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21st Century Supply Chain

1,090 posts
by Teresa Chiykowski

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

 

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

 

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

 

The challenge: Disconnected sales and operations planning processes

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

 

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

 

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

 

Consider these questions…

 

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

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

 

The solution: Cloud-based planning and response systems

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

 

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

 

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

 

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

 

1 Kinaxis TechValidate Survey, October 2015

 

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

 

Concurrency - New Era of Supply Chain Planning

 

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

by Palvashah Durrani

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Concurrency - New Era of Supply Chain Planning

 

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

Kinaxis

Running on autopilot

Posted by Kinaxis Jan 16, 2017
by Alexa Cheater

The growing role of AI in supply chain management

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

 

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

 

History of automation

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

 

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

 

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

 

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

 

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

 

Robotics process automation

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

 

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

 

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

 

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

 

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

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

 

Driving the competitive edge

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

 

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

 

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

 

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

 

Benefits of automation

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

 

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

 

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

 

Where’s the humanity?

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

 

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

 

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

 

Automation in supply chain planning

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

 

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

 

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

 

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

 

The rise of AI

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

 

  • Algorithms
  • Compute power
  • Training data

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

 

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

 

artificial intelligence impact on supply chain strategy

 

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

 

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

 

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

 

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

 

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

 

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

 

Concurrency - New Era of Supply Chain Planning

 

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

by Alvaro Fernandez

Internet of thingsLately, tales of how the Internet of Things (IoT) have become a common staple of tech conversations. IoT devices have the potential to produce humongous volumes of data (a reason we usually hear Big Data and IoT in many presentations). We like to picture zillions of sensors generating gazillions of bytes, while the CIOs are tasked to find ways to handle the impending data tsunami.

 

But, will this Big Data ever be useful in real-time? Whether it is stopping that self-driving car from hitting that seemingly unaware pedestrian, or changing a delivery drone route based on last minute weather information, there will be some moments where a huge amount of data won’t necessarily make a significant difference on the immediate outcome. This will be the territory of smart devices.

 

And no, your smartphone is not a smart device. These are incredible tools enabling us to become more productive (When you have the right tools in supply chain planning you can be.), but they are helpless without us. They are attention-seeking toddlers, capable of many things. But they have no clear definitions of good or bad behaviors, and they have no sense or purpose without someone there to guide them. I can’t tell my phone to go charge himself, I can’t tell him to make me a coffee, and certainly I wouldn’t trust it talking to strangers all by itself.

 

Same thing applies to many of the “smart” devices that help us drive our production lines and distribution routes. If we really want to step up our supply chain game, we need these devices to grow and become reputable members of the IoT society.

 

These devices will need to be capable of performing unassisted tasks involving some levels of uncertainty and be able to take care of themselves (self-preservation) while providing for the family (generating revenue), all while hopefully not hurting any human in the process (Skynet might disagree). They will also need to be capable of something that is not that easy for even humans to do: trusting others and being trusted by its peers, collaborating and competing, and pushing the envelope all the way it can go and then some.

 

To achieve this, artificial intelligence (AI) is not enough. After all, we, the intelligent humans, require tools to assess the trust we place on others. There’s a reason we have things such as police and credit score checks, as well as auditable accounting books. Machines will need a hand when looking to trust (or not to trust) other machines. If only we had such a technology, right?

 

Well, it turns out there is a promising one. It’s called Blockchain, a technology the Economist recently labeled as the trust machine, as it “lets people who have no particular confidence in each other collaborate without having to go through a neutral central authority. Simply put, it is a machine for creating trust.

 

Yes, you read right, they mention people, but this is being extended to machines, too. An example is this delivery, made using a drone enabled with a blockchain-registered chip, where the creators claim the drone was able to identify itself to the “self-authenticate with a computer-controlled window and gain access to a private residence in order to deliver a package.” To me, this sounds like a teenager climbing into your window – both exciting and a bit scary at the same time.

 

We are not there yet, but this is more than just programming a drone to perform a delivery. We can do that already thanks to Amazon. This is about being able to tell a device to perform a task, without having to break down every single task involved. Eventually, I could tell the drone to go deliver a package to X address without having to program beforehand the platform it will pick it up from, the path it should take, which recharging station to use and so on. Let the devices figure it out. But what if someone comes and tells them to do otherwise (i.e. hacking)?. Well, if the right incentives are in place, they would have to figure out the right thing to do, as they would have a reputation to maintain. Bad behaviors will cost them (imagine if spam mailers had to pay a penny for each mail they deliver), and since they will no longer be considered “children” anymore, they could be rewarded or punished accordingly.

 

Look, the technicalities behind the Blockchain, the current backbone of the Bitcoin cryptocurrency, are not for the faint of heart. All the coding and cryptography involved are no small pills to swallow. It doesn’t help much that Bitcoin has been associated with shady deals. But, as the Economist points out, a similar thing happened with the file-sharing Napster, which long ago perished but whose underlying technology (peer-to-peer or P2P) endured and ended up in the backbone of serious (and legit) businesses. Blockchain could give IoT devices a chance to obtain an identity, to be able to cooperate and transact without our assistance, a chance to grow up and carry on business out of our sight. That’s a pretty exciting thing that could happen in our lifetimes… if we let them grow.

 

Now it’s your turn, have you heard about Blockchain before? What are your thoughts on the possibility of having increasingly independent, yet cooperative devices?

 

The post Internet of Things Devices: It’s Time to Let Our Devices Grow appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Alvaro Fernandez at http://blog.kinaxis.com/2017/01/internet-things-devices-time-let-devices-grow/

by Melissa Clow

I’m excited to let you know about an upcoming webcast with SCM World’s chief content officer, Kevin O’Marah. In this not-to-be missed webcast, hear O’Marah’s predictions, insights and best practices for bringing concurrent planning to your supply chain operations.

 

Event Details:

 

This live webinar takes place on Tuesday, January 24, 2017, 1 – 2:00 p.m. ET | 6 p.m. UTC

 

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

 

Join this live webcast with Kevin O’Marah, chief content officer, SCM World, as he shares predictions, insights, and best practices for achieving success in this new era of supply chain planning, including:

 

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

Registration is free. Reserve your spot for this complimentary webcast.

 

 

 

The post Live Webcast – Concurrency: The New Era of Supply Chain Planning appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

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

by Bill DuBois

Education and training – What’s the difference?

learningFor anyone in supply chain, 2016 was an exciting and challenging year. Hot topics included advanced analytics, Internet of Things, 3D printing and robotics. Drop in all the global, economic, political and environmental challenges into the conversation and the changes needed to make supply chains survive and thrive in the future became front and center at all the top supply chain events.

 

At the Gartner supply chain conference back in May the theme was the “bimodal” supply chain. What exactly is bi-modal? Gartner describes it as running two modes within your supply chain simultaneously. Mode one focuses on managing day-to-day operations; mode two is all about making the breakthrough innovations needed to take on the new challenges facing supply chains.

 

Taking a bi-modal approach to learning

I recently sat in on a webinar that discussed learning options, subscriptions and how you can revolutionize the way your organization learns. At the heart of the webinar was how to drive maximum value from a technology investment, in this case RapidResponse. My thoughts though went back to the Gartner conference and the bimodal strategy. Perhaps organizations should take the same bimodal approach to learning as Gartner suggests for supply chain management. In this case the two modes would be education and training.

 

A number of years ago I was in a session with a client when someone asked, “What’s the difference between education and training?” As I was about to explain the difference as being the “why” versus the “how,” one of our clients more eloquently painted this picture; “Think of it this way, would you rather have your 16-year-old daughter receive sex education or sex training?” I didn’t need to explain any further.

 

For supply chain organizations, there is a need to continually educate their employees on new technologies and gain an understanding on how these technologies might impact their business. If companies decide to implement new processes and supply chain technologies to keep up with the shifting supply chain realities, they’ll also need the training required to implement fast and extract value as soon as possible.

 

The supply chain learning journey

There are several great sources that provide valuable insights into emerging trends and technologies. Gartner, SCM World and Supply Chain Insights are all organizations that study supply chain and help companies stay informed. The analysts provide valuable direction in keeping supply chains competitive with direct consults and best practices. These groups can steer your education plans so that gaining knowledge becomes a way of life and not just a once a year trip to a conference.

 

When it comes time to take action it must be swift and any learnings put into play – whether it’s building on success or moving on from failure. This is where the training comes in. For example, if it’s determined that your next step to supply chain excellence is the deployment of a new software platform, best-in-class training programs will ensure all those involved are getting timely training in order to maximize value.

 

In the webinar I mentioned on learning subscriptions, all of the training was based on the user’s role. The facilitator described five distinct roles:

 

  • Consumer
  • Contributor
  • Author
  • Administrator
  • Expert

Each role had a specific training path and there were several ways to consume materials, including recordings, instructor-led online and self-paced. All learning could be done over time and revisited if the learner needed to refresh on a particular topic. This ensures everyone receives the level of training they need, in a way that makes it easy to learn and in time to drive value. The faster you understand all the capabilities of a system, the more creative your organization can become in addressing challenges and changing processes that allow you to thrive in the face of disruption.

 

Part of creating an environment that’s attractive includes one that fosters education and training. You’ve all heard the expression “knowledge is power.” With everything supply chains are staring at in 2017, knowledge will certainly equal power and value. What approach does your company take on continued learning? Let us know in the comments below.

 

For more information on training roles and paths for the Kinaxis community visit: www.kinaxis.com/training-paths

 

The post 2017 – The year of learning appeared first on The 21st Century Supply Chain.

 

Concurrency - New Era of Supply Chain Planning

 

Originally posted by Bill DuBois at http://blog.kinaxis.com/2017/01/2017-year-learning/

by Alexa Cheater

bimodal supply chainInnovate to survive. It’s a common mantra among businesses these days, driven by the digital revolution and all that entails. It’s changing the way the world works, and how we as consumers interact with it. Your supply chain and S&OP process isn’t immune to the impacts.

 

Keeping up with digitization, big data and the Internet of Things (IoT) requires a supply chain that’s flexible, scalable and adaptable. It requires innovative new processes and approaches to data management. But driving that level of growth can’t be easily achieved if your supply chain is solely focused on efficiency. Doing the same old things won’t yield new results. It’s time to do things differently.

 

The key is running two modes within your supply chain simultaneously. Mode one focuses on maintaining the status quo and managing day-to-day operations. It seeks to reduce overall cost structure. Mode two is all about breakthrough innovations and what’s needed to break into new markets and launch cutting-edge solutions. It focuses on experimentation and driving revolutionary changes in how supply chains adapt to new risks and opportunities.

 

Both modes have value, but you need them independent from one another to achieve success. Innovative new digital initiatives need to run alongside the traditional analog business. You can’t just segregate innovation to an occasional brainstorming meeting. It needs a more significant commitment and requires an investment in new talent, processes and technology.

 

But the good news is, your supply chain likely already has pockets of mode two capability within it. You just need to draw them out, guide them and foster them. As Stan Aronow, Research VP at Gartner, points out, “Building a sustainable Mode 2 capability is about fostering a culture and governance that encourages open thinking and leverages creative talent in a way that balances disruptive innovation with the needs of the business.”

 

Operating a bimodal supply chain is a case of revolutionary new ideas becoming the next incremental evolution of your supply chain. Think of mode two as revolutionary. It is about big, fast changes that can lead to huge rewards. But also to huge risks if the implementation fails. Learning to fail fast is critical in this mode. Mode one is much more evolutionary. Small, incremental steps toward change. You aren’t likely to see a big payoff, but you aren’t going to bankrupt the company in the process either.

 

Interested in finding more about becoming bimodal? Check out our white paper Building a Bimodal Supply Chain, Connecting Supply Chain Efficiency and Growth, which explores how you can turn your supply chain into an innovation machine, while still maintaining the efficiency you’ve already built.

 

The post Building a Bimodal Supply Chain appeared first on The 21st Century Supply Chain.

 

How to Get Your Supply Chain Ready For the Future

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2017/01/building-bimodal-supply-chain/

by Bill DuBois

end-to-end supply chainIt’s that time of year again where moms and dads are busy gathering Christmas lists from their kids and ensuring they have exactly the right gifts under the tree. But for retailers, it’s a lot more complicated – they can’t just ask their customers to write letters to Santa; rather, they need a flexible supply chain to meet customer needs.

 

Impacts of seasonal demand

Wrangling demand signal information from independent toy manufacturers, clothing creators and electronics giants – whose interests don’t always match your own –  is easier said than done. And basing your sales forecasts on their word combined only with your historical data could leave you out in the cold.

 

Last year, Americans spent more than $635 billion during the Christmas season, accounting for up to 30% of annual sales for some retailers. With that kind of revenue on the line, it’s no wonder retailers around the globe have been gearing up for the big event for months. When it comes to delivering on your Christmas promises to customers, it’s not just which supply chain management software you use that matters. The quality of information you feed into it is key.

 

That information becomes even more vital in industries where forecasts are constantly changing the closer Christmas gets. Oftentimes, either you’re caught short and can’t respond to demand in time, or you don’t sell enough and are left with overstock. These seasonal surges in demand make supply chain management that much more difficult.

 

“Everyone is guessing along the supply chain as to how much to make and ship,” says Herb Kleinberger, leader of the global retail practices at PricewaterouseCoopers. “And they’re all guessing in separate ways from each other, so everyone builds in extra safety stock to buffer forecasting errors. You add it up along the chain, and you end up with a huge cork that’s clogged with excess capacity.”

 

Importance of good data

To handle peaks effectively, you need the right tools, including a good database and analytics so you can learn what causes spikes, and how to predict them. But predictions and forecasts can only take you so far. You need to be able to dynamically adjust inventory to successfully tie data gathered from ordering systems to sales forecasts.

 

Bob Moncrieff, a director at global management consultancy PRTM, says, “Data aggregation and trend analysis are where the CIO and IT organization can provide the most value.” He adds that in creating a flexible supply chain, the most important step is building a well-structured data warehouse, where you can store, format, and manipulate supply and demand data. It will help you see seasonal issues faster.

 

Organizations focused on driving analytics to build a competitive advantage often overlook the importance of first having a solid data foundation. Data readiness and data cleansing are necessities to success, but first require you to actually have access to the right data. Without it, your supply chain management processes are doomed to fail faster than a reindeer counting carrots.

 

The right data provides insights used to drive management strategies, including leveraging, pricing agreements, quantity discounts, value analysis, supply base optimization and other cost management activities. As NC State University points out, preparing that data for use in the context of supply chain management requires five distinct processes spanning software, process management and decision support.

 

  1. Data cleansing (including data acquisition, preparation and database population)
  2. Spend analytics
  3. Contract management
  4. Technology applications
  5. Customer service

Significance of supplier collaboration

As noted earlier, if your forecasting relies on third party data from suppliers, you’re likely operating on some measure of trust that their numbers are accurate. Just like the looming holiday season can put a strain on your personal relationships, it can have the same effect with your suppliers. All this fluctuation adds a new level of stress to the entire supply chain, and if suppliers can’t meet your last minute demands, business relationships can break down and cash flow across the value chain can become disrupted.

 

Procurement is risky business around the holidays. Rob Bonavito, the CEO of SciQuest, which offers businesses procure-to-pay and spend management solutions,  says “The big thing you have to remember is that, every time there is a problem or a mess-up in the supply chain, you have to have a human get involved, either by handling the invoice or purchase order.” All that manual intervention means a slower and more expensive procurement process, and threats to consumer loyalty and the bottom line.

 

The ability to quickly and easily collaborate with anyone in your supply chain is a critical component to beating the holiday blues. You supply chain management software should provide you with the tools to connect with colleagues, share possible scenarios and outcomes, and work jointly to resolve any issues that arise from missed or incorrectly interpreted demand signals.

 

Real-time supply chain responsiveness

Being able to respond to those changing signals with agility and flexibility will go a long way on getting you on a customer’s nice list. Real-time responsiveness requires the ability to plan, monitor and respond concurrently.

 

“If you’re able to, in real time, monitor your supply chain, you can basically be a little more proactive in trying to correct or adjust your supply chain so your customers and suppliers aren’t impacted,” adds Bonavito.

 

By knowing sooner when your numbers are out of alignment, you’ll be able to act faster in adjusting to meet the change. By focusing on this type of agility, instead of aiming for 100% forecast accuracy (which let’s face it, is only a Christmas wish anyways), your supply chain will make it through the season more profitable, and your employees will be a lot more joyous when they get to spend the holidays at home.

 

The post All I want for Christmas is supply chain flexibility appeared first on The 21st Century Supply Chain.

 

How to Get Your Supply Chain Ready For the Future

 

Originally posted by Bill DuBois at http://blog.kinaxis.com/2016/12/want-christmas-supply-chain-flexibility/

by Alexa Cheater

supply chain management naughty list

 

It’s that time of year again when Santa’s busy making a list, checking it twice and trying to find out who’s naughty or nice. If you haven’t broken these ineffective supply chain management habits, you’re likely to find nothing but a lump of coal in your stocking come Christmas.

 

1. Working in silos

When it comes to achieving supply chain success, it can’t just be all about your own results.

 

That’s unfortunately often the prevalent mentality in siloed organizations. It doesn’t matter what’s happening in the rest of the supply chain, as long as your team is meeting its goals and objectives. Siloed processes, people and functions work toward their own goals in isolation, instead of working towards the health of the overall supply chain. These negatively affect response time, as it can take hours, days or weeks to understand the complete impact of a decision on the entire supply chain. So get out there and collaborate. Your supply chain and your social life will thank you.

 

2. Global and regional misalignment

Most large enterprises now operate on a global scale. That means divisions all over the world. But regionalized processes may not be what’s best for the overall supply chain. And multiple enterprise resource systems and other solutions that don’t talk to each other effectively certainly aren’t. Managing operations for a specific geographical location independently of others will cause misalignment – strengthening those silos and creating data management and transfer barriers. As a result, end-to-end visibility becomes more difficult. Ensure your supply chain is successful by connecting data, processes and people across the entire network.

 

3. Lack of engagement

Everyone, from the day-to-day supply chain practitioner all the way up to the c-suite, has to be energized and engaged when it comes to the benefits an effective supply chain can bring. For executives, that means going beyond a one-time cursory glance at the metrics. Managing by numbers can’t be the only way you’re assessing your supply chain’s overall health. You need a well-planned strategy and effective execution. That means strong leadership, clear goals and meaningful metrics – all clearly communicated across the entire company.

 

4. Disparate systems

Making sense of all that information streaming into your supply chain because of the Internet of Things and big data is no easy feat. It’s challenging enough without the limitations of archaic systems never designed to integrate and process that much detail. Gluing together disparate systems is time consuming, error prone and difficult to maintain. It deteriorates accuracy and slows down decision-making. Find a better solution to meet the changing needs of your supply chain and your business.

 

5. Too many spreadsheets

Relying on a proliferation of Excel spreadsheets will cost you the agility needed to adapt. You’ll suffer from limitations in reliability, scalability and collaboration, with a greater chance for errors and delays as you try to determine which version contains the latest and most accurate numbers. In short, just don’t do it! Find a supply chain solution that lets everyone work from the same data set. Having a single source of truth will go a long way in bolstering your success.

 

On the naughty list this year? Not to worry, 2017 is right around the corner and provides the perfect opportunity to set some supply chain New Year’s resolutions. If you’re looking for a little help to get your supply chain in shape, contact us today to find out how RapidResponse® can make 2017 your best supply chain year yet!

 

The post 5 supply chain management habits that will land you on the naughty list appeared first on The 21st Century Supply Chain.

 

How to Get Your Supply Chain Ready For the Future

 

Originally posted by Alexa Cheater at http://blog.kinaxis.com/2016/12/5-supply-chain-management-habits-will-land-naughty-list/

by Taunya MacDonald

cabbage patch kidThe year is 1983, and all my sister and I wanted from Santa was a Cabbage Patch Kid doll. We had been dying for one for months, and my sister and I even dressed as Cabbage Patch Kids for Halloween that year (see picture proof included). If you were a little girl (and some boys I’m sure too, fess up boys!) around this time, you likely asked for the same thing from Jolly old St. Nick that year. If you were not part of this craze, let me tell you it was not a logical fad during the home computer and video game revolution of the 80’s. Cabbage Patch Kids were homely fabric dolls with yarn for hair, and each one was unique and came with a name. During a time when toys were continuing to get flashier and included electronics, these basic dolls were the hottest toy going that Christmas.

 

Cabbage Patch KidsThese dolls were manufactured in Asia and typically shipped by boat. While this was a cost effective shipping method, the entire supply chain planning system wasn’t fast and took four to six weeks for the dolls to arrive on the West Coast. In the weeks leading up to Christmas of 1983, the Cabbage Patch Kids craze was at its height. It gave rise to something that we are all too familiar with now – the shopping frenzy and in-store brawls over a toy. Display tables were knocked over, fights broke out. All of this chaos was caused by the shortage of the dolls. Once the company saw that they were not going to have enough supply to cover demand, they tried to fly the dolls rather than ship by boat, but their long lead times prevented them from manufacturing enough of the dolls to cover this unforeseen demand.

 

I am not exaggerating when I tell you that these dolls were extremely difficult to come by. My mom recently told me she read an article at the time that there was a Santa at a mall in New York that was regularly explaining the concept of supply and demand to children asking for the dolls, so that they wouldn’t get their hopes up. My parents were fortunate to have an inside scoop – my grandmother was working at Sears at the time, so she was able to snag two of the illusive dolls for my sister and I.

 

The minute she went in for her shift, she grabbed the only two left, as most were also snagged by employees. No wonder no one could get them, they barely even made it onto store shelves! But even with this advantage she was not able to get two girl dolls, but one girl and one boy. Not ideal for two little girls, but I’m sure my parents thought they were golden having snagged exactly what we wanted for Christmas when so many couldn’t get their hands on them.

 

Since I was the oldest, it was determined that I would be the recipient of the boy doll. On Christmas morning, as I opened the big box and I saw the Cabbage Patch Kid, branding I was so excited that I went nuts as only a 4-year-old can at Christmas. That is until I got the wrapping all the way open and saw the short brown haired boy doll staring back at me, and looked over to see my sister’s long blond-haired doll in her hand. Oh my friends, I can tell you my shouts of joy turned quickly into jealous tears of heartbreak. “How could Santa have thought I would want a boy doll? I should have been more specific in my letter to him and this tragedy could have been avoided! I will cut all the hair off my sister’s doll and then it will be fair.” These are the actual thoughts that went through my child brain. My poor parents were not prepared for this unexpected reaction to what they believed was going to be the best gift ever. My short brown-haired Cabbage Patch Kid named Ruben was not a hit (I even hated his name).

 

Cabbage Patch KidsI got thinking about this dramatic tale recently while watching the television coverage of Black Friday shopping chaos. It’s pretty funny when I think of this story now, because I see it from such a different light; the RapidResponse supply chain geek in me can only think, “if they had RapidResponse, they could have simulated a few different options and found a possible solution to their problem, and if they had, maybe the first Christmas toy craze would have never come about.”

 

I ended up loving my homely doll whom I renamed JoJo. I dressed JoJo in dresses and decided my doll was a girl with short hair. However, many woke on Christmas to even more bitter disappointment than I did. My coworker Wendy did not have the same happy ending, as her mom tried to make her a similar doll since she couldn’t get the real deal. Her attempt was commendable, but the result was not a great success (see picture). As you can imagine, Wendy had a bitterly disappointing Christmas morning like so many other kids, all because of the flaws in the supply chain planning system for the toy.

 

Do you have a Christmas toy shortage story to share? Comment below and let us know.

 

The post How the Supply Chain Planning System Stole Christmas appeared first on The 21st Century Supply Chain.

 

How to Get Your Supply Chain Ready For the Future

 

Originally posted by Taunya MacDonald at http://blog.kinaxis.com/2016/12/supply-chain-planning-system-stole-christmas/

by Dr. Madhav Durbha

Kinexions TokyoKinaxis hosted Kinexions Tokyo 2016 customer user conference event at the Canadian embassy in Tokyo. It was a stupendously successful event with many customers, prospects, and partners in attendance. The day kicked off with some very interesting and engaging presentations by Deloitte, Roland DG, Mitsubishi, and a Kinaxis keynote delivered by me. Here are some common themes based on the presentations and the conversations I had with the event attendees:

 

  • Organizations are looking to digital supply chains as a differentiator. With increased complexity and volatility in global supply chains, the ability to respond quickly to supply chain disruptions is becoming very critical. However, such transformation is not a big bang switch, but is a journey. Both Roland DG and Mitsubishi shared their experiences and their journey towards faster decision-making.
  • Companies are looking to significantly revamp their supply chain planning processes. This is due to increased realization that the current batch oriented planning processes are limiting their ability to run scenarios in real time and collaborate based on them.
  • PSI (Production, Sales, and Inventory) analysis has been the norm in the region for quite some time. Now, companies are looking to go beyond supply-demand balancing to profitable supply-demand balancing. In light of this, Sales & Operations Planning (S&OP) is an area of great interest to the participants. Deloitte’s presentation stressed the need to treat S&OP as not just a technology initiative but to bring in people, metrics, governance, change management and education aspects in to the mix.
  • Knowledge retention and skills shortage are cited as key challenges in my conversations.
  • Local language support, presence, and commitment to grow in the region are cited as critical factors in selecting any supply chain software vendors and services providers they like to work with.
  • There is more openness to consider Software as a Service (SaaS) consumption model for supply chain projects compared to what I had seen before in the region.

Kinexions TokyoThe evening included networking with the attendees. Hors d’oeuvres and cocktails were served while the attendees mingled, exchanged ideas, and contacts. Amongst customers and partners, there is a fair mix of business and IT community, as well as executives, management, and end users, providing an opportunity to exchange some very diverse perspectives and points of view. The event concluded with Mr.Toshiya Kaneko, head of Kinaxis Japan operations thanking the attendees for their presence and participation. All in all it was a great event!

 

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How to Get Your Supply Chain Ready For the Future

 

Originally posted by Dr. Madhav Durbha at http://blog.kinaxis.com/2016/12/insights-kinexions-tokyo-2016/

by CJ Wehlage

supply chain balanceIf you haven’t already, please read Bill Dubois’s blog, “Latest Polls Show We’ve Lost Faith in Polls”. Bill speaks to three factors, unpredictability, high randomness and variability. In my opinion, these are factors that led to the pollsters being so far off on the 2016 US election, and how supply chain practitioners can help these pollsters to improve.

 

Multi-tasking, I was reading Bill’s blog while I was watching the 2014 movie Godzilla. The general plot, if there ever is one in the Godzilla movies, is that Godzilla is awakened by nature to restore balance, and defeat the MUTO (Massive Unidentified Terrestrial Organism). I have to admit, it was cool to see the MUTO walk down the Las Vegas strip and knock down the casinos.

 

Thinking about Bill’s comments on teaching pollsters, and combining with Godzilla restoring balance, it hit me. Regardless of where you stand, left or right, agree or disagree, we hope that balance will reset itself, sometimes incrementally and sometimes shockingly. When Godzilla and the MUTO’s final battle occurred, half of San Francisco was destroyed. The results of that ‘ReSetting” was shocking, and cool to see them battle along the Embarcadero.

 

Balance is also critical for supply chains. We must have an ability to monitor the supply chain, and detect when it goes out of balance. This is why mature S&OP’s are needed. I say mature, as most supply chains can detect the cost based – unit demand vs unit supply imbalance. The more difficult, and mature S&OP, is the value based, where, profit, opportunity, risk, and market share, are balanced. See Figure 1.

 

Figure 1: Cost Based vs Value Based Planning

 

Cost Based vs Value Based Planning

 

Source: © 2007 AMR Research, Inc.  |  Page 5

 

What is the single biggest challenge to a Value Based plan? The trade-off. Should it be margin for product A or profit for product B. Should it be market share for region A or revenue for region B?

 

The ability to make a trade-off decisions is the most important factor of a mature S&OP. Aside from just getting the CEO/CFO to make the decision, a Supply Chain S&OP will always be faced with Marketing vs Sales, Product Management vs Procurement, or Service vs Finance. The problem with all these views into the S&OP is that each have a different set of priorities. They are, in essence, treating things differently.

 

And this is where the US Election can teach supply chains. To effectively manage the S&OP priorities, supply chains need to treat products/customers differently. If a supply chain is providing the same policies (shipping, fulfillment, safety stock, etc.) to all product and customers that supply chain is either under servicing customers or over spending on the network.

 

Key Point: Segmenting your customers will lead to best in class Supply Chain

I ask people to look at Figure 2. What does it tell you?

 

Figure 2: Forecast Accuracy vs Sales VolatilityForecast Accuracy vs Sales Volatility

 

Source: Gilliland, Michael; Sglavo, Udo; Focus on Forecasting: Worst Practices in Business Forecasting, 2010

 

a. The dots in the upper left are close together

 

b. The dots in the lower right are further apart

 

Seems obvious. But, effective segmentation will show a better picture for supply chain. See Figure 3.

 

Figure 3: Segmented Supply Chain

 

segmented-supply-chain

 

I need to break it to you as a supply chain professional, we don’t live in the upper left world, where volatility is low and forecasts are dead on. We live in the lower right! But, the dots in the lower right can be segmented, as these customers want something different.

 

The same can be said about the Election. Assuming all customers want the same thing leads to failure. Segmentation in the US Election showed us that Trump’s victory may not be so shocking. Like S&OP, if we treat every situation the same, we fail to understand the results.

 

Now, I ask people to look at Figure 4. What does it tell you?

 

Figure 4: US Election Results by County

 

US Election Results by Country

 

Source: Glaka, Max; Election Results in the Third Dimension, 2016

 

a. There’s not a lot of blue dots, except in the Northeast coast and California coast.

 

b. There’s a lot of red dots.

 

This is segmentation. Running polls and media out of only New York and Los Angeles would not tell us what the segmented customers want.

 

“If your supply chain was set up to service “blue” customers only, how much cash would you lose or revenue would you miss by using “blue” supply chain policies across the entire Figure 4 Map? “

 

For the Supply Chain, segmenting the customer to know what he/she VALUES is critical to providing the right supply chain policies. Then, managing the BALANCE of that network to know sooner and act faster will lead to best in class.

 

What supply chain lessons did you learn during this election year?

 

The post Balance and Segmentation – What the Election Can Teach Supply Chain appeared first on The 21st Century Supply Chain.

 

How to Get Your Supply Chain Ready For the Future

 

Originally posted by CJ Wehlage at http://blog.kinaxis.com/2016/12/balance-segmentation-what-the-election-can-teach-supply-chain/

by Melissa Clow

This guest post comes to us from Argentus Supply Chain Recruiting, a boutique recruitment firm specializing in Supply Chain Management.

 

Strategic Supply ChainEverywhere you look in the Supply Chain industry (including the Argentus blog), there’s lots of talk about how Supply Chains are becoming more strategic. It’s part of the big change taking place in the field – a shift that Supply Chain Management Review recently described as a “metamorphosis.” This function that – for decades – has specialized in bringing products to market on time, in the right quantity, is blooming into a much broader function with impact all over corporate organizations.

 

In short, Supply Chain is evolving from one concerned with tactics to one concerned with strategy.

 

But what exactly does it mean to be strategic rather than tactical in Supply Chain?

 

We don’t want strategy to be a buzzword – so we wanted to write this post to get a discussion going about what distinguishes strategy from tactics in Supply Chain.

 

As an entry point, here’s a quote from 19th-century military theorist Carl von Clausewitz:

 

“Tactics is the art of using troops in battle; strategy is the art of using battles to win the war.”

 

If you use this definition as an analogy for peacetime Supply Chains, the “troops” would a company’s production, air, rail, and freight resources. The “battle” would be the struggle to deliver products on-time in the right amount. But the “war” is the real question: how does a company use its Supply Chain to position itself to break into new markets, to launch new products, and market itself? That’s the key to understanding this shift.

 

From our perspective, “strategic Supply Chain” means that companies expect their Supply Chains to impact not only product delivery, but innovation, collaboration, sustainability, and corporate responsibility. It means designing an overall framework and philosophy that impacts the entire company and makes it more competitive, helping it win the “war” of profitability and innovation rather than just the “battle” of delivering products on time.

 

Here’s one lens to view this issue:

 

A study in Supply Chain Quarterly provides six models or “styles” of Supply Chain strategy, each suited to a different kind of industry: “efficient” Supply Chains, “fast” Supply Chains, “continuous-flow” Supply Chains, “agile” Supply Chains, “custom-configured” Supply Chains, and “flexible” Supply Chains. These names might seem like different terms for the same thing – and these words often get thrown around as buzzwords all over the industry. But the study’s author, Hernan David Perez, goes into deep detail about the differences in each strategic approach that shows the depth and complexity inherent in developing a truly strategic Supply Chain.

 

For example: a company making products for industrial clients with a high level of customization should adopt an “agile” Supply Chain strategy, with an emphasis on close collaboration with customers, as well as excess production capacity. A company producing trendy products on a short life-cycle might opt for a “fast” Supply Chain strategy that encourages affordable prices, emphasizing strong demand forecasting to schedule production according to a single batch per SKU (shop keeper’s unit) – and allowing for rapid iteration from idea to product launch.

 

People who can understand, implement, and adopt these different strategies aren’t only “getting products in the right place at the right time.” They’re driving innovation and competitiveness across the entire lifecycle of a product.

 

This is just a high-level example of some of the strategic considerations at play in today’s Supply Chains beyond the linear, “products in the right place at the right time,” descriptions we tell our family and friends. But there are tons of other illustrations of this concept, and we’re curious to hear about any others that you find useful!

 

Strategy is a very relevant topic to anyone in the field, because it has huge repercussions for the who, how, and why of Supply Chain. It means that skill requirements are changing, and that makes it more difficult to hire (and potentially find a job) in the field. A great recent article (paywalled) in SCMR discusses this shift from tactics to strategy and its implications for the workforce. The big shocker? SCMR cites a recent survey showing that – in this more strategic Supply Chain world – only 38% of the field’s leaders have confidence that their organizations have enough talent to meet their objectives. And only 44% of Supply Chain leaders think that their organizations have the skills to meet their objectives 5 years from now. These executives said that a lack of individuals who can meaningfully direct Supply Chain on a strategic, rather than tactical level, is their number one concern going forward.

 

We’ve been writing about this looming “talent gap” in the field for quite a while, but what’s becoming more clear is that it’s a crisis of skills and approach more than it is a crisis of numbers of workers.

 

Finding someone who can work within your processes to make sure products arrive on time and in the right amount? There are lots of great Supply Chain professionals who can do that. But finding someone who can dictate the overall strategy of your Supply Chain, tailor it to your industry and category, and then execute on an organization-wide level to drive innovation and competitiveness? Those people are hard to come by. And as the expectations placed on Supply Chain professionals increase, they’ll only be harder to find.

 

But they’re out there.

 

The post What Does It Mean to be “Strategic” in Supply Chain, Anyway? appeared first on The 21st Century Supply Chain.

 

Bimodal Supply Chain

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2016/12/mean-strategic-supply-chain-anyway/

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/

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