes and capabilities developed in the 1960s, based on Materials Requirements Planning (MRP), MRP II and more recently advanced planning systems (APS). Excel hell is still common place – companies filling the gaps of their supply chain systems with workbook after workbook.

 

Yes, we’ve added optimization capabilities as technology advanced, enabling ever-more complex models. But those early processes remain in use. When it comes to supply chains, the times, they aren’t a changing.

 

We need a structural shift in how supply chain planning (SCP) is performed. We need a new paradigm. We need a supply chain revolution. As our most recent white paper, SCP 4.0: Planning Revolutionized, outlines, the business need is there. The advanced technologies are available. And the younger generation entering SCP have the talent, approach and drive to take us there.

 

This next leap in planning, the fourth generation, SCP 4.0, means new operating models. Ones that flatten data access so it’s visible across functional and organizational boundaries. Data will need to be threaded together from new sources like the Internet of Things (IoT) and social media, allowing new insights to be formed and acted upon. Decision-making power will need to be put in the hands of an organization’s front line.

 

A Sensing + Intelligent + Social Supply Chain will need to be developed. My colleague, Trevor Miles, recently explained the concept of this type of supply chain his blog. It requires the connecting of data, processes and people across the entire network. Competing metrics need to be visible and actionable insights easily accessible.

 

Changing an operation model is not a simple exercise, but it is a necessary step to revolutionize planning bring SCP into the future. Check out our white paper, SCP 4.0: Planning Revolutionized, to find out more about this new, emerging planning landscape and what your organization needs to do realize SCP 4.0.

 

The post Revolutionize Your Planning with SCP 4.0 appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Meranda Powers at http://blog.kinaxis.com/2016/11/revolutionize-your-planning-with-scp-4-0/

by Trevor Miles

The Result is Faster and More Effective End-to-End Supply Chain Management

End-to-end supply chain managementIn my first two blogs on this topic, I explained how supply chain management is a collective activity. It requires collaboration, consensus, and compromise across functions for optimal decision making. With growing globalization and complexity, it is becoming more important than ever that your supply chain has all of these aspects. The Sensing + Intelligent + Social Supply Chain provides a way to harmoniously connect data, process and people to make better decisions faster and achieve an effective end-to-end supply chain management.

 

I outlined how decisions made by one functional group often have a ripple effect on other departments. Today’s velocity of change is only magnifying this cause-and-effect relationship. It can’t just be about individual issues. There has to be an eye on the bigger picture. But today’s environment of modular, functional supply chain planning is failing to provide that view. Companies can’t see, understand and orchestra end-to-end.

 

As highlighted in my previous blog on why you need a Sensing + Intelligent + Social Supply Chain, this new way forward can provide big benefits. But how can you implement one? That will be the focus of this final blog in the series.

 

Visibility into the End-to-End Supply Chain

When it comes to implementing a Sensing + Intelligent + Social Supply Chain, it starts with believing in the change.

 

The past few years have seen a significant focus on supply chain visibility. The reality though, is that gaining visibility is only a first step. To really improve supply chain performance, companies need a consolidated view of the end-to-end supply chain, and the ability to leverage that visibility for deep analysis and quick action. That means finding the right way to connect data, processes and people.

 

If all data used for supply chain decision support exists in one place, planning becomes significantly faster and more effective. In fact, the time it takes to collect and consolidate data can be reduced from days (and even weeks) to hours or even minutes. Adding automated integration of data from multiple sources, sites, regions and countries allows planners to accelerate decision making without having to wait. By offering one place for data, you can immediately reduce cycle time for collaborative supply chain processes where multiple people need to be involved. Having a supply chain management software solution that can accomplish this means one that can bring all supply chain data elements from any source into a single place for convenient, easy, instant access.

 

True value is achieved with the ability to interact with data in a collaborative way, performing real-time calculations, data modeling, and simulations to project results. Being able to interact and analyze data from across the extended supply chain network—rather than only seeing it—enables companies to dramatically improve responsiveness.

 

Once you have all related supply chain data, plus the ability to run your processes in one place, your supply chain community can begin to have meaningful conversations that result in timely planning decisions. When an organization can concurrently and continuously plan, monitor and respond in a single environment, people are able to know sooner and act faster. These companies substantially reduce supply chain planning cycles and response times, while simultaneously improving the accuracy of analysis and the profitability of actions. Driving the ability to know sooner and act faster are several key capabilities including visibility across the supply chain. This allows the ability to properly assess risk and respond to unanticipated events. The greatest technical challenge of a highly outsourced supply chain is to gain access to data—including forecast, inventory, in-transit, committed supply, and capacity—necessary to make critical decisions. Getting data from many different ERP systems, including those at contract manufacturers, suppliers and even customers, is a matter of necessity.

 

Seamless Integration of Data and Analytics to Support Supply Chain Processes

But don’t forget visibility to data is only the first step. It has to be integrated seamlessly from all sources. Beyond achieving a historical or current view of the state of the supply chain, you also need the capability for forward-looking, predicative views of a future state.

 

Along with the data, you should also be able to model the behavior or analytics required to support many supply chain processes. For example, if a customer calls and places a new order, you can immediately get the answers to all the questions you would have about the new demand. When can I tell the customer it will ship? Do I have the inventory and capacity to support? What’s the impact of this order on revenue and margin?

 

Developing a solution that supports supply chain processes with process orchestration and task flow capabilities that allow you to document and monitor your processes is critical. With data and analytics brought together in one place, you have the ability to do concurrent planning. There’s no need to pass data from one silo to the next to get the answer you’re looking for. Beyond visibility, it’s also vital to have event detection and alerting. The sooner a supply chain disruption is recognized, the faster the response. To be truly influential, alerts should be triggered based on the anticipated impact of the event rather than the event itself. For instance, a late delivery from a supplier may not warrant an alert because even though it is late, it will not impact shipment to customers. In this case, the system is intelligent enough to know that an alert does not need to be triggered. ERP systems, on the other hand, will flag all late supply but can’t tie the late supply to an impact on delivery, revenue, or margin. Contrast that with the value of automatically sending an alert to a customer service representative when an order is going to be late due to a delayed supplier delivery to a contract manufacturer. It becomes even more valuable when those people who may need to act on the issue are identified and included in the alert as well.

 

In today’s fast-paced, global environment, it is never enough to simply know when something unexpected has occurred. The real value comes from recognizing the event, quickly and accurately understanding its context and impact, and identifying the necessary next steps.

 

That is why analytics are so important. When an event happens, they’re used to model and determine consequences, as well as identify the impact of various potential decisions and actions taken in response to the event. These analytics need to be performed in real-time. Companies can’t afford to wait days or weeks to analyze the impact of an event or to identify resolution alternatives.

 

What-If Analysis to Mitigate Supply Chain Risk

When responding to an unanticipated supply chain event, ‘what-if’ analysis simulation is used to model and compare the various response alternatives. It’s important to note it also plays an equally important role in risk management. When assessing risks, ‘what-if’ simulations help to model the various scenarios, and once mitigation strategies are identified, they’re used to ensure the strategies are sound.

 

There is significant value from enabling anyone, at any time, to simulate anything in a private scenario to test, compare and share, the impact of various planning and response options. For instance, ‘what-if’ scenarios allow supply chain teams to perform an analysis of the projected outcome of a set of choices, such as testing alternative versions of a particular plan, testing business strategies against a number of alternative futures, evaluating the likelihood of achieving an outcome, or evaluating the operational and financial impact of decision alternatives.

 

Supply Chains Must Know Sooner and Act Faster

At the end of the day, the best plan is still just a plan. Events, both big and small, will happen—and when they do, a company’s response must take place quickly and confidently. Traditional ERP systems weren’t designed for responding to supply chain exceptions because it takes too long to model an event, calculate the impact and analyze the results. Spreadsheets can’t be used as a stop gap. They are at best an approximation of what’s actually going on.

 

The ability to respond effectively requires a combination of capabilities that enable organizations to know sooner and act faster. That is only possible when the company is able to:

 

  • Detect when an event occurs or will occur.
  • Trigger an alert so personnel who need to respond receive immediate notification.
  • Allow fast ‘what-if’ modeling of different resolution options.
  • Promote collaboration and communication (across multiple functions, even multiple tiers of the business) among key personnel.
  • Provide clear guidance as to which resolution provides the best results by evaluating and comparing scenario results against key performance metrics.

So how can you achieve a Sensing + Intelligent + Social Supply Chain? By combining those key capabilities and recognizing it’s time to look to the future of supply chain management, not the past.

 

The post The Sensing + Intelligent + Social Supply Chain: How can you achieve it? appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Trevor Miles at http://blog.kinaxis.com/2016/11/the-sensing-intelligent-social-supply-chain-how-can-you-achieve-it/

by Jonathan Matthews

renewable energyWhen talking about supply chain, either professionally or more casually, people typically default to the assumption that supply chain is about the movement of goods and people from one destination to another. Other “non” physical goods, such as electrical energy and renewable energy resources, are almost never discussed in a conversation about supply management, and why would it be? It’s always there, ready at a moment’s notice. Plug an electrical cord into an outlet and the device is instantly on. Electricity, as we use it in our day-to-day lives, is always available. (I am, of course, making the assumption you’re not reading this on your phone in the middle of a power outage.) Electrical transmission doesn’t need to worry about typical supply chain issues such as expiry dates, lead times/critical paths, methods of shipment, or delays. Instead, electrical companies only need to worry about demand and insuring that the supply is adequate to meet humanity’s ever growing hunger of energy. And it is this renewable energy supply chain that brings its own unique challenges. As Earth’s population continues to grow, developing nations are starting to become energy dependent and developed countries continue to increase their consumption. To meet this demand, new power plants are continuing to be built to keep up with this demand, which is where the problem lies. Countries are embracing “green” technologies such as wind, solar and tidal that are environmentally friendly, (unlike traditional “old” plants which used coal and oil), but these environmentally friendly options have one major drawback, something that most people don’t think about: quantity of supply.

 

To properly understand the problem of green energy supply, look at how much energy developed nations actually consume. Population wise, Canada can be considered a “small” nation with roughly 35 million people. In 2010, Canada had an electrical demand of 500 TWh (Terra-watt hours).1 For your reference, a Watthour (Wh) is a unit that measures the energy required to power a one-watt device operating for one hour. This 510TWh is in itself a large number, but ponder for a moment the energy consumption of the United States with a population of nearly ten times that of Canada! As it stands, a lot of the electrical supply is provided by “traditional” plants, such as oil and coal. As everyone is aware, these plants are extremely dirty to run and terrible for the environment. Water dams don’t emit any pollutants into the atmosphere and are “clean”, but they do extreme damage to the lakes and the land surrounding the river. Nuclear power, while being very clean in operation, has very toxic waste and can certainly have a tremendous environmental impact, as Chernobyl and Fukushima can show.

 

Solar Energy

Switching to renewable or “green” power plants is great, but consider the Solana Generating Station (a solar farm) in Arizona, which just opened in 2013. This solar farm uses 1,920 acres to generate an average of 944 GWh.2 While 944 GWh seems like a respectable power output, this output is severely lacking compared to a nuclear power. The Bruce Nuclear Power Plant in Ontario occupies 2,300 acres of land and has an average generation of 45,000 GWh3 of electrical energy. For the Solana Generating Station to create the same electrical output as Bruce Nuclear, it would require roughly 91,525 acres of land!4 In a sunny, desert-ish region such as Arizona, this may be possible. But consider for a moment the environmental impact in Canada of having to clear that much land!

 

Wind Energy

Fortunately, wind power can mitigate much of the land issues that solar has, since wind turbines don’t require a large footprint and can even be built in the sea. Unfortunately, even wind power still pales in comparison. The largest wind farm in the world (the London Array, which is built entirely in the sea) only has an average generation of 2,500 GWh. Better than the solar generating plant, but still a far cry from the supply capability of nuclear power.

 

Making new solar and wind farms is a step in the right direction, but they’ll likely never be able to supply all of the needs of a country such as Canada, the US and other heavy electrical dependent countries. These renewable energy resources are also very dependent on location. Solar farms are great down in the desert, but not an efficient use of funds further up north. Likewise, tidal power is useless to any place that doesn’t have tides.

 

Nuclear Fusion

Fortunately, scientists are making big strides on a new form of energy that will completely revolutionize the supply of clean electrical energy: nuclear fusion. Using Hydrogen as a fuel (the most abundant material on Earth) with a waste product of Helium and producing more energy than today’s nuclear power plants, fusion reactors will be the ultimate form of clean energy. The nuclear plants in operation today use a fission reaction, which is the process of splitting atoms. Electrons are shot into a uranium atom splitting it apart, releasing energy and additional electrons. These additional electrons in turn collide with other uranium atoms, releasing more energy and electrons in a process referred to as a chain reaction. Energy is required to keep this chain reaction under control and preventing a Chernobyl type disaster. When this control energy is removed (such as in the case Fukashima), the chain reaction will continue unhindered and eventually explode.

 

Nuclear fusion is the complete opposite in that it combines two hydrogen atoms together, fusing them into the Helium element (what we use to fill balloons). This process is the same reaction that occurs in stars such as our sun. The problem is that the fusion of hydrogen atoms requires a TREMONDOUS amount of energy to start and maintain. (For comparison, to set off a Hydrogen reaction, scientists initially used a nuclear (fission) bomb to start the process). Opposite of a Fission reaction when control energy is removed, a fusion reaction will simply sputter out and cease operating.

 

The emergence of fusion energy will supply this world with the safest, cleanest and largest energy output, such that humanity will never need to worry about “green” energy again. But we’re not there yet. 2016 has seen a number of major milestones achieved in fusion research, but current fusion experiments currently require more energy output then they produce.

 

If they haven’t already, a number of people may wish to point out that countries such as Denmark or Portugal are very close to being completely powered by renewable energy. With only 501 Twh (Portugal) and 331 Twh (Denmark), these are quite small compared to even just Canada.

 

All this to say, the next time you plug that appliance into a wall outlet, take a moment to think about the supply of power to your house. Researchers are making great strides to provide the world with safe green energy supply, but many difficulties remain. One can now see how the supply of green energy is certainly not without its supply challenges, one that perhaps deservers a closer look.

 

As a side note, the world electric power production in 2014 was 23,536,500 GWh5, or, because I’m excited to be typing out this many zero’s, 23,536,500,000,000,000 Wh.

 

 

 

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[1] http://www.nationmaster.com/country-info/stats/Energy/Electricity/Consumption

 

[2] https://en.wikipedia.org/wiki/Solana_Generating_Station

 

[3] https://en.wikipedia.org/wiki/Bruce_Nuclear_Generating_Station

 

[4] ((1920 acres/944GWh) * 45,000 GWh)

 

[5] https://en.wikipedia.org/wiki/List_of_countries_by_electricity_production

 

The post The problem with renewable energy resources isn’t the technology, but the quantity of supply appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Jonathan Matthews at http://blog.kinaxis.com/2016/11/problem-renewable-energy-resources-isnt-technology-quantity-supply/

by Alexa Cheater

Ford Supply ChainHenry Ford has become synonymous with revolutionary advances in manufacturing. His utilization of the assembly line for his Model T changed not only the way businesses operated, but consumer demand as well. As an early technology adopter and strong proponent of innovation, Ford was more than a manufacturing master. He was a supply chain pioneer. His company delivered on affordability and availability, designing with the customer need in mind. It’s something every business today tries to emulate.

 

David Thomas, Director, Global Capacity Planning, Ford Motor Company recently resurrected some of the company founder’s most inspiring quotes during his presentation at Kinexions, the Kinaxis annual user and training conference. While he used them to illustrate Ford’s regional and global changes in recent years, I thought I’d put an even bigger supply chain spin on them. Here are the top six things Henry Ford can teach you about your supply chain.

 

  1. “Businesses that grow by development and improvement do not die.” Stagnant companies (and their associated supply chains) will forever stay stuck in the past. As seen time and time again in the consumer electronics space, companies that innovate and push new ideas and concepts forward are often more successful than their counterparts focused solely on efficiency and maintaining the status quo. Developing a bimodal supply chain, one that allows for efficiency and innovation simultaneously, is the way forward.
  1. “If everyone is moving forward together, then success takes care of itself.” Your supply chain is made up of more than just the sum of its parts. The people behind it, including fellow employees, suppliers, contractors, partners and customers, are all part of your success. But it takes everyone being on the same page, working toward the same corporate goals, to get there. Silos, conflicting metrics, lack of visibility and poor communication are all hurdles today’s supply chains have to leap over. Improving collaboration, having a central corporate vision and implementing change management strategies are key.
  1. “The short successes that can be gained in a brief time and without difficulty, are not worth much.” There’s something to be said for the quick, easy win. It can motivate, inspire and drive additional change. But those small wins in and of themselves usually don’t amount to much when it comes to your supply chain. Make sure you also take the time to work toward the bigger picture – how to revolutionize your supply chain, not just implement the next evolution of it. To add in another of Ford’s famous wise words, “The competitor to be feared is one who never bothers about you at all, but goes on making his own business better all the time.”
  1. “Be ready to revise any system, scrap any method, abandon any theory, if the success of the job requires it.” Failure at some point is inevitable. The trick in supply chain is to catch it fast. Don’t be afraid to try new ideas, innovate and explore alternative ways of doing things. But at the same time, make sure you fail fast. As painful as it can be to admit your great new plan just isn’t working, cutting your losses early can prevent bigger issues down the road.
  1. “When everything seems to be going against you, remember that the airplane takes off against the wind, not with it.” Profitably managing complex, global supply chains is a tall order, and as most who have worked in the industry for any length of time have learned, unexpected obstacles, challenges and setbacks seem to be around every corner. But born out of those times of strife are some of the most innovate ideas and creative supply chain solutions.
  1. “Whether you think you can, or you think you can’t, you are right!” It’s all about your mindset and that of your fellow supply chain practitioners. If you don’t believe in the change, you’ll work twice as hard to see it fail. Ensure all stakeholders are on board, eager and invested in your supply chain revolution and you’ll find success a lot easier.

What other supply chain lessons have you learned from Henry Ford? Let us know in the comments area below.

 

The post 6 Supply Chain Lessons from Henry Ford appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2016/11/6-supply-chain-lessons-henry-ford/

Kinaxis

Is S&OP an expensive band aid?

Posted by Kinaxis Nov 17, 2016
by Dr. Madhav Durbha

S&OPI love talking to customers and prospects! Each of these interactions provide me with an opportunity to meet someone new, learn about their business, their challenges, dreams, and aspirations. The topic that often comes up in these conversations is Sales & Operations Planning (S&OP). While S&OP as a discipline has been around for over two decades, it has been generating great interest recently. As much interest as it has generated, based on my conversations, the results from S&OP efforts have been mixed at best. From time to time, I hear comments such as:

 

  • “My monthly S&OP process takes 6 weeks to execute”
  • “We have this massive excel sheet into which we load all our S&OP data to generate the reports for review. The process to gather the data is time consuming and by the time we present our S&OP to our leadership, the world has moved on and our plans are no longer valid”
  • “We started S&OP as our COO insisted we do it. It is turning out to be a report to him, rather than a tool to run our business”

In fact, this has been such a recurring theme that I decided to share my point of view in this blog. Let me elaborate on what I believe are the reasons behind this disillusionment.

 

  1. Disconnected processes: Several of these companies were advised by well-meaning consultants who have written books preaching S&OP best practices. These consultants talk about “above the line” planning and “below the line” planning. “Above the line” planning in their view refers to aggregate level S&OP planning processes such as demand review, supply review and so on covering an 18 to 24 month horizon in many cases. “Below the line” refers to lower levels of planning down to SKU level and into days and weeks (shorter time horizons). An artificial boundary is drawn between the two realms.

In this paradigm, translating S&OP to “below the line” plans requires running a bunch of excel spreadsheets to disaggregate the information. This causes disconnects between the aggregate volume plans and lower level mix plans. If a major disruption happens at execution level, to pass that information back to S&OP level takes quite a lot of time resulting in disconnects between strategies, tactics, and execution.

 

  1. Islands of information: Over the last two decades organizations made quite a bit of investment into Supply Chain Management (SCM) systems. These systems span across functions such as demand planning, supply planning, inventory planning, etc. Majority of the established vendors in the SCM space have grown into these disparate planning functions through acquisitions. This resulted in a highly heterogeneous underlying technology. Integration of these distinct capabilities became an afterthought. Sharing of information between these modules itself is cumbersome, let alone bringing external data from internal and external systems. The communication between these functions is often batch, waterfall oriented, introducing latency. These vendors approach S&OP as an overlay, creating what essentially is a band aid.
  1. People working within their bubbles: Traditional roles such as demand planner, capacity planner, inventory planner, etc., place people in individual bubbles with information thrown over the fence from one function to another. These planners are making decisions everyday within their functional domains with no visibility to the companywide impact of their decisions, undermining S&OP, which is meant to be a highly collaborative, cross functional process. The effects of this can be underperforming promotions, or slower inventory turns while increasing the risk of stockouts.

The factors listed above have significant impact on productivity of people. Those in the business community that are key stakeholders in the S&OP process spend countless hours providing inputs, massaging spreadsheets and formatting plans to fit the S&OP template. Most of these plans are out of synch by the executive meeting as the business keeps moving at the speed of….. well….. business! They start to see S&OP as an administrative overhead as opposed to a process discipline to run their business. Creating “what-if” scenarios happens in different versions of spreadsheets which reside in people’s inboxes for collaboration and reviews. In short, it is a mess!

 

Another problem due to the above challenges is as follows. When a company begins its S&OP journey, a process lead is assigned to orchestrate the process. This individual happens to be one with broad and deep knowledge of different planning functions across the organization. In other words, someone with the intellectual curiosity, knowledge of the business and supporting systems, and people skills. However, latency of information and inability to collaborate across the functional bubbles reduce the “S&OP lead” to an “S&OP coordinator”, an administrative function focused on gathering data and getting reports ready, as opposed to helping run the business. When stakeholders lose faith and the role of the S&OP process lead diminishes, the initiative is destined to fail.

 

So, should companies get rid of S&OP? The short answer is no. It can be very effective, provided organizations can address the challenges highlighted above. Harnessing the power of connecting the people, processes, and data can significantly enhance the value from S&OP. Here are some suggestions:

 

  1. Harmonize and surface the right data: Having the technological platform that is agnostic to underlying data systems and provide flexible means to extract and harmonize data can be very useful. Rendering this data in the form that can be consumed by the S&OP processes, and doing so in a timely manner is most fundamental to effective S&OP. This ability to harmonize and surface the right data is even more critical in today’s world where increasing amounts of data comes from external sources such as contract manufacturers or channel partners.
  1. Plan concurrently: The ability to concurrently plan all the way from S&OP down to production, distribution, and procurement planning at lower levels with explicit and visible links between financials, volume, and mix will close the gaps between strategies, tactics, and execution. To be able to assess the impacts and tradeoffs in real time, concurrent planning is critical to an “executable” S&OP plan. Effective end to end planning should be like pulling a chain. You pull at one end and you should feel the tug at the other end. In short, get rid of “above the line” and “below the line” thinking when it comes to S&OP.
  1. Empower people: Information is power. Rendering the right information to the S&OP stakeholders at the right time, enabling them to create what-if scenarios on the fly, to collaborate with other stakeholders, and to make decisions in near real time is absolutely critical to empowering people. Without the right tools, people with best of intentions cannot do their jobs well and feel empowered.

All in all, if you want to ensure your S&OP is not an expensive band aid creating work for the sake of work while aggravating disjointed planning processes, addressing the above as you establish your processes is absolutely critical. Would love to hear your thoughts!

 

The post Is S&OP an expensive band aid? appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2016/11/sop-expensive-band-aid/

by Trevor Miles

For Global Supply Chain Visibility and Faster Decision Making

Global supply chain visibilityMy earlier blog talked about what the Sensing + Intelligent + Social Supply Chain is. So why do you need one? If you’re experiencing supply chain pain points around lack of visibility, slow decision making, or poor collaboration, these may be the symptoms that will help answer that question.

 

Most existing planning solutions were developed in the 1990s. At the time, they represented big improvements in planning capacity. But, most companies still had supply chains that were almost entirely housed within their own four walls. That’s not the case anymore. Supply chain globalization has exploded. Market needs have expanded exponentially. Companies have surpassed the capabilities of these dated solutions and need full global supply chain visibility.

 

Today’s supply chains often have data housed in multiple locations. These can include multiple enterprise resource planning (ERP) systems, product life cycle management systems (PLM), ad-hoc databases, and most commonly, mass amounts of Excel spreadsheets. The inherent latency in these islands of data reduces the speed and effectiveness of decision-making. More time is spent collecting and consolidating data than making planning decisions.

 

No matter how many systems are used, or how much data is available, if decision-making isn’t rapid, the quality of those decisions will suffer. Planning delays lead to higher inventory levels, lower capacity utilization, and subpar on-time delivery performance. As companies become leaner, it becomes clearer that decisions must be made more quickly.

 

Obstacle 1: Supply Chain Siloes

However, organizations siloed in traditional functional work groups are actually impeding the flow of their own information across the network. To overcome this, there’s a great need to bring people together in a collaborative environment. That would allow them to identify and understand business tradeoffs impacting supply chain performance in time to have predictable results. An example would be delivering an order on time at the expense of margin. Sales would favor on-time delivery, while finance would likely prefer maintaining a better margin. The reality is, there’s never going to be one perfect answer that doesn’t involve some level of tradeoff across conflicting metrics and objectives.

 

Obstacle 2: Limitations of Current Enterprise Systems

Another key obstacle many companies need to overcome stems from limitations of the current enterprise systems. As noted earlier, ERP and advanced planning systems were developed in the ‘80s. Their primary purpose was to manage manufacturing and movement of goods through an integrated enterprise—indicative of the time when most manufacturing was done in-house. While these solutions offered a wide span of control and management of data, the expectation was that all the required data would be available within the application.

 

But the reality is that today’s distributed supply chains have large portions of the network that are external to the organization. That means data associated with those sections is external as well. The result is a need for integration between modules, but also between companies with their own ERP systems and data sources. Most existing tools are failing. They can’t effectively connect, synchronize and harmonize all of the disparate data.

 

Compounding the problem are mergers and acquisitions, which only add to the number of ERP systems used across the organization and the value chain as a whole. Some companies are able to consolidate to a single ERP system, but even then likely require multiple modules for functions like consolidating supply and demand, supplier and customer collaboration, reporting, and scenario management.

 

The Sensing + Intelligent + Social Supply Chain Solution

But technology isn’t the only roadblock to making better decisions faster. Bringing a social aspect to the supply chain allows for human judgement to be brought into play. There is a definite need to involve informed people. Hence why it’s an integral part in a Sensing + Intelligent + Social Supply Chain.

 

A supply chain disruption can rarely be resolved in the company’s best interest by addressing a single metric. Functional metrics, tied to just one department, often conflict with those of other teams. Combining the knowledge and experience of people from different organizational groups is the optimal way to resolve supply chain conflicts. Human judgement is needed to reach a consensus decision and balance tradeoffs.

 

The personal touch is also required to recognize soft constraints, like deciding to pay to expedite a shipment in order to keep a key customer happy. Some things just cannot be accurately represented in an optimization engine. Technology is evolving, but it hasn’t reached the level where it can completely replace human judgement. That judgement, supported by hard facts, is how businesses can best evaluate several ways of resolving the problem at hand and reach a viable solution.

 

But no one person is likely to have the right answer 100% of the time. The ability to identify others and bring them into the evaluation process is critical—both to validate the proposed strategy, and provide additional insight.

 

While it’s crucial for stakeholders to collaborate and evaluate alternative solutions, it’s equally important they do so in a manner consistent with financial and operational corporate objectives. This ensures consistency of decision making. It also gives front line managers a clear way to understand the effects of decisions on their own metrics, and of greater importance, the effects of their actions on corporate goals.

 

So why do you need a Sensing + Intelligent + Social Supply Chain? It’s the way forward to a collaborative and cohesive approach to supply chain decision making. By bringing together the right people at the right time, action can be taken in minutes, driving significant improvements in the supply chain.

 

The post The Sensing + Intelligent + Social Supply Chain: Why do you need it? appeared first on The 21st Century Supply Chain.

 

Supply Chain Planning 4.0: Planning Revolutionized - Kinaxis

 

Originally posted by Trevor Miles at http://blog.kinaxis.com/2016/11/sensing-intelligent-social-supply-chain-need/

by Bill DuBois

Supply Chain CollaborationToday’s supply chains are more complex than ever before. Businesses are facing greater volatility, more uncertainty and unprecedented and unexpected risks. The time it takes to make critical decisions is lengthening, dramatically cutting into companies’ bottom lines. Why? In large part due to the negative impacts of poor collaboration.

 

So what’s causing this lack of communication across companies? The answer is threefold.

 

  1. Data extraction and analysis is happening in siloes. Each department is taking a vertical approach to reporting, where the focus is on individual functional metrics, instead of the health of the entirety of the supply chain network.
  2. Processes and functions have conflicting goals. Managers across the organization are responsible for one specific department, one set of priorities. Oftentimes they’re unaware of what other departments are doing. There’s an absence of communication between departments and business units.
  3. Globally distributed teams. There’s nothing wrong with having teams spread out over vast geographies, but there needs to be effective and continual communication. Without it, decisions are made with little understanding of cross-functional impact, causing minor speed bumps to become road closures.

Essentially, there’s a fundamental disconnect between the data, the processes and the people overseeing the supply chain, which is impacting the ability to collaborate. It’s time to break down these communication siloes and work together harmoniously.

 

As outlined in our recent eBook 3 Ways to Improve Supply Chain Collaboration, this enhanced collaboration begins with connecting data. By dealing with multiple enterprise resource planning systems, modules, Excel spreadsheets and data warehouses around the globe organizations have data in more place than ever before, making end-to-end supply chain visibility impossible. The secret to solving this challenge requires businesses to do away with all those spreadsheets and creating a more robust supply chain.

 

Connecting processes means eliminating the firefighting and avoiding exception conditions. Standardizing routine processes can help organizations realize more effective communication, collaboration and growth. But true collaboration also requires context. That means developing more agile processes and a better picture of the end-to-end supply chain to support decision-making aimed at achieving corporate goals.

 

The best solutions to supply chain challenges aren’t created in isolation. Successfully streamlining any supply chain requires cooperation and 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 manufactures, suppliers and customers is critical to supply chain success.

 

Sustainable collaboration isn’t an overnight accomplishment and it’s not a one-and-done project. It’s an ongoing commitment to working together toward supply chain excellence. To learn more about how to improve collaboration within your supply chain, download our eBook 3 Ways to Improve Supply Chain Collaboration.

 

 

 

The post 3 Challenges to Supply Chain Collaboration appeared first on The 21st Century Supply Chain.

 

Supply Chain Planning 4.0: Planning Revolutionized - Kinaxis

 

Originally posted by Bill DuBois at http://blog.kinaxis.com/2016/11/3-challenges-to-supply-chain-collaboration/

by Joe Cannata

Supply chain risk managementWith Hurricane Matthew, the most powerful storm to threaten the Atlantic Coast in over 10 years that has already brought severe damage to Haiti, the Bahamas and several Southeastern U.S. states, obvious disruptions to supply chains and supply chain risk management were a given. Many of the states affected contained key ports and supply destinations, as well as transportation and logistics hubs. These ports accounted for 18.3% of U.S. container import shipments and 49.8% of east coast and Gulf of Mexico imports in September, according to an article from the Business Information Industry Association.

 

  • Starting with Miami, this port primarily handles containerized cargo with small amounts of breakbulk, vehicles and industrial equipment. It is the largest container port in the state of Florida and ninth in the United States.
  • Going up the coast in Jacksonville, FL, there is a huge port that receives the second-most automobiles in the US along with all types of cargo.
  • Heading further north along the coast is Savannah, GA, home to the largest single container terminal in the United States. In 2015, the Port of Savannah moved 8.2% of total U.S. containerized loaded cargo volume and more than 18% of the East Coast container trade.
  • A little more northward up the coast is the port of Charleston, SC. In 2016, this port handled 1.1 million containers, moved 1.2 million tons of non-containerized cargo and had the most productive crane moves in the U.S.

The theme here? The southeast contains a bunch of key ports and supply chain links that were in peril as Matthew approached and eventually passed through them. As if the situation wasn’t bad enough, Hanjin, the huge shipping company, was already in bankruptcy as of early September and putting a delay in the arrival of goods well before the hurricane. Hanjin typically handled delivery of goods to the west coast, but their containers can be found all across the US, so suppliers, wholesalers and retailers were already feeling the effects of the Hanjin situation. Several container ships adjusted schedules to arrive before the storm, which put a strain on the dockworker supply as well. They would be handling maybe twice as many ships in a typical set of days. The human links of the supply chain were stressed. Then, with the southeast ports eventually closed for weather issues, even more intelligent decision making was needed to mobilize and survive the situation that pre-planning did not account for in time.

 

As is typical with an impending hurricane, many East Coast retailers ordered extra supplies ahead of the major rush on key items and necessities. Trucking companies already warned customers trying to get shipments into the region that they should expect at least a two-day delay. Long before the red flags with black squares in the center were raised, the grocery stores were the first to stock up on goods. However, each store only has so much shelf and storage space, so they could only sell a fixed amount.

 

Next up were the big box home improvement stores, like Lowe’s and Home Depot, which activated their emergency supply chain plans. Home Depot devoted a whole distribution center in Florida to hurricane relief supplies such as tools, generators, tarps, flashlights, batteries and chainsaws, to support more efficient distribution across the southeast. Lowe’s also had distribution centers in Florida, Georgia and North Carolina with extra supplies ready and waiting. This involved in some cases, diverting some inventory bound for other regions. The key was to get everything in place well before the arrival of the hurricane.

 

The major pharmacy chains, CVS and Walgreens, took steps to protect their perishable pharmaceuticals, as well as ensure adequate supply was on hand once they reopened. They encouraged their customers to refill prescriptions in advance, in case the store had to be closed for an extended period either due to flooding, or lack of electricity.

 

Speaking from personal experience, it is important to get a jump on the situation well before it happens, to avoid being stuck in lines, scrambling for supplies, or even gasoline to go get supplies and necessities. Do not forget that during a storm, fuel trucks will not be out and about, nor can they deliver to stations that do not have electricity. The state of Florida “requires motor fuel (1) service stations near interstate highways or evacuation routes, (2) terminals and (3) wholesalers to have transfer switches and appropriate wiring to transfer the electrical load from a utility to an alternate generated power sources in the event of a power failure. It requires corporations or entities with at least 10 service stations in a county to have access to at least one portable generator.” (information is courtesy of this site: https://www.cga.ct.gov/2011/rpt/2011-R-0389.htm). The fuel supply chain could be one of many chains affected by a hurricane, especially if the hurricane threatens the Gulf of Mexico hampering the oil fields like Katrina did in 2005. While cleared roads are a necessity, also finding available staff to drive trucks becomes an issue. A supply plan is needed for the human element, as well.

 

For retailers, it is huge to keep the supply chain running smoothly, regardless of the weather, while balancing the needs of staffing, customers, safety and common sense. While there is never a guarantee a retailer won’t experience losses in a major weather event, there are some ways that can help them hunker down when the storm arrives. This is where RapidResponse can help, by making use of:

 

  • Automating the fulfillment optimization
    • Selecting the distribution center best equipped to fulfill orders
    • Finding alternative suppliers
  • Up to date inventory status
    • Knowing what you have and what you can deliver
    • Global, regional or local asset tracking
    • Update e-commerce websites to sell only available items
  • Use analytics
    • Thorough data reviews before and after the storm
    • Determining the buying patterns
    • Determining which products sold in higher quantities

After Hurricane Matthew hit, were companies prepared for supply chain disruption recovery? Based on what I read about Hurricane Matthew, the answers ranged from not at all to minimal planning. That is where the what-if scenarios in RapidResponse can help. This powerful feature lets a supplier or manufacturer see what would happen if the ports all closed, or the delivery mechanisms could not embark.

 

Whether it’s a storm, a fire or an earthquake, or a man-made disaster, preparedness is key to surviving any kind of major catastrophe. Having the best tools and systems at your disposal is key to weathering the storm (bad pun intended). Don’t let your supply chain get blown away by any category of winds.

 

The post Supply Chain Risk Management: Could You Face a Category 4 Supply Chain Disaster? appeared first on The 21st Century Supply Chain.

 

Supply Chain Planning 4.0: Planning Revolutionized - Kinaxis

 

Originally posted by Joe Cannata at http://blog.kinaxis.com/2016/11/supply-chain-risk-management-face-category-4-supply-chain-disaster/

by Alexa Cheater

concurrent planningThere’s something to be said about the resiliency of a really good supply chain. One that’s able to quickly respond to those unexpected problems, easily adapt to changing industry conditions and make waves with its innovative, yet still efficient, processes. It’s like a piece of moving artwork – all those intricacies and people working behind the scenes to deliver exactly what the masses of the world want, when and where they want it.

 

But as a seemingly growing number of companies face very public breakdowns in their supply chains, it’s becoming increasingly clear very few organizations actually have these masterpieces within their midst. Failure to keep pace with consumer demands. Inability to react to unanticipated risks like environmental disasters or political unrest. Breakdown in cross-functional communication. All present supply chain challenges that need to be overcome.

 

Traditional supply chain processes tend to be linear in nature. Plan, then execute. Plan demand, then plan supply, then plan capacity, then plan inventory, etc. If a potential risk interrupts one of those steps, it’s back to the beginning, starting all over again with a new plan – and that’s assuming they even noticed the problem before execution, which wasn’t always the case… Doesn’t seem like a very efficient model, does it?

 

Truly resilient supply chains, those that can nearly seamlessly respond and react to interruptions, are much more agile. They plan, monitor and respond continuously in a single environment and across business functions. When the unexpected happens, they know sooner and can act faster to minimize disruption. This kind of comprehensive and connected view across your global supply network has become a prerequisite to success.

 

Concurrent planning allows supply chain challenges to be overcome by radically shrinking supply chain planning cycles and response times, while improving the accuracy of analysis and the profitability of actions.blogpost-concurrent-planning-infographic-kinaxis

 

With concurrent planning you’ll be able to achieve the following all from within a single system:

 

  • synchronized demand, supply, product, capacity and inventory management;
  • active monitoring of current and projected business results;
  • rapid what-if analysis and scenario comparison to evaluate alternatives and impacts across multiple functions; and
  • continuous orchestration of business activities and coordinated course corrections that optimize overall corporate performance and profitability.

Concurrent planning bridges functional silos and connects all nodes within your supply chain. It allows you to holistically manage multiple supply chain functions within the same system, improving cross-functional coordination and faster, more effective decision-making. It’s the difference between mediocracy and building a masterpiece.

 

Want to learn more about concurrent planning? Check out our infographic Mange Murphy’s Supply Chain Law with Concurrent Planning.

 

The post Building a Supply Chain Masterpiece with Concurrent Planning appeared first on The 21st Century Supply Chain.

 

Supply Chain Planning 4.0: Planning Revolutionized - Kinaxis

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2016/11/building-supply-chain-masterpiece-concurrent-planning/

by Iman Niroomand

The major concern of big organizations in implementing an efficient supply chain network is improving the flow of material throughout a complex network. One way to improve the flow is with crossdocking and to expedite the process of materials throughout the supply chain channel. In this post, I would like to review the transformation of distribution center operations by using IT solutions to expedite the flow of products and minimize the cost of inventories.

 

The Trouble with Traditional Supply Chain Networks

Let’s start with a simple example (figure 1): The distribution center provides a consolidation point in the supply chain network and acts as a buffer to reduce the number of shipments and manage uncertainty. In a daily distribution process, the shipment of plants 1 and 2 arrive to distribution centers 1 and 2, are off loaded, and stored. When the distribution centers receive the demand from the customers (C1 to C4), they begin the replenishment process by retrieving the products from storage, loading them, and shipping them off. These processes are non-value added from the customer point of view, and considered waste. The best solution to eliminate or reduce these non-value added processes is to get the plants to the distribution centers at the right time, consolidate on the spot, and ship to customers with the right quantity.

 

This holistic view of supply chain operations was hard to achieve in the past. In traditional supply chain networks, each site only corresponds to its next level transfer site, and lacked the information and visibility to connect the supply and demand efficiently. However, the beauty of end-to-end supply chain solutions with the help of IT is having the visibility of the entire network beyond one site and customer.Cross docking

 

The Pros and Cons of Crossdocking

A broad definition of crossdocking is to transfer the goods and materials from an inbound carrier to an outbound carrier without storing it at a warehouse1. Advantages of crossdocking including minimizing the inventory and expediting the customer order, which leads to more customer satisfaction. If we summarize the distribution operation to some key processes, we would have:

 

  • Receiving,
  • Storage,
  • Replenishment,
  • Picking, and
  • Shipping.

Implementing crossdocking would reduce above processes to just:

 

  • Receiving
  • Staging
  • Shipping

Crossdocking will decrease the inventory and safety stocks, and will eventually reduce the cost of inventory on hand, as well as labor costs and the number of part damage. Also, by implementing crossdocking, an organization can reduce the number of touches applied to materials, reducing the cycle time. Therefore, crossdocking is a good way to improve the flow of the material in the network.

 

Nonetheless, implementing crossdocking is not easy, and needs a lot of consideration and prep. Crossdocking must be programmed and monitored carefully, and requires a good collaboration among all members of the chain. The basic steps involved in implementation of crossdocking are:

 

  • An awareness of the demand at customer level (point of sale)
  • Knowledge of the destination of incoming items even before their arrival at distribution centers, and
  • The same unit of measure from both inbound and outbound carriers.

Moreover, it is not feasible to apply crossdocking on every part type. For example, the slow moving inventory parts should not be considered for crossdocking. The rule of thumb in selecting the right product for crossdocking should be back order items, seasonal parts, high value products, and products having short lead time.

 

In the current version of Rapid Response, the order fulfillment distribution planner will be able to identify the parts that are fit for crossdocking. These parts are flagged as a crossdocking opportunity and are shown on the distribution planner dashboard. The planner sees a report of incoming and outgoing parts to/from a distribution center on daily bucket with the same unit of measure. This report will help the planner to easily send the report to a warehouse manager to prepare the dock for implementing crossdocking.

 

In Summary, the crossdocking should not be used to replace inventory. Late changes in customer order, disruption in production planning, and shipment disorder are all examples that make the inventory inevitable in supply chain network.  But if it implements correctly then it improves the flow of goods in the network and will reduce the holding inventory.

 

1) Crossdocking as a supply chain strategy, Ray Kulwiec , target volume 20, Number 3.

 

The post Crossdocking a Way to Marry Your Supplier with Your Customer appeared first on The 21st Century Supply Chain.

 

Supply Chain Planning 4.0: Planning Revolutionized - Kinaxis

 

Originally posted by Iman Niroomand at http://blog.kinaxis.com/2016/11/crossdocking-for-supply-chain-network-efficiency/

by Teresa Chiykowski

Halloween Supply Chain ManagementWarning: This blog post isn’t for the faint of heart. In fact, I should include a PG-13 rating on it. Just kidding, although, for those involved, the scare factor must’ve been pretty high at times.

 

Halloween is big business. In fact, National Retail Federation’s annual survey estimates that enthusiastic celebrators will spend an estimated 8.4 billion on Halloween – an all-time high in the survey’s 11-year history. You could say the pressure’s on for retailers to deliver the costumes, treats and decorations demanded by the estimated 171 million Americans planning to partake in Halloween festivities.

 

But the scary truth is that sometimes retailers can’t deliver. Often, unexpected events such as suppliers failing to deliver, software glitches and even Mother Nature can wreak havoc with even the best supply chains.

 

On that note, I’d like to share some tales that undoubtedly still “haunt” the parties involved.

 

The great pumpkin shortage scare

What are Halloween and Thanksgiving without pumpkins?  In October 2015, it was a frightening thought for fans of falls’ favorite flavor. Predictions warned that only those who got to the store weeks before Thanksgiving would find canned pumpkin. A pie-making crisis was inevitable.

 

The reason: Illinois produces about 90% of sugar pumpkins each year. But when Mother Nature (in the form of heavy rains) hit Illinois hard, half of the crop was wiped out. Fortunately, Libby’s, which has an estimated 80% of the canned pumpkin market, had enough canned inventory to make it through Thanksgiving. Pie crisis averted, but just barely.

 

Hershey’s Halloween nightmare

In September 1999, candy giant Hershey Foods former CEO and Chairman told Wall Street analysts that the company was having trouble with its new order-taking and distribution computer system. He also said that the issues would keep Hershey’s from delivering $100 million worth of Kisses and Jolly Ranchers for Halloween.

 

Guess what happened then? The company’s stock price fell more than 8% that day, and the computer system mystery made the front page of The Wall Street Journal. Was the 8% unusually high? It was about the norm according to research shared in the World Economic Forum Report. On average “supply chain disruptions can reduce shareholder value by 7%, with disruptions affecting stock prices even before formal announcements or coverage of impacts.”

 

Wal-Mart’s frightening RFID debacle

On June 11, 2003, Walmart CIO announced that the company would require its 100 top suppliers to implement radio-frequency identification (RFID) – technology that promised fast-tracking of items and, ultimately, a more efficient supply chain. But things went wrong, terribly wrong. The retailers involved, the researchers, the standard organizations underestimated the issues:

 

  • RFID technology had not matured enough to prove effective in the industry in a real-world setting like retail supply chain.
  • Pricey RFID tags could be the difference between profit and lost for products with small margins.
  • Maintaining two inventory streams, including a Wal-Mart dedicated one, was costly for suppliers.
  • RFID technology proposed a threat to suppliers’ IT departments and managers.

In response to the RFID hype started by Wal-Mart, RFID manufactures and investors poured in large amounts of money. But, sadly, RFID never really took off. It was RIP for many companies that bet the farm on RFID.

 

By 2007, after various delays and issues – Walmart changed its RFID strategy. While RFID technology wasn’t completely abandoned, the promise of making sure products landed at the right place at the right time, never became supply chain reality.

 

Have you got scary supply chain stories to share? We’d love to hear them. We can always, write a sequel to this post and call it, “Tales from Supply Chain Crypt 2.”

 

 

 

The post Ooh, Scary Stuff, Kids. Tales from the Supply Chain Crypt. appeared first on The 21st Century Supply Chain.

 

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Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2016/10/ooh-scary-stuff-kids-tales-from-the-supply-chain-crypt/

by Teresa Chiykowski

Supply chain collaborationWelcome to the first blog post in our three-part series discussing three ways to improve supply chain collaboration.

 

Maybe I’m stating the obvious but… a lot has changed in the world of manufacturing since Keith Oliver of Booz, Allen and Hamilton Inc. coined the term “supply chain management” in early 1982.

 

Move over, 1982, it’s 2016.

 

It’s no surprise that today’s supply chains are more complex than those of three decades ago. They face ever-growing volatility, uncertainty and risk. Lack of visibility and collaboration in supply chain management is dramatically impacting the time it takes to make critical decisions. And, in the end, sometimes those decisions end up being wrong ones.

 

Making informed decisions fast comes down to collaboration – how effectively the data, processes and people who oversee the supply chain can connect, communicate and interact with one another. But, for many organizations, there’s a distinct disconnect between data, processes and people that is preventing collaboration.

 

What’s inhibiting collaboration and, more importantly, what can be done to fix what ails? You’ll find the answers in the new eBook, 3 Ways to Improve Supply Chain Collaboration. The book looks at how companies can foster ongoing supply chain collaboration by eliminating the disconnects between data, processes and people.

 

Let’s zero in on the first of the “disconnects” explored in the eBook – data.

 

The challenge: Disconnected data

Today’s supply functions and processes are siloed, making data extraction, capture and analysis siloed, as well. Often, departments take a vertical approach to reporting, whereby 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.

 

Faced with multiple ERPs, modules, Excel spreadsheets and data warehouses around the globe, these organizations have a significant challenge – they have more data in more places than ever before, making end-to-end visibility of the supply chain impossible.

 

Most systems don’t have the required analytical capabilities in one place, which has only solidified some companies’ reliance on Excel spreadsheets. In this manual approach, stakeholders are forced to make decisions based on stale data that could be days or even weeks old.

 

The solution: A single place for data

Rather than spending time collecting and consolidating data in spreadsheets that will quickly be out of sync with their system of record, stakeholders can get straight to the business of collaboratively planning and responding to supply chain demands. They can do this by implementing cloud-based technology that combines real-time data streaming and historical data to transcend the different behaviors of each system or data source.

 

Global professional services company Accenture underscores the importance of this approach: “With the amount of data required for analytics ballooning,” Accenture says, “Companies need to perform calculations on the data, create and execute simulation models, and compare data statistics faster than ever.”[1]

 

Get the full story on how to improve supply chain collaboration by downloading the eBook. Plus, stay tuned for upcoming posts on the remaining two disconnects inhibiting collaboration in supply chain management: processes and people.

 

[1] Data Acceleration: Architecture for the Modern Data Supply Chain, Accenture 2014

 

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

 

Originally posted by Teresa Chiykowski at http://blog.kinaxis.com/2016/10/improving-supply-chain-collaboration-connecting-data/

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