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2018

Our congratulations go out to Toyota, for selecting a great partner for supply chain management and visibility, and to Kinaxis for closing this deal with one of the world’s largest automotive manufacturers.

Kinaxis better plan image

Iwao Nakano, GM for Corporate IT at Toyota, expressed optimism in this newly created partnership saying, “We are looking forward to working with Kinaxis to optimize inventory and enable more flexible response to customer demand.”

 

As many enterprises are seeking to do today, leaders at Toyota—long revered for their long-range, forward-looking management foundation and practice—are seeking to unify once again their entire S&OP process. Nakano expectation is that “RapidResponse will help us unify sales and production, and will become the foundation upon which we can continue to realize improvement in demand and supply planning.”

 

You can read the full article here.

 

We can all look forward to hearing about Toyota’s process of ongoing improvement (POOGI) with Kinaxis RapidResponse as a base upon which to build.

 

Again, our congratulations to all.

 

 

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We are sure that many of you are already familiar with the S.M.A.R.T. (SMART) acronym for goals and metrics. The SMART stands for:

  • Specific
  • Measurable
  • Attainable
  • RealisticS.M.A.R.T. acronym details as steps
  • Time-related

 

UN-SMART metrics

Virtually everyone is measuring things that are, indeed, measurable (that’s the ‘M’ part). After all, you can’t have metric for things that cannot be measured or quantified.

 

However, we hear a lot of goal-setting that is not quantified.

 

Here’s a big one that seems to be getting a lot of attention these days:

 

Improve forecast accuracy

 

Everyone wants to improve forecast accuracy!

 

However, if you’re like most supply chain executives and managers, you’ve had this goal for a long, long time.

 

You may have spent hundreds of thousands of dollars, and thousands of man-hours, trying to improve forecast accuracy.

 

But, also if you’re like most supply chain executives and managers, you have barely moved the needle toward any real, long-lasting improvement.

 

Sure! You’ve seen some improvements.

 

But, my guess is that most—if not all—of that improvement has come in the fewer than 20 percent of SKU-locations (SKULs) that were already pretty consistent movers, and were already the easier to manage SKULs for which you are accountable.

 

Nevertheless, you’re still struggling almost daily with the 50 percent or more of your SKULs where demand is volatile and your typical forecast (on average) has error rates (at the SKUL-level) of 40 percent, 50 percent, or even more!

 

So, what’s my point here?

 

My point is: Why?!?

 

Why are you spending so much time, energy and money measuring and attempting to change something over which you clearly have very, very little control?

 

Are your forecast accuracy goals specific? Do you set specific targets for the really hard ones—the ones with lower demand levels and higher volatility?

 

Are they measurable? Are they achievable? (Now, there’s a big question!)

 

If they’re not achievable—and I think your history of effort and investment over months and years probably proves that point—then why are you still beating your head against that wall? (It will feel so much better when you stop!!)

 

Measure what you’re after

What you’re really after, we believe, is to improve FLOW in your supply chain, so that you can improve ON-TIME PERFORMANCE, so that you can MAKE MORE MONEY.

Demand-Driven Adaptive Enterprise ROI formula
Are we right?

 

So, what you should be applying SMART metrics and goals to are these:

  • How much VISIBILITY do you have across your supply chain of ACTUAL DEMAND? (Compare to this: How much of the VISIBILITY is obscured by FORECAST data that is almost always going to be wrong to some degree or other?)
  • How much VARIABILITY is being passed up and down your supply chain due to actions being taken based on FORECASTS rather than ACTUAL DEMAND?
  • How likely are your supply chain BUFFERS—literally, any given buffer—going to PROTECT FLOW? Do you have EARLY WARNING VISIBILITY of buffers that are in danger of NOT PROTECTING FLOW based on ACTUAL DEMAND (not clouded by FORECASTS)?
  • Are your actions leading to IMPROVED CASH VELOCITY, or are firefighting efforts, overtime, and expediting eating up all of your supposed “improvements”?
  • Is your ROI actually improving as a result of your efforts, or are you in the same profit position you were in years ago, even though you have spent “the big bucks” on things others promised (or, you thought) would lead to improvement?

 

It’s your turn

What do you measure in your supply chain? Are forecasts clouding your visibility? Are you achieving real, long-lasting improvements that lead to MAKING MORE MONEY? Or, are you just getting better at putting out recurring fires?

 

We would like to hear your comments. Leave them below, or feel free to contact us directly, if you prefer.

 

 

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Sometimes I wonder why we continue to do what we do?

Flow Diagram of Supply Chain Driven by Forecasts

 

The old saw applies:

 

“Insanity is doing the same things over and over, but expecting a different result.”

 

We know our forecasts are always wrong, to some degree or other.

 

We know that our resources get misallocated. We know that we are constantly using precious resources to make, ship, and store things that will not be needed—not now, certainly; and maybe not ever. We know that we must regularly rework our plans and break our schedules, simply because actual demand has revealed just how wrong our plans and schedules really are.

 

Nevertheless, we continue doing these same things—over and over again.

 

And, we settle for profits that are far below the potential for our operations.

 

We could be doing something different

Consider what happens when we stop doing what everyone else is doing.

 

Look at this simple accompanying figure.

Flow Diagram of Demand-Driven Supply Chain

 

All we did to get to this result was the “lean” thing. We eliminated the waste.

 

We eliminated the time, energy, money, and capacities spent making, shipping, and storing the stuff our customers were not seeking.

 

And, what happens?

 

The obvious thing is that we make more money.

 

But, that’s not all.

 

Eliminating the waste reveals new capacities—20 percent, 30 percent, 40 percent or more.

 

The unveiled new capacities make us more flexiblemore able to respond to changes in the marketplace, and more able to produce what our customers are really demanding.

 

In other words, it helps us do more with less.

 

Cash flow is improved. Morale goes up. Employees are more happy and feel more in control.

 

Firefighting dramatically declines.

 

On-time delivery goes up—typically, way up.

 

Isn’t this the way you’d like your supply chain to operate?

 

At its core, this is what becoming truly demand driven is all about.

 

Personally, I think you should look into it more. You can find a plethora of information about it on the Demand Driven Institute Website.

 

Do it today. Why would you want to wait?

 

Move from complex to simple. Move toward simplicity and sanity, by stopping the merry-go-round of practices that do not lead to improvement.

 

What do you think?

 

We can help. Leave us a message below, or contact us directly, if you prefer.

 

 

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