Digitization is here. And it’s redefining supply chains. Disruptive technologies like advanced analytics, artificial intelligence and the Internet of Things are converging, bringing together the physical and digital worlds into new digital supply chain networks. These networks are taking supply chains from siloed and sequential to dynamic and interconnected. But true digital transformation isn’t just about the technology in supply chain management.
Join us for our webinar, Is your supply chain ready for a digital transformation?, to learn why true digital transformation requires more than just digitization.
When: Thursday, March 15 | 2 p.m. ET
Register for this webinar to hear industry experts Tim Gaus, Principal at Deloitte Consulting LLP, and Trevor Miles, Vice President of Thought Leadership at Kinaxis, explore:
The post [Webinar] Is your supply chain ready for a digital transformation? appeared first on The 21st Century Supply Chain.
Originally posted by Alexa Cheater at https://blog.kinaxis.com/2018/02/webinar-is-your-supply-chain-ready-for-a-digital-transformation/
The Food Packaging Trends and Advances report from PMMI forecasts that the US Food and Beverage industry will experience a 2.9 % CAGR through 2022. The report also mentions that the global growth rate is almost double that of the US food industry. It’s a prediction that shouldn’t be ignored.
Continued economic growth, customer preferences (especially those of the millennial generation), the rise of ecommerce and the Amazon channel, increased product choices and newer product categories in the marketplace are all driving the need for efficient and effective supply chain networks to support customer demand.
Among the many supply chain initiatives taking place today, vendor-managed inventory (VMI) has become an increasingly effective process and business model to help organizations share risk and information between vendors and customers — while benefitting from lower stockouts, reduced uncertainty and lower costs.
As with any industry, food and beverage faces its own unique set of supply chain challenges, including:
Not surprisingly, each challenge requires its own focus, strategy and best practices to overcome. Now, let’s take a closer look at what VMI is and how it can address some of these challenges through best practices.
VMI is the process whereby a supplier or vendor manages and replenishes inventory at a customer’s location at the levels required by the customer. The customer shares data such as point of sale (POS) data, customer forecasts, current inventory levels, and inventory target levels, which will be used to develop an appropriate distribution plan by the vendor. The vendor is usually the supplier, a manufacturer or a distributor.
The benefits of the vendor-managed inventory process include:
The VMI concept is well documented with a real-world example in Michael Hammer’s best-selling book, Reengineering the Corporation.
Let’s take a closer look at a vendor-managed inventory case study. Traditionally, Walmart managed its own Pampers (disposable diapers) inventory. However, when the company realized that inventory management is a costly activity, it approached Pampers manufacturer Procter & Gamble (P&G) to manage inventory at P&G’s distribution centers.
Through this arrangement, Walmart would tell P&G how much stock was moving out the distribution centers to its stores; P&G would identify how much to replenish and when. This approach worked so well that it developed into a strong win-win relationship between both companies.
Walmart offloaded into replenishment function to its supplier, leading to decreased costs, reduced stockouts and lower inventory levels. P&G gained improved visibility into its customer demand, and better supply chain and manufacturing planning led to reduced order lead times. On the storefront, P&G benefitted from additional shelf space and preferred end aisle displays.
Here are some best practice guidelines for the food and beverage industry to consider when addressing its own unique challenges.
Optimize to reduce transportation spend, while maximizing shipment efficiency. This includes understanding cost drivers, and product flows and lead times; defining service levels; and performing cost analysis and optimization.
In today’s food and beverage supply chain, success demands ensuring the right product is on the shelf at the right time. Retailers are selling more brands than ever. Distributors have a huge responsibility to stock the right inventory and improve forecast accuracy — all while reducing obsolescence and waste, managing quality and adhering to regulatory and legal restrictions. Suppliers are under more pressure to reduce lead times, improve quality and reduce costs. Finally, logistics and transportation companies must provide more visibility to their freights while struggling through a shortage of qualified commercial drivers.
I’m not promising that VMI is the ultimate answer, but it is one giant step in the right direction. VMI can help ensure you build the right relationships, product is always available when it should be and customers don’t walk away dissatisfied.
Do you have any VMI real-world stories or use cases? I’d love to hear your thoughts.
Originally posted by Jeswin Philip at https://blog.kinaxis.com/2018/02/vendor-managed-inventory-distribution-planning-food-beverage-industry-heres-something-chew/
It all started a little more than two years ago with two supply chain management certification exams — Kinaxis® Certified RapidResponse® Author Level 1 and Kinaxis Certified RapidResponse Administrator Level 1.
Since then, we’ve grown our supply chain management exam portfolio to provide exams for contributors, authors and administrators, while also adding integration- and application-focused exams.
We’ve also added three new credential levels to help partners and employees qualify for integration and solution consultant roles, which go beyond formal written exams to include training in soft skills and practical field experience.
Combined, these exams and achievements create a firm foundation upon which to build toward our ultimate, top-level credential, the Kinaxis Certified RapidResponse Master.
Representing the highest achievement in RapidResponse expertise, along with the respect and experience that comes with a supply chain industry thought leader, this credential symbolizes more than just having passed a series of exams. A Kinaxis Certified RapidResponse Master demonstrates practical field experience and a well-rounded background in the supply chain industry.
To qualify, he or she has worked in all Kinaxis RapidResponse job roles, has been a leader on multiple engagements across different verticals, has performed a variety of integrations and has implemented multiple applications. A Master is a distinguished individual with multiple talents and is highly respected within the Kinaxis ecosystem.
With credential requirements developed by cross-functional senior Kinaxis leadership and input from the partner community, the road to becoming a Kinaxis Certified RapidResponse Master is a steep but reachable height.
Potential Masters must have:
Qualifying candidates must submit appropriate documentation and/or proof of achievement. A peer review board comprised of Kinaxis stakeholders and senior members in the partner community will evaluate the submission.
As rigorous as it is prestigious, the rank of Kinaxis Certified RapidResponse Master signifies worthy candidates who will continue their careers having earned our highest honor and distinction.
Originally posted by Joe Cannata at https://blog.kinaxis.com/2018/02/ultimate-kinaxis-credential/
I talked about integrating finance into supply chain operations, including outlining how integrated business planning (IBP) can help. Now it’s time to look at how IBP can take your supply chain to the next level of performance, and bring finance right alongside with you.
Just as with other areas of supply chain management, machine learning and artificial intelligence (AI) are likely to find roots in IBP, primarily through the introduction of prescriptive analytics. Unlike descriptive analytics, which looks at what happened and why, and predictive analytics, which explores what will happen, prescriptive analytics suggest actions and shows the implication of each potential option. It tells you the best way to get to where you want to be.
Modelling financial and operational business constraints and using prescriptive analytics alongside IBP provides enhanced visibility and the ability to better manage change. The result is a more holistic picture of the organization and faster decision-making by executives. IBP done well provides a periodic rolling forecast, highlights gaps between the budget and operations and helps direct the company to where it wants to be.
Adding dynamic data integration and assumptions like capacity, downtime and material availability directly from intelligent machines will create an automatically updated plan and forecast, which could then trigger warnings to managers if misalignment occurs. You’d be able to intervene before critical thresholds are breached. We’re already getting closer to this reality, but prescriptive analytics could take over tactical and strategic decisions when looking further out. This would create prescriptive execution, where self-learning and self-sustaining algorithms not only outline the best solution and implement it, but also make changes afterwards to incorporate changes in circumstances.
Stuart Harman, a partner at Oliver Wight Asia Pacific, believes the future of IBP lies in the improvement of short-term planning and execution to ensure medium-to-long term plan deliverables. He says companies are unfortunately, “… being held back by the absence of a robust, formal, daily/weekly planning and execution process that integrates demand, supply, product management and customer service activities in the short-term planning horizon (typically the next 12 weeks).”
Improving this area means senior management spends less time being sucked into short-term activities unless their attention is actually required (exception management), and allows them to focus on the longer-term planning horizons associated with IBP.
Hand-in-hand with this improved execution will be an emphasis on better understanding where growth is coming from and how an organization’s products and services provide value, all of which will be updated through the IBP process. More organizations will adopt IBP as a way to plan for uncertainty and volatility, using it to identify areas of risk and where their supply chains are most susceptible to change.
As Harman notes, “Having the right processes in place will allow companies and supply chains to improve their understanding of the potential outcomes and ultimately enable them to prepare for uncertainty. The companies that do this the best will be able to seize the opportunities that always accompany change.”
The future of IBP lies in its ability to plan across the extended end-to-end value network, not just inside your own four walls. This requires understanding and incorporating constraints from interdependent supply chains and commodities across global boundaries. But the result will be a better corporate-wide understanding of constraints, risks and opportunities.
Originally posted by Alexa Cheater at https://blog.kinaxis.com/2018/02/future-integrated-business-planning/
When I was planning supply, it wasn’t unusual to have a dinner interrupted, a weekend cut short or a vacation disturbed. That happened to be the norm. It wasn’t a surprise when a supplier shipped late, a machine was suddenly overloaded or a demand planner informed you that you were working off the wrong demand plan. We spent hours, even days sifting through countless spreadsheets and trying to navigate manual processes.
During that time, we also invested in some “just-in-time” techniques we borrowed from the Toyota Production System (TPS). Unfortunately, our planning survival instincts kicked in and our just-in-time processes were supplemented with just-in-case fallbacks. All of a sudden, we had just-in-case inventories, and an exceptionally high number of expedites which really did nothing more than mask our supply planning deficiencies.
All of that was just business as usual. When we ran into unexpected disruptions like machine breakdowns or weather events that hampered deliveries, then it was goodbye to family time because the scramble was on. We thought we’d be in much better shape if suppliers could just keep their commitments, operations could manage their resources and demand planners could just get it right.
However, when we took a step back, we realized suppliers didn’t have timely information and supply planners were unknowingly overloading resources because they had no visibility into constraints and our manual processes. This meant it took too long for supply planners to understand the impact of demand changes.
Something needed to change. We needed to connect our supply chain planning to the rest of the network to include demand planning, operations and external suppliers. If there was a top-level demand change, we needed immediate bill of material explosions that would show us impact. We needed to consider all of our planning attributes like sourcing restrictions or material expiry.
We also realized we needed a smarter supply chain.
If we did have material that was going to expire, we needed automatic notifications to alert us so we could plan accordingly to avoid excess and obsolete materials. If we did get hit with the unexpected, we needed to simulate tradeoffs and compromises. By understanding the impact on revenue, delivery and margin, we could make decisions in time to have a positive impact on our performance.
Our latest eBook, Four mission-critical capabilities for navigating supply chain complexities, does a great job of capturing and explaining these supply planning capabilities.
Not only did we do a better job of profitably aligning supply with demand by implementing those critical capabilities, but I got my weekends back.
Check out the eBook here and let us know what you think.
Originally posted by Bill DuBois at https://blog.kinaxis.com/2018/02/supply-chain-planning-time-get-personal/
Bringing together finance and supply chain operations can make your company more operationally savvy and improve financial efficiency through:
Tighter integration can also lessen the pain of the budgeting process since a forward rolling plan means managers will already have consensus approval for some of the next year’s requirements through confirmation of the S&OP process. Without finance’s involvement in S&OP, the budget will start from a common plan based on what has happened in past years, and not one actually associated with what your operations team is forecasting will happen next year.
According to an Aberdeen Group study, 63% of respondents say they’ve already integrated finance and S&OP to some degree, but only 4% indicate finance is driving that process. While best-in-class companies focus on a more holistic consideration of supply, demand and finance, the vast majority still struggles with more basic supply chain issues like managing demand forecasts within the S&OP plan.
The same report shows best-in-class companies are:
It’s little wonder then that 76% of finance professionals say integrating financial planning and budgeting with S&OP is their top strategic action.
Corporate performance management typically focuses too much on analyzing past actions and not enough on forward looking plans. With IBP, you’ll see the projected financial performance of the company, not just a history of the past, and the variance between the budget and operating and financial plans through metrics. To do this effectively, you must seamlessly integrate financial and operational information.
Unfortunately, there’s still widespread use of Excel as the key enabler for S&OP. While that number has dropped from the 70% it once was, it’s still high enough to cause concern. Extended use of spreadsheets in supply chain planning causes increased room for error (it only takes one misplaced number to throw off all your calculations), and greatly delays the decision-making process. Compiling data from your multiple enterprise resource planning (ERP) systems takes time, and means the numbers you’re working from in your monthly S&OP meeting could already be weeks out of date.
One of the most important aspects of financial and supply chain operations integration is the IBP cycle. Making sure your processes are at a certain maturity level will increase the odds of success. To borrow from Gartner, you should be aiming for a stage-five S&OP maturity level, meaning you have the ability to react, anticipate, integrate, collaborate and orchestrate, with that final stage including financial integration into your day-to-day supply chain operations.
The typical stages of a monthly S&OP cycle are:
If this cycle seems familiar, you likely aren’t including any potential financial implications until well into the later stages, once the demand and supply plans have already been set. By implementing IBP, finance plays a bigger role at every stage of the cycle, with both the operational and revenue impacts of changes to the demand and/or supply plans happening much earlier on.
Instead of only running scenario simulations to see how to accommodate shifts in demand, you’ll look at how each potential scenario impacts the corporate-wide KPIs. Essentially, you’ll move from just balancing supply and demand during your S&OP meetings, to balancing supply, demand and finance, and creating a consensus plan that accounts for all aspects of the business, not just supply chain.
The post Benefits of integrating finance and supply chain operations appeared first on The 21st Century Supply Chain.
Originally posted by Alexa Cheater at https://blog.kinaxis.com/2018/02/benefits-integrating-finance-supply-chain-operations/
IBP helps achieve key performance indicators (KPIs) like sales, customer satisfaction, inventory level and other metrics outlined in the strategic plan. Oliver Wight research shows “companies that do integrated business planning well achieve greater benefits than companies that do not.”
Those benefits, as outlined by the Aberdeen Group, include:
But it’s not quite as simple as saying, “let’s start doing IBP.”
Disconnected data, processes and people, coupled with technology limitations, often leads to misalignment, frustration and an unrealistic financial plan. That in turn results in inventory issues, forecast inaccuracies and reduced profits, leading to falling stock prices and reduced shareholder value.
Ken Olsen, Director, Deloitte Consulting LLP, notes how IBP can help with the integration. Olsen says IBP improves alignment between strategic planning and finance to produce more accurate forecasts, and helps chief financial officers (CFOs) identify inaccurate numbers before they get committed in the financial plan.
While that sounds great in theory, in practice it requires work to get it right. S&OP diehards insist the financial forecast be a product of the sales forecast. Unfortunately, budget cycles, price forecasts and other external reporting requirements often needed at the aggregate level mean finance develops its forecast independently. Overcoming that challenge means developing meaningful and robust metrics that measure financial performance, and including them in S&OP operations. At the end of the day, the overall goal for everyone, regardless of business function, should be sustained profitability.
That becomes critical in developing accountability and getting ahead of inaccuracies that could cause a financial miss. However, you’ll only see those disruptive boulders careening toward you if you have corporate-wide end-to-end visibility. That means bringing together data from multiple sources, whether it’s financial or supply chain-related, into a single system for viewing and analysis. Having the ability to simulate potential scenarios will also help you more easily come to collaborative, consensus-driven decisions focused on metrics aligned with the financial plan.
An example would be sales and marketing driving increased demand through a promotion, without knowing capacity is constrained at one node of the supply chain. Enhanced operational visibility means you’ll be able to spot the inability to support the demand plan before it causes an unfavorable outcome. You can then look at cost-effective alternatives to meet the shift in demand, whether that’s prebuilding or expediting supplier shipments. This enhanced visibility helps executives see exactly where shortfalls or misalignments happen, highlighting opportunities to improve financial metrics.
With siloed processes, you often see a mentality that it’s not happening in my backyard, so why bother paying attention to it. You end up with groups each going their own way. At the end of the day, if the numbers don’t add up, it becomes a game of shifting the blame. Stronger integration between finance and operations means improving that accountability. Each function no longer operates to its own set of goals and standards. Everyone is responsible for working together toward the same set of metrics, and everyone knows the role they play in achieving those numbers.
Successful integration also means CFOs and their teams can take a more active interest and role in S&OP processes and supply chain outcomes, so they’re involved earlier on in course correction and decision-making. This active participation gives CFOs the opportunity to evaluate, monitor and influence the financial impact of the demand plan. Finance should play an active role in setting targets and ensuring you’ve aligned your operational plans with corporate objectives.
Linking financial metrics (revenue, margin, cash flow, etc.) to operational metrics (on-time delivery, inventory turns, capacity utilization, etc.) gives you a way to check if your operational decisions are consistent with your financial objectives.
Overcoming silos, disconnected processes and people, and technology limitations will help make the road to financial and supply chain operations integration a little easier. In my next blog, I’ll explore the kinds of benefits you can achieve by bringing these two functions together.
The post Overcoming obstacles to integrating finance with supply chain operations appeared first on The 21st Century Supply Chain.
Originally posted by Alexa Cheater at https://blog.kinaxis.com/2018/02/overcoming-obstacles-integrating-finance-supply-chain-operations/