This is a follow-up to my post froma fewweeks ago: Expediting versus Planning. I received many comments and recommendations on this subject as to whether much of the expediting that occurs is in factrelated to planning deficiencies. After reading and reflecting on the comments I received, it seems to me that the premise that effective planning by itself will reduce the need to expedite is not necessarily true. Obviously, effective planning is critical to reduce expediting. Without a good plan, then what do we execute? However, no matter how good plan is, it will always change. Forecasts by definition are not accurate. As we all know, changes and disruptions can occur in an almost infinite number of ways throughout the supply chain. The best plan will always be out of date almost immediately after it is published. (Just to be clear, when I say plan, I am referring to the MRP plan.)

 

Given the assumption that a plan is crucial, together with the realization that the plan will not be accurate,we areled to the conclusion that we need a stable plan, but be able to adjust the plan as and when needed. We need to be able to adjust the plan only when significant enough factors warrant a change to the plan, and with enough lead time and stakeholder buy-in to execute properly. To restate, I believe that the following are important:

  1. Plan Accuracy and Stability – The MRP plan needs to be stable enough to enable effective execution but we need to be able to detect exceptions that are significant enough to warrant a change
  2. Responding to Change – The capability to effectively respond to required changes needs to be in place

 

How do we effectively accomplish the above?

 

Plan Accuracy and Stability

  • First, the plan needs to start with an effective Sales and Operations (S&OP) process. The more robust the S&OP process, the better that the high level plan will be.
  • We need to be able to detect or sense the need for changes, and once needed changes are detected, we need to be able to discern which are significant enough to warrant a change to the plan.
  • We also need to be able to prioritize these since there may be more than we can deal with.

 

The key is that potential problems such as material shortages and late customer orders need to be detectedfor the future. Obviously, once late orders or shortages have occurred, they are easy to detect (maybe evenby way ofangry calls from customers or buyers getting urgent messages from production regarding shortages.)

 

Referencing a recent blog post by Kerry Zuber, “ Driving performance improvement through exception management“, Kerry states that in some organizations, there can be as many as 30,000 action messages generated by an MRP regeneration. This exemplifies the complexity of the MRP plan and sheer volumne of exceptions in many organizations. The organization cannot work all of these recommended actions, but which ones are the right ones to work? Which ones signal that something in the higher level plan needs to be adjusted? A second level, automated process needs to be in place in this type of environment to prioritize actions andalso alert the responsible parties.

 

The capability is required to detect what future demand will be late due to the mis-alignment of supply schedules, issues with capacity in the supply chain and other issues. If the future state/impactcannot be detected, then adjustments or contingencies cannot be put in place to avoid or mitigate them. And as mentioned, we also need to be able to determine which of the detected changes require action and by who.

 

Responding To Change

 

Once changes are detected, we need a process to effectively implement these changes.This involves two key process and system capabilities: simulation and collaboration.

 

We need to be able to simulate what-if scenariosto determinehow best to deal with the change. For example, it is difficult to calculate what the impact of a supplier changing commitments on a PO schedule will be in many environments without being able to simulate what that change in the commitment does to the overall plan. In developing a response to the change, we need to be able to simulatemultiple action alternativesand assess how well they will solve the problem and also whether they are achievable.

 

These simulations cannot be done in a silo. Any significant change needs to be collaborated on with the extended supply chain. Collaboration iscertainly required with other internal organizations and potentially withaffected external suppliers.

 

I realize that the above is very high level and probably over simplified, but I believe the general concepts are necessary in a complex manufacturing environment to optimize planning. Without an optimized plan, execution cannot be effectively and efficiently accomplished and we have to resort to a lot of brute force exercises, including expediting. Even the best of plans needs to be monitored forrequired adjustmentsand we need to have effective processes and systems in place for responding to these changes.

 

Has your organization implemented a process for responding to change?



Originally posted by mjeffrey at http://blog.kinaxis.com/2010/06/responding-versus-planning-versus-expediting/

Would you ever think of comparing the World Cup to the supply chain? What analogies can be made?

  • Both are filled with unplanned events. Italy out? England out? That was not in the plan. There will always be surprises no matter how much you plan. However, the challenge of unplanned events in the supply chain is that you have to make course correction very quickly. If you miss the finals in the World Cup, you have another 4 years before you need to execute an improved outcome.
  • Not meeting expectations has a significant financial impact. Businesses disappoint shareholders and affect stock price and risk market share erosion. Soccer teams affect their economies. Italy's early exit is estimated to cost their economy $177Million US , just in the restaurant/bar business.
  • Time to market can be short. Think of the businesses that are waiting for the World Cup winner and want to have their products on the market first.
  • Communication and collaboration is critical to succeed. While soccer is on and off the field : supply chain is often across continents.
  • Both need to strategize scenarios. In soccer, the team evaluates the potential outcome of different plays. In supply chain, you need to evaluate the impact of demand, supply or new product introduction scenarios.
  • Provided with the right tools to do their job, every team member will be empowered to do their best, strengthening the team.
  • In order to excel, you need to have a vision. Your vision needs to place you ahead of your competition. Don't listen to those around you that make excuses as to why the vision cannot be executed. Just ask Cisco or Apple. There are reasons why they are leaders in supply chain. As to the winner in the World Cup?? We will have to wait and see.

 

Do you have any analogies to share? What is your prediction for the World Cup ?



Originally posted by cmcintosh at http://blog.kinaxis.com/2010/06/world-cup-and-the-supply-chain-a-comparison/

Just a reminder of our web cast next week with Lora Cecere, Partner with Altimeter Group.

 

 

 

What S&OP Capabilities Matter Most?

 

 

 

Date: June 29, 2010
Time: 1:00 p.m. EDT

 

 

 

Register today!

 

 

 

Based on her recent research, Lora Cecere outlines optimal practices for S&OP, and what’s required to get there.

 

 

 

As S&OP grows in significance, companies are redefining S&OP and the supporting technological requirements. While the field evolves, everyone has a slightly different take of what the future state of S&OP maturity will look like. Learn the points of differentiation companies like Kinaxis are putting forward.

 

 

 

P R E S E N T E R S
Lora Cecere, partner, Altimeter Group
Trevor Miles, director, industry and applications marketing, Kinaxis

 

 

 

FREE REGISTRATION

 

 

Originally posted by lsmith at http://blog.kinaxis.com/2010/06/whats-needed-and-whats-available-in-sop-offerings-today/

I've recently been noticing a number of articles in Industry Week dealing with labor disputes and issues in China;

 

Foxconn, Honda, Brother have all been the target of labor disruptions driving higher labor costs. Foxconn and Microsoft are both mired in reports of poor working conditions. While China's communist government doesn't officially allow unions, they seem to turn their head at labor protests — so long as the protest doesn't appear to be critical of government policies.

 

Is it any wonder that this is happening? Prices for electronics have been pressured downwards continuously over the past several years. Just look at the cost of a laptop today compared to a few years ago. Almost a 1/3 the cost. While some of these reductions are due to economies of scale and improved manufacturing techniques, much of the savings is because of the low cost of labor. Even still, factory wages are significantly more than a typical Chinese worker could make farming or as a laborer in the rural parts of the country, and so workers flocked to the factory towns. As a result, China's workers started having a disposable income. Money for televisions, cell phones, bicycles and automobiles. The same desire that drives consumption in the West, is starting to permeate life in China. The Chinese worker wants the same things that you and I want. Can you blame them?

 

So what do these changes mean for us? To a certain extent, we will need to accept that things will get more expensive (in the case of electronics, the downward price trend will slow and perhaps even reverse). Chinese workers will continue to demand fair wages and better working conditions (as they should!). But these changes can continue only to a certain point. At some point (as it did in North America, Europe and Japan), the wage pressures are going to increase to the point that the advantages of doing manufacturing in China will start to disappear and China will transition from being a low cost supplier of goods to a net consumer of goods. At this point work will be moved to the next hub of low cost labour (India? Africa?).

 

My advice for companies with manufacturing in China? First and foremost, take notice of the working conditions in the factories. It doesn't matter that the contract manufacturer is a separate company with their own policies, it is your company name and brand that is attached to the product. Have a plan in place in case your manufacturing source (or their supplier) goes on strike. Also, (and I'm sure this is something that you are doing already), closely monitor the costs from your manufacturing operations. At some point, costs will rise to the point where you will need to start looking at other sources. The sooner you recognize that point, the better off your company will be.

 

Before looking for another low cost offshore location to manufacture your goods, consider bringing your manufacturing back to North America. While labor costs would be undeniably higher, these additional costs might just be offset by reduced lead time, reduced transportation costs, improved quality, reduced risk and improved goodwill. Just a thought.



Originally posted by jwesterveld at http://blog.kinaxis.com/2010/06/china-times-they-are-a-changin/

Who doesn't embrace the concept of management by exception? This is one of those universal concepts that suggest we should build processes that handle normal variations virtually automatically, and reserve our precious human capital to address the variances that have significant business impact. Like most great concepts, the real challenge lies in the application of the concept.

 

 

 

First you have to decide where the concept can be applied. This suggests that you examine your existing processes to determine where you can address a significant portion of the normal variation with a minimum of organizational effort. That alone can be a major stumbling block and too often I've heard the comment "everything is an exception around here". So the challenge is identifying what constitutes a meaningful exception, and in my book, a sign of a good process is where something is an exception less than 10% of the time. The next step is to identify who needs to act, how they will be notified, and what tools they will need to address the exception. Not a trivial job, but well worth the effort.

 

 

 

Let's use a common administrative process as an example, committing to a sales order delivery date. For this example, your business uses either a traditional ATP process, or perhaps product lead time to automatically establish a proposed commit date. If in 90% of the cases this results in a date that is in alignment with the customer need date, then you have the basis for implementing an exception based process. In this case, only those orders that do not meet the customer requested date would be identified as an exception and flagged for special consideration. All other orders would be automatically committed and confirmed with the customer. This might be refined further to establish tolerances where the exception is only in cases where the delivery date is more than 3 days later than the customer request.

 

 

 

Once the exception condition is defined, an effective process for dealing with them requires timely notification (alerts) to the people who must collaborate to establish an acceptable outcome. In today's largely outsourced supply chain, that can be both technologically and logistically challenging. Not only do they need to be notified of the business condition requiring their attention, but given access to the tools and information that can lead to a rapid and reliable decision. Using the order commit process as a further example, the ability to meet the customer request date might take one of several paths;

 

  1. Product substitution (if availability exists)
  2. Production acceleration (if capacity and material availability exist)
  3. Order split (if a partial order can be delivered when the customer needs it)
  4. Order prioritization

 

 

 

A well defined exception management process would consider options in a logical sequence and within a time frame that meets customer expectations for responsiveness.

 

 

 

Applying the concepts of exception management to ERP action messages is an area ripe with opportunity. I've known organizations that get 30,000 or more action messages following an ERP regeneration. In those organizations it is readily acknowledged that planners will never get through the action list. Therefore, the real question is, "Are they working on the right actions?" In one organization, a second level analysis was performed on the action queue to evaluate the messages and prioritize them with regards to their importance and impact. This had a huge impact on planner productivity and overall business performance.A well designed exception management system should have that effect where ever it is applied.

 

 

 

The bottom line is that I strongly recommend examining if your organization has the tools to effectively implement exception management processes. This requires the ability to generate alerts, identify the right participants, provide the right views of information, and facilitate collaboration where needed. The investment to put this in place will typically yield returns that are often 10X within the first year. With the economy now on the rebound, the time is right to better leverage your organizations human capital through the implementation of effective exception management processes.

 

 

Originally posted by kzuber at http://blog.kinaxis.com/2010/06/driving-performance-improvements-through-exception-management/

Many times the responses to a blog post are more valuable than the original post itself, especially when the original post poses a question. In the case of " How accurate does the forecast need to be?" that was certainly the case. The following are some "nuggets" from the responses received to the original post that are worth sharing.

 

Stephen Mills (who responded to the LinkedIN version of the post) talked about using what we know about past relationships and other key variables that may be in the future to determine what sales, demand and production should be. It's the "shocks" to the forecast that can't be built into the model. How you respond to the shocks will determine the impact of an inaccurate forecast. Running scenarios to determine the impact of "future shocks" to your replenishment times, inventory policies and customer relationships, etc. all play a factor on how accurate the forecast needs to be. Stephen also supplied the best quote related to forecast accuracy,

 

"Forecasts are either wrong or lucky."

 

Stephen points out that a robust end to end supply chain will ensure that an inaccurate forecast doesn't mean bad luck for the business. It's only one piece of the puzzle.

 

Another respondent also pointed out that forecast accuracy was only one piece of the equation. This response also talked about forecast communication. Communication between functional partners on everything from market trends, process improvements and "shocks" are discussed in a timely manner so adjustments can be made in time to improve the business. Some relevant examples included the case where demand for a product may be unexpectedly soft, so marketing may shift promotions to help on the sales and supply chain side. Finance would also be in the loop so they could adjust their balance sheets.

 

I believe overall respondents agreed that the need for the forecast to be accurate is a function of such factors as the cumulative lead time, safety stock policies and flex capacity. Continuous improvement activities around lead times and quality will take some of the burden off those responsible for developing the forecast. Operational excellence and the ability to respond to "shocks" are a competitive advantage when unexpected demand opportunities present themselves. One response pointed out that this introduces an element of “time” to this issue of forecast accuracy. How good the forecast needs to be will be dependent on the range of the forecast and service level policies, especially on critical lead time items.

 

As pointed out, forecast should not be left on its own but accompanied by all the background and risk information so demand plans can be set, supply rationalized and plans easily re-evaluated if the "shocks" hit. This was only a small sample of some great insights from the blog responses. Thanks to all those who participate in these discussions. It really is worth it!



Originally posted by bdubois at http://blog.kinaxis.com/2010/06/the-real-value-is-in-the-response-in-this-case-responses-to-my-blog-post-on-forecast-accuracy/

The C-suite & SCM

 

 

 

Much has changed over the years since the 1980's when few knew the term Supply Chain Management (SCM) and even fewer knew what it meant, including me. The closest one could come to study SCM at university was Operations Research or Industrial Engineering. Having done this at the graduate level, I can attest that the focus was very much on factory optimization with little emphasis on the inter-connectivity between demand, production, and supply.

 

 

 

I remember going to a pulp and paper manufacturer in Florida in the mid-1980's because they wanted to optimize the utilization of their digesters, even though they were at over 90% utilization. It didn't take long to discover that there was over 9 months of finished goods and over 4 months of raw material on site. I had no idea and never bothered to find out how much finished goods inventory there was in the distribution channel. Clearly, the company's supply chain problems were not related to the utilization of their digesters. However we had been brought by the plant manager to optimize the digesters and he had no responsibility for either raw material (Purchasing) or finished goods (Sales) inventories. The question we were faced with was who owns the problem? We could have gone to the Sales VP or to the Purchasing Director, but they each only owned a part of the problem. Notice also the titles of the people responsible for Sales, Production, and Purchasing. Eventually we managed to get a meeting with the CFO on the pretext of getting data for production costs. The CFO was a lot more receptive to our message but really didn't own the problem either, so he sent us to the CEO. He thought we were a bunch of engineers, and he was right. We couldn't really articulate the issue in a manner in which he would understand. Somehow, we managed to get enough across to the CEO to ensure that project focus changed to profitability rather than capacity utilization. https://blog.kinaxis.com/wp-content/uploads/2010/06/SMC-World-CSCO-Report-184x150px1.jpg

 

 

 

And yet, ina recent study by SCM World and Aberdeen titled " The Evolving Role of the Chief Supply Chain Officer", there still appears to be a mismatch between the expectations of the C-suite and the people actually running the supply chain. There have been a lot of positive developments since the 1980's including the establishment of university courses and the knowledge of the function and strategic value of SCM within the C-Suite. The use of the term "chief supply chain officer" is a testament to this change. While the gulf between the C-suite and operations has narrowed, the very first chart in the SCM World report indicates a mismatch in objectives and perception.

 

 

 

https://blog.kinaxis.com/wp-content/uploads/2010/06/Figure1-CSCO-report.png

 

 

 

The good news is that the C-suite is focused on using the supply chain as a competitive weapon; however, it reminds me of Peter Drucker's definition of the difference between being effective and efficient.

 

 

“Efficiency is doing things right; Effectiveness is doing the right things."

 

 

 

Perhaps this is the correct split in which the C-suite focuses on what should be done, while the rest of the organization focuses on doing this in the most efficient manner. The SCM World report indicates that there is a much closer alignment between the C-suite and the rest of the organization when it comes to the areas of efficiency gains. However, even here it appears that the C-suite has a greater focus on the more strategic goal of restructuring the supply chain organization (effectiveness), whereas the rest of the organization has a greater focus on reducing inventory (efficiency).

 

 

 

https://blog.kinaxis.com/wp-content/uploads/2010/06/Figure3-CSCO-report.png

 

 

 

I think there is still the need for people in the supply chain to understand the objectives and perspectives of the C-suite and to align themselves with these, and to communicate in the language of the C-suite. The arrival of the "chief supply chain officer" in the C-suite is certain to close this gap.

 

 

 

Planning & Execution

 

 

 

Some months ago, Lora Cecere wrote a blog postabout the gap between planning and execution, what she calls the supply chain black hole.

 

 

 

Lora states that:

 

 

Technologies are evolving to eliminate the supply chain black hole. In this first generation of supply chain applications, we have built a fixed response with very little sensing.

 

How can we effectively respond when we cannot sense?

 

 

 

Lora goes on to state that

 

 

The first generation of supply chain applications got us started down the path, but they must be cast-off to move forward. ERP is not the backbone of supply chain management for the future. The new technologies will not come from the ERP consolidators.

 

We are at a discontinuity between inside-out and outside-in technologies. The new technologies will be outside-in. They will help us sense before responding. They will help drive an intelligent response.

 

 

 

Lora's statements are supported very strongly by the findings of the SCM World study, with very clear differentiation between the best-in-class SCM companies and those that received an average rating. In the case of closing the gaps between planning and execution, there is a huge difference of 17%, and 28% to the laggards. While not as dramatic, there is also a significant difference in the degree to which information from trading partners is included in SCM processes.

 

 

 

https://blog.kinaxis.com/wp-content/uploads/2010/06/Figure6-CSCO-report.png

 

 

 

How can you sense what is happening in your supply chain quickly and effectively if you do not get demand or supply signals from your trading partners? Or as Lora states, "how can we effectively respond when we cannot sense?" Sensing is only half of this statement, responding is the other part. How can you have an effective response without closed-loop integration between supply chain planning and execution? As Nick LaHowchic states in an interview in SCDigest,

 

 

Companies need to respond much faster tactically. You can't wait for a monthly S&OP meeting to make most of those tactical decisions any more.

 

 

 

Summary

 

 

 

These commentators and the results from the SCM World survey clearly indicate the importance and benefits of closing the gaps between planning and execution. The business drivers behind this need start from customer expectations for reduced order-to-delivery lead times and competitive pressures to bring new products to market in ever shorter cycles.

 

 

 

But the gap is wider than just between supply chain planning and execution. It starts from the gap between financial plans and supply chain planning. This is, of course, the primary gap between the C-suite and the supply chain function. One talks in financial terms and the other talks on operational terms. One talks effectiveness, the other talks efficiency.

 

 

 

Perhaps the answer is to have a single integrated planning and execution system, frombusiness planning all the way to execution, including S&OP in between. Only then can we bring these gaps together. Any change in the business plan will be reflected immediately as changes of goals and objectives for operations. Equally, changes in planning and execution will give the C-suite visibility in future performance.

 

 

 

What are your thoughts? Do these gaps exist in your organization? How effectively do you communicate with the C-suite?

 

 

Originally posted by tmiles at http://blog.kinaxis.com/2010/06/closing-the-gaps-in-supply-chain-management/

On June 15th, I had the privilege of presenting at the world first Chief Supply Chain Officer Summit alongside a very well-known and respected Supply Chain Leader. I say alongside because Angel Mendez, Senior Vice President of Customer Value Chain Management at Cisco (NASDAQ: CSCO), really did the majority of the work. On this occasion, his message focused on the path he's taking towards creating the " Next Generation Value Chain to Deliver Customer Value " for Cisco. While still a work in progress, with over 9,000 strong under his influence across 90+ locations and 32 countries, my money is on Mr. Mendez succeeding with his endeavor.

 

 

 

It begins with what he believes defines the customer experience value chain:

 

 

"Network of internal and partner processes, people and capabilities that translate innovation into customer value while delivering an unrivaled customer experience"

 

 

 

While closely formulated from Forrester's definition, loosely defined as "activities through which companies create value, competitive advantage, and superior customer experiences", what I find unique and interesting about Cisco's definition is the specific attention and promotion of "people" and their "capabilities". Perhaps this resonates so much with me because I have long believed that collaboration is the next supply chain "optimizer", and collaboration is decisively a purpose-driven human activity. To be more precise, it is the unifying of actions taken by uniquely capable people for a common good (more on this later).

 

 

 

Angel identified four legs required to support the creation of strategic advantage; Customer Focus, Agility, Collaboration and Sustainability. At first glance, you might find these to be obvious and perhaps not so unique — and indeed, many companies are talking about these elements in one form or another. What is different about Angel's message, for one, is the maturity and execution of the model. For example, I've never met a company who would say they are "not customer focused"; however, most continue to govern themselves according to traditional, and very operationally focused, metrics (e.g. cost, quality, delivery and speed). Cisco, on the other hand, measures their customer focus by focusing on perfect product launch, perfect order, order-to-invoice cycle time and last but not least "moment of truth customer satisfaction measurements" — thus, redefining their balanced scorecard to align with its customer focus.

 

 

 

A significant portion of Angel's presentation was spent on the Flexibility/Agility leg. What caught my eye most is a theme I am seeing across multiple manufacturing segments, and is becoming a key requirement for many looking to improve their supply chain management and S&OP processes: the growing gap between Demand Chain and Supply Chain. Today, it is not uncommon to see completely disjoint demand side planning (S&OP) and detailed supply chain planning solutions, and yet, it is in between the two where a significant amount of efficiency and performance can be lost. I believe the gap is widening at a steady rate, and this is what is driving the need for new and innovative solutions to "collaborate and effect change in real time".

 

 

 

So we're back to Collaboration — the third leg. In my humble opinion, it will be in this area where excellence will be won or lost. You might look at collaboration as the combination of people + processes + technology/tools, but I was very impressed to see a slight variant of this long standing equation. In Angel's vision, it is "culture" + process + technology/tools. I admit never having thought about it as a cultural challenge, but having worked with many large organizations on this problem, I've come to realize how unique a problem this is... collaboration amongst peers and employees is often challenging enough across departments. The type of collaboration Angel is talking about is inter-enterprise — which means that on a given day, you may very well be collaborating with a complete stranger living on a different continent. Indeed, there are cultural implications to achieving this level of maturity.

 

 

 

Again, I might say there is nothing new about promoting collaboration as a key to success; however, it is what Cisco is doing about it that distinguishes them from the rest. They are leveraging many of their own technologies to produce what they call an "Integrated Workforce Experience" (IWE) platform capable of bringing teams together to collaborate and solve 'moment of truth' problems that occur in the gap between demand chain and supply chain planning. Unlike social networking platforms, such as Facebook, MySpace and the like, which use friends, family and fun as a hook, I believe platforms like IWE will motivate productive usage and involvement through content, context, and consequence.

 

 

 

Finally, we have Sustainability, which is extremely topical these days as we watch in horror the catastrophe still hemorrhaging under the Gulf of Mexico. Here, we heard some common themes on creating efficiencies and innovations in product design, educating and increasing employee involvement, and a particularly catchy tag line: "Don't just 'comply', lead, innovate, differentiate". The one resonating message around sustainability, more of a lesson really, is the reminder that sustainability should not be viewed as a factor for competitive advantage, but rather, the one common flag around which everyone can unite and learn from one another. Industry collaboration will be the key to effecting a meaningful and lasting change.

 

 

 

Does Angel's vision align with yours? Do you see effective collaboration as an emerging competency that will distinguish your company's performance?

 

 

 

By the way, if you missed the presentation, grab a soda and sandwich and watch the replay of this presentation by registering here .

 

 

Originally posted by jsicard at http://blog.kinaxis.com/2010/06/is-collaboration-the-next-supply-chain-optimizer/

That’s a good question isn’t it? Well, that’s the topic of our upcoming webcast presentation with Lora Cecere, Partner with Altimeter Group.

 

All the details below…. Register today!

 

What S&OP Capabilities Matter Most?
An Overview of User Requirements and Technology Offerings

 

Date: June 29, 2010
Time: 1:00 p.m. EST

 

Hear first-hand some key findings from the Sales and Operations Planning Reportpublishing this month by Lora Cecere of Altimeter Group. Based on her recent research, Lora outlines key user requirements for S&OP technologies. Lora answers the question of what’s needed and what’s available in S&OP offerings today.

 

As S&OP grows in significance, companies are redefining S&OP and the supporting technological requirements. While the field evolves, everyone has a slightly different take of what the future state of S&OP maturity will look like. Learn the points of differentiation companies like Kinaxis are putting forward.

 

P R E S E N T E R S
Lora Cecere, partner, Altimeter Group
Trevor Miles, director, industry and applications marketing, Kinaxis

 

FREE REGISTRATION



Originally posted by lsmith at http://blog.kinaxis.com/2010/06/what-sop-capabilities-matter-most/

A couple weeks ago, I posted a message titled "Expediting versus Planning?" A lot of response and comments were received with some valuable insight and recommendations on how to reduce expediting andits relation to effective planning. I appreciate all the valuable input from some very experienced and knowledgeable supply chain professionals, but thought I would take a little break, and on a less serious side, try to create a little comedy on the subject.

 

There is a comedian here in the US, Jeff Foxworthy, who is famous for his "You might be a redneck" jokes. I am copying his format – I hope I do not get any trouble related to comedian patent regulations or something like that!

 

"You might be expediting too much…"

  • IF, you are amassing major points in your Air Frieght carriers "frequent flyer program"...
  • IF, you constantly get emails from your Land/Sea carriers saying "We miss you, please come back"...
  • IF, your key supplier ran out of bright orange "hot order" stickers to place on travelers and had to place a rush, expedited purchase order for more stickers...
  • IF, even though your "Material Expediters" canceled their gym memberships but are actually in the best shape ever...
  • IF, you use half of your white board to prioritize which late parts need to be expedited by keeping score of angry phone calls from production…
  • IF, you use the other half of your white board to track supplier promise dates for late/shortage parts and you have run out of space...
  • IF, you have not logged into your company's MRP system for weeks because none of the dates are accurate... You might be expediting too much.

 

OK, these are obviously starting to get worse, so I am going to stop. Any more to add? Join in!



Originally posted by mjeffrey at http://blog.kinaxis.com/2010/06/you-might-be-expediting-too-much-if/

Our very own John Sicard will be joining Angel Mendez, senior vice president, customer value chain management at Cisco Systems for a presentation on Next Generation Value Chain Best-Practices.

 

As part of the2010 CSCO Summit, the free-to-attend virtual event taking place on June 15th and 16th, 2010, John and Angel will co-present the track entitled, " Creating the Next Generation Value Chain to Deliver Customer Value," on June 15th, 2010 at 9:00 EST (14:00 GMT).

 

Attendees will learn about Cisco's supply chain transformation from a cost-centre to a competitive advantage. In response to rapidly shifting business demands, Cisco has focused on integrating previously siloed back-to-front end operations into a single global operations group that covers the extended value network, from downstream suppliers through to upstream customers. This session will provide critical insights on the lessons learned and the key focus areas to consider.

 

The CSCO Summit, a two-day event consisting of an agenda of 11 presentations, brings together an influential group of global supply chain, operations and procurement leaders to learn and share best practices around the critical factors driving strategic supply chain and operational agendas across multiple industry sectors.

 

To register for this free event, please visit:
http://cscosummit.raptureworld.co.uk/register



Originally posted by lsmith at http://blog.kinaxis.com/2010/06/2010-chief-supply-chain-officer-summit-free-virtual-conference-starting-tomorrow/

There seems to be a battle raging between the old guard of process consultants who state that S&OP is a process that requires minimal technology and those that state that S&OP has evolved to the point that more mature or sophisticated S&OP cannot be achieved without technology. The truth of the matter is both are correct, but the process advocates are in a shrinking market. Their market is end-of-life. Let me explain why.

 

At the 2010 AMR/Gartner supply chain conference in Phoenix this past week, there was a lot of debate about the reason that S&OP has gained so much attention over the past few years, even though it has been around for 20-30 years. Most people point to the recent economic turmoil as the tipping point. Personally I think this is too simplistic and relegates S&OP to a fad. I believe there are 2 deeper causes: Outsourcing coupled with the arrival of the Millenials in the work force. Though different these causes are closely related. Outsourcing is the business driver, while the arrival of the Millennials is about the removal of traditional barriers and therefore increased adoption.

 

Many of the companies that I consider to be on the leading edge of S&OP maturity are mostly in high-tech and are heavily outsourced. Their focus has shifted from asset utilization, principally of production capacity, to one of financial and operational performance across a distributed supply chain network. Their role has become one of coordination, dare I say of management, rather than execution. Of course S&OP has a big role to play in companies that are still vertically integrated, but their ability to command and control is greater and their need to sweat the assets is also greater, and therefore their incentive to adopt a more advanced form of S&OP is less.

 

One of the often quoted barriers to the adoption of S&OP is the cross-functional cooperation and collaboration that is required. This is why process consultants state that S&OP is a process first and technology is a very distant second. Yet AMR cites the lack of adoption of technology as the primary reason that companies get stuck with immature S&OP processes, and much of the technology is focussed on collaborating across organization and functions to establish consensus demand and supply plans.

 

The arrival of the Millennials (or Generation Y) — born between 1977 and 1998 — in the work force is leading to a much greater adoption of social media in the work force. Of course these generational groupings are not exact and the so-called Generation X — born between 1965 and 1976 — has also shown a great adoption of social media/networking, and are currently one of the fastest growing groups on Facebook.

 

" Generation X and The Millennials: What You Need to Know About Mentoring the New Generations", by Diane Thielfoldt and Devon Scheef, August 2004

 

I am referring here more to an attitude rather than to a particular technology, such as social networks embodied by Facebook and LinkedIn. We have not yet seen wide adoption of these technologies for trade across organizational and functional boundaries. The rapid adoption of Microsoft SharePoint indicates pent up demand for sharing of information within companies, though the most common form of sharing information across organizational boundaries is still email or EDI.

 

According to the Harvard Business Review,

 

"(Millennials) need to work in a social environment, often one that would appear to some of us as chaotic. This means, however, that they are very good at working in teams. They are good at multi-tasking, understand how to employ technology productively, and as a result can often produce good work at what appears to be the last minute."

 

Much of the process consultants' message is about overcoming the barriers of a silo'ed organization, principally those of sharing information between people/organizations with competing objectives. This is especially true in an outsourced environment, but even in large multi-nationals with 10,000's of employees. The Millennials are very versed at the use of technology to do exactly that and have far less sense of privacy of information, both of which aid in the access to and availability of information. And they are accustomed to doing this at arm's length through technology, not face-to-face with someone with whom they have a pre-existing relationship. Again, I am not talking about particular technologies, but rather the attitude toward sharing information with virtual strangers and the use of technology to do this.

 

How do these causes of a greater interest in S&OP come together? Angel Mendez of Cisco made the comment a few years ago at the AMR conference that Cisco has over 20,000 people in their supply chain, only 2,000 of which work for Cisco. In other words, Cisco is heavily outsourced. Let's face it most of the 20,000 that don't work for Cisco are changing frequently, do not work in the same time zone, and very likely don't speak the same language. The ability to find the right person with whom to communicate, negotiate, and reach a compromise is crucial to an effective S&OP process. If you think it is tough to get communication going between sales and production, try doing it between a distribution partner and a contract manufacturer. Yet we have the opportunity to do so by learning from the Millennials' use of technology to find and to communicate with strangers.

 

Of course we can still continue to communicate via phone, fax, or email. But a far more effective manner of communicating and collaborating is to do so through systems that emulate the best aspects of social media while providing a security framework to validate the credentials and access rights of the person. One of the most important aspects to be emulated is "self-declared" interest. Let the user decide what data they wish to "follow", what changes in information constitute an alert, and what data to change to evaluate a scenario. However, because S&OP is carried out in a business context, an audit trail must be kept of all changes made, including the information people are watching and the alerts they have created.

 

None of these requirements would exist if it wasn't for the pervasive outsourcing and off-shoring that has taken place over the past 20 years. Outsourcing has created an environment in which the OEM role in the supply chain is principally one of coordination. They capture demand, ensure that there is adequate supply, schedule the introduction of new products, and commission new capacity. (Companies that have their own manufacturing need to do this too, of course, which is why S&OP is not limited to the companies that have outsourced.) Off-shoring means that lead times have been extended and, because of the cost of shipping less than full containers, more "lumpy". Communication channels have also become extended and less transparent because of different time zones, languages, competing objectives, etc.

 

What do you think is behind the renewed interest in S&OP? Is it only a fad based upon the current economic turmoil? Will the Millennials make as much of a difference to the manner in which companies communicate?



Originally posted by tmiles at http://blog.kinaxis.com/2010/06/what%e2%80%99s-behind-the-renewed-interest-in-sales-and-operations-planning-sop/

As always the AMR/Gartner conference, held this past week in Phoenix, was well attended, informative, and, believe it or not, a lot of fun. This year we had some of our Sales organization attend and that is always bad news for the Marketing folks. We have neither the stamina for nor the practice of the late nights, let alone the will to refuse to participate.

 

Before the meeting we heard that the meeting was fully booked and that people were being turned away. I am usually sceptical when I hear this, but I have to say all the sessions were packed with many people standing at the back of the hall. The Top 25 dinner on Wednesday evening was well attended as was the barbecue on Thursday evening. While we did not attend the Peer forums run during the day on Wednesday, I heard anecdotal evidence from attendees of a packed house. While good for AMR, and the conference as a whole, I interpret the strong attendance numbers to mean that companies in North America are feeling a lot more bullish about the economy. This is important given the theme of the conference, which was "The Economy of Abundance: Rebuilding the Infrastructure of the Global Supply Chain for Sustainable Growth". Rebuilding infrastructure is not cheap and is a long-term commitment. One has to be fairly confident of the outcome before embarking on infrastructure investment.

 

As always the announcement of the AMR Research Supply Chain Top 25 is one of the main events. In announcing the list for 2010, Debra Hofman made the observation that

 

“Twenty years ago, a typical product company had supply chain reporting to manufacturing, with responsibility mainly for inbound materials management and outbound shipping. New data shows that supply chain reports to manufacturing in only 6 percent of companies surveyed, while 61 percent have the head of supply chain reporting directly to the CEO, general manager or president of the business.”

 

For those of us who have toiled in the industry for years, this is good news. I don't mean this in a selfish manner, but rather that it is great to see that the value added by the supply chain function is being accepted and therefore the transformative capabilities of the supply chain function are being adopted. The value add is from being able to operate more efficiently and therefore to reduce costs, while improving customer service. The transformative capabilities are from being able to operate more effectively in an increasingly global market with a widely dispersed supply chain because of off-shoring and outsourcing. But also more effectively in terms of using the existing infrastructure — whether currently inadequate (emerging economies) or crumbling (Western economies) — at a reduced environmental cost.

 

I compared the top 10 companies on the AMR list for 2010 using the free Kinaxis Benchmarking Service, and summarized the results below. The AMR convention is to average the results over the past 3 years, which I have done too. One observation I would like to make based on the table below is the constant interplay between efficiency and effectiveness brought out by the fact that the two companies with the highest net profit, Cisco and RIM, have amongst the worst working capital ratios (WC Ratio), other than Apple (which is number 1 on AMR's list).

 

https://blog.kinaxis.com/wp-content/uploads/2010/06/AMR-Top-25-Supply-Chain.png

 

The speaker list was carefully and well chosen. I was struck by what seemed to be a conscious effort to get more speakers from outside North America. The keynote address was given by T. Boone Pickens, chairman of BP Capital Management and founder of the Pickens Plan. I had never heard Mr. Pickens speak in person before, and was thoroughly amazed at his command of the facts. He spoke for over an hour without notes and without a script, constantly reeling off facts about the energy industry. While not entirely aligned with Mr. Pickens politically, I find his plan to use natural gas compelling. Some facts he stated which made me sit up and take notice are:

  • Maximum oil production in the world is 85M barrels/day.
  • Demand in 2008 was projected at 87M barrels, until the economic crisis hit
  • Forecasts for Q4 in 2010 is 86M barrels.
  • 70% of all the oil in the world is owned by state run oil companies
  • 1 mcf of natural gas is equivalent to 7 gallons of diesel
  • 1 mcf of natural gas costs $4.10
  • 7 gallons of diesel cost $21
  • A battery cannot move an 18 wheeler
  • The US spends $1B/day on oil imports

 

While these facts are compelling reasons to adopt the Pickens Plan for the conversion of the heavy truck industry to natural gas, it is also a wake-up call to all supply chain practitioners about the future cost of fuel and its impact on the supply chain. While switching to natural gas in the US makes sense from an economic perspective, most supply chains are now global and will be under increased strain from both cost and scarcity of fuel. If we include sustainability and "green" issues, there is a lot of incentive to rethink our supply chain designs and to operate our existing supply chains both more efficiently and more effectively.

 

In keeping with the theme of the conference, the other speakers, namely Robert Blackburn (BASF), Didier Chenneveau (LGE), Brian Krzanich (Intel), and Richard Lechner (IBM) all emphasised sustainability in all its aspects including reducing the impact of application and by-products (including containers) of the main product. But the overarching theme of all the speakers was the effective use of the supply chain to reduce the movement of goods to a minimum while satisfying customer demand in order to reduce the financial and environmental cost of the supply chain.

 

We had a much bigger presence than normal at this conference and it was well worth the cost and effort. The quality of the speakers is excellent and AMR does an excellent job of identifying a topical theme. As always the more detailed sessions run by AMR analysts were also of excellent quality. There was a real buzz at the conference about S&OP. Jane Barrett of AMR made the observation that many of the companies that were early adopters of S&OP have now started to use a different term to distinguish their more mature S&OP practices from standard practice. One can always tell when a topic is reaching critical mass because people start inventing new names for it in order to differentiate their application.

 

I'd be really interested to hear from other people who attended the conference to compare and contrast observations/opinions.



Originally posted by tmiles at http://blog.kinaxis.com/2010/06/observations-from-the-amr-supply-chain-executive-conference-the-constant-interplay-between-efficiency-and-effectiveness/

In talking with a number of companies,sales and operations planningseems to be the hot topic. Why is there a suchfocus today on changing the S&OP processes of yesterday? Much has changed since the early days of S&OP. It seems that overnight the unexpected can throw your demand and supply plan out of complete alignment. Global economies, unpredictable demands and interrupted supply are much more pronounced today versus when current, outdated S&OP processes were pieced together. Although S&OP processes may vary from company to company, there seems to be some commonality around the complaints of current processes and what people are looking for in the future.

 

Integration

 

One description I heard was "Silo-based" S&OP. The silos described by the companies we talked to exists between S&OP participants, functions, sites and divisions. People are looking for one place to see a global view of demand, supply and financial data however all of this data rarely exists in one source. Today's challenge is getting this data to a state where it can be useful. This seems to be the biggest cause of frustration with current S&OP processes. It also the reason why most S&OP process cycle times are measured in weeks and not days or hours.

 

Collaboration

 

The second request most often heard is that all participants collaborate in the process. Companies have described their process as being linear. Those responsible for demand, shape and developthe demand plan and then pass it over the fence for supply rationalization which could include passing it to manufacturing or outsourcing partners often in different locations. Somewhere in there is a financial review but many times this linear process leads to decisions based on "gut feel". This is part of the " Black Hole" in supply chain Lora Cecere describes. One person said it takes weeks to get the wrong answer. Those responsible for S&OP all need to be sitting at the same table including sales, marketing, demand and supply planners and your financial team.

 

Quick Evaluation

 

With the current data challenges this makes it difficult to quickly re-evaluate demand plans rationalize supply and review optimal inventory targets to support growth and margins. This is also why S&OP participants tend to look after their piece and then pass it along rather than collaborating on strategy and direction. Being able to go to one place for all elements of S&OP will also enable you to develop exception based action plans. Conducting "what-if's" with all participants around the table will enable a process that delivers a clearer vision of the future. It's not that you will run the S&OP process every day, but when you need to run it, you can do it. You don't have to wait for the next monthly planning cycle.

 

Going to one place for all S&OP data elements, collaborating with all participants and quickly making sense of information to develop your S&OP strategy are three key requests often heard when launching an S&OP project. What else would you add?



Originally posted by bdubois at http://blog.kinaxis.com/2010/06/focus-on-sop-what-are-people-asking-for/

Kinaxis was the presenting sponsor of last night's AMR Supply Chain Top 25 awards dinner. It was a great event. Kudos to the AMR/Gartner team and congratulations to the 25 stand-out leaders. We are proud to say that two of the top 5, and all 3 companies that participated in the evening's panel discussion, were Kinaxis customers.

 

The panel discussion was quite interesting. It consisted of 2 companies from the list — RIM, a newcomer and Cisco, a vetran, and it included NCR, who, given its size is not eligible for the list. The discussion centered on trends in supply chain and their impressions of the Top 25 listing: what does it mean to them, what do they like aboutit , what would they change about it. A few interesting themes emerged:

  • Supply chain excellence is defined in large part by a company's agility. Their ability to be responsive to volatility and be flexible amid complexity were keys to success.
  • The Supply Chain is no longer the errand boy for Manufacturing. Innovation in supply chain is what has raised its profile and increased its relevanceto the organization.
  • In terms of where there is room for improvement for the Top 25 list, there were good suggestions made: more global representation, include mid-market companies (or provide a separate list), and find a way to capture "customer experience" as part of the evaluation of a company's supply chain leadership.
  • Lastly, when asked who should be on the list that isn't, the point was raised that there are a number of contract manufacturers that may not have the brand recognition (which feeds into the voting portion of the Top 25 methodology) but are clearly leaders in the supply chain discipline. I couldn’t agree more.

 

As a sponsor of the event, I had the good fortune to take to the stage for 5 minutes. My speech was a fitting opportunity to share our recent announcement of the Kinaxis No Risk Deployment offering (there is a quick video clip of me talking about it here too). I've copied my speech here below...now, I must admit, I didn't stick to it word for word but the main points were the same.

 

It is our honor to host this year's AMR Supply Chain Top 25 dinner. Our ability to host this event is largely due to many of the companies in this room who we are fortunate to call customers. It is your leading edge practices that are fueling the advancement of the industry. Thank you for entrusting us to join you on your journey of supply chain excellence. And thank you for being a driver behind our success.

 

I believe this is a consequential time for supply chain leaders. Rightfully, supply chain is now a boardroom discussion and is being recognized as a vital part of corporate strategy and competitive differentiation. This is the moment for supply chain management to shine. And tonight is a fitting way to honor the discipline, as well as highlight its leaders.

 

From a technology provider perspective, it is also a prime opportunity to shine. Kinaxis has been fortunate to experience excellent growth during what has been extremely challenging years for software vendors. I believe that, in and of itself, says something about our unique vision for supply chain management and our forward-looking product development efforts that we've been pursuing for the past 10 years.

 

Kinaxis has taken the approach of developing a single offering which solves multiple supply chain problems. Suites of software modules no longer make sense in today's environment. This approach fails because supply chain problems themselves are not "modularized." Today's businesses and processes are multifaceted and interconnected. Likewise, the supply chain challenges are many, complex, and inter-dependant. What we are consistently hearing from the market is that companies are no longer silo in their thinking and thus, a silo'd technology approach is incongruent with the way businesses need to be run.

 

I believe this has given way to a rebirth of S&OP. By its very nature, S&OP crosses operational boundaries. When you have a supply chain that includes contract manufacturers and distributors, S&OP needs to be executed and maintained across sites, systems and partners. We are seeing a growing adoption and modernization of S&OP processes among our customers and prospects. Our sales funnel is proof of that, with a large majority of our new opportunities coming from S&OP budgets. Companies are looking to take advantage of more modern technology concepts and capabilities that enable the multi-enterprise supply chain visibility, collaboration and speed that's required to make a plan and keep it on track. This requires a different technology approach.

 

Now, I am not a supply chain expert, but with my years of experience, I would like to think I am a software expert. And I believe that future success for technology providers will be dictated by their ability to be leading edge, not only in their solutions, but also in how they are delivered.

 

We decided four years ago to develop RapidResponse as an on-demand offering. Many said you could not make a SaaS offering for supply chain problems — but that is simply not true. In fact, it has proved to be a much more efficient model. Only recently are we seeing the non-believers start changing their tune. The big guys are doing their best, but they are late to the game and have many obstacles yet to hurdle.

 

Today, we took yet another step in setting ourselves apart from the stereotype of traditional supply chain software with our announcement of our No Risk Deployment, whereby companies can use our deployed service for 30 days. If they don't see value, they can simply walk away. No catch. You heard it right — Kinaxis will deploy its standard service, companies can then use it live in production for 30 days before deciding to start a subscription service with us. We are telling customers "let us prove it first."

 

Billions of dollars and millions of man years have been exhausted over the past decade on SCM and S&OP projects that haven't delivered the value expected. CIOs and supply chain executives deserve to have more confidence in the success of the solution, more accountability on the part of their vendor, and certainly better ROI. What better way for our prospects to confirm the merits of our service then to see it for themselves before they invest.

 

We are taking the "try before you buy" concept to the enterprise space because we are just that confident in what our service can do. And we are challenging other enterprise software vendors to hold themselves to the same standard.

 

Enough about us...

 

My main goal tonight is to say thank you. What we are most proud of as a company are our customers — which no doubt, will include some from the Top 25 list and many others in this room. We are honored to be associated with your brands and help in achieving your vision. We are delighted to be able to learn from the best of the best, and our company and product is better off because of our close partnerships. We hope in the coming months and years many others in this room will join our growing community of satisfied customers.

 

All in all, it was a great night. And the Kinaxis team is looking forward to a full day of sessions today. Stay tuned for more insight and commentary.



Originally posted by dcolbeth at http://blog.kinaxis.com/2010/06/amr-supply-chain-top-25-dinner-we-got-to-be-a-part-of-the-evening/
Kinaxis Inc.

In-memory…In-style

Posted by Kinaxis Inc. Jun 2, 2010

There was no avoiding the buzz surrounding SAP’s recent announcements and demonstration of its newly available in-memory database technology at the SAPPHIRE 2010 conference. There’s a good description of Hasso Plattner’s vision here, and some deep and relevant commentary from Dennis Moore here. Having read previously that SAP acquired Sybase in part to gain access to its in-memory database technology, I was somewhat surprised to see a demonstration of what many are now calling “HassoDB,” which I can only assume is distinctly not Sybase…makes me wonder whether there will be an internal competition between these two platforms. Hasso has been working on the HassoDB for a number of years and even had a keynote on in-memory technology at SAPPHIRE in 2009. I can’t see him giving this up without a fight. With multiple applications already in production leveraging HassoDB (BWA, etc.), where would Sybase fit? Oh yes, I remember now…mobile computing…or was it buying revenue and improving SAP’s earnings per share? I’m just musing…forgive me.

 

As most who closely follow SAP know, SAP has been talking about in-memory databases for several years. To those that don’t follow the exciting world of database technology, you might even think SAP invented in-memory databases! The truth is that in-memory databases have been around for longer than most realize. Check out this Wikipedia page and you’ll get a sense for the dozens of innovators that led the way well before SAP stepped onto the field. While you won’t see Kinaxis technology mentioned in the mix, we’ve been at it for longer than most—perhaps even the longest. Despite our laser-like focus in this area, our senior architects continue to admit there’s still room for improvement and are in tireless pursuit of it. However, to borrow from the barber’s famous line from one of my favorite Leone spaghetti westerns (“My Name is Nobody”), they would also state, “Faster than ‘us?’ Nobody!”

 

While I wasn’t present to witness it, our development of in-memory technology began 25 years ago with a hand full of brilliant engineers in a basement who founded their own company, Cadence Computer. Their goal was simple: to invent something meaningful and technologically amazing. One of our Chief Architects, Jim Crozman, had an idea to run ERP in-memory—motivated by improving upon a then 30-plus hour run. As you might imagine, finding a machine to run the software that was in his head at that time proved to be impossible, so Jim, along with a small group of talented engineers, did the only thing they could think to do: They invented and constructed a specialized computer (the size of two refrigerators), which would become a dedicated in-memory database appliance—likely a world first. They would call it SP1018. We all know how technologists love a good acronym with some numbers attached to it! At that time, 4MB of RAM took an 8x10 circuit card—and wasn’t cheap! They were packaged into modules with a custom bit slice MRP processing engine capable of 10M instructions per second that could process data in memory at its peak speed. Program and temporary working memory were in their own storage blocks, so the main memory space and bandwidth was reserved for the database. Up to 16 of those processing/memory modules were clustered with a high speed backbone to form single MIMD processing system that could do an MRP “what-if” simulation for a large dataset in minutes. We would go on to sell this computer to GE, at that time an IBM 3090 showcase center. The IBM 3090 had a whopping 192MB of RAM, and sitting next to it, our appliance with 384MB of RAM. IBM’s ERP analytics ran in over three hours, while our appliance replicated the same analytics in approximately three minutes.

 

Computer architecture and speed has evolved greatly since those trailblazing days. Inexpensive multi-core systems with big on-chip caches are capable of tens of billions of instructions per second. No need for custom hardware today! Speaking of on-chip caches, understanding and leveraging this resource has become the key to maximizing speed and throughput. Memory architecture remains 10 times slower than processor speed, so understanding how machines retrieve data and the treatment of that data within the core is fundamental to in-memory database design. It takes the same amount of time to retrieve 1 byte of data as it does 1 block of data. This makes locality of reference a very important system design criteria, minimizing memory access cycles to get the data you need for processing. Data organization and keeping data in a compact form (e.g. eliminating duplication) and with optimal direct relationships and clustering makes for optimal processing speed (minimize memory access cycles).
At this year’s SAPPHIRE Conference, SAP explained how it has chosen a hybrid row/column orientation as the construct to store in-memory relational data. Indeed, columnar orientation helps with data locality and compaction of a column of data (obvious), and is most effective in circumstances where the use cases are driven by querying and reporting against a database that does not change or grow rapidly or often. Dennis Moore says it best in his recent blog:

 

"There are many limitations to a columnar main-memory database when used in update-intensive applications. Many SAP applications are update-intensive. There are techniques that can be used to make a hybrid database combining columnar approach for reading with a row-oriented approach for updates, using a synchronization method to move data from row to column, but that introduces latency between writing and reading, plus it requires a lot of CPU and memory to support the hybrid approach and all the processing between them."

 

The challenges associated with columnar orientation will be felt most when attempting to drive performance of complex in-memory analytics. By analytics, I don’t mean complicated SQL statements, compound or otherwise. Rather, I refer to compute-intensive specialized functions, like ATP/CTP, netting, etc. That is calculating consequence to input events based upon a model of the business, particularly the supply chain. Columnar organization solves issues for a small subset of problems but makes most usages of the data much worse. Processing usually involves a significant subset of the fields on a small related set of records at a time. Since a single record's data is spread across different areas of memory by a columnar organization, it causes a bottleneck between memory->cache->processor. A single processor cache line ends up with a single piece of useful information and multiple cache lines are then needed to get just one record's data. For example, ATP for a single order needs a subset of demand, supply, order policies, constraints, BOMs, allocations, inventory, etc. Perhaps this is the main reason why the PhD students at the Hasso Plattner Institute of Design at Stanford reported only achieving a 10x improvement for their ATP analytic prototype using HassoDB, significantly slower than their raw query performance ratios.

 

Millisecond query results are at most half of the equation—and definitely the easiest half. Don’t get me wrong, faster BI reports are great. If you’ve been waiting a few minutes for a report, and you can now get it in seconds, that’s real value. The trick is to go beyond “what is” and “what was” analysis, and add “what will be if” analysis. If done correctly, in-memory analytics can achieve astounding speeds as well. For example, the Kinaxis in-memory engine processes analytics (e.g. ATP), from a standing start (worst-case scenario) with datasets consisting of 1 million part records, generating 2 million planned order recommendations following the creation and processing of 27 million dependent demand records in 37 seconds, while handicapping the processor to a single core. Further, eight different users can simultaneously request the same complete calculations on eight what-if scenarios of the data and still get their independent answers in less than 60 seconds. No need for ”version copy commands.” My personal favorite performance test done in our labs involves proving that the more users logged into to the system, the less time it takes for them to receive their results (i.e. average time per request goes down). As impressive as these benchmarking numbers are, these tests do not represent typical user interaction (i.e. batching full spectrum analytic runs). If done correctly, massive in-memory databases with intensely complex analytics can scale to thousands of users on a single instance (think TCO here), each capable of running their own simulations—change anything, anytime, and simultaneously compare the results of multiple scenarios in seconds.

 

https://blog.kinaxis.com/wp-content/uploads/2010/06/Scenarioset1.png

https://blog.kinaxis.com/wp-content/uploads/2010/06/Scenarioset2.png

 

RapidResponse simultaneously measuring eight scenarios for a user using weighted scorecard

 

 

All this speed and scale becomes valuable when businesses can bring about new and improved processes capable of delivering breakthrough performance improvements. With collaboration gaining traction as the new supply chain optimizer, companies are driving innovation toward this area and testing in-memory databases in new ways. For example, not only is it important to monitor changes in the supply chain and the potential risk/opportunity they create, companies now want to know “who” is impacted, “who” needs to know, and “who” needs to collaborate. While this seems like an obvious value proposition, the science involved in delivering this on a real-time basis is staggering.


I’m happy to see SAP draw such attention to the merits of in-memory databases. It serves to validate 25 years of our heritage, our focused research and development, and surely validates the investments made by some of SAP’s largest customers (Honeywell, Jabil, Raytheon, Lockheed Martin, RIM, Nikon, Flextronics, Deere, and many more) to leverage RapidResponse. Whether related to Sales and Operations Planning, Demand Management, Constrained Supply Allocation, Multi-Enterprise Supply Chain Modeling, Clear-to-Build, Inventory Liability Reduction, What-if Simulation, Engineering Change Management, etc., these great companies are experiencing and benefiting from the speed of in-memory technology today.

 

Why wait?

 

 

 

Originally posted by jsicard at http://blog.kinaxis.com/2010/06/in-memory-in-style/

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