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2015
by Melissa Clow

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with our customers. And, we’d like to share them!

 

In this interview, hear Jeff Murphy, director of supply chain managed services with Celestica, describe how the company has improved forecast accuracy and demand visibility, against this backdrop of industry transformation.

Celestica has identified three main priorities in its effort to achieve supply-chain transformation: improving forecast accuracy in the face of growing demand volatility, acquiring visibility of product and optimizing of inventory at multiple locations, and synchronizing the chain from end to end.

 

“Having visibility is one thing,” says Murphy. “But knowing the cause of everything, with a system solution that synchronizes the entire supply chain, is key to our clients.”

 

Check out: Celestica’s Top Priorities for Improving Forecast Accuracy

 

 

Those goals are within reach today, he says. Advances in information systems over the past 10 years have made it possible to enable integration, with the ability to collaborate across multiple networks in real time, Murphy says.

 

Celestica’s efforts come at a time when contract manufacturers are seeking to do more for their clients than simply building product. Providers are “going up the value stream,” looking to provide additional services that are crucial to getting product to market, says Murphy.

 

The company is five years into its implementation of the RapidResponse forecasting and planning tool from Kinaxis. “It’s core to our architecture,” Murphy says, adding that the system allows Celestica to be proactive in simulation environments. Employing “what-if” scenarios, the company can see how emergency orders perform, and what impact they have on risk, revenue and inventory levels. “Previously,” he says, “we might chase that [information] for a couple of weeks.”

 

Clients, too, are struggling to synchronize their supply chains. They are seeking visibility into their contract manufacturers’ operations, all the way to the part level. Celestica needs to be able to respond to customer requests within minutes, as opposed to the days it took in the past, says Murphy.

 

 

 

The post Celestica’s Top Priorities for Improving Forecast Accuracy – SupplyChainBrain & Kinaxis Video Series appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2015/01/celesticas-top-priorities-for-improving-forecast-accuracy-supplychainbrain-kinaxis-video-series/

by Lori Smith

In-Memory Computing for Supply Chain Management: What, Where and How…The recently published Gartner report, The Impact of In-Memory Computing on Supply Chain Management (Payne, T., 21 October 2014), describes the potential of in-memory computing (IMC) for supply chain management (SCM) including supply chain planning (SCP) applications, as follows:

 

“By 2018, at least 50% of global enterprise companies will use IMC to deliver significant additional benefits from investments in SCM, and especially, SCP.”

 

As awareness of the potential for transformational benefits from IMC grows, companies are asking tough questions about how, where and what type of IMC-enabled supply chain applications they should deploy. This is important because, according to Gartner’s research, the potential “benefits will vary by organization size, functional domain, industry and supply chain maturity.” So while the list of advantages of IMC technology is significant – and includes performance and scalability improvements, facilitation of advanced analytics, and process innovation – like any technology investment, the impact to your specific environment will depend on the chosen solution approach.

 

Gartner outlines three styles which include:

 

  • Native IMC: These applications are “developed from inception on the basis of IMC design principles”
  • Retrofitted for IMC: These applications were “originally designed on traditional technologies (for example, RDBMSs), but are now replatformed on top of an in-memory data store”
  • Hybrid IMC: These applications “use IMC design principles and technologies only in part, usually to store (at times, only temporarily) and process the most performance or scalability sensitive application data, or to support real-time analytics”

Interestingly, the Gartner reports states:

 

“The maximum transformational benefits will come from native IMC, because this approach allows organizations to leverage IMC to drive completely new ways of working in line with the company’s supply chain transformation efforts.”

 

Kinaxis RapidResponse uses a Native IMC approach. With RapidResponse, the analytics code is directly compiled into the database engine where it has direct access to the data and the various data relationships. The speed and scale that this provides is valuable because it enables businesses to develop new and improved processes capable of delivering breakthrough performance improvements.

 

If you’re evaluating IMC-enabled supply chain applications to determine how your organization can get the most benefit this Gartner research report is a must-read! It sheds light on the business value that in-memory computing brings to supply chain management in general and provides key findings and recommendations on the potential of IMC across functional domains, industry verticals and solution types. It’s only available for a limited time, so be sure to read it today.

 

P.S. With a 25+ year history of developing in-memory computing technology, we’ve talked about this topic before, so be sure to also check out some of our other posts:

 

 Source: Payne, T., The Impact of In-Memory Computing on Supply Chain Management, Gartner, 21 October 2014.

The post In-Memory Computing for Supply Chain Management: What, Where and How… appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Lori Smith at http://blog.kinaxis.com/2015/01/in-memory-computing-for-supply-chain-management-what-where-and-how/

by Melissa Clow

S&OP Innovation SummitJust a quick post to let our readers know that we’ll be at the 2015 S&OP Innovation Summit. This year’s event will be held at the Bellagio hotel, January 28 & 29, 2015.

 

If you plan to attend the conference, join C.J. Wehlage, Vice President, High Tech Solutions, Kinaxis, as he presents ‘S&OP: It’s the Journey, not the Destination’ on Wednesday, January 28th at 11:00a.m.

 

Event Details
CJ wehlageC.J. Wehlage will provide a true 360 degree view – as a practitioner, leading supply chains at Apple, EMC, Bose and Sony, as an analyst, running the high tech practice at AMR Research, and as a software provider, implementing RapidResponse.

 

Laugh and learn, as CJ presents the four keys to S&OP effectiveness and how the best in class execute S&OP from both a North-South & East-West integration, aligning demand and supply, as well as integrating finance. They tie volume and mix plans and perform S&OP on-demand, not just on schedule.

 

We’re a sponsor and invite you to visit us there and follow #SOPVegas on Twitter to get real-time updates from the event.

 

For more Kinaxis news, follow us on LinkedIn, Twitter or Facebook.

 

Happy Monday all!

 

The post S&OP: It’s the Journey, not the Destination appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2015/01/sop-its-the-journey-not-the-destination/

by Melissa Clow

SupplyChainBrain attended our annual Kinexions user conference, and while there, they completed a number of video interviews with customers, analysts, and Kinaxis executives. And, we’d like to share them!

In this interview, hear Dave Stenfort, director of operations with Anritsu, speak about how the company achieved visibility of inventory and improved control over critical parts in its manufacturing supply chain. Anritsu provides testing and measurement equipment for research and development, manufacturers, and field and maintenance personnel.

 

Its top supply-chain priority is responsiveness, says Stenfort. Customers expect short delivery times for their precision equipment. To satisfy them, Anritsu is looking at how it can tighten existing relationships with suppliers. “Typically, material is the constraint,” he says.

 

Check out: How Anritsu Achieved End-to-End Supply Chain Visibility

 

 

The company is also working closely with its R&D group to fit new products into existing supply-chain processes. To survive in a sector marked by cutting-edge technology, Anritsu needs to differentiate itself through innovative products. That never-ending quest often requires dealing with new suppliers – a change that adds risk to the supply chain.

 

In addition, Anritsu is deploying a number of tools and information systems to streamline its supply-chain processes. As they become successful, organizations tend to grow more complex, Stenfort says. There’s a need to focus on “standard functionality.”

 

Recently the company combined a number of supply-chain functions into one internal organization, crossing lines between sales, corporate and other departments. The shift was considered to be an essential part of Anritsu’s efforts to reduce costs meeting customers’ demands for short order lead times, as well as standardizing systems.

 

Stenfort says it’s vital to achieve an integrated view of the supply chain. It helps the company to make better decisions, as well as turn around quotes in a matter of hours.

 

Today, with the help of the RapidResponse, Anritsu can see product in the pipeline all the way back to its contract manufacturers. Such capability "ultimately increases the likelihood of success in getting orders and meeting delivery commitments," he says.

 

The post How Anritsu Achieved End-to-End Supply Chain Visibility – SupplyChainBrain & Kinaxis Video Series appeared first on The 21st Century Supply Chain.

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2015/01/how-anritsu-achieved-end-to-end-supply-chain-visibility-supplychainbrain-kinaxis-video-series/

by Melissa Clow

erwin hermans celestica  Is There a Third Option for Supply Chain Management Executives Looking to Revamp their SCM Operations? Our partner Celestica recently published the following article, ‘How to Turn Your Supply Chain into an Innovation Engine’. The author, Erwin Hermans, vice president of supply chain services, describes the areas to consider when turning your supply chain into an innovation engine:

  • An Enabler for New Business Models
  • Finding the Real Cost of the Supply Chain and Optimizing
  • Tune the Supply Chain to the Demand
  • Analytics is the Answer
  • How to Take an Idea into Practice

So, how do you turn your supply chain into an innovation engine? Let’s find out.

 

Highest quality. Lowest cost. On-time delivery. That’s how companies typically view an effective supply chain.

 

But what if that thinking was replaced with a new vision of supply chain? What if business leaders start to view it as an engine for growth and innovation, a differentiator, and an enabler of product realization and marketing strategies?

 

Today’s modern supply chains are more than just a back-end conduit to deliver products on time. An organization’s supply chain can deliver value that goes well beyond cost, quality and efficiency.

 

Let’s look at how the old way of thinking can change.

 

An Enabler for New Business Models

To look at how the supply chain can be an enabler, business leaders need to shift away from looking at it as a back-end operations function and instead, as a front-end enabler.

 

Companies like Apple and Amazon have built their businesses by thinking differently. Apple has cornered the market in its supply chain to gain an edge in volume and scale, while Amazon has made supply chain its core business. Apple leverages its scale to lock up supply of key components, thereby shutting out its competitors and shaping demand by constraining supply.

 

Let’s look at another example, one from the painting industry, where constraints in the supply chain forced different thinking.

 

In the past, stores had to supply a wide variety of paint colors and finishes based on consumer demand estimates, building inventory and tying up working capital. Today, stores are able to mix and create paint colors on the spot, allowing them to easily respond to changing consumer demands.

 

The innovation which allows this instant paint mixing to occur is enabled by a supply chain working together with the product management and marketing teams toward a unified goal, reducing the theoretical lead time of paint from weeks to minutes.

 

Embracing customization within the supply chain is not just confined to paint stores. Dramatic changes to business models through supply chain innovation can be seen in several industries, such as same day/next day delivery in the parcel industry, mass customization in the consumer PC market and a rapid cycle of new product introductions in the retail clothing space.

 

To replicate this model, organizations should ask themselves how the supply chain can be a catalyst for innovation in their supply chain by delaying product customization to the last possible stage, customizing at the warehouse instead of the factory. And if so, they must determine how the supply chain can help to facilitate the new process and be a differentiator.

 

Having an open mind when examining a supply chain can turn an entire go-to-market strategy on its head—launching new products and services, and opening up new markets for the business.

 

Another area to explore is how collaborating with key partners can help build a unique business model. One example is Best Buy, which enabled a services business, Geek Squad, to complement its retail business.

 

Let’s look at a few opportunities where supply chain can act as a catalyst for growth and innovation.

 

Finding the Real Cost of the Supply Chain and Optimizing

Simply looking at supply chain costs will not show you the big picture. Developing a total landed cost model that looks at all price elements of a product will unearth insights about the supply chain that can be a platform for growth.

 

For example, let’s look at a cloud-based infrastructure company that outsources its manufacturing to two contract manufacturers. The current market for their products is heavily centered in the U.S., while growth is expected in Asia. The company’s product is highly configurable with long lead time components sourced from suppliers in Asia. In addition, demand is highly variable resulting in adequate, but not great, on-time delivery performance.

 

The primary contract manufacturer builds their product in Mexico, within a one- to two-day delivery interval to customers in the U.S., while the second contract manufacturer builds in Asia, with a three- to five-day delivery interval to the U.S. In this scenario, which contract manufacturing model is preferred?

 

Only a data-driven optimization model can provide enough insight for a rational answer. In this scenario, the contract manufacturer with operations in Asia proved to be the right model due to an Asia-based supply base. Additionally, high variability in demand and proximity as a result of long lead-time components allows for a better response time to customer changes at a lower total cost.

 

Assessing total landed cost can also serve as the foundation for product and category managers to lead product segmentation and portfolio optimization strategies, and at a tactical level, it can lead to increased profitability and target price competitiveness. Organizations need to determine the total landed cost of its products, which includes many different variables and is not limited to manufacturing and transportation to successfully optimize product portfolio. If a company has a six month oversupply of product, this will factor into the total cost as well. Similarly, opportunity cost of perishable demand is another element that needs to be included to get the whole picture. Tying front-end and market information to the supply chain can help gain these insights.

 

Tune the Supply Chain to the Demand

Many companies worry about keeping a steady supply of inventory on the shelves instead of better understanding the ebb and flow of demand. Conventional wisdom suggests inventory placed closest to the customer will help meet demand. But what if inventory was replaced with information?

 

With the right data, organizations can ensure that product is not only available when the customer wants it, but also at the right time, in the right quantity and at the right price, giving the organization a competitive advantage.

 

Two key supply chain factors can make the difference: forecasting and lead time. Forecasting, coupled with product segmentation, can predict which product meets customer demand. Reducing lead time for the right products can allow for quicker response time to meet customer demand.

 

But just as the paint industry evolved from forecasting individual buckets of green, blue and yellow paint, to reacting to current demand by mixing paints in the store, a demand-driven supply chain could mean cornering the market for a new product introduction.

 

A supply chain that helps its business react to real demand helps build game changing products and business models.

 

Analytics is the Answer

Over the past few years, analytics has become an increasingly prominent term in the C-suite’s vocabulary. Most business leaders, however, have not figured out how to integrate analytics into their operations and how it can be a driver for innovation. Turning data into meaningful insights is a challenge, but one which can lead to new business ideas and processes.

 

For many companies, the simplest form of analytics is looking at customer demands and patterns; then leveraging the gathered insights to build innovative and differentiated services—delivering greater value to the consumer and the businesses bottom-line.

 

A wireless networking company, for example, used segmentation analysis to provide them with insights into market behavior for different customer channels. With the proliferation of new products and configurations, they had lost sight of the subtle market dynamics that were influencing their demand. Through segmentation and forecast analytics, they were better prepared to have the right inventory closer to the market segment with high demand for certain products and configurations.

 

The supply chain is an untapped source of this crucial business data.

 

How to Take an Idea into Practice

To look at how the supply chain can be a differentiator, organizations need to ask themselves a variety of questions:

 

  • What’s our new big idea?
  • How does our supply chain influence those big ideas?
  • What are the drivers behind customer behaviour that are being enabled by the supply chain?
  • How can our supply chain strengths be exploited to bring a new product or service to market?

To answer these questions, organizations need to start looking at their supply chain through the lens of the marketing and product management teams.

 

In general, the supply chain is an afterthought, brought into the fold late in the product design and manufacturing stage. Bringing marketing, product managers and even engineering teams into the supply chain fold can help enable big, creative ideas. When the supply chain is brought into the early ideation and design process, it can truly function as a hub for growth and innovation.

 

Going back to the paint example, when a hardware store sets a goal to deliver any color of paint to their customer within 30 minutes, it forces them to think about meeting that goal in a completely different way than simply shaving a day or two off of their product delivery times. Integrating a manufacturing process that takes advantage of the supply chain to customize paints in the store created a key differentiator.

 

Setting “Big Goals” will force that type of out-of-the-box thinking. Harnessing the power of the supply chain can help be the key differentiator to meet those goals and approaching the supply chain with an open mind can open up new markets and product lines.

 

To keep with the theme of paint, when looking at a piece of art, it is important to take a step back, and not focus on any individual color or stroke, but rather see the bigger picture of how all the elements work together.

 

 

 

 

 

 

 

 

 

 

 

 

 

The post How to Turn Your Supply Chain into an Innovation Engine | Guest Post from Erwin Hermans appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2015/01/how-to-turn-your-supply-chain-into-an-innovation-engine-guest-post-from-erwin-hermins/

by Christopher Hatcher

semi automatic software blog chris hatcherYears ago when I was in the army, one of the most memorable days of my mostly forgettable BASIC training experience was flipping the switch to automatic. Yes, we’re talking about the M16 rifle standard issue weapon for soldiers. We were trained on this weapon out at the firing range where we learned to hold the weapon steady, breath calmly, and ignore the clamor of dozens of shots ringing out through the earplugs nestled in our ears.

It was cold out in Missouri in the middle of winter, but it was a bit of a thrill to do what I’d done as a kid with toy guns. This was the real thing. Well, sort of the real thing in the sense that the weapon and bullets were real, everyone was dressed in camouflage fatigues with serious looks on their faces, but the targets that popped up anywhere from 50 to 300 meters away were just some special fabric that fell over if a bullet whistled through it.

 

What we learned was that the cowboys shooting from their hips and hitting their targets was a fantasy of Hollywood. Hitting the targets required patience, focus, and a bit of luck. Like most training in the Army, the thought was that if you do it long enough it would become ingrained in your psyche and muscle response. As it turned out, after months of training out at the firing range I qualified as a Marksman, but that was not the big thrill. The big day was actually at night when we were allowed for the first time in months to flip the little switch on the M16 to automatic. Up until that night, each shot was aimed, the trigger squeezed and the result was immediately apparent.

 

Either you hit the target and it plopped over or you saw a wisp of dirt fly up in the air a bit to the right or left. With the switch now set to automatic each second of squeezing the trigger spat out 10+ bullets. Even better was every 5th bullet being a tracer round so they glowed red as they buzzed through the air at 3300 feet per second. I can’t remember if I actually hit any targets that night, but it was so cool to try the automatic setting and live the Star Wars experience for a short moment in time. That was 30 years ago.

 

Now what does this have to do with managing a supply chain?

Or as my old drill sergeant would have said it… “What the f%$*& do you f$#@&*ing think you’re f%^&@#ing doing, son?!

 

Hear me out. There is so much supply chain related data that we have access to now and even better, we have automated solutions that recommend the best thing to do in a given situation on a given day. That’s a good thing, because we don’t want to go back to managing everything. We need to manage by exception and keep our focus on the big problems. One thing to keep in mind is that many of our automatic solutions turn into black boxes over time. The smart guys that built the solution are long gone and it seems to be working fine, so just let it roll, right? Well, the devil is in the details, and despite the agony of digging through the logic of work done in the past, if the automatic answer is not as good as it could be, there are likely a few tweaks that could be done to the process to make it more fruitful in its results.

 

An example of this is the automatic pull in messages that can be acted upon when the available date of a sales order improves to earlier than its due date. Well, if no orders are harmed by pulling in the sales order to an earlier date, then why not do it? Remember first, that an automatic solution is based on certain assumptions and filters. Does the Automatic solution consider Priorities on the sales order? Perhaps an earlier low priority order can ship on time while a later high priority order will ship late due to constrained supply? Maybe the high priority order, although later, is for a very important customer so we should honor the priority setting and the supply should be set aside for a few days to ship to our valued customer?

 

What do we do? Flip the switch back to Semi-Automatic to manage your supply chain? In this case where constrained supply allows only 1 of 2 sales orders to ship on time, a supply planner should be able to intervene and decide which order to ship. Planner A good supply chain software solution must first identify such cases where the semi-automatic (human involvement) approach is recommended, then be able to quantify the appropriate metric, which solution path is better, and finally notify the right individual to intervene quickly enough to make a difference. Software solutions like Kinaxis RapidResponse can provide the filtering, scorecard metrics, and alerting needed to guide the planner to make the right decisions. Over time, as the calculations that drive this semi-automatic approach are in need of fine tuning, the filters and metrics can be easily changed as necessary.

 

Running most operations in automatic mode is likely a wise choice, but it’s important to understand which parts of the process can trigger the responsible party to intervene when necessary. Automatic sometimes just scatters lots of of bullets with a great deal of sound and fury, but semi-automatic usually hits the target every time.

 

Do you prefer semi-automatic or automatic to manage your supply chain? Or, perhaps a combination of both? How has it benefited you? Comment back and let us know!

 

 

 

The post Will that be automatic or semi-automatic to manage your supply chain? appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Christopher Hatcher at http://blog.kinaxis.com/2015/01/will-that-be-automatic-or-semi-automatic-to-manage-your-supply-chain/

by Melissa Clow

erwin hermans celestica  Is There a Third Option for Supply Chain Management Executives Looking to Revamp their SCM Operations? Our partner Celestica recently published the following article, ‘The Third Option for Supply Chain Management Executives’. The author, Erwin Hermans, vice president of Supply Chain Services, describes the three main areas to consider when revamping your supply chain management operations:

Growing companies often consider two options when implementing or revamping their supply chain management (SCM) operation—hiring a consulting company to work with their in-house SCM team, or buying specialized software and going it alone. Consulting firms deliver strategy and process improvements, but leave the customer to execute and sustain the new process, while software companies sell new supply chain capabilities without executing and driving its adoption.

 

A new alternative is now possible for companies, especially those looking to gain a competitive advantage with their SCM operations.

 

The case for working with a strategic partner that can go beyond implementing a new tool and designing new processes to actually drive, execute and sustain a company’s supply chain has arrived. Every company is looking to improve its time to value. The traditional notion of a three- to five-year transformation program is not practical in today’s fast-paced environment.

 

Improvements need to be achieved in months, not years, a reality that can only be realized through a managed services partnership in which the only measure of success is tied to the operational improvements resulting from the program. While many supply chain executives have never seriously considered managed services as an SCM option due to liability, performance or security risk concerns, this is indeed an economical, efficient and strategically viable solution that supply chain leaders should consider to deliver operational performance.

 

1. Is SCM a Core Competency?

Many organizations with established SCM operations have been working with third-party logistics firms for decades, largely eliminating the use of in-house transportation fleets. Looking at it today, hiring, training and providing equipment for in-house transportation teams makes little sense as this function is not a core competency of a typical company. A similar trend emerged in the electronics manufacturing sector. In the early ‘90s, high-tech companies sought scale and cost advantages through outsourcing manufacturing. Today, starting up a high-tech manufacturing operation is economically unviable.

 

Over that same period of time, however, many non-manufacturing supply chain functions, such as inventory management, forecasting and supply planning have remained in-house. Given how rapidly the world of SCM evolves, organizations that maintain an in-house team need to keep up with this pace of change, and add new capabilities to maintain or increase their supply chain performance.

 

One of the biggest barriers SCM executives face when trying to improve their supply chain performance is up-skilling their talent to maintain the required supply chain expertise in house.  It is often the tribal knowledge of the company, the industry, its products and operations that make refreshing talent a challenging undertaking.  Maintaining this in-house experience is often a trade-off for building and growing core supply chain talent, as they are perceived to be mutually exclusive.

 

Many companies resort to consultants when they have reached the limits of their own ability to bridge the talent and process gaps. While this has a fair chance of improving the short-term situation, it does not address the longer term question: Is supply chain a core competency?

 

Supply chain executives need to determine whether these supply chain functions are truly a core competency in their overall business. Take, for example, a typical medical device maker that has a laser focus on research and development (R&D), product design, and the goal of delivering innovative products that meet and exceed the expectations of its customers. Does a company fitting this description have the focus and priority to dedicate the resources they need to inventory management, forecasting and supply planning?

 

The answer is evident almost immediately when discussing SCM with these firms. They are questioning their core competency as they are challenged to address the perils of supply chain execution, directly or indirectly affecting customer satisfaction.

 

2. The Talent Make vs. Buy Decision

Partnering with a service provider for core supply chain functions is a decision that should not be taken lightly. Much like in the first waves of outsourcing in logistics and manufacturing, the drivers for outsourcing need to be aligned with the strategy of the business.  First, clearly identify the supply chain strategy, and how supply chain is or needs to be a competitive differentiator. Once this is clearly defined, it is easier to consider the core competency question, or the make vs. buy decision.  The answer leads you down the path of evaluating the three dimensions of people, process and technology.

 

The emergence of cloud-based technology solutions is providing companies with opportunities to acquire capabilities that may have been too costly before. Rather than having to invest in a hardware and software technology stack, SCM solutions can be virtualized where the physical infrastructure required to manage and use software is no longer required.

 

Process excellence and continuous improvement have been around for a long time. Process discipline, however, tends to be grounded in the culture of the company. When supply chain performance lags, driving the process improvement from within or looking for an external catalyst is part of the make vs. buy decision.

 

Lastly, there is the talent question, which is probably the most difficult question to address. There are no shortcuts and no easy answers. And until recently, no real options.

 

The business process outsourcing (BPO) industry is answering the cost part of the equation. Repeatable, prescriptive, transactional functions can be outsourced to a BPO provider to achieve a lower cost of operation. For more complex functions, such as forecasting, inventory management and supply planning, in which skill and experience are the driving factors for success, the make vs. buy decision centers around the investment in talent. Managed services can be the “buy” answer, and should be considered if the patience and commitment to talent management is not core to the business.

 

3. What to Look for When Choosing a Partner

To help determine whether it is viable to work with an external third-party service provider to redesign and reengineer your supply chain, executives need to determine whether they can effectively support critical SCM functions in house or whether the resources can be better deployed elsewhere.

 

If a supply chain executive decides to outsource his or her SCM function to a third-party services provider, he or she should look for a partner that can provide both supply chain expertise and a technology platform that complement each other. A third-party services provider should be able to help supply chain executives manage their SCM operation, from planning functions down to execution.

 

While the right partner has this end-to-end capability, executives should evaluate which areas of supply chain require the most immediate help to start the engagement with a managed services provider. With a specific focus, improvements can be quantified and a trust-based relationship can be established. The engagement should be focused on achieving operational results with a managed services partner who is responsible for designing and executing the SCM function.

 

And finally, SCM executives should look to a strategic partner that has demonstrated SCM services across a variety of manufacturing industries. Cross-industry experience is important when choosing any managed services provider, but this is particularly true in the supply chain services realm as companies can greatly benefit from the work and experience already put into practice in other successful supply chain implementations across industries.

 

More supply chain executives are seeing the potential of working with a SCM services provider to help them manage one or several of their supply chain functions. Just as they would for any area of their business, they need to determine whether SCM is a core competency and how it aligns with their company’s long-term strategic direction.

 

The post Is There a Third Option for SCM Executives Looking to Revamp their Supply Chain Management Operations? appeared first on The 21st Century Supply Chain.

 

 

Originally posted by Melissa Clow at http://blog.kinaxis.com/2015/01/is-there-a-third-option-for-scm-executives-looking-to-revamp-their-supply-chain-management-operations/

by CJ Wehlage

supply chain best practice metrics predictionsFor those that follow the National Football League (NFL), these next few weekends are going to be engaging. We are down to the final four teams: Seattle Seahawks, New England Patriots, Indianapolis Colts and the Green Bay Packers. With full disclosure, I have to say that I do not have a rooting interest. I grew up in Pittsburgh, and it is Steelers all day.

 

But, that didn’t stop me from wondering who the Super Bowl champion would be. So, I decided to use supply chain best practice metrics to predict the Super Bowl participants, and the ultimate winner.

I remember when my parents questioned my plan to go after a dual degree in college – Industrial Engineering and Statistics. Only four more courses would get me the Statistics degree – that cost a lot of money. And, now, after 25 years, it’s about to pay off!

 

The winner of Super Bowl XLIX (or 49) will be…

 

Okay, not just yet… Let’s consider that best in class supply chains use ‘Value’ to measure success:

 

Value = [(Service * Quality) / (Cost * Speed)] + Innovation

 

This is a simple equation, but yet very effective when used as an end-to-end metric. Much like supply chain, a focus on a single, functional area will improve one facet, but not the complete network. This ‘Value’ equation accounts for the end-to-end success.

 

Now, I’d like to challenge the Analyst community! If this model accurately predicts the Super Bowl, then let’s consider using this to rank the Top Supply Chains. So, without further ado, in terms of the NFL, ‘Value’ would be:

 

Service

For this metric, I searched for the best indicator of “does this team provide its customers with a high level of service” and “are the customers willing to “go above and beyond” in support of their team”? Forbes came up with a ranking of NFL Fan Base, using ‘stadium attendance’, ‘television ratings’, ‘merchandise income’, ‘social media rank’, and ‘fan club count’ (including season ticket waiting list count). This accurately identifies a high level of service.

 

                                              
TeamStadium AttendanceTelevision RatingsMerchandiseSocial MediaFan ClubWaiting List
Green Bay Packers635110111,072
New England Patriots6934660,000
Indianapolis Colts6121553None
Seattle SeahawksNRNRNRNRNR12,000

 

 

Quality

The quality of an NFL team depends on two factors: Does the offense score touchdowns and/or gain first downs? And, does the defense stop touchdowns and/or first downs? DSR, or Drive Success Rate, as determined by Pro Football Prospectus, measures the percentage of down series that result in a first down or touchdown.

 

                               
TeamNet Yards per DriveNet Points per DriveNet DSR
Seattle Seahawks7.1800.7500.052
Indianapolis Colts4.6200.5500.047
New England Patriots1.3800.8100.047
Green Bay Packers6.0000.8400.044

 

 

Cost

Some NFL teams have a net value of nearly $3.2B (Dallas Cowboys). The total net value of all 32 NFL teams is $45.7B USD. But, I think ‘Cost’ should be driven off what revenue is created against the operating income. So, ‘Cost’ calculation is NFL team revenue/Operating Income.*

 

                               
TeamRevenue ($M USD)Operating Income ($M USD)Rev/OI
Seattle Seahawks28827.310.549
Indianapolis Colts28560.74.695
Green Bay Packers29925.611.680
New England Patriots428147.22.908

 

 

Speed

Speed is the metric that pulls all the functional areas together. I see in many supply chains the desire to focus on a single, functional metric. With the global and complex network of supply chains, the real challenge is taking this Value equation to all nodes of the network. I will use Football Outsiders rating – DVOA – or Defense-adjusted Value Over Average. This metrics breaks down every single NFL play and compares a team’s performance to a league baseline based on situation in order to determine value over average.

 

                               
TeamTotal Team DVOAOffense DVOADefense DVOA
Seattle Seahawks31.9%16.7%-16.3%
Green Bay Packers23.3%24.6%-1.0%
New England Patriots22.4%13.6%-3.4%
Indianapolis Colts4.7%-0.9%-2.3%

 

 

As always, positive numbers represent more points, so Defense is better when it is negative.

 

Innovation

I remember my days at Apple, and the intense focus on innovation. We used the concept of Strengths Development + Engagement = Innovation. Steve Job’s gave me a quote, “Know what you know, and know what you don’t know, and surround yourself with people who know what you don’t know.” This is the core driver of Strengths Development. Not everyone has or “knows” all the strengths to run a supply chain. You need to figure out who are the “A” players, build up the “B” players, and play to your strengths. And, you need to be engaged, or in NFL terms, “on the field”. No supply chain, or NFL team, will be successful if they are standing on the sidelines. Therefore, I will use ‘Team Time of Possession’ as the ‘engagement’ metric. There is a direct correlation between teams with a time of possession and winning the game.

 

 

 

Strengths Development:

 

                                    
TeamPointsPlaysYards per GameYards per Play
Seattle Seahawks248864268.64.7
Green Bay Packers328988348.65.3
New England Patriots296975349.25.4
Indianapolis Colts359948352.75.6

 

 

Engagement:

 

                               
TeamPossessions per GameTotal Time% of Possession
Seattle Seahawks3252554.69%
Indianapolis Colts3151053.13%
Green Bay Packers3048850.83%
New England Patriots2947349.27%

 

 

Now, let’s break down the winner…

 

                                                            
ServiceQualityCostSpeedInnovation
Strengths DevelopmentEngagementTotal
Green Bay Packers11422313
Seattle Seahawks42111110
Indianapolis Colts33244218
New England Patriots24333419

 

 

There you have it. Using the supply chain best practice “Value” equation, the Super Bowl will be:Super Bowl 49 predictions using supply chain best practices

 

Seattle Seahawks vs Indianapolis Colts

 

With the Seattle Seahawks prevailing, and winning back to back Super Bowl Championships.

 

As I said earlier, the challenge is out to the Analyst community! If this prediction is accurate, let’s remove the highly influenced peer, analyst, and academia voting.

 

Let me know your “supply chain” measured predictions for the NFL Super Bowl!

 

 

 

The post How Supply Chain Best Practice Metrics Can Predict the NFL Super Bowl appeared first on The 21st Century Supply Chain.

 

 

Originally posted by CJ Wehlage at http://blog.kinaxis.com/2015/01/how-supply-chain-best-practice-metrics-can-predict-the-nfl-super-bowl/

by CJ Wehlage

2015 New Years Resolutions for the Supply Chain Industry2015 will be my 25th year in the supply chain industry, mostly as a practitioner. I’ve had the benefit of stepping away from the grind for 2 years, spending time at AMR Research, where I visited with many companies and learned about their supply chain practices. As well, these past 2 years at Kinaxis have brought great insight on the operational challenges of supply chain leaders.

 

Which brings me to today… I was planning out my 2015 supply chain conference schedule, and noticed the conference themes: Digital, Green, Internet of Things and Social. These are what I call “Cool Theme” topics. But after my 25 industry years, I find that the fundamentals of revenue, profitability and service are the still most important themes. It feels like we’ve drifted away from the fundamental supply chain strategies. So, I decided that 2015 needs to be a re-focus on the hard core fundamentals of supply chain success. And change in the New Year begins with resolutions…

 

 

 

My 2015 Resolutions for the Supply Chain Industry

Resolution #1 – Stop using the term VISIBILITY

 

People say that information is power. I beg to differ. I say, an informed decision is power. The visibility term has been over used. I’ve even heard some say that getting visibility to your supply chain is 80% of the challenge. They must not have run a supply chain. I see many supply chain leaders that have visibility, some in excel and some in automated tools. The ones that don’t have visibility can easily call the supplier and get it. Getting visibility isn’t the challenge. The real 80% challenge is “what are you doing with the visibility?”

 

  • Are you using visibility to eliminate searching for exceptions?
  • Are you setting control limits on your visibility to set planning priorities?
  • Does your visibility provide a proactive view into supply chain challenges?
  • Are you doing the #1 supply chain best practice, simulation, with your visibility?

Most supply chains can actually answer these questions, but with multiple spreadsheets, phone calls, MRP runs, and planning modules; in essence, without having agility. With today’s complexity, these questions need to be answered in seconds, concurrently across multiple exceptions. Yet, supply chain leaders seem to be stuck in the strategy of incremental change. Problem is: supply chain complexity is growing exponentially, customers and competitors are becoming more global, and the time to make decisions is shrinking to minutes instead of days and weeks.

 

This lack of urgency is driven by the “Supply Chain Anarchists”. This is a group that tries to undermine the best efforts of supply chains.

 

The Supply Chain Anarchists had a meeting in late 2014, to figure out a way to stop supply chain progress. The first person said, “Let’s tell everyone that there is no Complexity”. The others thought about it, and said, “that’s good, but people will still be on late night conference calls with far off suppliers, and have to travel around the globe for supply chain issues”, so that won’t work.   The next person said, “Let’s tell everyone there is no Risk”.   After a while, the others said, “that’s interesting, but there will be another earthquake, flood, or political event, and people will see the risk”. So, they thought some more, and one person said, “I got it”. “Let’s say there’s no Hurry”… Supply chain leaders don’t need to change their strategy this year.   You can make small, incremental improvements in 2015. It would be difficult to align all your partners. “Things can wait for now.” They all agreed, that’s the ticket. We will stop supply chain progress by making people think “there’s no Hurry”…

 

My #1 resolution for 2015 is to drive that sense of urgency to change. Informative decisions across your entire end-to-end network are needed now. You need to proactively simulate issues. You need to make your supply chain THE differentiator. The traditional horizontal Plan-Buy-Make-Deliver model is gone. Disintermediation is happening to your supply chain as you read this. Look at what Amazon is doing to the Deliver model. You need to be using visibility to bring value and differentiation.

 

 

 

Resolution #2 – Read only ONE “Cool Theme” report

 

In 2014, I saw the emergence of Cool Themes from all the Analysts. The digital supply chain, green supply chain, internet of things, and the best, social supply chain.   What happened to the core fundamentals of revenue, profitability and service?

 

In 2015, I resolve to read only one Cool Theme report. I’m tired of research analysts peddling these themes as a means to gain an edge on readership. Yet, I watch the audience during some of these Cool Theme presentations. And, half the people are on their smartphone working core issues back home, while the Analyst is talking about how supply chains should save the Panamanian golden frog, reduce the ozone layer, produce products with plastic wire from 3D printers and generate forecasts from Facebook posts!

 

 

 

Resolution #3 – Stop moaning about Bad Data

 

Let’s face it, everyone has some form of bad data. And, when you include all your tiered suppliers, they have bad data. The one constant is that you will never fix all the internal and external bad data. Yet, I still hear supply chain leaders say they need to focus first on fixing the data. I’ve seen many presentations from “Top 25” supply chains and how they’ve cleaned data, and why they should be considered a top tier supply chain story. This reminds me of my farmer friend…

 

I needed to borrow an auger from my farmer friend. He has many tools, and I went over to his farm. His wife said he was out in the barn. When I turned the corner to the back side of his barn, I saw him with a Hoyt Spyder Turbo bow and arrow – Top of the line and expensive. I looked at the side of his barn and saw 17 bull’s-eyes. And in the middle of each bull’s-eye was an arrow… dead center! I stuttered to get my words out, and said did you do that. To which he said yes. I turned back around and looked at the side of the barn, and asked him how long he’s had the bow and arrow. He said about 2 weeks. I said, only two weeks? That’s amazing! 17 bulls-eyes, 17 hits in the center of each bulls-eye. You’ve only practiced for 2 weeks. How can you be so accurate? He said it’s easy. I shoot first and they draw the bull’s eye around where the arrow hit!

 

I’ve seen many supply chain presentations that are like my farmer friend. They appear more on target than they actually are. They may talk about cleaning all the data, but the truth lies in using both good and bad data. The thing leaders should focus on is executing to what data is there and, where there’s bad data, use simulation tools to make up the difference.

 

And that’s the resolution to make. It’s okay to moan about bad data. But, don’t let bad data dictate your execution. The best simulations I’ve seen have focused on supplementing the bad data. Sort of like the scientists in Jurassic Park – where they supplement frog DNA code to make the dinosaurs.

 

 

 

Resolution #4 – Fix the Disruption you can influence, not the Disruption you are concerned with

 

There are two types of disruptions. That which you are concerned with, and that which you can influence.

 

Volatility, regulation, geopolitics, economics, energy, and the list goes on. These are in your Circle of Concern. They happen, and you should be concerned. Yet, many supply chain leaders face fail to focus on the Circle of Influence, the area where you can make a difference.

 

There are two methods to manage your Circle of Influence. The first, and most widely used, is to simulate disruptions before they happen, or quickly after they occur. The second, and not widely used, is called “responsibility based collaboration.” It’s having the right people, with the right information need to make the right decisions, in the right time. Without responsibility based collaboration, too many people are involved. Redundant work is processed. Planners feel dis-empowered. The process of resolving the “disruption” is creating more disruptions.

 

Core questions to assess your level of responsibility based collaboration:

 

  1. Are senior managers as close as possible to the decision?
  2. Can the decisions be implemented faster?
  3. Do those making decisions have the detailed understanding?
  4. Does the decision account for “carnage” created elsewhere?
  5. Are all the impacted departments aware of the tradeoff?
  6. Are Planners feeling more empowered to analyze and decide?

Concurrent, responsibility based collaboration is needed in 2015.

 

 

 

Resolution #5 – Scrap the Talent Research, Make Planners more Productive

 

After reading all the Talent Research done in 2014, the topics of attrition, retiring professionals, and university-business alignment, I notice a big gap. The one thing missing in all this Supply Chain Talent research is the concept of being more productive with the talent you already have.

 

How can every supply chain improve productivity? In every supply chain I’ve seen in my past 25 years, there’s one constant – they all use some form of Excel – mostly to search for exceptions. Planners spend half their day dumping ERP and BI data into Excel, and then search for exceptions.

 

And that’s not even the biggest problem! Once a Planner finds an exception, they work to resolve it. Yet, 80% of the exceptions found don’t actually break and end-to-end control limit. So, the Planner, after half a day searching, is now working on the wrong exception. And, even worse, that Planner resolves the exception without concurrently understanding how they’ve impacted other areas. That’s called “carnage” – aka “next week’s exceptions”.

 

This is the main reason I love the Kinaxis solution. Single code, pulling end-to-end data, running all the time, in memory fast, alerting Planners only when control limits break, and providing concurrent understanding of how a resolution impacts all nodes of the network.

 

The result is that Planners no longer search for exceptions. That’s half the day back = much more productive. Then, Kinaxis customers use that gained productivity to simulate future issues = more proactive planning. In essence, fixing exceptions before they happen. This is the reason Kinaxis customers are “giddy”.

 

These are my Five Resolutions for 2015. What are your resolutions?

 

 

 

The post 2015 New Year’s Resolutions for the Supply Chain Industry appeared first on The 21st Century Supply Chain.

 

 

Originally posted by CJ Wehlage at http://blog.kinaxis.com/2015/01/2015-new-years-resolutions-for-the-supply-chain-industry/

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