Click here to view Part 1: Does the Art of Scheduling Still Exist?

 

In the late 1980's I was working for a large government electronics manufacturer located in Scottsdale, Arizona. This was the first time that I was on a complete MRPII (Manufacturing Resource Planning) implementation team. My duty on this team was that of a Training Instructor, responsible for the development of the training materials and the facilitation of the courses.

 

During the initial training sessions I attended given by the software developers, one of the instructors introduced me to a field I had never heard of called fixed Manufacturing Lead Time Override. He explained that it was to be used on an exception basis. True manufacturing lead times were always to be used but on occasion, when some assemblies were bought outside or brought in from another division, you could temporarily override fixed and variable elements of true manufacturing lead times.

 

To my surprise, at completion of the implementation, fixed Manufacturing Lead Time Override was, in fact, the norm and not the exception. All of the make parts were being planned utilizing fixed lead times. This means that once you set a fixed manufacturing lead time, all of the manufacturing orders will use this one lead time. If you have a 10 piece spares order, it will be back-scheduled with the same lead time offset as a 1,000 piece manufacturing order. There is no variable element to give the 1,000 piece manufacturing order the correct amount of lead time it deserves.

 

When I questioned the use of Manufacturing Lead Time Override, I was told that the studies that were conducted found that the start dates of the assembly manufacturing orders were only off by about 2 — 3 manufacturing days and usually within the same week. Besides, it takes a lot of work to come up with all of the move, queue, setup and runtimes and it is much easier to input one Manufacturing Lead Time Override.

 

I believe that there is a law of physics that states "The whole is equal to the sum of the parts". We aren't just building and shipping assemblies, we are building an entire product. If you have ten levels in a bill of material and you short all of the assembly orders by 2 — 3 manufacturing days, you are shortening the planned build schedule of the product by an entire manufacturing month along with scheduling the purchased material to support that product build by the similar amount.

 

https://blog.kinaxis.com/wp-content/uploads/2011/11/crapsdiceroll1-300x200.jpg

 

The 2 — 3 day start date variation argument might hold water if you are just shipping spares assemblies but from a Master Production Scheduling viewpoint that is concerned with forecasting and shipping finished product it results in a crapshoot. That's right, MPS success then depends on the roll of the dice. The manufacturing order quantities that closely align with fixed manufacturing lead times will succeed but the ones out of alignment will fail. What makes it an even bigger crapshoot the fact that very seldom will you ever wind up with all of the manufactured order quantities for a finished product that align properly. The odds against that go up as the number of levels in a bill of material increases.

 

Fixed manufacturing lead times appear to be the norm in just about every company I've come in contact with and so my question is: Does the art of scheduling still exist?

 

Those senior schedulers were undervalued by their company but in my opinion, they were worth their weight in gold. Who knows, if we redeveloped the art of scheduling, we might be mass producing aircraft as fast as they did back in WWII and maybe a 2012 Chevy Bel Air might cost $2500 again.



Originally posted by Ray Karaffa at http://blog.kinaxis.com/2011/11/part-2-does-the-art-of-scheduling-still-exist/

The Dictionary.com definition of sched·ule: a plan of procedure, usually written, for a proposed objective, especially with reference to the sequence of and time allotted for each item or operation necessary to its completion.

 

An early practitioner who became famous in our field, Ollie Wight, described a good, realistic schedule as basic and fundamental to the health and integrity of a good MRP planning process. He also described the aftermath result of poor unrealistic scheduling as the informal systems of hotlists and shortage meetings engulfing the formal planning process. The MRP planning process still exists, today, in its original form, as the foundation of our evolved MRP, Closed Loop MRP, MRPII and ERP systems.

 

Back in 1973, I was a young college graduate living in Columbus, Ohio. I was very fortunate in my first job as a Materiel Controller (Buyer/Planner) to work with the first computerized MRP software package developed by IBM and APICS, the IBM PICS (Production and Inventory Control System) Package. During those two years I learned a lot about the computerized MRP planning process and wondered how this complicated and detailed process was ever achieved prior to the invention of the computer.

 

IBM in cooperation with APICS modeled this software package from the most efficient manual planning processes of manufacturing companies such as Steelcase and Black and Decker. These manual planning systems utilized Fixed Lead Times for purchased parts and a combination of fixed and variable lead time elements (fixed move, queue, setup and variable run time per unit) for the manufacturing lead times of make assemblies. Mfg. LT = Move + Queue + Setup + (Order Qty. * Run Time per Unit).

 

A week after being walked out the door due to the 1975 recession I found employment again in Columbus, as an Inventory Control Analyst (Shop Floor Scheduler) for a heavy equipment manufacturer of electric driven coal mining machinery. This company was in business since the late 1800's and it was there I found the manual planning process that preceded computerized MRP planning. It was a complete manual MRP planning process utilizing Acme Visible index cards with lots of clerks running around posting entries to transactions.

 

I had to be totally retrained by some senior schedulers who wore green cellophane visors as headwear and striped long-sleeved shirts with arm bands. I thought to myself that these were the type of schedulers who planned the production of the bombers of WWII and the 1957 Chevy Bel Air. Wow!

 

There was one retraining session that will always remain in my mind. The senior scheduler was judiciously studying one of his ledgers and said to me "Here, we have to create two manufacturing orders for this gearbox assembly, a 10 piece order for final assembly and a 5 piece order for a spares requirement. They are both due on the same due date but we have to release the final assembly order on June 1 st and the spares order on June 15 th".

 

I questioned him and asked since the orders were both for the same gearbox and due on the same date, why not set the release dates the same for both orders? He stated that the orders were for different quantities and releasing them both on the same date would unnecessarily overload the broaching and Bridgeport machining operations. He was doing CRP in his head! He was also using the true manufacturing lead time elements of move, queue, setup and runtimes so the smaller quantity spares order could be released at a later date than the larger quantity production requirement.

 

The most important lesson I learned from the senior schedulers was the impact of the accuracy of the true manufacturing lead time elements to the success of the overall schedule. The lead times elements had to be accurate with as little padding as possible. Too much padding and you will overload limited resources and start the jobs too early along with bringing in purchased material too soon thus inflating inventory levels. Too little padding or lack of lead time would release the jobs too late and not give the shop floor enough time to complete the orders on time. Too little manufacturing lead times also schedules the purchased materials in too late and then when the informal shortage meetings are held you are in a constant expedite mode to move up the jobs on the shop floor and pull in the purchased material.

 

Stay tuned for part two tomorrow where I'll discuss Manufacturing Lead Time Overrides.



Originally posted by Ray Karaffa at http://blog.kinaxis.com/2011/11/part-1-does-the-art-of-scheduling-still-exist/

Are you holding your supply chain data hostage in siloed software solutions or data warehouses? It's time to use all of that data to your advantage. Organizations work hard at collecting all of the data but what happens next? Yes, that's right...non value added activity extracting data, merging information between systems, waiting for results and guessing at decisions.

 

Imagine what it would be like if:

  • Every one of your employees made a difference every day
  • Every one of your stock holders could see the difference every day
  • Every one of your customers would want your difference every day

 

Sounds idealistic but supply chain practices need to improve. One such idea that is being turned into reality within many supply chain organizations is that of a control tower. You immediately think of an airport control tower and that is very similar to a supply chain control tower. Air traffic control is fundamental in the airline industry so why wouldn't we embrace this role in the supply chain? Think of the complexity across multiple industries today — aerospace, high tech, pharmaceutical, retail, CPG, industrial.....Organizations are global in nature with numerous distribution centers, manufacturing centers, inventory stocking locations and very very volatile demand. How does that get managed without a control tower? Unfortunately, we are conditioned in supply chain to think in silo's. Siloed software solutions, siloed geographies, and siloed business processes.

 

A control tower solution integrates all of these silos. It does the monitoring and provides predictive visibility and the "Supply Chain Traffic Controller" is alerted to conditions that require their attention and works with others to resolve the conflicts. It can support numerous supply chain processes from demand planning, to supply planning, project management, and P&L. Processes that will improve the overall effectiveness of the supply chain become part of that organization's control tower.

 

If you haven't already you will hear about visionaries within supply chain organizations, analysts and software companies working together to deliver state of the art control towers. I highly recommend Capgemini's article on Global Supply Chain Towers ( full report).

 

I am interested in your opinions. What do you see as opportunities or challenges in implementing a control tower approach in your organization?



Originally posted by cmcintosh at http://blog.kinaxis.com/2011/11/are-you-holding-your-supply-chain-data-hostage/

 

Balancing supply and demand of anything is everything.

 

We have been using that phrase for some time now and it resonates more with me everything I see it and think about it.

 

It doesn't even just apply in business, but in life in general. Monthly finances. Deciding on vacations. Decisions on career path. Many even apply this to personal relationships — "they have had us over for dinner the last two times, we are overdue to have them."

 

In business it is even more obvious. It is true across all business functions and across all industries.

 

IT has to balance budget and resources (supply) against the top priority business needs (demand). HR has to balance hiring of the right people at the right time (supply) against the goals of the business to support customers (demand). Finance has to balance the needs of the growth of the business (demand) against the revenue and investment income (supply) the company generates. Product and R&D organizations have to balance customer and market requirements (demand) against the resources available to them (supply). Most of the other areas of the business should be even more apparent.

 

It is also true of industries. Whether companies are in high tech, consumer products, retail, life sciences, automotive, industrial, oil and gas, or agriculture — it remains the same — balancing supply and demand is everything. It is also true when you think about balancing people and their skills. It is true of consulting and construction. It is true for every industry.

 

Another strong belief we have at Kinaxis is ... business is complex, your IT systems must not be.

 

With these in mind, I want to ask all business leaders one straightforward question ...

 

What if you revisited all your software, IT and consulting spending and rethought it in the context of ... how would my business look if I had a single demand/supply balancing engine and process that went cross all functions and allowed me plan, monitor and respond to deviations from plan in near-real time?

 

Think about it.

 

'til next time ... Kirk



Originally posted by kmunroe at http://blog.kinaxis.com/2011/11/my-first-90-days-day-87-balancing-supply-and-demand-of-anything-is-everything/

https://blog.kinaxis.com/wp-content/uploads/2011/11/Stressed-Desserts.jpg This is a quote attributed to Ernestine Ulmer, an American writer born in 1925, that my middle child, a son, has lived by since his birth, though I suspect his sweet tooth has little to do with a philosophy of life, but is rather a life choice.

 

 

 

What I really like about the quote though is the combination of a realization about life, followed by a radical shift in behavior.

 

 

 

As importantly, from an operations perspective, is that the quote the neatly captures two really important concepts in planning, namely:

 

  • How certain are we that the plan represents reality accurately?
  • How will we behave when we know the plan is never accurate?

 

 

 

Life is Uncertain

 

 

 

Years ago, I had an on-going discussion with a colleague about the importance of uncertainty in any model. The topic was about how likely it was to achieve a plan generated by a model.Think of likelihood as a measure of the accuracy of a plan. It turns out that the likelihood is scarily small, and gets smaller as the time horizon expands.Correctly, my colleague said that people wanted certainty; they didn't want to know that it is unlikely that they would ever achieve the plan they put in place. He is correct in that people don't want to know this, but incorrect that they shouldn't know this. They should know and develop different competencies and skills.

 

 

 

We all need to plan. That the plan is not 100 percent accurate is not the problem. The fundamental problem is that we behave as if the plan is 100 percent correct. This is manifested in the fact that we even develop metrics such a 'Plan Conformance' or 'Plan Adherence', and measure our factories and supply chains as if these are attainable. How silly is that?! Einstein's definition of insanity is Doing the same thing over and over again and expecting different results. If we know that the plan is never 100 percent correct, why behave as if it is? Why not also develop the competencies and skills to respond profitably and quickly to real conditions, which often don't match what we anticipated through our planning process.

 

 

 

I believe that 'uncertainty' is a more fundamental concept than 'volatility', in Operations in general, and in supply chain specifically. Clearly Ernestine Ulmer would argue that uncertainty is a fact of life. Industry/market trends such as demand volatility, globalization, escalating customer expectations, shortening product lifecycles etc... only serve to amplify the underlying uncertainty.But uncertainty was always there whether for demand, capacity, quality, supply, lead time, or any number of other factors that go into the models used to create plans for our companies. The most succinct way to capture the result of this uncertainty on these models is GEP Box's quote that

 

 

 

" Essentially, all models are wrong, but some are useful ."

 

 

 

Uncertainty and the consequent model inaccuracy are themes I have been writing about for some time, including my latest blog and in terms such as " embrace volatility", " embrace complexity". Complexity and volatility only exacerbate the fact that the model is inaccurate and therefore the plan is inaccurate.

 

 

 

Eat Dessert First

 

 

 

If I were to define a tag line for Kinaxis, it would be "Plan, Monitor, Respond." The importance of this line is the implied equal importance of these three competencies in https://blog.kinaxis.com/wp-content/uploads/2011/11/bike-fail.jpg tandem. This is a very important shift to recognize the importance and value of being able to detect quickly when and where the plan does not intersect with real life, and then be able to respond quickly and profitably. It is not enough to develop world-class planning skills in isolation. We must develop the competencies and skills to reduce the time to detect that our plans will not be realized, and the competencies and skills to reduce the time to correct by demand or supply shaping, or by modifying our plan.

 

 

 

This is a big change in approach because in life it seems unnatural to anticipate the worst and to change our behavior accordingly. When we teach our kids to ride bicycles we teach them how to stay on the bike, not how to anticipate when they are going to fall off and how to roll when they do, so that they hurt themselves less. And yet, we buy insurance to cover medical bills in case they fall and break an arm. This behavior is predicated on the assumption that all kids can learn to ride bikes well enough so that in nearly 100 percent of the time they will be able to ride their bikes without incident, and insurance is there to cover the 0.1 percent of the time when they fall off.In other words our behavior is predicated on the assumption that our kids will only injure themselves very occasionally.

 

 

 

How would we behave if our kids fell off their bikes 30 percent of the time they went riding? What if they fell 50 percent of the time? One natural response is to teach them to ride better and therefore fall less frequently. How would we respond if after 10 years of trying, they were still falling off 30 percent of the time they rode their bike? (I reference the Terra Technologies study on forecast accuracy in this context.) Would we not at some point want to teach our kids to anticipate when they are going to fall and how to fall to minimize injury? One logical response is to tell our kids that they cannot ride a bike, but that isn't possible in the real supply chain world. So aren't we duty bound to teach our supply chains not only how to ride better, but also how to anticipate that they are going to fall, how to fall gracefully to reduce the likelihood of major injury, and most importantly, how to quickly get back up and on the path?

 

 

Originally posted by tmiles at http://blog.kinaxis.com/2011/11/life-is-uncertain-eat-dessert-first-great-supply-chain-lessons-from-a-chef/

I was reading an interesting article a while back in Bloomberg Business Week by Victoria Taylor titled Supply Chain Management: The Next Big Thing? The article highlighted the emerging trend by undergraduates in seeking supply chain management studies, and colleges and universities are responding in kind by increasing the variety of courses relating to various aspects of supply chain management. It pointed out that this trend was being fueled by the demand for qualified professionals to manage the complexities of today's globally integrated supply chains.

 

Taylor, while highlighting the growing importance of supply chain management positions in global companies, noted the creation of new C-Level Supply Chain positions in these same companies. However, she quoted William Verdini, an associate professor and chairman of the Supply Chain Management Dept. at Arizona State University's Carey School of Business, who pointed out that, "Many of the current supply chain managers are transplants from other parts of their companies, with no formal schooling in the discipline."

 

So what are the potential risks of filling these roles with managers from other parts of the business?

 

To understand the potential risks, one must understand the key ingredients which make C-Level Supply Chain Executives successful. A good white-paper written by William V. Fello and Peter Everaert for Korn/Ferry International, " The New Supply Chain Executive: Using the Integrated Supply Chain as a Competitive Weapon" lists five ingredients:

1) A seat at the strategic decision-making table

2) Cross-functional expertise and relationships

3) S trong customer and supplier relationships

4) A global mindset

5) Demonstrated success as a change-agent

 

When you examine the list, two items stand out as the greatest potential risks: Cross-functional expertise and relationships and strong customer and supplier relationships. The reason is that it would be extremely difficult for someone who hasn't spent significant time managing the supply chain to have a deep understanding of the supply chain processes and the internal motivations and politics of various customers and suppliers alike. The risk would be a supply chain strategy that lacked cohesion, recognized critical challenges, and lacked the commitment of sufficient resources. Often this results in a supply chain strategy that is nothing more than a disparate list of key initiatives.

 

So what are the potential rewards of filling these roles with managers from other parts of the business?

 

Back to the previous five ingredients, the very last one, demonstrated success as a change-agent combined the first ingredient, a seat at the strategic decision-making table can bring in a fresh approach and, with it, the commitment to see that approach to completion. Typically change-agents are self-described students. They study the problem, they take input, the examine alternatives, they weigh consequences, and then they create a vision. The vision is simple but it focuses the efforts of the team and prioritizes the commitment of resources. When you combine this with executive support, positive change is almost always the result.

 

An excellent example of a change-agent coming from another business (though not a C-Level supply chain one) is Steve Jobs when he took over The Graphics Group which later became known as Pixar. His initial intent was for it to become a high-end graphics hardware company. Not that much of a stretch for a hardware guy. However, here was a smart, creative, driven technology change-agent who pointed his company in a new direction. What he needed to know, he learned. What he didn't need to know, he appreciated the complexity and how it impacted his success. The people talent he needed, he found. If something didn't work, he understood why and then went in a different direction. He established a vision and then changed the computer animation world forever. He was a change-agent who was also the head of the dtrategic decision-making table.

 

My own entry into supply chain management is another example of taking a job without being grounded in the fundamental concepts. My formal schooling was in Engineering Physics and, after serving four years as an Army Officer, my first civilian job was two years of hands-on manufacturing management experience. At the time, I felt more than prepared for a new challenge when my Plant Operations manager asked me to take the newly created Inventory Control manager position. The reality, however, was that I didn't have a clue as to what I was doing or what I was getting myself into. Even worse, I was trying to establish inventory control in a factory that didn't understand the meaning of the word 'control.' Fortunately for me, my boss had confidence in me and gave me time to learn and fill the void. What followed were countless hours of APICs training, materials management conferences, reading books on materials and supply chain management, trial and error in the real world, and, most importantly, understanding the fundamentals of the processes and how ingredients are needed to effect change.

 

Fortunately for me and my boss, his gamble paid off. I had dramatically transformed the way that inventory was managed in that factory and in-turn dramatically stabilized the ability to plan production due to the accuracy of the inventory. Assigning me the position was a risk, but from his perspective, small and manageable since the factory was going from nothing to something. Fifteen years later, that very same company and plant, could ill afford to have someone so under-qualified in such a key role without jeopardizing their ability to consistently produce and meet financial expectations. A young smart guy with a lot of passion is no substitute for a highly qualified practitioner of supply chain management.

 

In my nearly 20 years in the industry, I have met a few supply chain managers that have not made the same investment in educating themselves. Sadly, some do just enough to survive and become masters at managing up. They feel they can 'task manage', conference call, and brow beat their way through the problem without educating themselves in the fundamental concepts, the process intricacies, and the drivers of risk in their supply chain. They focus on the near term and rarely make investments for the long run. At best, they will be able to continue to steer the ship in the same direction. At worst, they will not be able to course-correct and the ship will run aground. More often than not, they tend to blame the crew and the ship itself.

 

Personally, I welcome more formally educated practitioners into the profession. My hope is that upon a strong formal educational, with time and additional experiences in the trenches, they will have the foundation needed to be in the next generation of C-Level supply chain positions. They will focus on substance and see through the smoke and mirrors. They will lead and innovate instead of turning the same levers and expecting a different result.



Originally posted by rstappert at http://blog.kinaxis.com/2011/11/tomorrow%e2%80%99s-supply-chain-leaders-%e2%80%93-do-they-know-the-fundamentals/

http://chipdesignmag.com/lpd/files/2011/10/660px-Supernova-1987a.jpg https://blog.kinaxis.com/wp-content/uploads/2011/11/space-300x272.jpg While driving around town on Saturday doing some errands I had the radio tuned into a CBC program appropriately called Quirks and Quarks. Luckily my daughter wasn't in the car otherwise the radio would have been tuned into one of the pop music channels and I would have missed a really interesting discussion by Lisa Randall, whom the NY Times describe as " ... a professor of physics at Harvard and one of the more original theorists at work in the profession today."

 

What caught my attention, and made me late for an appointment, was when the discussion turned to what was right or wrong about Newton's Laws of Motion and Law of Gravity, which are so apparent in our everyday lives. I am an engineer by training and therefore I have a greater interest in the pragmatic than the theoretical, so when Prof Randall challenged the interviewer's comment that Newton's Laws have been proven to be wrong I was very interested. Prof Randall's comment was that it isn't so much that Newton's Laws are wrong, but rather that they do not apply in all circumstances. In the scale of everyday life — time, size, distance — they are extremely good at predicting, for example, the flight of a football out of Tom Brady's arm, to the distance a car will take to stop given its speed and the surface area of its tires on the road.

 

Prof Randall went on to explain that it is at large distances (universe scale distances), high speeds (approaching the speed of light), and very small distances (micro-atomic sizes) that Newton's Laws fall apart. The pragmatic engineer in me scoffed "who cares?!" But she had a really interesting point that at high speeds, the more fundamental theory that emerges is Einstein Law of General Relativity. And if we go to really small distances, the more fundamental theory that emerges is Quantum Mechanics. She went on to say that while we wouldn't ever calculate the trajectory of a ball using anything other than Newton's Laws, these other theories are more fundamental. Of these, Prof Randall says that Quantum Mechanics is " ...more violating to our intuition...the idea that there are probabilities rather than definite predictive statements." Perhaps most intriguing to me is "dark matter", which Prof Randall says is " ...defined by the property that it interacts weakly. It interacts gravitationally, but it doesn't interact with light...so it can't be detected."

 

So what has this all to do with supply chains? Well little directly, but there are analogies that bring out concepts that aren't necessarily new, but are not that well understood.

 

First and foremost is that for the most part, we treat the supply chain as if it conforms to the APICS definition of Manufacturing Resource Planning (MRP II), which I see as the equivalent of Newton's Laws, meaning that MRP II certainly has merit but does not necessarily apply or is sufficient for all circumstances, and I contend that the number of circumstances in which MRP II is relevant is diminishing. I include the Oliver Wight standard supply chain planning processes in this perspective. For the most part MRP II can be used to generate a good plan. But, and it is a big but, the business context in which we operate supply chains has changed sufficiently so that we need to reevaluate some of our approaches to the topic.

 

So what is different? https://blog.kinaxis.com/wp-content/uploads/2011/11/diagram-blog-nov-14-233x300.jpg

  • Large Distances/Dark Matter
    Globalization and outsourcing have extended supply chains to the point that many products have circled the world several times by the time we buy them from a retail shelf. And the full effects and costs of moving materials such large distances are only recently being understood with concepts such as Total Landed Costs (TLC), but as the article referenced points out, TLC is not easy to calculate because of constantly changing fuel prices and labor costs, but more importantly because there are so many factors that go into getting an accurate measure of TLC that the author states " I wondered if it was even possible to accurately calculate a company's true landed costs."

     

    If you can't measure it, you can't manage it.

     

    Well, not to the degree to which we would like to think we can manage it. And I contend that the degree to which we can measure and manage TLC decreases exponentially with an increase in globalization and outsourcing, which is consistent with Complexity Theory. This is because not only is it difficult to get a good initial/annual measure of TLC, but also that the variables that go into calculating TLC are changing constantly and, in some cases, are barely recognizable from the assumptions made a year ago during a budgetary cycle.

  • High Speed/Relativity
    Ok, so I am a late Boomer, and every generation has thought that life progresses more quickly, but few can argue with the fact that especially since 2008 we have seen huge and frequent swings in business cycles compounded by natural disasters. In fact, we can extend this observation to the mid-1990's as the internet began to take root. As an aside, I had a great-grandmother who died at the age of 98 in 1974, so she would have been born in 1876. In her life time, she experienced the advent of electricity, cars, steam ships, television, telephone, x-ray, penicillin, ... Wow. Back in modern life, we see the ever shrinking product lifecycles coupled with the ever shrinking dominance of companies. Who would have predicted in 2005 that by 2010 Microsoft would be a "has been" in terms of driving innovation and change? Oh, I know there are lots of people that will raise their hands now and say "I did. I did." But these voices were few and far between in 2005.

     

    Perhaps we haven't reached the point of warping the time and space continuum, but it does feel to me that we have reached the point that the speed of business has increased to the point that we need to examine the processes and manner by which we operate companies. I am definitely hearing a lot more about rolling budgets, quarterly budgetary cycles, and even ad hoc or continuous budgetary cycles. I am definitely hearing and reading a lot about the merging of Financial Planning & Analysis (FP&A) with Sales & Operations Planning (S&OP). Perhaps I am hearing about these two processes being executed in lock-step whereas in the past there was minimal interaction.

     

    By warping, I mean changing processes to accommodate the speed of business. We cannot accommodate new scales of speed using organizational structures and business processes designed in the mid-1900's.

  • Small Distances/Quantum Mechanics
    This is the one that is really near and dear to my heart, because, as Prof Randal says, this is the one that challenges our intuition because of "...the idea that there are probabilities rather than definite predictive statements." Most of us who work in supply chain management or operations are engineers, if not by training, then at least by nature. We believe in things that are tangible, measurable, predictable. So what do we do with systems that are not fully predictable? We assume that they are predictable, and, even worse, we act as if they are predictable. The most obvious of this phenomenon in business is the uncertainty related to the revenue/sales forecast. We use terms such as demand variability or demand volatility instead because they imply that yes, demand is variable/volatile, but it is predictable, if only we knew all the variables required to predict demand exactly. But the term uncertainty makes us feel, well, uncertain. How can we have confidence in our models if we are uncertain about a key input variable?

     

    But uncertainty permeates supply chains and operations. From yield uncertainty, to cycle time uncertainty, to transportation lead time uncertainty, to new product adoption uncertainty. And many more. I contend that we are far better advised to focus on the skills and processes required to be agile in the face of uncertainty than in the effort to understand "all" the causes of uncertainty and, by extension, to try to remove all uncertainty from our understanding of the market conditions in which we operate.

     

    Planning is important, but the skills and processes for early detection of discrepancies between reality and what we predicted, and the agility to respond quickly and profitably to these discrepancies should be equivalent skills.

     

    Let us learn how to absorb and respond to uncertainty rather than thinking we can design it out of our operations and processes.

 

My take is that each of the concepts that Prof Randall described as challenging Newton's Laws have an equivalent not only in supply chain management, but more importantly in the more general concept of Business Operations, which, in Wikipedia, is defined as:

 

The outcome of business operations is the harvesting of value from assets owned by a business. Assets can be either physical or intangible. An example of value derived from a physical asset like a building is rent. An example of value derived from an intangible asset like an idea is a royalty. The effort involved in “harvesting” this value is what constitutes business operations cycles.

 

As we can see from this definition, supply chain management is a more specific definition of Operations applied to companies that have physical products, but even in these companies Operations is a broader concept that relates to the business activities that even manufacturing organizations carry out in order to satisfy customer demand and, hopefully, make a profit, including Marketing, Product Design, etc.

 

In other words, balancing supply and demand of anything is everything.

 

As always I welcome comments, arguments, and contrary opinions. They drive our collective learning.



Originally posted by tmiles at http://blog.kinaxis.com/2011/11/the-quirks-and-quarks-of-the-supply-chain/

 

In my last blog post, I spent some time explaining why both "Good is the Enemy of Great" and "Great is the Enemy of Good" (paraphrasing myself here) can be true depending on how, when and where you are applying them.

 

Well, I think "Time is the Enemy of Everything" when applied to business pretty much always holds true. (OK, before getting into the meat of the blog, I am going to assume that releasing high quality products and services are always the goal when I make this statement. Clearly, rushing a product to market with no concern to quality is not a good idea.)

 

Back on point, I am hardly the first or most informed to take up this topic. In a blog post from December 2009, Trevor Miles referenced a 1987 article from George Stalk Jr, formerly of Boston Consulting Group. I think Stalk captured the point about time best with the following statement, "Response time is the secret weapon of all businesses. In fact, a company's overall competitive advantage is directly tied to response time, more so than other performance differences."

 

Stalk has a number of "Rules of Response" — very objectives measures of the impact of time lag — which can be found in the link in the article referenced above. I am going to focus a little less on numbers and more on general time-reduction activities in my approach to this subject.

Let's look at the three outcomes that we state, andare confident that companies will achieve, with RapidResponse Control Tower. The outcomes we have stated are:
  • improved customer service
  • reduced risk and
  • improved financial returns (both revenue and cost).
If we took a look at "how" we help our customers achieve these outcomes, the statements might be more precise if they were stated as:
  • reducing thetime torespond tocustomerrequests
  • time to detect and correct (or at least mitigate) risk situations
  • reducing time to achieving financial results.

 

In thinking aboutexamples of where reducing cycle times have a significant impact of business operations, I can't actually think of any examples of where reducing cycle times don't have a significant impact!

 

Reducing…time to market on new products; time to respond to customer inquiries and complaints; time to hire onboard and train new employees; time to collect cash; time for contractors to get started and co-ordinated for the next phase of a project; time to move inventory; time to get raw materials into finished goods. I could go on, but I worry about the amount of data for readers without 64-bit browsers.

 

Look, I realize everyone fundamentally gets the concept, but why have improvements in cycle time reductions across all these areas been so modest over the last decade?

 

Many people get it. Processes — through process (re)engineering, lean, six sigma and other quality intiatives- have gotten better. Maybe there just hasn't been the technology to allow for integrated planning, rapiddetection of deviations from plan (due to either internal or external factors) and responding to these deviations to allow for critical course corrections. That is, technology to drive time out of the system.

 

To close, am I suggesting that if a company has a solid strategy, that reducing time to...well...anything is THE competitive advantage? Maybe I am.

 

One last point to help reinforce the pointof thistime reduction theory is to ask if it has held up over the course of time.

 

The most simple expression of the concept may be a Benjamin Franklin quote, "Time is money.” The same Benjamin Franklin who died 73 years before Henry Ford was born and 165 years before the birth of Steve Jobs and Bill Gates.

 

til next time ... Kirk



Originally posted by kmunroe at http://blog.kinaxis.com/2011/11/day-71-in-business-time-is-the-enemy-of-wel-everything/

Just a quick post today to share a recent Industry Week whitepaper sponsored by Kinaxis titled "It's Time to Embrace Volatility." This paper is about how response management can help an organization embrace market volatility— or at least manage it —by becoming risk robust. You can get your own copy of the whitepaper here: http://www.kinaxis.com/campaign/time-to-embrace-volatility/?submit

 

Here's a small abstract from the paper:

 

"The ability of ever more sophisticated algorithms to make a perceptible improvement in supply chain performance is nearing its limit. In today's volatile demand environment, response management solutions present a largely untapped opportunity to maximize profit potential by optimizing day-to-day execution. "

 

The paper also features response management case studies on Jabil and Aviat Networks.

 

Here on the 21 st Century Supply Chain Blog, we're no strangers to volatility. In fact, we've been talking about embracing volatility for a while! Here are a couple of posts:

 

VUCA, a useful acronym for today's supply chain

 

Embrace Complexity



Originally posted by lsmith at http://blog.kinaxis.com/2011/11/its-time-to-embrace-volatility/

I saw this post over at the Sourcing Innovation blog. It links to an excellent article with the catchy title of " Don't let this happen to you!" on Supply and Demand Chain Executive. It brings to the forefront thoughts I've been having over the past little while. It amazes me that every once in a while we're approached by a company that has built staggeringly complex spreadsheets to do basic planning. I'm glad that they've come to realize that a spreadsheet is no way to run a multi-million dollar company, but at the same time...wow. The more surprising thing is how many mid-size to large companies are out there that still do large portions of their planning on spreadsheets and haven't realized the peril they are in.

 

So...what's wrong with using a spreadsheet? I've approached this issue in an earlier blog post where I linked to a study that shows that 80-90 percent of spreadsheets contain serious errors. The article on SDC Exec gives some real life examples;

  1. A high-volume software company unwittingly threw $20 million annually into the scrap bin. The culprit was a hidden, and devastating, spreadsheet logical error that systematically triggered over-ordering seasonal printed materials.
  2. A financial services firm underestimated support center demand by over 250 agents, roughly 25 percent of total demand. Only very fast action was able to turn around customer comments like, "I can't get tech support and I hate your company!" Formula errors and inappropriate assumptions had negated demand associated with deploying a new service platform.’
  3. The national build-out of a digital service network was beset with months of delays and millions of dollars in lost revenue. Spreadsheet-based material planning and execution tools were overwhelmed with the size and complexity of the job.

 

I'm not anti-spreadsheet. In fact, I consider myself to be an Excel wonk. I've built some honkin' big spreadsheets in my day, including pages of VB script. In retrospect, many of these would have been much better suited for a proper enterprise application.

 

So how do companies get into a position where decisions worth millions of dollars are based on some guy's error-prone spreadsheet? It certainly doesn't start out this way (I can't imagine an IT organization when asked to source a planning system would propose a spreadsheet written by the guy down the hall...) No, what typically happens is that some creative individual, tasked with a small but challenging problem that their ERP system can't handle, creates a simple spreadsheet that solves the problem. Then, as the company grows, and challenges change, the simple spreadsheet expands, evolves, becomes more complex until eventually, you have a multi-headed Hydra lurking in your business processes.

 

The SDC Exec article has some tips to mitigate some of the risk associated with using spreadsheets...but I think the most important advice is to review your processes. For each key process that is spreadsheet based, plot the business process and the complexity of the spreadsheet (Execution Risk) on the matrix shown.

 

https://blog.kinaxis.com/wp-content/uploads/2011/11/spreadsheet-blog-300x233.jpg

 

If your process approaches the top-right, then it should not use a spreadsheet. Obviously a simplification but it gets the idea across.

 

There will always be a need for spreadsheets. They offer a fast way to model simple processes. However, complex, high impact decisions need more robust tools. What do you think? Are spreadsheets a risk? Comment back and let us know.



Originally posted by jwesterveld at http://blog.kinaxis.com/2011/11/when-spreadsheets-go-bad/

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