I was reading a blog on the Supply Chain Expert Community by Peter Balbus on How can we make America's Supply Chains More Dynamic and Innovative, which got me thinking about my own experiences in dealing with supply chains and their impact on companies I have worked with.

 

Having spent a considerable time consulting in the SME space (small to medium enterprise), I have seen firsthand how larger companies could harness the innovation and dynamism of these small businesses over here and abroad.

 

It's no longer the big that eat the small, it's the fast that eat the slow. And small businesses have the ability to react quickly and move fast, as the decision makers are close to the customer and have little to no bureaucracy to slow things down. Larger companies can take advantage of these benefits in the following ways:

  1. Data Integration: Smaller companies can be linked into the enterprise's supply chain through the exchange of data. With the growing sophistication of Web Services, Portals, and other Internet based communication and collaboration tools, the supply chain can now be modeled in almost real-time in a bi-directional manner. However, this requires a greater commitment on the part of the customer to the supplier relationship, as a small supplier does not want to invest the time and money to connect to a customer's virtual network, just to be dropped for a lower priced bidder. The loss of fully competitive bidding on sourcing must be weighed against the benefits of the virtual network. A connected supply chain gives the large corporation something it desperately needs: the ability to quickly react to changing customer demand by getting the entire supply chain to work together to make the necessary directional change, and the ability respond to the customer in a timely fashion, based on the speed of the connected supply chain response.
  2. Leveraging their Ideas: Smaller companies operate in a different environment than large companies, and so their business practices are different. Setting up a round table with suppliers to get their ideas on performance improvements in the supply chain can yield some significant results. Ideas to better implement virtual networks, reduce component costs through design and engineering for manufacturability, and reduce logistic costs through transportation network redesign, can all yield valuable results.
  3. Leveraging Overseas Supplier: Oversea suppliers (especially in developing markets) can face radically different business and regulatory regimes, which forces them to come up with new ways of doing things in order to remain competitive. While most commonly associated with lower labor costs, the very fact they have to operate in a low cost environment can lead them to develop some innovative processes in order to compete. While some of these practices will not work in our environment, some others may result in significant cost savings to the supply chain as a whole, or allow a faster response to customer needs. Since the overseas supplier is generally hungry for export business, this gives the customer significant leverage to "pick their brains" for new and innovative ideas.
  4. Implementing Quality Improvement Faster:
    With a connected supply chain, information can be disseminated throughout the supply network faster and more reliably. This includes feedback from customers and other links in the supply chain on quality issues. If the connected supply chain also has processes built into to it to resolve issues, quality problems can be addressed in a more timely fashion, leading to reduced costs (scrap, warranty, replacement), and better customer relations.

 

Of course, all these benefits are dependent on large companies who are willing to spend the time, money, and effort to integrate their supply chains, and then listening to what their supply chains have to say and acting upon it.



Originally posted by mbuckley at http://blog.kinaxis.com/2011/07/the-benefits-of-integrating-small-business-practices-into-your-supply-chain/

Just a quick post today to let you know we will be hosting a free webinar called, "An Introduction to Supply Chain Response Management — Driving Supply Chain Performance Through Responsiveness to Unexpected Events." The session will be presented by Trevor Miles, director of thought leadership, Kinaxis, and Kerry Zuber, director, solutions consulting, Kinaxis.

 

The webinar takes place on Wednesday, August 3 from 1 p.m. to 1:45 p.m. EDT.

 

Here's the abstract:

 

In a perfect world, you could plan against a forecast and sleep soundly at night, but the reality is that disruptions are constant and unpredictable. This webinar will provide an introduction to response management. Join us and learn how large organizations are developing a corporate competency in coping with unexpected, but ever-occurring events such as receiving customer orders inside of lead time, part shortages, or forecast changes.

 

Registration is free. Click here to sign up for the event.



Originally posted by lsmith at http://blog.kinaxis.com/2011/07/an-introduction-to-supply-chain-response-management-from-the-company-that-defined-the-term/

Recent natural disasters are forcing supply chain executives to take a hard look at their supplier relationships. There has always been a risk of natural disasters but the frequency is increasing with more substantial consequences. The global nature of the supply chain creates more risk as the consumer is much more likely to buy elsewhere. Companies can't rely on customer loyalty.

 

In the article, Boeing and Sharp: Addressing Different Types of Supply Chain Risk, the two companies speak about their changes in strategy. How do you define critical parts that require a second source? The article talks about the effectiveness of focusing on the 80 percent of your spend that typically comes from 20 percent of your suppliers. Does that work? The article debates that it does not and I agree. How many of you have heard about a label shortage affecting a high dollar shipment? Supply chain risk analysis involves a number of criteria. Cost is one, but also the characteristics of the material. Is it custom? Are their capacity limitations with your supplier? Are there currency risks? What is the leadtime? Sharp also talks about regulatory or legislative risks specifically related to solar panel demand. What is the government's policy on renewable energy? Is there risk that the policy may change?

 

There is a cost to addressing risk. Typically the senior executives of a company need to approve such decisions. It is recommended that a number of different response management strategy scenarios are evaluated and compared before making any final decisions. This allows the decision to be more objective by understanding the margin or customer service impact of selecting one strategy over another.

 

The article states that, "Companies that manage supply chain risks effectively will outperform those that ignore or are blindsided by them." This is certainly true but the wild card is the natural disaster itself. Recently our family cottage was damaged by a wind storm. The damage was not significant but the question was, "Do we submit a claim?" The insurance company advised us that we would lose our 15 percent discount if there is a subsequent claim and the company may not want us as a customer. With the severity of natural disasters increasing, do we anticipate another with more serious damage and not submit a claim now or believe that it may never happen again? This is the dilemma we are evaluating now. Much like forecasts, weather is unpredictable. Risk analysis is paramount with full disclosure within the organization of the supply chain strategy and the assumptions associated with it.

 

My colleague John Westerveld also wrote a blog recently on risk management called, “ Natural disasters aren't the only risks in town.” What are your thoughts?



Originally posted by cmcintosh at http://blog.kinaxis.com/2011/07/whats-the-cost-of-addressing-supply-chain-risks/

The past few years have brought risk due to natural disasters to the front of supply chain consciousness.Severe storms, killer tornadoes, devastating earthquakes and tsunamis, forest fires, and drought. All cause for concern, all are risks that supply chain professionals should have mitigation plans in place to address. But risks can take other forms, and these risks can be just as devastating to a company's bottom line.

 

A post by "the doctor" over on the Sourcing innovation blog, led me to this article in Industry Week. In it, they present a short case study about how a company survived the chaos and upheaval of Hurricane Katrina, only to fall victim to other risks:

  • Rapid growth — Rapid growth sounds like a great situation to be in, and it can be. But it can also cause significant problems.Companies have growing pains just like people do and processes that worked before can become problematic with higher volumes. Suppliers might not be able to grow at the same pace you are and qualified people might not be available to meet hiring demand.
  • Expanded and new facilities — New facilities are really systems wrapped in a building and like any system there can be problems getting things working. As you bring new facilities on-line or as you renovate and expand existing facilities, you need to plan for potential start-up issues.
  • Increased and changing product range — Things can be simple when we have one or two products but as the product offering grows, complexity grows with it. Care must be taken when adding new products not to kill demand for existing products, at least until supply has been whittled away. Apple is a master at this – when a new product is coming, even before it is announced, supply starts to dry up for existing products so that as Apple transitions to the new product, they reduce the risk that they will be left with large quantities of the outgoing product.
  • New, large (and more demanding) customers — New customers are wonderful. Large customers, even better! But... there can be a downside. Maybe others have noticed this little truism – the larger the customer, the more demanding the customer.They want what they want, when they want it. And because this customer now makes up a healthy portion of a company's revenues, the incentive is there to make sure these customers are satisfied. The risk is that if you have successfully ramped the company to meet this demand and the customer subsequently leaves, you are left with significant excess capacity and expense.
  • Changes to the supplier base — Suppliers come and go. As the supplier base changes, so does the performance characteristics of your supply base. Quality, on-time delivery performance, lead times, costs, all impact profitability.
  • Changes to IT systems — This can be a killer. IT systems are often the brains of the operation. If the brains aren't working, not a lot of stuff can get done. Companies are often lured into huge projects to overhaul and replace their systems. If done right, the change can be quite beneficial. If done incorrectly, the results can be disastrous, sometimes leading to litigation.

 

The Industry Week article has a number of suggestions for improving a company's ability to assess and mitigate risks of all kinds.If you were to pick one that you absolutely must implement, it would be to build risk management into all aspects of your business. Make risk assessment and mitigation a key part of your decision making process.A good place to start would be to add risk assessment and mitigation to your monthly S&OP process. What better place to ensure that all teams are thinking in terms of what risks exist and how best to manage them?

 

Have you experienced some of these risks? How did you overcome them?Comment back and let us know.



Originally posted by jwesterveld at http://blog.kinaxis.com/2011/07/natural-disasters-arent-the-only-risks-in-town/

Just a quick post today to let you know we will be hosting a free webinar called, “ Managing Uncertainty in Volatile Global Economic Times.” The session will be presented by Caroline Dowling, president, NOVOFlex and Retail Technical Services, Flextronics, and moderated by Trevor Miles, director of thought leadership, Kinaxis.

 

The live webinar takes place on Tuesday, July 26 from 11 a.m. to 12 p.m. EDT.

 

Here’s the abstract:

 

In the current business environment where the pace of business and competition continues to grow, responding rapidly to global economic change or major incidents such as the recent tragedy in Japan frequently requires organizations to collaborate and make tradeoffs. This webinar will showcase how Flextronics works to synchronize supply chain actions when faced with a constant stream of value chain exceptions, ranging from ordinary daily order changes to extraordinarily large and unexpected supply chain disruptions such as blockades, strikes and regional tragedies.

 

Registration is free. Click here to sign up for the event.



Originally posted by lsmith at http://blog.kinaxis.com/2011/07/managing-uncertainty-in-volatile-global-economic-times/

Let's go back a few years just before the term Response Management first showed up in supply chain. It really wasn't that long ago; let's say the mid 90's. You were listening to cd's, your children still used the home phone, and your internet connection sounded like a fax machine. Many companies had already been through their second ERP implementation, plans were generated and executed. When it was business as usual and things went like clockwork, everything was fine. In the case that there were deviations to the plan, for example scrap, late supply, machine breakdown or an unexpected customer request, planners would somehow manage. In many cases they would turn to Excel for supply chain analysis. Sound familiar? The answer may be yes because for some companies the use of Excel, or supply chain's version of manual labor is still good enough. But for most companies the growing complexities of the supply chain required something that could handle the volatility that supply chains had never seen before. People turned to Advanced Planning and Scheduling (APS) systems because some had primitive simulation capabilities required to respond to change. For the most part though, they were still planning and scheduling systems. There was still a gap when things didn't run like clockwork and it was not business as usual.

 

This was a fascinating time for supply chain. High tech electronics led the way with increasingly shorter life cycles for products aimed at a customer base that was quickly becoming more educated and demanding. The early stages of Response Management as its own category were set (with Kinaxis coining the term and defining the category by the way). There emerged the first of two components of Response Management: "sense and respond." For the most part this was all about anticipating demand because at this point historical analysis was of no use. Companies needed to get even closer to the customer, product life cycles became more difficult to manage, and it was the contract manufacturers who took the lead with emerging Response Management capabilities. From a functional standpoint, the requirements for a world class Response Management system were being defined:

  • One place for all global supply chain data and information. More often than not this is coming from many different systems in different formats and different time zones
  • "What-if" simulation anytime. For example what if demand dropped earlier than expected? What if this product was promoted? People could no longer wait for answers. They needed to know the risks and how best to respond or it could ultimately mean a loss of market share.
  • One place for all supply chain participants. Demand and supply managers could no longer do things in silos. They needed to collaborate efficiently to effectively respond to change.

 

Even through all this, the term Response Management was still slow to catch on (though there were some industry analysts that understood and bought in See report: Response Management: Next Wave of Supply Chain Innovation?)

 

The second component of Response Management began to make headlines. The first component, "sense and respond," I think was exciting. New product introductions, emerging markets, anticipating demand. Highly competitive aspects of supply chain and the companies that were the leaders started to be recognized, for example today you can go to The Gartner Supply Chain Top 25. This second component though does not yet have a catch phrase associated with it and is much different than "sense and respond." Trying to think of something that is respectful of the human tragedies associated with this component of Response Management you might call it "respond responsible." We are talking about the catastrophes nobody can "sense." You don't have to look too far for examples but since 9/11 they seem to be more frequent. I'll just point you to my last blog, " Top 5: What Else Could Go Wrong?" for other examples. On top of the human element, supply chain professionals still need to source supply, allocate limited inventories and respond with confidence to their customers.

 

It has taken these events for many companies including the big ERP vendors to recognize that there is a need for something between planning and execution. Something when things don't run like clockwork, when demand is unpredictable, or when you get hit with the unexpected. Response Management has arrived as an official category that companies will start, or for some continue to build strategies around.



Originally posted by bdubois at http://blog.kinaxis.com/2011/07/response-management-history-101/

Like many things, transitioning your supply chain to be sustainable is not easy. Looking at all your products, your suppliers, your infrastructure, and your distribution network can quickly become overwhelming. Where do you start? How do we pay for it all? How do we keep delivering to customers while we do all this? These are all good questions. However, the sustainability train is moving and as I've pointed out before, you need to be on-board.

 

In a recent post, Dave Meyer compared the effort to become sustainable to his efforts to learn the guitar. His approach? Start small — stay focused — keep going. By starting small (in his case, he started with a three string guitar), he was able to learn, yet not be overwhelmed. You need to keep focused. Learning something new (like the guitar or sustainability) won't happen overnight. You will make mistake and you will go need to go back and fix thing but you will get there. Finally, you will achieve some success. Don't stop there, keep going. Tackle the next issue.

 

In his post, Dave suggests starting with a plan (always a good idea!). He describes two alternatives.

1) A systematic framework like the ISO14001 Environment Management System

2) A Plan-Do-Check-Act Deming wheel approach to continuous improvement.

 

The Continuous improvement approach might be more manageable, especially for small/medium businesses. It involves seven iterative steps to sustainability. Dave lists them in his post:

 

Prepare (Plan)

1. Map your impact, set priorities and build the team.

2. Select useful performance indicators and associated data.

 

Measure (Do)

3. Measure the inputs used in production (primarily materials and components).

4. Assess the impact and efficiency of your facility.

5. Evaluate your products. Determine how they perform in terms of energy (resource) consumption.

 

Improve (Check/Act)

6 .Understand measured results.

7. Take action to improve performance.

 

The trick with continuous improvement activities is that you go through a cycle like this and gain a small improvement. Once that improvement has become internalized, you start the cycle over again. I'll use a different analogy then Dave did (and unfortunately one that hits closer to home...). If you want to lose weight, setting a target of losing 50 pounds next week is unrealistic and will likely result in frustration and disappointment...and could be very unhealthy. However, setting a target of losing two pounds next week, and two pounds each week thereafter is far more manageable much more likely to be successful.

 

What is your sustainability approach? Comment back and let us know.



Originally posted by jwesterveld at http://blog.kinaxis.com/2011/07/sustainability-start-small-stay-focused-keep-going/

As I wrote earlier, the topic of control towers seems to popping up everywhere lately. But I am sure that there are as many definitions of a control tower as there are analysts and commentators. So I thought I would weigh in with my own definition. https://blog.kinaxis.com/wp-content/uploads/2011/07/control-tower-pic-300x225.jpg

  • Let's start from the perspective that a control tower is a decision making tool, not merely a visibility tool. Visibility is a precursor, a building block. In optimization parlance, visibility is an adequate but not sufficient definition of a control tower.
  • A key requirement of a control tower is that several simulations can be performed to test high level hypotheses at a granular level to determine the potential effect on operational and financial metrics, as well as identify any constraints.
  • A control tower by definition must cross functional and/or organizational boundaries. I think we can all agree that the term implies a view across a fairly broad span of operations, not a narrow functional perspective.
  • Because a control tower crosses function and/or organizational boundaries it must support collaboration in order for people to be able to share perspectives and arrive at consensus and compromise that balances competing objectives and performance measures.
  • Direct people to what is important and alert then to what is critical, and of course within their span of control.
  • Identify consequences to underlying events, as well as the people who are responsible for both the events and the consequences, so that they can arrive at a joint resolution.

 

 

The analogy of the airport control tower has great deal applicability to supply chains. All of the systems required to manage airplane departures and arrivals, airplane cargo management, bookings, maintenance etc. are interwoven into a real-time mesh of information and decision making in addition to the visibility that an elevated position and radar afford. In contrast company supply chains, by and large, are separate, isolated, data ‘islands.’ The very best of these typically have ‘batch’ type connections to each other. When things go wrong the signals are late to arrive and impacts difficult to estimate. Imagine a supply chain world that is run like the world’s airports, with common standards (like pilot/tower communication always in English) and systems designed to communicate with each other in real-time. This is a very instructive model with standards and collaboration at its heart.

 

Below is what Sameer Patel wrote earlier this year in a blog titled " 2011 Business and Technology Forecast," with my emphasis:

As organizations increasingly start to see the benefits of deploying social and collaborative initiatives to improve employee, customer and partner engagement, they will soon begin to realize that the decade old notion of streamlining repeatable processes made popular by ERP and CRM system-of-record deployments was largely over promised. In practice, customers and prospects have unique questions not answerable in the knowledge base or by marketing; employees living in rigid ERP systems need to constantly find experts who have the best answers and to collaborate with them. And reseller partners are constantly spending time looking for the right answers not available on asynchronous partner portals to keep end customers happy. Silo'd but open collaboration initiatives on activity streams and other enterprise social networking utilities currently being deployed will expose such engagement not historically possible in an ERP or CRM laden design. Consequently, LOB and IT leadership will realize that traditional process approaches and fluid collaborative constructs need to come together to truly accelerate business outcomes.

 

My definition above focuses on the process and organizational requirements, but also on some key functional capabilities. What is clear from Sameer's perspective is that by definition the solution will not be coming out of ERP or CRM systems. I think his observation that;

... they will soon begin to realize that the decade old notion of streamlining repeatable processes made popular by ERP and CRM system-of-record deployments was largely over promised.

 

is particularly important because for years these systems have been sold on the promise that they encapsulate best practice processes. If a process is repeatable isn't it by definition a standard process and not a best practice process? OK, I concede that the process may be best practice and repeatable in a few organizations, but if everyone deploys a standardized best practice process, is it still best practice? I could go on forever on this topic, but I will leave it to Sameer's devastating observation that;

In practice, customers and prospects have unique questions not answerable in the knowledge base or by marketing; employees living in rigid ERP systems need to constantly find experts who have the best answers and to collaborate with them.

 

And I will go further to state that not only should a control tower identify the experts for the employees, but in addition a control tower should allow an employee to suggest a resolution and to test its efficacy against operational and financial objectives. By all means get an expert to validate the assumptions and results, but all too often it will take too long to get expert feedback, especially if the expert must be identified, the problem described to the expert, and then have the expert investigate resolution in a separate system. The customer or prospect will have moved on to other problems by then.

 

In other words a thin collaboration capability that is little more than sharing ideas without the capability of evaluating the impact of the ideas is not likely to be of much value and is only a slight improvement on using phone, FAX, and Excel attachments. The issue isn't that humans don't have ideas, but rather that they don't have a timely and effective manner of testing their ideas at a sufficiently granular level to ensure both feasibility and value. This is the key to having an effective control tower.

 

https://blog.kinaxis.com/wp-content/uploads/2011/07/Gartner-control-tower-279x300.jpg

 

Gartner has also being weighing in on the topic of control towers, although nearly all the article focus on logistics visibility, hardly a ground breaking areas. (Any references I make will require access to Gartner materials for full viewing.) In an article titled "Supply Chain and Manufacturing Outsourcing Discussion with Supply Chain Leaders" published on (Michael Dominy, Hussain Mooraj; Nov 22, 2010), the authors define a control tower, that goes beyond logistics, as follows:

a “control tower” or centralized shared service organization to manage relationships and information between the company and its outsourced manufacturing, logistics and other service providers.

 

Unfortunately they don't include a mention of collaborative decision making, but they do go on to state in the same article that;

Even if a partner delivers the supply chain visibility and events across the ecosystem of supply chain partners, the enterprise must control and direct the response across the supply network.

 

I can only presume that being able to control and direct the response across the supply network implies the ability to reach
a timely and consensus decision on what that response will be.

 

What I do like about this Gartner article is that it includes a maturity model. I am often guilty of describing nirvana without painting a picture of how to get there and the steps between. Something else that is brought out by the Gartner diagram and article is the applicability of control towers to outsourced environments. In other words when key operational activities are outsourced it is necessary to get on overview of the operations in order to provide the control and direction to the extended supply chain.

 

So far I have focused very much on the definition of an "operational" control tower. In my next blog I will weigh in on a "corporate" control tower that focuses more on the needs of the executive level. In the meantime please give me some feedback. I'd love to hear your ideas about control towers and the convergence of consumer-led social networks concepts, enterprise 2.0 ideas, and control towers.



Originally posted by tmiles at http://blog.kinaxis.com/2011/07/control-towers-visibility-insight-or-both/

Remember back in the day when planners were planners. Late supply only happened because a buyer forgot to place a PO. Your only worry was to make sure your alarm clock was set. Women wanted to be with you, men wanted to be like you. You could plan your way out of anything. Well it wasn't exactly like that. There were still plenty of issues to deal with when balancing supply and demand but in today's global supply chains, the unexpected and unusual seems to be more prevalent. I was reading the APICS Operations Management Now article, " The Real Question of Cargo Security." My first thought was, "what else could go wrong?" In the article Abe Eshkenazi gives an example of cargo theft which in some cases can include "violent hijackings." The article will certainly get you thinking about risk management and Mr. Eshkenazi also invites you to participate in an extensive practitioner survey to determine how you are applying risk management in your organization. (To access the survey go to https://www.surveymonkey.com/s/6G269QR ) What other risks does your supply chain face? What else could go wrong? In the spirit of the Late Late Supply Chain Show, especially the late part, here are the top 5 responses to "What Else Could Go Wrong?"

 

5. Cargo Security. Let's take one from the article that got this list going.

 

4. Black (and grey) Markets. Here is another form of theft and here comes the quality issues.

 

3. Terrorist threats. Homeland security, border crossings, and customs issues are only going to get more challenging to deal with.

 

2. Regulatory delays. FDA, FAA, VUCAT (For explanation, check out this blog post.)

 

1. Natural disasters. Japan, volcano in Europe, extreme weather conditions, no other explanation required.

 

Would you add any others to this list to get it to a Top 10? Are there other issues you predict will hit hard in the future? Raise some awareness on risk management and let the community know what you think.



Originally posted by bdubois at http://blog.kinaxis.com/2011/07/top-5-what-else-could-go-wrong/

We recently presented at an execTALKS session from the Ottawa Centre for Research and Innovation (OCRI) called "Swimming with the Sharks — The Kinaxis Story." This session featured Kinaxis' very own John Sicard (COO), Mark Mototsune (VP of research and development), and Bill Dubois (business consultant/resident comedian).

 

The focus of this session was to showcase how Kinaxis effectively competes against the likes of monster organizations such as SAP and Oracle. In typical Kinaxis style, we didn't stick to the regular session format. We added our own flare and presented in a Late Late Supply Chain Show format. Overall, the session was informative and funny!

 

To get straight to the meat of the interview, go to the 9:20 mark where John and Mark share stories on:

  • the company’s history;
  • transition to SaaS;
  • management model and style;
  • marketing strategies; and
  • future strategic initiatives.

 

The entire 35 minutes session was recorded and posted to the OCRI website. Check it out: http://tv.ocri.ca/2011/06/28/swimming-with-sharks-the-kinaxis-story/



Originally posted by lsmith at http://blog.kinaxis.com/2011/07/is-your-industry-competition-like-swimming-with-sharks/

It is amazing how there can be a synergy that drives several parties to coalesce around the same idea. I once read about a crazy idea that if one cow learns how to cross a cattle grid this capability will somehow be transmitted to all other cows. Sounds pretty quirky right?

 

Well somehow the notion of a supply chain control tower has gained broad interest lately across a broad spectrum of industries. I stole the title of my blog from James Cooke of CSCMP who wrote about the same topic a few weeks ago. James comments that:

In one notable session, for instance, a Procter & Gamble executive described the company’s initiative to set up “control towers” to help it manage its distribution networks in emerging markets in Eastern Europe, the Middle East, and Africa. In the supply chain sense, a control tower is a location that provides visibility into inbound and outbound distribution flows—much as a control tower coordinates the movement of aircraft to and from an airport. Although a number of companies in Europe have adopted the control tower concept, P&G’s case is particularly interesting because executives believe that this approach will help the consumer goods giant control distribution costs and manage supply flows into emerging markets.

https://blog.kinaxis.com/wp-content/uploads/2011/07/visibility-300x198.jpg

 

http://www.hydrometeoindustry.org/catalogue/ProductSheets/Vaisala/RoadWeather/VaisalaRoadWeatherSheet.htmI must admit that the last sentence left me wondering what the justification was for the other control towers? It's the 'particularly interesting' bit that I found a bit confusing, not that P&G expects real benefits from the control tower, which I would assume.

 

From my perspective, the application of the control tower concept only to distribution is a fairly narrow use of a very powerful concept. A multi-tier control tower in the high-tech/electronics space that spans customer location, the OEM, several contract manufacturers, and component suppliers has much greater likelihood of both success and benefit. Time and time again I hear about visibility being a problem in this environment. What better way to get visibility than to have a single system that sucks in data from multiple systems of record (not just ERP) to provide this visibility?

 

But visibility is not enough. Don't get me wrong, knowing about an issue is hugely better than not knowing about an issue until only after you feel the impact. But even better than knowing about an issue is knowing about the consequences of that issue. Will it affect customers service? Will more material be required? Will we need an extra shift? Will we miss the quarter? Without this type of consequence analysis, knowing of the issue itself is relatively uninteresting and of little value (beyond the people directly affected that is.)

 

Control Tower Diagram Even better, is to be able to perform “what-if” analysis to determine the best course of action to avoid the risks and negative consequences of events. But in a multi-tier, and therefore multi-organization supply chain there is no obvious 'best way' to resolve the issue in the best interests of all the participants. There is a natural tension between the objectives of the different tiers that has to be negotiated. However, in a multi-tier supply chain, how do you determine who is impacted and who needs to take action? After all, without this knowledge how is resolution possible? I suppose resolution is still possible using conventional means — exporting data into Excel and emailing it around followed by several conference calls — but the time this takes is a primary cause for supply chain waste and inefficiency and the very problem that a control tower will solve...well, a control tower that goes beyond simple visibility anyway. Visibility is a start, consequence evaluation the next step, “what-if” analysis leading to resolution is the third step, and multi-enterprise collaboration the final stage and most complete description of a control tower.

 

So what is different now? Do we trust our trading partner more than we did two years ago? To be honest, I am not sure. Perhaps it is that we are getting management coming through that is very familiar and comfortable with sharing information across the internet, the so called Millenials. But, as I never tire of pointing out, we have been talking about control tower like concepts for 50 years ever since Jay Forrester published his work in industrial dynamics – “Industrial Dynamics-A Major Breakthrough for Decision Makers,” in: Harvard Business Review, 1958, Vol. 36, No. 4, pp.37—66 – and the bull whip effect in which he states that:

Company (and supply chain) will come to be recognized not as a collection of separate functions but as a system in which the flows of information, materials, manpower, capital equipment, and money setup forces that determine the basic tendencies towards growth, fluctuation, and decline.

 

For years, many analysts such as Lora Cecere while at AMR Research and now the rest of the Gartner supply chain people have been writing about demand-driven value networks (requires membership), which, while slightly different in concept, is all about pushing the demand signal down the supply chain across functional and organizational boundaries. Without a doubt, technical solutions have improved and lately even the concept of social networks has gained a lot of acceptance in the consumer community. But technology is the enabler, perhaps the driver too in some cases, for example Facebook. But we need to get well beyond the social graph provided by the likes of Facebook and the interest graph required by social media marketing to the responsibility graph required in B2B collaboration across enterprise boundaries. We need to get from 'this is what is happening' to 'who needs to know.'

 

As I mentioned above, I do think it is the arrivals of the Millenials in the workforce, particularly in management positions, that is leading to the re-evaluation of existing inter-company processes. This combined with the huge adoption of social networks applications such as Facebook and Twitter in the consumer space has opened the curtain just a little. I think we have some way to go before this all gels into something really significant, but it is very exciting to be part of the process, to see customers and prospects exploring control towers and making the first steps to meaningful adoption, well beyond simple visibility. And there is a significant body of discussion on the use of social media in the supply chain, such as Sameer Patel's blog titled " Talking Collaborative Supply Chains at Enterprise 2.0 Conference" in which he states that:

Supply Chain efficiency is a big big deal. More over, this area of the enterprise technology stack and associated strategy has seen little to no innovation for well over a decade

 

Well, I am not quite sure of that, but the pace of innovation has sure slowed down, especially in the area of collaboration, particularly multi-tier collaboration. In the blog above Sameer refers to an earlier blog he wrote on 2009 titled " Taming the Supply Chain beast, Enterprise 2.0 style" in which he states that:

... one of the biggest opportunities to enterprises using such social computing technology is be able to pry open the gates that lock out supply chain access to core processes such as product management, R&D, marketing, end customer support, etc. And conversely — giving these business units access to knowledgeable supply chain partners as well.

 

First of all, I find Sameer's description too narrowly focused within the enterprise whereas I believe the greatest benefit to be achieved is from collaboration between enterprises. Second, I find that the lack of innovation has been on the part of the user community. The activity in control towers is a clear indication that this has changed.



Originally posted by tmiles at http://blog.kinaxis.com/2011/07/the-next-big-thing-control-towers/

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