Lora Cecere

Trends I am Watching

Posted by Lora Cecere Nov 30, 2011

It is that time again: ring out the old and ring in the new. The end of the year is a good time to reflect on the most significant trends of the past year and launch research into new areas. Here, I share both:

Significant Trends of 2011

§ Supply Chain Disruptions: With the floods in Thailand, the tsunami in Japan, and the Arab spring in the mid-east, there are few supply chain leaders NOT talking about supply chain resiliency and the design of the shock absorbing supply chain. Supply chain sensing, control tower analytics and what-if analysis are growing in importance. 65% of companies that I am working with experienced a major supply chain disruption in 2011.

§ Supply Chain needs to be more than a Game of Labor Arbitrage: As labor rates in China increase, companies are rethinking supply chain design for flexibility. Labor, taxes, and raw material benefits are ever-changing and the supply chain needs to be able to adapt and flex with global conditions. It is no longer a game of labor arbitrage. Companies are waking up. It is more about value and learning the hard way that supply chains can no longer foolishly chase the lowest labor costs.

§ Chief Supply Chain Officer. With the growing importance of the supply chain on operations reliability, resilience and strategic alignment, 2011 is the first year that I have met professionals with Chief Supply Chain Officer in their title. While they are still few and far between, I feel that the evolution of the title is significant.

Trends I am Watching for 2012

1.       Big Data Supply Chains. The concept of the big data supply chain is the evolution of technologies to harness the explosion of data and new data sources–sensor data, unstructured text, demand and supply sensing, transactional data forms– to drive a near real-time response. In this research, I will be writing about the evolution of Map Reduce models to harness new types of data with a keen interest in the use of unstructured data types. I will also be closely following the expanding capabilities of in-memory processing and the growing capabilities for reporting and analytics.

2.       Definition of Outside-in Supply Chain Processes. Today’s supply chain processes are designed from the inside-out (from the enterprise processes of procure to pay and order to cash). Tomorrow’s processes will be designed from the outside-in (from the external environment to internal processes). The focus will be on sensing, shaping and driving an intelligent response. This evolution will take many years and will require the redefinition of current supply chain architectures. I will be following these trends.

3.       Digital Path to Purchase and Social Commerce. I am currently writing a short report on social commerce. Last year in October 2011, Altimeter hosted an event–Rise of Social Commerce– to focus on the evolution of social processes to drive commerce. A year later, I find that the goals are still aspirational, but following one of four paths: extension enrichment of eCommerce, social as a new channel, social convergence of mobile/social and digital in the digital path to purchase and open innovation. The intersection of the open and social graph is still largely an untapped opportunity for the customer-centric supply chain.

4.       Evolution of Supply Chain Adaptors. To connect the end-to-end supply chain, companies need adaptors for both demand and supply relationships. These adaptors cleanse, harmonize, translate and normalize disparate data types to improve demand and supply sensing.  Demand signal repositories (DSR) were an early form of this technology category. Companies are learning the hard way that building the end-to-end supply chain is not as easy as connecting ERP and APS building blocks.

5.       Safe and Secure Supply Chains. With changing legislation for serialization in pharmaceuticals and food safety in global supply chains, I will be following the impact on supply chain execution and the extended supply chain.

6.       Supply Chain Sensing. Today, supply chains respond. They do a poor job of sensing. While latency in the extended supply chain is weeks (and the concepts of the bullwhip effect are understood academically), the impact is largely ignored in the extended supply chain system design. In this research theme, I will focus on understanding the benefit to companies to reduce supply chain latency.

7.       Redefinition of Supply Chain Benchmarking. Software as a Service (SaaS) offers companies the opportunity to redefine benchmarking practices to represent the near real-time supply chain potential of peer groups. I will be closely following this trend as SaaS offerings embrace content and global supply chains align to near real time performance signals.

Interested in your thoughts. What trends do you think are significant? Any trends that you would like for me to watch?

Where has two years gone?  I have been working on a report on the evolution of S&OP technologies for the last two years.  Normally, a report is much quicker for me, but this one has been difficult, because of the many nuances.  There are three dynamics in play: the definitions of the basic process terms have changed, the technologies have improved, and the market is over-hyped by technology and consulting pundits. It has taken (even an old analyst gal like me) months to figure this out.



The report that I will publish next week is a guidebook on how to put the technologies together based on the process goal/maturity.  It has been reviewed by all the major technology providers and is designed to help line-of-business users architect their S&OP solution platforms.  There are many reasons why this is important, but the ones that came to the top in the research are listed below.


In qualitative interviews with 60 line of business supply chain leaders, when asked what is your focus for S&OP in 2011, the response was:

§ 90% of supply chains are grappling with skyrocketing costs and supply volatility.

§ 87% are struggling with the integration of business planning and supply chain planning technologies.

§ 85% of supply chains experienced a disruption.

§ 62% of companies have multiple S&OP processes.

§ Uniform frustration that industry progress on working capital has stalled.

There are several major shifts in the technologies:

§ Evolution of a S&OP Platform:  Recognition that there is a need for a S&OP platform for demand translation, mix analysis and analysis of differing units for volume (always amazed at how many different definitions of volume there are in an organization).  This also is evolving to connect the multiple S&OP processes together.

§ Change in how Planning is Done:  Movement from tight integration of demand and supply to the need for iterative analysis between demand, inventory, financial and supply modeling.

§ S&OP Execution:  Evolution of S&OP execution to tie planning to execution.

§ Better Analysis:  Deeper modeling and what-if capabilities.

§ Improved Visualization:  Better visualization of S&OP processes for the executive S&OP meetings.


To hear the webinar, click on the link http://vimeo.com/32284837  The slides are also available on slideshare at http://www.slideshare.net/Altimeter/not-your-fathers-sop.


What do you think?  I welcome your feedback.

Lora Cecere

Watching Paint Dry

Posted by Lora Cecere Nov 16, 2011

As an analyst, one of my biggest surprises is how slowly supply chain processes mature.  I liken it to watching paint dry on the wall.  You cannot see it, but slowly–and sometimes ever SO slowly–it dries.  I often have difficulty predicting the speed and the final color, but have had success predicting the general direction.

What is Supply Chain Excellence?

Last week, I presented at the Chief Supply Chain Officer (CSCO) Summit in Chicago (reference slideshare presentation http://www.slideshare.net/Altimeter/for-the-csco-conference-final) on supply chain excellence.   I am currently analyzing 20 years of balance sheet data to track individual company progress to drive supply chain excellence.  As I shared in my talk, I don’t believe that supply chain excellence can be defined by putting all companies in a spreadsheet and shaking it up.  Instead, I believe that supply chain excellence is defined by:


§ Resilience:  I believe it is defined by a company’s ability to drive year-over-year progress against their peer group.  I don’t think that you can evaluate a supply chain based on one or two year’s performance against an all-industry list.  Instead, the trend needs to be over time against their peer group.

§ Balance: I also believe that managing a supply chain is like running a decathlon  It is one where you want to be good at all events, but you need to make trade-offs between individual events to win the competition.  For me, the supply chain decathlon is trading off growth, working capital, asset utilization, and profitability (earnings before taxes and interest).  The key is  making conscious choice.  I believe supply chain leaders raise the bar higher each year driving new levels of performance while making these trade-offs.  I can see this in the data.

§ Focus on Value-based Outcomes.  I also believe, based on interviews, that supply chain leaders believe that the supply chain is an engine of growth.  It also offers an opportunity to build new business models.  The best known examples of this are Dell make to order/ship direct model, funding the supply chain by negative working capital, Apple’s introduction of itunes, and General Motors introduction of Onstar.  For leaders, it is about MUCH more than supply. It is about redefinition of the platform to drive new value based outcomes.

Moving from a Focus on Supply to Value-Based Outcomes

Opportunities abound to power growth through value-based outcomes.  At the conference, I spoke on the shifts in four value networks. In health care it is the shift from efficient sickness to effective programs for wellness, in A&D it is the shift from selling airplanes to performance based-logistics, in automotive it is the transition from selling cars to delivering safe transportation, and in consumer products it changes from a focus of right product, right place at the right time to delighting the customer at the three moments of truth (pre-purchase, decision to buy, and  product usage).  All of these require the redefinition of processes outside-in and across the network.

The availability of new technologies to sense combined with the information supply chain in big data supply chains allows the redefinition from supply to drive value-based outcomes. We are slowly moving in this direction… Again, it is like watching paint dry, however, based on the research, I can more accurately predict the color.  I believe that it is green:  it is the color of money. Over the next couple of weeks, I will be sharing case studies on supply chain excellence from this research.  I look forward to your thoughts.

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