Skip navigation
2012

For many companies, it remains a significant challenge to bring projects in on time, on budget, and delivering expected results. This is particularly true for organizations that manage large, materially-intensive projects. Many software tools and solutions are available that support Project Management but very few fully model the interdependence between projects and material supply, a key project resource. Businesses that do have the ability to link project schedules to the supply chain can actively manage the impact material availability can have on project schedules.

 

Problem – Changes in material supply, product orders, customer forecasts, or staffing resources can have a significant impact on project schedules in terms of having to accelerate or delay project delivery. Often, these supply and demand changes take too long to show up in project management schedules, resulting in missed milestones, “throw away” work, penalties, and cost overruns.

 

Need – Enterprises need a single management system that breaks down the silos between human resource management, supply chain management, demand planning, cash management, and project management to ensure that physical and human resource utilization is maximized."

 

In fact, we've just published a white paper on this very subject. The paper describes an integrated approach to project management which enables an organization to model all their projects and their entire supply chain together in one environment. I recommend checking it out to understand the business case for linking project management to the supply chain and to understand the specific capabilities that should be included.

 

With the question of why integrate project management with the supply chain answered, I offer some further insight into the how . In this, and upcoming posts, I'll walk through the various considerations for establishing the link.

 

Implementing the New Link between Project Management and the Supply Chain.

 

Implementing Project Management tools linked to the Supply Chain is similar to the move from stand-alone MRP tools to integrated ERP solutions. In a MRP to ERP transition, a major challenge is bringing finance and supply chain/operations departments together to understand each other's data and functional needs, then configure both software and business processes to meet the new requirements.Adding project management to the mix and linking this function to the supply chain/operations and finance groups (who are hopefully already running flawlessly together in their connected ERP environment) presents similar challenges.

 

Implementation Success Factors
Successfully integrating project management capabilities with supply chain data includes;
1. Identifying variable(s) linking project management to the supply chain.
2. Knowing/Managing the data that impacts the linking variables.
3. Defining linking strategies.

 

Identifying key variable(s) should be the first focus. A 'key' variable is one that if it's changed by one department, the change impacts decisions and metrics used by another.

 

For example, when shifting from MRP to ERP systems, a key variable is the goods movement transaction. Once linked, goods movement transactions result in real time shifts of assets in financial summaries. In a RapidResponse example, the Constraint Management Resource was added in a recent release; key variables linking the Constraint Management Resource to Planning Resources were constraint capacity variables. If constraint management is utilized, real time changes in Planning Resource data occurs as constraints are changed.

 

With the introduction of the RapidResponse Project Management Resources, the key variable linking it to RapidResponse Supply Chain Resources is the linked order 'Material Availability' date (the date an order is expected to be available given other supply chain dependencies. This often varies from an order due date). Changes in material availability can be configured as a hard link to immediately automatically shift project management tasks in or out, or a soft link to allow for warnings when out of sync that must be manually acted upon.

 

In all of these examples, configuration settings and business processes for the existing software/RapidResponse Resources were defined before the new linked software/Resources were adopted. They weren't initially set-up to meet needs of linked software/RapidResponse Resources/departments. In the pre-implementation phase it's time to re-evaluate, and as needed, re-design business processes and software configurations to ensure the key linking variables meet goals of all parties to minimize "discovering" them in the course of normal daily work.

 

In this latest integration effort, one doesn't want to link project management tasks to orders without first communicating with the supply chain group to understand how material availability changes over time. In some cases, shifts in order material availability may be the 'exception' that project management should be aware of immediately. However, in other cases, material availability may have significant swings on daily/weekly basis. Are both situations acceptable to directly impact a project management schedule with a hard link? Should a soft link be used where only warnings appear to be manually reacted upon in the Project Management Resource? What is the root cause of the variance and should/can it be eliminated? All are good questions for...

 

Future Posts...

  • Do you know your data?
  • To Link or not to link. That is the question.

 

 



Originally posted by Dan Nowicki at http://blog.kinaxis.com/2012/09/another-link-in-the-chain-connecting-project-management-to-the-supply-chain/

Control Towers, perhaps the most important concept to come out of Supply Chain Management practices in some time, is a concept in desperate need of definition and description. Aberdeen recently ran a survey of Business Intelligence (BI) looking for answers, and came away with some great insight and good direction. But BI does not provide the technology capabilities that were identified by Aberdeen as necessary to support a Control Tower. I'll explain later.

 

In the Aberdeen report, Supply Chain Control Towers: Concept and Impact , Bryan Ball defines the supply chain issues driving the need and interest in Operations Control Towers really well though, and in the process describes some of the key characteristics:

 

What if we could remove all of the information delay in supply chains and operate in real time when it comes to problem solving? ... Responses to "what-if" questions could be determined in minutes rather than hours and days.

 

... the "Holy Grail" of supply chain leaders has always been to remove as much latency as possible in every aspect of the supply chain ... latency results in inventory buffers ...

 

The term "Control Tower" is ... an end-to-end holistic view of the supply chain and near real-time information and decision making .

 

That is my bolding and underlining in the last sentence. This is because Bryan has identified an absolutely key differentiator between a simple alerting system and a Control Tower. The visibility provided by the end-to-end holistic view of the supply chain is a necessary precursor to a Control Tower, but, without the ability to determine how to act (decision making) on the information provided, you do not have a Control Tower.

 

While nice in concept, the question is if removing latency has been the "Holy Grail" for some time, why is there now an interest in Control Towers? The answer lies in the business needs.

 

 

So it is the virtual storm between increasing customer expectations and increasing supply chain complexity that is driving the need for Control Towers. Perhaps more importantly is the process capability improvements that early adopters have achieved with the rudimentary capabilities provided by BI tools.

 

 

It is important to note that in the context of using BI tools to support the concept of a Control Tower, Bryan states that:

 

... we define the improvement in latency as a key to measuring the effectiveness of a Control Tower and we equate this to the "time to problem resolution". This approach goes far beyond measuring the "time to alert" that is often touted by business intelligence (BI) providers and simple event management systems.

 

While undoubtedly a good way of looking at things, the terms "time to alert" and "time to problem resolution" need to be explored some more. Each term starts with "time to ..." indicating the importance of speed and echoing the early statement that

 

Responses to "what-if" questions could be determined in minutes rather than hours and days.

 

Time to Alert — Know Sooner

Key questions that need to be asked about an alert are :

  • To whom?
  • About what?

 

Let's start with what simple event management and BI tools can provide in terms of alerting, which is ample, but not sufficient. They can, for example, in the case of a simple event management system, send an alert to a purchasing agent if a delivery from a supplier is late by, say, a day. BI tools can be used to determine that over the course of, say, the last month the supplier on-time delivery performance has dropped below 95%.

 

All good stuff, but are these isolated pieces of information important? Does it matter to the rest of the supply chain that the delivery is late? If there is a significant impact, who should know? In my example, will the late delivery cause a production line to go down next week because of part shortages? If it will, shouldn't we alert the plant manager? What if the plant manager isn't an employee but rather works for a Contract Manufacturer?

 

It is impossible to determine the future impact of an event without:

  • A multi-tier representation of the supply chain that crosses functions and organizations
  • A multi-tier BOM that links the late materials to end item customer demand
  • Routings, manufacturing capacities, and transportation leg lead times
  • Sourcing and allocation rules
  • Costings for each of the supply chain steps from material supply to end item delivery

 

Simple localized event detection or historical performance analysis will not tell you the impact, if any. This is truly complex event processing.

 

As Bryan describes, one of the primary purposes of an Operations Control Tower is to reduce latency, and yet supply chain complexity is only growing because of globalization and outsourcing. So now you have put multi-tier BOMs and other capabilities into place so that you can determine the end-to-end impact of an event, but who should know? Unless you can determine this very quickly (reduce latency), the downstream/upstream impact information is of little use.

 

This is where the concept of Responsibilities come into play. Knowing who needs to know about an effect, not the event itself, is critically important. Armed with both the ability to determine the downstream and upstream effects or impacts and whether they exceed acceptable control tolerance very quickly, and the ability to determine who needs to know very quickly.

 

BI tools and simple event management systems can't do this.

 

Time to Problem Resolution — Act Faster

 

Undoubtedly knowing something sooner is important. Knowing quickly that this something will have significant upstream or downstream effects is even better, and quickly telling someone that needs to know is significant. So now what do you do? If it takes you forever to determine how to either take advantage of the opportunity of reduce the risks associated with the event you might as well have not known sooner.

 

Remember that a key concept behind a Control Tower is that it is at least multi-functional, and, in many cases, multi-enterprise. So how are you going to resolve the issue at hand when it crosses multiple functions and multiple enterprises with competing objectives and metrics? The Aberdeen survey highlighted complexity as one of the biggest challenges in supply chain driven by global operations and outsourcing. How do you know who needs to know about a situation and who can help you resolve the issue? In a presentation at the Gartner Supply Chain Conference a number of years ago, Angel Mendez, at the time the head of Cisco's Customer Value Chain Management organization, commented that Cisco had something like 20,000 people in their supply chain, only 2,000 of whom worked for Cisco. (The exact numbers may be wrong, but you get the picture.) So how do you find the right person to speak to in this type of end-to-end supply chain. Every minute it takes to find the right person to alert and the right person to help greatly reduces the physical supply chain's ability to respond profitably and quickly to the alert.

 

This is where the concept of Responsibilities comes to play, which is the ability to identify the people who need to know about the event, and also, and more importantly, the upstream and downstream effects of the event, and the people impacted by these effects. For example, if a late supply deliver is going to mean a 2 week delay in delivering an important customer order, it is best to tell the customer before the agreed delivery date. And to correct this situation may require the reallocation of existing raw materials or even finished goods. Alternatively, this situation could be resolved by expediting materials from an alternate supplier, but this needs to be evaluated against the impact on revenue, margin, and customer service of doing so. Spending time finding the right people who can act increases the time to problem resolution.

 

But another dimension to this puzzle that shouldn't be lost is the time it take to come to an agreed course of action that is aligned with multiple, and often competing, performance metrics. This is where What-If Analysis and side-by-side comparison of Scorecards on Dashboards becomes so important. Once you have assembled the team of people that are required to resolve an issue, they must be able to propose changes and evaluate the impacts quickly across multiple metrics. For example, expediting materials from an alternate supplier may wreak havoc on the metrics of the Material Supply department, but may be the best alternative in that it has the least impact on revenue and customer service, and only a moderate impact on margin.

 

If it takes 8 hours to evaluate the upstream and downstream impacts of the proposed changes, let alone getting consensus and approval for the changes, the default behavior of the organization will be seat-of-the-pants firefighting, leading to all sorts of unintended consequences. The team selected to resolve the issue must have a collaborative environment in which they can propose changes, capture their assumptions, evaluate the alternatives, and vote on the outcomes. All supported by a full audit trail to eliminate the 'I didn't know' excuse. And the results of the what-if analysis must be computed in minutes, even seconds, not hours.

 

This is how you can act faster, and with confidence.

 

Outcomes

 

Without tangible results this discussion about the need for Control Towers would be theoretically interesting at best. Which is why I was so interested in the tangible results published by Aberdeen.

 

 

As anyone who reads my blogs with any regularity knows, Cash-To-Cash is one of my favorite supply chain metrics. To put it into perspective, a 7 day difference in Cash-to-Cash to a $10B company means a reduction in capital requirements of $191M. And this is for fairly simple Control Tower capabilities provided by BI solutions that do not extend much beyond simple alerting systems. When decision making capabilities are included in Control Tower capabilities the benefits are even higher.

 

So where are you on this journey to ' an end-to-end holistic view of the supply chain and near real-time information and decision making'? Studies out there indicate that most companies are still at an early stage of maturity focusing on functional excellence with some early stage adoption of cross-functional capabilities exemplified by S&OP. So don't be intimidated by the achievements of the visionaries. It is a journey, but every journey must have a destination, and there is no doubt in my mind that Bryan Ball describes the ultimate Control Tower destination very well.

 

 



Originally posted by Trevor Miles at http://blog.kinaxis.com/2012/09/supply-chain-control-towers-defined-and-described-by-aberdeen/

The Kinaxis bags are packed and we’re ready for a full conference schedule this fall.
Here is the Kinaxis conference line up:
Happening this week is the Automotive Logistics Global,September 25—27, 2012 in Detroit, MI. At this show Kinaxis is a goldsponsors. If you are there, be sure to stop by our table – we will be doing live RapidResponse demos throughout theday.

 

 

We will also be at the LogiPharma Conference: October 9—11, 2012inPhiliadelphia, PA. LogiPharma is the premier pharmaceutical supply chain and logistics event in North America covering a comprehensive range of supply chain topics.

 

The next show on our stop will be the APICS Conference: October 14—16, 2012inDenver, CO.Visit Kinaxis at Booth 512 to learn how from our single product RapidResponse, it enables customers to make both long-term and real-timedemand and supply balancing decisions quickly, collaboratively, and in line with the shared business objectives of multiple stakeholders.

 

If you are at any of these events, please be sure to drop by, or email usto set up an onsite meeting.

 

 

And of course,we will be hosting Kinexions2012 in Scotsdale, Arizona, October 17-19, 2012.Kinexions is our Annual Training and User Conference that brings together its valued RapidResponse user community and Kinaxis partners for an event dedicated to education, networking, and customer appreciation.

 

This year Kinexions was honored as a Gold Stevie® award winner in 2011 in the International Business Awards(SM).Kinexions was chosen for its one-of-a-kind 'Late Late Supply Chain Show' format. Register now to find out what makes Kinexions a Stevie winner!

 

 



Originally posted by Melissa Clow at http://blog.kinaxis.com/2012/09/our-bags-are-packed-upcoming-events-for-kinaxis/

A long time ago, back in the 60's, when early practitioners like Dr. Joseph Orlicky and Oliver Wight both from IBM, first developed computerized Material Requirements Planning (MRP), there was no way of determining whether or not the manufacturing facility even had the necessary capacity to achieve the proposed master production schedule (MPS). Sure, there were some old timerssome company long-timers who, by guess and by golly, would could come up with some rough-cut capacity profile either in their head or scribbled on the back of some envelope to somehow come close to determining the feasibility of the MPS. Eventually, people realized there had to be a better way.

 

Developing MRP — it's all about the lead times

 

In order to computerize a successful manual planning process, guys like Joe and Ollie looked around at the successful manufacturers of the time like Black and Decker and Steelcase Mfg. They realized that the entire scheduling vortex began at the manufacturing order level with the following lead time offset expression: Fixed Lead Time + (Order Qty. * Variable Lead Time). The fixed lead time elements can be broken out into Move, Queue and Setup times and the variable lead time would be the Run Time per Unit. These lead time elements are derived directly from each operation within the assembly's production routing.

 

The variable lead time would give the correct amount of lead time offset based on the quantity of the order. This would allow a much greater lead time offset for a 1,000 piece manufacturing order in relation to a 10 piece manufacturing order and justifiably so. You are not much of a scheduler if you can't give a manufacturing order its due with the correct amount of lead time based on quantity, in order to complete on time.

 

Another aspect that requires the scheduling of the manufacturing order properly involves the Start Date. This is calculated by subtracting the lead time offset from the manufacturing order Due Date. The resulting manufacturing order Start Date is used in the calculation of the Due Dates for all of the purchased components and sub-assemblies that are needed to be picked for the assembly's manufacturing order.

 

So as you can see, all of the scheduling of any manual or computerized planning system completely revolves around this manufacturing order Start Date vortex. And so when the early practitioners were developing the computerized planning processes, this lead time offset expression used by the successful manual planning processes was established as the scheduling foundation of the MRP model. This same lead time offset expression exists in every type of planning software that includes MRP all the way up to SAP planning software.

 

Next step: CRP

 

So much for MRP, the topic of this blog is about CRP or Capacity Requirements Planning. CRP came about in the 1970's when those early practitioners realized they had all of this wonderful operational lead time data available from the production routings. They thought it would be great if they defined work centers and their capacities and netted the manufacturing work order standard hours that flowed through each of these work centers against the defined capacities to arrive at a load profile. This way the Master Production Scheduler could bounce his/her proposed MPS against the defined capacities of all of the work centers. Therefore, the Master Production Scheduler could achieve a "best fit", doable and achievable MPS.

 

And now? Closed loop!

 

Another benefit of CRP is first it calculates the start and finish dates of each operation through each work center so it is the perfect tool for daily priority planning for the work centers on the shop floor via dispatch listings. I have never seen a dispatch list or schedule utilized on the shop floor. Where is the closed loop?

 

The following is a depiction of CRP's fit into the overall Closed Loop MRP of the 1970's with one minor modification to depict the Supply Chain as coming off of the manufacturing order Start Date scheduling vortex of the shop floor schedule discussed previously.

 

CRP has to use the production routing's operational lead time elements of fixed and variable lead times. These are the same lead time elements that are used in the scheduling process lead time offsets. Every company that I have ever worked for has defaulted the variable lead time element within the lead time offset expression to zero (0) thus only scheduling using fixed manufacturing lead times. This makes it impossible to implement CRP and even worse, takes the truth out of the overall manufacturing schedules. So if we are not working towards a single version of the truth, what are we working to?

 

I think that now more than ever, companies need to step up and use good MRP principles. They should use principles such as accurate lead time scheduling and finally close the loop through the utilization of CRP and the generation of work center schedules. The shop floor has been left out of the overall planning process for much too long. Those on the shop floor should be working to the same schedules as those who are procuring the material necessary to complete their manufacturing orders.



Originally posted by Ray Karaffa at http://blog.kinaxis.com/2012/09/do-you-have-the-capacity-for-crp/

 

As one of the 'go to' people for supply chain practitioners when it comes to defining supply chain strategy and determining what tools to use to support the strategy, it is important for us to understand and internalize the Gartner perspective.

 

For many years now they have been using the term DDVN. I believe the definition is very close to the Kinaxis Control Tower perspective.

 

Demand-driven value network (DDVN) is a business environment holistically designed to maximize value of and optimize risk across the set of extended supply chain processes and technologies that senses and orchestrates demand based on a near-zero-latency demand signal across multiple networks of corporate stakeholders and trading partners.

 

My suggested edit to this definition is that it should include a supply signal too, not just a demand signal. The supply signal is important for when you need to respond because supply does not match demand, or when supply changes after the initial demand/supply balance.

 

However, the key DDVN message is that an end-to-end process capability is required in order to achieve supply chain transformation. Satisfying individual functional needs — demand planning, supply planning, inventory optimization etc — will not get you there. What companies need is a single end-to-end solution rather than a hodge-podge of functionally-focused applications loosely tied together with SOA technology.

 

Remember the days when you had a cell phone, a separate calendar device, a paper-based address book, and you could only email from your laptop over dial-up? Remember synching all those devices? Each app had its own device and own UI, and you usually needed multiple synch apps because the synch apps were point-to-point. That is what we have for most SCM solutions today.

 

I like to think of RapidResponse as the smart phone of SCM, bringing this all together into a single solution with no synching required.

 

Unfortunately most companies are still approaching SCM technology from a functional selection perspective. And as a vendor, the challenge is to fight for the opportunity to tell the end-to-end story to those that care about the end-to-end story.



Originally posted by Trevor Miles at http://blog.kinaxis.com/2012/09/the-smart-phone-of-scm-no-synching-sessions-required/


We recently completed a SMTC case study entitled Achieving Supply Chain Visibility, Agility and Alignment.

 

SMTC is a global Electronics Manufacturing Services (EMS) provider having spent more than two decades working in close partnership with diverse Original Equipment Manufacturers (OEMs) in the computer, industrial, communications, consumer and medical markets.

 

This case study provides insights on how SMTC is operating effectively amid a volatile environment by achieving high levels of supply chain agility.

 

As an example, SMTC is able to do quick and deepanalysisprior to making customer commitments. Case in point: for a single, discrete order (or order change), SMTC is able to determine the clear to build based on material status for every single part within two minutes. For a multi-level customer order involving a hundred different SKUs, the entire clear to build analysis can be performed in less than an hour.

 

Years ago, previous to RapidResponse, SMTC's ERP system was databases that produced silo reports, and that were manually consolidated. RapidResponse has brought all sites together, producing a single data source from which to manage operations.Taking a holistic approach to leveraging RapidResponse across the company, SMTC’s use of RapidResponse has evolved and permeated throughout the organization over time.

 

Scott Tracey, VP Supply Chain, SMTC, is quoted in the case study:

 

"We've tailored RapidResponse to our business. It gives us an avenue to continually enhance our processes.RapidResponse allows us a great deal of flexibility to do our own changes without having to make the type of large investments with developers that are typical with ERP systems and their associated modules. Virtually all of the configurations we've made have been done by internal employees that have become RapidResponse power users.

 

I like to think of Kinaxis as personalization tool not a customization tool."

 

To learn more, download the case study here:

 

http://www.kinaxis.com/downloads/customer_spotlight/spotlight-SMTC.html

 

 



Originally posted by Melissa Clow at http://blog.kinaxis.com/2012/09/achieving-supply-chain-visibility-agility-and-alignment-smtc-case-study/

In the 1980's, Europe had what was colloquially known as butter mountains and wine lakes. Farmers in the EU under capitation grants were being paid to produce product for which there was no market. The overhang was enormous, and this inventory glut of unsold butter and wine went on to impact the price industry could command for these products. Europe is still paying the price with what is now known as decapitation, effectively paying farmers to leave land fallow in order to try and manage the supply demand imbalance.

 

China, and more widely the Asian region, is not immune to the global economic downturn despite growth figures their western counterparts envy. Europe & the US are still struggling. China's input and output figures released for August are lower than expected. They have also reduced expected growth rates for 2001/2012 by 1/5 to 1 %. The upshot of this to a regular consumer is quite staggering, and to business worldwide. China is a country of production. If we, and in we, I mean all of us, don't buy, or more accurately can't buy, where does all of the production stuff go? Into warehouses. And that's when the problems really begin. Building inventory mountains is a major problem. Masking the problems and creating falsified growth make it much more difficult to manage. So, what can you do to avoid it, and if not avoid it completely, best manage it?

 

The moral to the story is this: Know your inventory. Here is the key:

 

Make inventory management a direct part of S&OP, not a by-product of the process. There is a difference.

 

With the trend of outsourcing still strong, inventory planners cannot go down to an inventory floor and visually see what they are managing. Your CM's contractual obligations can also be negatively impacting you. Harsh sale or return clauses on VMI (Vendor Managed Inventory) can negatively impact your bottom line. And depending on your forecasting model, you could be contributing to the problem.
Having, and managing key inventory metrics are key to knowing your position, and enabling you to react. Often, S&OP can be implemented with inventory falling out as a by-product of S&OP policy, not as an integral part of it. Linking dynamic inventory management to S&OP is the key.

 

Maintaining strong E&O (Excess & Obsolete) reporting, measuring DoS (Days of Stock) and ToR (Turns of Ratio), reviewing contractual VMI clauses, and closely monitoring forecast accuracy is the best way to keep your inventory glut to a minimum.

 

Forecasting accuracy is the bugbear of the supply chain. With business building to forecast as opposed to real demand, this is shortening lead-times and enabling responsiveness. All good. But, and it's a big but, it only works if you closely monitor forecast consumption and adjust your horizon accordingly. Use market trends to help determine the right statistical model to use. Regardless, historical trends should be an indicator, but not the only consideration. Given economic instability, what was in the past, may not be the future and determining the weight you apply to historical is key.

 

This nicely segues into VMI. Depending on your contractual obligations to your CM— normally a 60 day sale or return policy— you could end up with a large inventory bill on your P&L statement that few companies have the luxury to absorb easily. Ensure your figures look like they should.

 

Trending DoS and ToR of your inventory will allow for intelligent analysis. If the numbers are rising for DoS and lowering for ToR, this should be reflected by your CM's figures and is an indicator of forecast consumption.

 

Growing inventory mountains bring bad news. It reduces product value, negatively effects employment therefore reducing consumer spending power, and floods the market with cheap goods. It is crucial that inventory management is treated within the S&OP process as an integral part of planning strategy, and not a by-product.



Originally posted by Jenny Tyrrell at http://blog.kinaxis.com/2012/09/inventory-gluts-avoiding-butter-mountains-and-wine-lakes/


In the current corporate climate, most companies are seeking to increase market share by flexing their supply chain to meet the needs of both the company and the customer. The question for many corporations comes back time and time again to: How can market share be retained or even post gains with on time performance? Many companies over the last few years have been holding onto cash due the economic downslide along with cutting jobs and any other way of reducing cost. It has been noted that the economy will not improve unless we change that way of thinking. Promoting jobs, promotes spending. It's simple yet complex at the same time. In my opinion, large companies hoarding cash is not the way to stimulate growth in this country.

 

As many of us are aware, supply chain management is a challenge for companies of any size. I have spent many years in both distribution and manufacturing helping to streamline business processes and have learned that it is a continual evolution. In my years of consulting on the business side of things, I always found that effective and innovative Supply Chain Management plays a large role in increasing revenue. Years spent working with implementations of ERP business systems have taught me that there are several ways to increase productivity, reduce costs and streamline business processes from quote to cash. Most focus was spent working with inventory management, procurement and lean manufacturing processes in order to help companies become more profitable. During this time I found that responsiveness to customers is directly linked to capturing more revenue opportunities. The supply chain planning process along with inventory and procurement has always been the focus to increase profitability in distribution. Manufacturing is not much different, just a few more processes, but cost reduction and process improvement in the manufacturing cycle can greatly improve revenue. Sales always seem to have the need to be competitive and so there is very little room there to increase revenue only through pricing measures. Today, with the economy being down makes it harder to increase prices without losing sales and customers.

 

Recently I came across an article by Hitachi Consulting that talks about the "Six Key Trends" for changing Supply Chain Management today. These may be some keys to success, but I believe there is more to it, but it's a great place to start.

 

I believe one way to improve supply chain performance and efficiency is to use technology to continually improve upon business processes. This has become the widely accepted element of an overall business strategy — to improve the supply chain, thus increasing value for the customer resulting in a more profitable company.

 

Let's face facts. We as consumers all look for the same product, but try to find the best affordable price. Corporations know this to be true and must look for ways to cut cost, retain revenue and provide better service and value to the customer so as to retain that customer. Technology plays a vital role in that (and specifically as it relates to the six trends discussed below).

 

Here are the six key trends for supply chain management today highlighted in the article, with my thoughts on a few aspects of those themes:

 

Demand Planning
There have been new approaches to demand planning in manufacturing. Plant level production planning is costly and does not directly influence what products sell most. Instead, having a demand driven focus will influence the sales focus on what products are "wanted" in the market place and therefore drive a more customer focused approach to managing supply chain effectively without sacrificing operational efficiency.

 

Consensus demand planning has become critical as all leaders in a company must be in agreement with a demand plan in order for it to be successful. This requires capturing all influencing factors and cross functional input, such as customer demands, new potential products, product improvements based on market trends and competition, market conditions, current market acceptance and services needed to support such products. These factors need to be continually evaluated and the demand plan must be changed accordingly for continuous improvement and forecast accuracy.

 

Analytic tools available today help reveal the flaws in most ERP systems that can be fixed. The key is to know where to look to find the root of the cause and fix it. ERP systems are designed to "run the business" from 'quote to cash'.

 

For example, MRP will show you what needs to be purchased or made to meet the forecasted demand, but the demand plan could be flawed (and often is) and without the ability to analyze "why", we follow orders based on straight demand from the system.

 

Only after the fact did we realize that we don't need to make 1000 of something. Somehow, a minimum was set wrong or safety was set wrong on the part and no one caught the exception because ERP systems don't warn you that this is not an independent or dependent demand. If we could proactively analyze the supply and demand on an ongoing basis, we could see when there is a problem and fix the root of the problem. Some systems afford the ability to create queries, but again, this is more often after the fact, and by then it's too late, or the queries put too much strain on the system to run often and as needed (MRP takes usually 8 hours or more to run on average).

 

Only after the fact did we realize that we don't need to make 1000 of something. Somehow, a minimum was set wrong or safety was set wrong on the part and no one caught the exception because ERP systems don't warn you that this is not a independent or dependent demand. If we could analyze the supply and demand with tools, we could see when there is a problem and fix the root of the problem. Some systems afford the ability to create queries, but again, this is after the fact and by then it's too late or the queries put too much strain on the system. MRP takes usually 8 hours or more to run on the average.

 

Globalization
The business world is becoming more global both in supply acquisition and sales. This is mostly due to communication, internet and the digital age. A global customer and supply base has greatly affected the supply chain. Most corporations are looking for the best place to manufacture product cheap, without sacrificing quality, as well as looking for the best place to buy supply needed to manufacture product.

 

Container shipment volumes have increased over the years and some ports have capacity issues related to customs or trans-shipping, thus forcing companies to logistically re-route, which has a major effect on the overall cost and efficiency of the supply chain network. Changing the point of entry for inbound shipments can have a positive impact on the "total landed costs" due to factors such as customs clearance times, capacity and better efficiency of transporting materials. Alternate ports would need to be evaluated for supply chain costs and efficiency.
A well thought out global network design can optimize a supply chain network, reduce overall costs and obtain maximum performance due to a better flow of materials to the "end point" — be that a customer or the manufacturing facility.

 

Increased Competition and Price Pressures
As with most brands in the past, if you had a unique product that was in high demand (such as an iPhone) than you could stay ahead of the competition and focus on improvements. However, today that is not enough to remain competitive in the market place (Android is closing in on market share). There are too many competitive products in every category. Price is the factor that is driving demand in most cases due to a challenging economy, but it's not the only factor. People will sacrifice a better product for a cheaper one if they cannot afford it. So to diversify, suppliers can differentiate themselves to OEMs by offering value added services such as VMI, Drop Shipping and collaboration to name a few. Ultimately, better collaboration among OEM, CMs and suppliers across the global network can lend itself to value added services for end customers, which can keep your company competitive by building better relationships with customers. Many consumers do take into account quality, support and services when evaluating products for purchase.

 

Outsourcing
This one is debatable in a lot of areas.

 

Outsourcing some or all of your supply chain can be advantageous if you have all the right control measures in place and manage the process from end to end. But we have seen over time that it can be dangerous and can cause loss of customers if this part of the supply chain breaks down. In my opinion, the US has outsourced too much and it has had a direct impact on the economy. By trying to save money and outsource manufacturing operations, we have caused the loss of jobs and growth to which in the end, has resulted in less US revenues for companies, because many individuals have curbed their spending.

 

However, one can outsource certain parts of the supply chain and be successful. Many factors come into play such as, provider selection, competency, performance, capacity limitations and financial due diligence on the provider/supplier to name a few. There also must be focus on proper management, communication and control variables of outsourced providers and process, this would be key to manage the processes efficiently and be proactive in monitoring the various components of this particular outsourced supply chain part/product line.

 

Sometimes outsourcing can be harmful if not properly managed and can affect the breakdown of the complete supply chain.

 

Shortened and More Complex Product Life Cycles
This one key trend in my opinion is the most challenging. Companies looking for the cheapest method to manufacture, as well as the cheapest components to build their products in order to keep the cost down, are taking risks that far outweigh the cost benefits. If the product fails too soon or the quality is spared as a result of this process, the consumer is left with a bad experience and with consumers having such a strong and far-reaching online "voice", for the offending company, a poor reputation is very hard to recover from.

 

A well thought out, engineered PLM (Product Lifecycle Management) process will greatly benefit companies by reducing risk of obsolete components and materials. The struggle today remains with products not sharing common components, operations, or materials with the newer products that will take the place of older models. There needs to be a better focus on managing new product design with product discontinuation in mind, and designing for manufacturing using similar processes so as to gain leverage across the entire product line. This will help reduce costs and complexity, as well as increase/improve product life cycle times without sacrificing quality.

 

Product lifecycle management also encompasses adherence to local packaging, labeling regulations, development costs (engineering) and final entry to market. As the economy becomes more Global, all these factors must be considered in order to promote effective distribution of the product, whether targeted to region or consumer.

 

Collaboration Between Stakeholders in the Extended Supply Chain
Collaboration across all lines of the supply chain is critical. This increases visibility and coordination across the supply chain and that allows all involved to make good decisions which will affect the total value. The right tools (software), processes and organizational structure will make effective supply chain collaboration achievable.

 

Consumers, suppliers and manufacturers need to be in alignment in order to improve upon supply chain value.

 

Recently Sales & Operations Planning has emerged as the main vehicle for collaboration and a way to help increase value by maintaining a well-coordinated, valid operating plan in support of customer demand, business planning and strategy. S&OP bridges the gap between sales/forecasting and supply chain. This is needed to make critical, informed decisions.

 

S&OP also allows for greater visibility across the entire value chain. This cross-functional (and even cross-company collaboration) will lead to a better PLM process, improved demand planning, minimized inventory, reduced costs and will help achieve superior customer service and fulfilled customer expectations.

 

In conclusion:
As a whole, these trends seem to be what most corporation are taking into account when evaluating their current supply chain. No doubt that technology is needed to address these key trends, and that includes:

  • ERP to run the business efficiently, supplemented by
  • Added SCM solutions designed for today's complexity and volatility and targeted at creating an integrated, streamlined, and agile supply chain.

 

As the market changes, so too must the companies serving it. The bottom line is that if the supply chain performs poorly, the effect is felt across the entire business causing possible long term failure in performance of an otherwise successful business.

 

 



Originally posted by Bryan Collemacine at http://blog.kinaxis.com/2012/09/musings-on-6-supply-chain-management-trends-are-changes-needed-for-success/

A Gartner S&OP MarketScope was recently published (Payne, T., MarketScope for Stage 3 Sales and Operations Planning, Gartner Inc., 23 August 2012). This report focuses on evaluating S&OP vendor solutions in terms of how well they would support a full deployed global Stage 3 maturity S&OP process. Per the report:

 

Increasingly, companies will look to establish well-designed and effective Stage 3 S&OP processes to help manage more-global and unpredictable operations, as well as revisiting existing, lower-level maturity S&OP processes in a bid to improve their effectiveness. As companies find that their operating environments become more complex and unpredictable, the need for superior supply chain performance increases.

 

We believe Gartner's vendor ratings confirms our leadership position in the market for providing customers with a modern-day solution to their modern day S&OP challenges. Today’s reasons for needing S&OP are the very same reasons S&OP needs to evolve — while the end objective of operational and financial alignment remains the same, in an environment of volatility and complexity, how you achieve that alignment (and maintain it) is very different than ever before.

 

Here is what we think S&OP should look like:

  • Demand and supply in a single application. Use a single software solution to tie the highest level demand signals (e.g. product family forecast) to the very lowest level raw material component, while simultaneously supporting near term planning (days & weeks) and long range planning (months & years). Having all demand and supply data in one place (including data from contract manufacturers and suppliers) enables faster and more reliable plan development as well as clearer, quicker insight into the impact of changes. When the whole organization works from one data source, there is increased consensus and fewer surprises.
  • Alignment between volume and mix. Make changes to the plan at the volume level and disaggregate it to the mix level, ensuring that execution of the plan is feasible.
  • Inclusion of related corporate functions into the S&OP process. Tie adjacent functions like project management, profitability management or workforce optimization to the sales and operations planning process to understand and manage the cross-functional implications of your actions.
  • S&OP alignment with corporate and financial goals. Ensure that decisions are made in the context of corporate targets, so when changes happen at the operational level, their impact can be seen and understood at the corporate level.
  • Rapid creation of “what-if” scenarios. What-if versions of the entire sales and operations plan can be created in seconds and can be revised as needed during S&OP review meetings, thus accelerating process times. Simulations should be able to be made on any type of change — demand, supply, product, policies or assumptions.
  • Continuous S&OP. Continuously monitor plans and act on events that will put the plan at risk. Respond quickly with mid-cycle adjustments as required.
  • Parallel planning and collaboration. Fully integrate supply chain planning and operations personnel, so you can bring together people across the organization best able to contribute to the resolution of a particular issue into a collaborative environment. Not only does this greatly speed up the decision process, it also ensures consensus among all stake holders—internal or external to the organization.

 

Disclaimer:
Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.



Originally posted by Lori Smith at http://blog.kinaxis.com/2012/09/kinaxis-receives-positive-rating-in-gartner-stage-3-sales-and-operations-planning-marketscope-report/

I'm really excited to tell you about an upcoming webcast hosted by IE Group " The New Brushstrokes of Supply Chain Planning". The presenters include Lora Cecere, Founder, Supply Chain Insights and Trevor Miles, vice president, thought leadership, Kinaxis

 

The New Brushstrokes of Supply Chain Planning
September 12, 2012
10am PST/ 1pm EST/ 6pm GMT

 

Full details below — register today — less than a day away!

 

Empowering Supply Chain Leaders to Paint Outside Traditional Lines
Years ago, in an attempt to explain supply chain planning to the potential buyer as well as to identify and rate technology vendors, the analyst community went to work creating supply chain application areas, defining taxonomies, outlining frameworks...

 

The intent was to provide order and clarity; but what was built ten or more years ago, while still widely used, is far too confining. There is no room for innovation when you are trying to stay within a box.

 

In this webcast, Lora Cecere —long-time analyst and recent founder of Supply Chain Insights — will outline eight market shifts that are moving us away from the traditional view of supply chain management. Supply chain planning is being redefined. The business problem has changed. And new technologies can enable modern approaches that will:

 

 

 



Originally posted by Melissa Clow at http://blog.kinaxis.com/2012/09/sept-12th-webcast-the-new-brushstrokes-of-supply-chain-planning/

We recently completed a Celestica case study entitled Dramatic Gains in Order Promise Efficiency and Responsiveness . As any vendor will tell you, sometimes good customer case studies are hard to come by, so it is with both great pride and appreciation that we are able to tell the Celestica story. I've included the highlights below:

The Goals
With a global manufacturing footprint and inherently complex supply chains, Celestica sought an opportunity to:

 

  • standardize and optimize available-to-promise and clear-to-build capabilities across operations
  • facilitate the speed and effectiveness of how each site communicates with each other
  • improve responsiveness to the customers with clear and complete answers

 

 

 


The Gains

 

  • Realized a 15% gain in efficiency of supply chain planning functions. E.g.
    - Reduced clear-to-build assessments from up to 2 days to less than 1 hour
    - Eliminated the need for shortage reporting work, which averaged 4 hours a days
  • Freed planners' time to do more value added activities
  • Sustained or improved on time delivery performance

 

 

 

It is companies like Celestica that we feel so fortunate to call customers. Sharing the vision and supporting the leading edge practices of our customers is ultimately the fuel of our success.

 

 

 

 

 

 

Originally posted by Clow Melissa at http://blog.kinaxis.com/2012/09/celestica-makes-dramatic-gains-in-order-promise-efficiency-and-responsiveness/

Filter Blog

By date: By tag: