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A Day of Firsts

Posted by lcecere Sep 27, 2012

Today, was a day of firsts. My first book is edited. Today, the book Bricks Matter went to the printers. We have completed the editing of the first press run of Bricks Matter. Oh my, what a job! With the help of my asssitant, Jill, we have now read 411 pages and checked 72 graphics over 25 times. The book is scheduled to publish the beginning of December. <Let me know if you want a signed copy for the holiday season.> Our first Supply Chain Insights webinar is completed. Over 150 people signed-up for the webinar. We were pleased with the strong showing.  The topic was Analyzing Twenty Years of Supply Chain Financial Data. I started this research project as part of the effort to write the book, and I have found that it is far more complex and interesting than I expected. I expect that the completion of this analysis will actually culminate in the writing of a second book, because supply chains are complex systems with increasing complexity that I think need more in-depth analysis.  So far, I am nine months into the analysis, and I can see early patterns, but there is much more to learn. We presented data on process industries today.  Next month, we will do discrete. The high level summary of the presentation today is:

  • Consumer Packaged Goods Companies have Stronger Supply Chains than Other Process Industries (e.g., CPG when compared to Food and Beverage, Chemical or Pharmaceutical manufacturers show greater year-over year improvement.)  Why? The supply chains were more resilient through the economic recovery of the Great Recession and they showed less gyration in year-over-year results. The audience could only pick a supply chain winner in the area of consumer packaged goods.  While they crowned P&G the winner of the global CPG companies of Colgate, Kimberly Clark, Kraft, P&G, and Unilever, they could not determine the leader for the chemical (BASF, DuPont or Dow Chemical) sector or global pharmaceutical companies (Abbott, Merck and Pfizer).
  • The Companies with the Best Scores on Gross Margin were Less Reslient Through the Economic Downturn of 2007-2009. These companies tend to "Sweat Assets" and throw their supply chains out of balance. In our analysis of five process sectors, only Colgate has been able to remain resilient with best-in-class gross margin (no substantial change in inventory or cash-to-cash cycles).
  • Inventory Everywhere. Only high-tech and electronics companies have made TRUE progress on managing inventory (improved inventory turns). For the rest, progress on cash-to-cash cycles has been largely driven by squeezing the procurement relationship and improving the Days of Payables Outstanding (DPO).  We have rewarded supply chain leaders in the last decade for pushing costs back in the value chain. When DPO is squeezed too hard, there is an adverse effect on Gross Margin.  With the rise of Corporate Social Responsibility (CSR), I predict that this will be less prevalent.
  • Flat Growth. The last decade was a race for global expansion and new product innovation. With flattening growth, and declining margins, supply chain excellence will matter more than ever. I think that the next decade will see the rise of the "T-shaped Manager" to lead horizontal end-to-end processes, and that superiority in supply chain leadership will transfigure relationships to drive new business models and allow companies to improve the Supply Chain Effective Frontier. Over the past decade, we have seen that the fastest progress in supply chain management happens when margins are tight, product cycles are short, and metrics are aligned across the organization to balance the supply chain holistically (growth, profits, working capital, customer service, and forecast accuracy) as a complex system.

This analysis is hard work, but it is fun. And it is rewarding.  After getting the supply chain ratios, we are mining the data and completing the analysis at the intersection of supply chain ratios for growth, profitability, cycles and business complexity; we are just beginning the work.  It will take us many years to complete. Over the course of the next year, it is our goal to tie this work to the  quantitative surveys that we are completing so that everyone can understand which supply chain practices drive the largest value for each industry. (All survey data is held confidential and reported in aggregate.) You can help by submitting a request for us to do a custom analysis for you.  Just submit the request via the SCI Community, and @indexgirl will deliver your own personal cuts of the data. We will get to learn from you as we interpret the data together.  After doing this day-after-day for many companies over the year, we believe that we will see patterns emerge through the guided data analysis that we would not see otherwise. We will be doing monthly webinars for supply chain leaders over the course of the next year. The slide deck from the webinar is posted on SlideShare, and the full webinar is available (with the slide deck) at  the SCI Community site here. And you can view the webinar at our On-Demand Webinars page at Supply Chain Insights.  Please continue the discussion that we started today there. We are committed to helping supply chain leaders through open research.



Posted by lcecere Sep 27, 2012

It is midnight in Melbourne, and I cannot sleep. I hate jet lag.


Tomorrow, at 10:30 AM, I will buckle my seat belt for a 22 hour journey back to the United States. I need to sleep, but sadly I cannot. I love Australia, but I hate the trip. So, tonight I went for a midnight walk, and have called room service for some coffee.  I think that I will pass the time before I put my exhausted body in a seat to fly home by sharing some reflections on my experience here.


I have spent the last three days with 200 SAP users at an Eventful Group Conference. The event team put me to work. I led four discussion groups, gave a keynote, presented on master data management and then taught a workshop  on supply chain excellence. I enjoyed  it. The folks in Melbourne were gracious and no-nonsense. They were hungry for information. Many had traveled many miles to come to the event. (e.g., I was surprised to have a wonderful woman from Chile in my class yesterday from Komatsu. I find teams in South America are thirsty for information on supply chain excellence.)

Similar, Yet Different

As I walked Collins Street at midnight, my mind was churning on how the folks at the event were different, but similar to the recent events that I have done in the states. How were they different? Their organizations were smaller, their understanding of supply chain was more basic, and their focus was more pragmatic than most groups that I speak to.  I enjoyed the no-nonsense approach.  How were they similar? The group struggled with how to use the software that they have bought, they are frustrated that they cannot access the data that they need, and they are not clear on the definition of supply chain excellence. I believe that companies all over the world have implemented supply chain projects without a holistic view of value.  As a result, they have not maximized the potential of their investments.


I love designing quantitative research studies. In the design, I always ask a question on business pain of the company; but recently, I have started asking a question about the pain of the individual in the company. The questions sound similar, but the outcome is very different. It is my belief that the pain of the individual in supply chain is rising and that we are not addressing it well. I am now analyzing my third survey where I have asked this question, and I am getting similar responses as  shown in figure 1.


Figure 1: Top Three elements of Supply Chain Management Pain

So, as I worked with the groups at the conference this week, I shared this slide and asked them for feedback. "Was this their business pain?"

It resonated.  It was. So, at the event, I listened with a new ear to understand  "why they could not get to data"

and "what is the gap of knowledge and understanding of supply chain by the executive team?"


And, before my good friends at SAP call me to talk about why I have it all wrong, let me share that I think that this has nothing to do with SAP or the use of Business Warehouse Accelerator, or the evolution of HANA, or the good work that they have done with Business Objects. I believe that this problem is universal across industries, continents, and software solutions for supply chain management. Here are my insights: We Got Here on the


Wrong Road.

Supply chain management is now thirty years old. In the evolution, most companies implemented projects. They were sold technology. The average company now has over 150 distinct software systems. Consultants swarmed on implementations without any practical knowledge of supply chain touting best practices. We do not have Best Practices. We have EVOLVING PRACTICES.


Supply chain teams not knowing any different believed them. And, in their defense, the consultants do have insight on how to implement the technology.  What was not clear then, but is exceedingly clear now, is that the technology is only the enabler.  It is about much more than bolting in the technology.  Instead, it is about the effective USAGE of the software.


What was not clear then, and is still not clear for most, is how the multiple sets of technologies needed to be designed to drive value-based outcomes. As a result, project after project was implemented without a clear understanding of the definition of supply chain excellence. Metric systems were designed without ensuring the availability of inputs. Companies have not learned that when it comes to supply chain excellence, that you do not start with process. Instead, you need to start with business strategy, define value-based outcomes through a supply chain strategy, use this to build supporting cross-functional metrics to view the business holistically, and then define the supporting processes. The problem is not with the BI tools, it is with what we are asking them to do.


Enlightened Leadership is a Hard Nut to Crack. The lack of leadership and understanding by the executive team on supply chain excellence is tougher. These projects are typically led by an enlightened mid-level manager.  And, there is a belief that the project will be more successful with the support of the executive leadership team. This is true if the executive team is knowledgable and understands supply chain excellence. The unfortunate reality is that most are not. It is a rare team that I encounter that has this support.


This problem is usually made worse by software sales teams and consulting groups. The providers of software have limited the potential of the market by selling software versus enabling a better way to run a business.  It is like a car manufacturer selling cars when there is no place for people to learn how to drive or read a map. While the software sales people have made it a bad situation, the consultants have made it much worse. It saddens me to see that most consulting partners think that they know what supply chain excellence is, but they do not. They do not see the problem. They have been rewarded for many years for a project-based approach, and most lack grounding in supply chain excellence. I have a very short list of folks that I think do it well. This will be an upcoming blog post. Let's just leave it here as I am still working on this one.


We Focused on the Wrong Goal. Companies have focused on project implementation not on software usage to solve a business problem. Software sales cycles were long and companies pushed to get software implemented fast. Most companies do not use the software that they have installed. They cannot get to the right data. In the webinar that I will present on Wednesday, I see an inverse relationship between short implementations and business value.  Over the last 9 years, I have worked with over 400 companies selecting and implementing software. This experience has given me a great reference point to now look at the impact of these projects against the corporate financials.  The companies that have achieved the most on the Supply Chain Effective Frontier implemented slowly with strong leadership against the goal.

Conquering the Effective Supply Chain Frontier

I am passionate about supply chain.  I believe that effective supply chain processes improve economies, minimize environmental impact and improve the satisfaction of employees in companies.  I am bothered that we have made these mistakes.  As a result, I have written a research report and built a webinar series around it.  Please join us for these insights on Supply Chain Excellence on Monday.  The sign-up for the webinar is (We are doing a review of process industries in our September webinar and discrete/high-tech in our October webinar.) I am very excited about the methodology that we have built. I spent six months developing and testing it. I share insights on the work that we are doing in the report Conquering the Effective Supply Chain Frontier. It is the essence of the book Bricks Matter which is now publishing in early December.


As I walked the streets of Melbourne in my sleepless state what troubles me most is that many companies are looking to speed up their current SAP processes through the use of in-memory processing with HANA analytics.  Let me state for the record that I am a big fan of HANA and love some of the new SAP analytics capabilities. My caution to business users is be careful. I worry that we are going to speed up the wrong things versus taking a step back and rethinking business value.  I want to see companies do value stream mapping and focus on a clear definition of supply chain excellence and then re-implement to make the right business decisions faster.


Thoughts? I would love to hear from you.  And, I am hoping that you can join us for our webinar on Monday.


Where has the TIME Gone?

Posted by lcecere Sep 27, 2012

Greetings from Melbourne, Australia. Tonight, I have dined on Tasmanian salmon, enjoyed a snack of Tim Tam fingers, and dipped Wattle cookies into my coffee. I traveled over 10,000 miles. It has been a very long day. I will be speaking on Monday at "Mastering Supply Chain Management with SAP" by the Eventful Group. I am excited to talk to an Australian audience and welcome them to the SCI Community . I will share more on these insights later this week (probably from an uncomfortable plane seat somewhere over the Pacific on my way home).

Lots Going ON!

We now have 240 participants in the SCI Community. My goal is to have over 6000 supply chain leaders active in the community by February 2014. Slowly people are getting their sea legs and building confidence to share their voice. One manufacturer has asked for benchmark data, one has submitted a question to a wizard, but no one has had the courage to share a technology/consulting partner rating or review. You could be the first! Congrats to Karen Conway at GHX for jumping in head first. She is our Featured Leader on the SCI Community leader board this week. I love her leadership in Healthcare. And General Mills is leading the contest to sign up the most community members to get a free training day, along with signed copies of the book Bricks Matter for the supply chain team (the contest ends on October 31st).


Watch your mailbox this week. More reports are on the horizon. I am spending the weekend working with the Supply Chain Insights team (via Skype) to finish up three new reports that will publish in the Supply Chain Insights newsletter next week. (You can still sign up for the newsletter .) This will make our 11th report published since we founded the company in February 2012. All of our reports are available on slideshare or in the SCI Reports area of the community. (We had 3,000 views of our reports this month.)


A  new webinar series is also being kicked off. We're currently finalizing the content for our first webinar in the series. Over 100 supply chain executives have signed up so far. It is great to see old friends on the list. In this webinar, we will be sharing twenty years of financial data along with insights on how companies have performed on the Supply Chain Effective Frontier. This webinar has been six months in the making, and I am proud to co-host it with Abby Mayer, Research Associate, Supply Chain Insights (@indexgirl). Please sign up for the webinar

while open seats remain. It is the first of a series of webinars that we will be doing (one per month) to help you and your supply chain team better understand supply chain excellence.


The book page proofs of Bricks Matter, co-authored with Charles Chase, have also arrived from Wiley. We have a burgeoning file of 65 sign-offs (and ten refusals) for artwork and stories to be included in the book. All these changes caused a flurry of activity at the end. The book is a retrospective of thirty years of supply chain leadership. It is chock-full of case studies, quotes and data. Wiley has told me that the book is so well written that they have moved the publishing date up from December 24th to early December. Next Saturday, I will spend the entire day going through the manuscript for the final (yes, FINAL) set of edits. This is the thirteenth set of edits. The book took six months to write and four months of begging for sign-offs/permissions. But it is almost done.

How Can You Help?

I am working hard to redefine the analyst model. My goal is to make research more relevant, actionable and available. I believe that research sells and relationships renew. So, you might be saying, how do I help Lora to change the analyst model?  There are three favors that I would ask:

  1. Join our Community. The community is free and available to all that care about supply chain.  Sign up your team at the Supply Chain Insights Community.  Come join in a conversation, and add your voice and share your opinions on supply chain excellence. Try a rating and review. If you have gone to an event and it was great, give it a rating. If you have gone to an event and it was bad, let others know.
  2. Use our Research.  Our research is designed to be leveraged. We want it to be used. We want to become the brand standard for business leaders trying to understand the definition of supply chain excellence. Read it. Use it. And let us know your feedback.
  3. Complete our Surveys. Open research is only possible when people fill out our surveys.  We have four in the field right now, and we would love your help in completing one:
    • For technology providers, consultants and manufacturers, let us know your thoughts on Transportation Management:
    • A special study of retailers to understand what should be the Role of the Store:
    • A study on the use of channel data focused at retailers and consumer products companies. Downstream Data:
    • How has digital marketing affected trade promotion budgets?  And how will this shift affect trade promotion practices? To know, help us by filling out our study on Trade Promotion:


All the best!  We at Supply Chain Insights are having fun. Many thanks to our 42 customers that have helped us by buying services (speaking, webinars, advisory workshops and strategy days) in our first six months of business. We are committed to serving the supply chain leader through open, relevant research.

Supply chain talent is constrained. As we try to find a solution for the supply chain talent gap, there are more questions than answers. Last week, I attended a Penn State networking conference on the topic. It was attended by 35 supply chain leaders.  This week, I continued to learn about talent development by facilitating an executive workshop at the Logility Connections conference. To prepare for the conference, I worked with Karin Bursa, Vice President of Logility marketing, to complete a survey of 44 Logility clients on the state of talent in the supply chain. (I think that the responses from the Logility customers are typical of the industry.) In this blog post, I share insights from these two experiences. At a high level, supply chain leadership teams are facing a talent shortage. It is driven by three forces: baby boomer retirement, growth in emerging economies, and growing recognition of the importance of supply chain as a discipline. No one has an answer; but here, I share some insights on the approaches teams are trying.

The Problem

Data and Understanding. Getting clear on the problem is the first step. Despite thirty years of supply chain evolution, as shown in figure 1, executive teams are still struggling to understand supply chain. In the last year, the talent gap has become more acute.  It is a common for executives to look at the situation and question why jobs have been vacant for SO long. Many wonder if " the HR department is doing their job." In short, it is a new era. There are new obstacles. Closing the gap of understanding by the supply chain executive team is the first place to start.


Figure 1: Supply Chain Management Pain


Open Jobs.

Of the 44 respondents, 52% currently have open supply chain planning jobs. Business pain is acute in the area of demand planning.  The average time to fill a job is five months. I believe that this is only going to get worse. Building retreads --stealing planners from other companies--is not going to be an answer. I also believe that hiring students from supply chain programs at Universities will not resolve the problem. Why? The graduates from schools like Penn State are heavily recruited. As a result, only large companies with well-established recruiting programs will be successful with this approach.


Vertical Silos.

While companies talk of breaking down vertical silos, only 27% of companies actively manage supply chain careers focused on cross-functional training (across make, source and deliver); and only 16% have a human resources department focused on the management of supply chain talent. As shown in Figure 2, in the survey responses, there is a clear gap in job progression opportunities. Skill requirements are also changing.  The planner today needs to be a combination of analytical skills, business knowledge and influence skills.


Figure 2: Today and In Five Years

My Take:

Demand is eclipsing supply. The gap will grow larger. Buckle your seatbelt.... There are no "Sure-fire" answers, but here are some things people are trying:


Invest and Grow your Own.

I do not believe that the industry need for planners will be satisfied by the current programs at business schools. Graduating students are being courted heavily, and many have unrealistic expectations. I think that companies will need to actively recruit from other disciplines --engineers and math students-- and train them through active cross-functional development programs to be supply chain leaders. The Johnson & Johnson Gold Program or the Intel Supply Chain Masters Program are good reference models for the industry.


Actively Partner with Local Schools.

Go to your local school and try to get momentum with internships and co-op programs. Work to train talent in disciplines that are not as great in demand.


Career Move for Customer Service Employees?

One company was having good experience in training talented customer service representatives to be planners. They were investing in training and working on teaching long-term employees new skills. I find this to be an interesting idea. Senior customer service respresentatives know the customers and the supply chain constraints.


Oops! Plane is ready to land. Gotta wrap this up!  I am off to Australia to speak at a conference.  And, I will miss my flight. We will be continuing this discussion on the SCI Community. Check it out at Also, please join us for our first webinar on September 24th.  We will be sharing insights on supply chain financial benchmark data and evaluating how companies historically make trade-offs.  It is designed for anyone with an interest in metrics that matter (reference


It's HERE!

Posted by lcecere Sep 27, 2012

Six months ago, I founded a new firm with a promise to redefine the industry analyst market.  Today, with the launch of the SCI Community, we have taken an important step in realizing our vision. The SCI Community is open and global. It is free and available for supply chain leaders and teams everywhere. We have tried to make it fun! It is designed specifically for the supply chain professional. We at Supply Chain Insights LLC have worked for the past six months to deliver what we think is a set of unique services:

  • Financial Supply Chain Benchmarking. It is just too hard to get meaningful financial supply chain data. We have built a database on financial ratios that go back over 20 years. Want to understand how your company stacks up against a peer group on Working Capital, Inventory Turns, Free Cash Flow, Altman Z, or Return on Assets? Ask us to run a custom cut on the data for you.
  • Technology and Consulting Ratings and Reviews. We go to YELP for a rating on a restaurant, check out Expedia for a hotel recommendation; but up until this point, there was no place for supply chain leaders to rate software or consulting partners. The SCI Community gives supply chain leaders a place to share.
  • Industry Events Ratings and Reviews. There are a lot of events. How do supply chain leaders know which are the good ones? The community allows ratings and reviews of the events so you know which ones to attend.
  • Ask an Industry Expert. Want to ask an industry analyst a question? The SCI Community is a place to go.  Pose a question to our panel of experts and engage in discussion.
  • Supply Chain Wiki.  Need help getting your group on the same page on supply chain terms? Check out our Supply Chain Wiki.
  • Meaningful Discussion Groups. Follow the tags and the discussion groups to get in on the action.
  • Blogs, Videos, and Webcasts. Listen, share and learn.
  • Open Research. It is part of our strategy to redefine supply chain research. We believe that it should be open and actionable. On our community today, there are nine research reports, three new surveys and the opportunity for you to tell us what should be on our future research agenda.
  • Posting of Content. The community allows supply chain leaders everywhere to post and share content. If you have an article that you are proud of, post it for others to rate and review.
  • Meaningful Networking.  Connect with supply chain leaders like you. Network with supply chain leaders you respect. Do you have a question? Ask another supply chain professional directly in the SCI Community.


I believe that research sells and relationships renew. It is my goal to deliver deep research that is actionable. The community is part of my vision. Check it out today! Let us know what you think.


Another Concorde?

Posted by lcecere Sep 27, 2012

In high school, my favorite teacher was Wanda Hughes. She taught history. Her class was both loved and feared. This was one class where there was no messing around. It was strictly business.  She made us read the Wall Street Journal and New York Times daily. We debated the potential outcome of headlines: the Vietnam War, the rise of the Beatles, and the fall of the Nixon administration. We learned that current events quickly become history. In the process, I learned that there were patterns: people make the same mistakes over and over again. It is hard to learn from history.

A Look Back

Let's fast forward. When I was 28, I worked for General Foods (now a division of Kraft). I was a divisional engineer responsible for the purchase of $42M of equipment for a national launch. It was a big responsibility for a young kid. The equipment vendor was in Denmark; and I flew cross-Atlantic flights frequently to check on progress. In those days, the corporate policy was to book cross-Atlantic travel as a first class ticket. (Ah yes, sadly these days are gone forever.) So, as a young kid, I had the enviable choice to either fly SAS First Class directly to Copenhagen or book to Paris on the Concorde and take a commuter to Denmark.  The total time difference was two hours. The cost for the Concorde aircraft was slightly higher than a first class seat on SAS.  For me, the choice was easy. The Concorde was not as pleasant of a ride. The seats were smaller and the food was not as good. Today, there are no Concorde flights. It was canceled in 2003. After 27 years of flight, it died a slow death.  The price/value equation for the average traveler to fly the Concorde was just not there.

Learning from History

Every year, computer speeds get faster and memory costs are cheaper.  Currently, I am working with several supply chain technology vendors that are attempting to place these new forms of analytics underneath traditional supply chain planning platforms. My caution is that this is analogous to the Concorde.  My question is, "Should we invest to make current supply chain planning systems faster or take advantage of new technologies to redefine them?" I was speaking to a leader at a supply chain planning company last week, and his words hang in my mind as I write this: "Lora, you are pulling us along. It is hard for us to do things differently. Our business users ask us for refinements not a re-write of supply chain planning. The momentum in the company is not to do things differently. There is no incentive to adopt new enabling technologies."


In my opinion, there is just not enough value in speeding up traditional supply chain planning footprints to make it worth our time.  I want technology vendors to start over and "Paint Outside the Lines" and recreate supply chain planning. I want them to deliver more value for the supply chain leader. However, I am convinced that it will only happen if it is pushed by the supply chain leader. If supply chain leaders do not push, I fear that we will have the 1995 version of supply chain planning in-memory.  In my opinion, this would be another Concorde. Here is my logic: The Definition of Supply Chain Planning is Inadequate.


Supply chain planning applications rate lower in user satisfaction than supply chain execution (warehouse and transportation management) software systems.  In Figure 1, based on a recent supply chain survey of 60 supply chain leaders, you can see the current satisfaction levels of supply chain software.


Figure 1: User Satisfaction with Current Supply Chain Software


The traditional definitions of planning were based on computer capabilities from the 1990s. They were the best that we could do then; but they are inadequate today. There has not been a substantial redefinition of planning platforms since 1995.


Time to Paint Outside the Traditional Lines.

I would love to see us put these new forms of analytics to use in building the End-to-End value network.  I would like for us to redefine versus making the old, inadequate definitions faster. I am passionate about using new technologies to redefine business outcomes. The possibilities to improve supply chain planning are numerous--deeper optimization, in-memory processing, mobility, pattern recognition, rules-based ontologies, simulation, text mining and visualization-- and offer great promise. However, the adoption of these new technologies to supply chain planning platforms has been slow. I find that most line-of-business users do not even know of some of these possibilities.


Figure 2:  Potential Supply Chain Planning Platform Using New Technologies


These new advances in business analytics can allow the Line of Business User to sense channel demand from the customer back, to test and learn in real-time, and map multiple ifs to multiple thens to orchestrate demand and supply. We are moving into the world of Big Data Supply Chains and Outside-in Processes. Here are some examples:


Digital Manufacturing. The use of mobility in manufacturing is defining digital manufacturing.  In digital manufacturing, sensing real-time equipment status and scheduling based on actual conditions, allows companies to move from a near real-time to a real-time response for manufacturing planning.  No longer does maintenance need to be based on mean-time failure. Instead it can be based on actual operating conditions of real equipment outputs--pumps, conveyor motors and filler heads--to improve the certainty of manufacturing output.


Orchestrating Demand and Supply.  We know that a customer is not a customer and an order is not an order, but there is no way to orchestrate this; and once determined, in today's systems there is no way to manage a rule-set to ensure that the highest priority customers get the highest priority for inventory. Or for companies to manage operations to ensure that the lowest cost operations are used to fill the customer order. These new forms of analytics enable new sets of trade-offs horizontally. I would love to see supply chain planning vendors embed the combination of

Enterra Solutions and Signal Demand to orchestrate demand and supply.


Channel Sensing and the Redefinition of Order Management.  Similarly, I would love to see the roll-up of demand vendors-- a demand signal repository vendor like Relational Solutions, Retail Solutions, Vision Chain with a demand sensing vendor like Terra Technology to translate demand from the channel to the enterprise and drive priorities in order fulfillment.


Network Design and Supply Chain Visualization. It is good to see the Llamasoft solution for network design being applied more widely.  This more advanced capability for optimization and simulation can be used for operational and tactical decision-making.  Today's solutions lack sufficient visibility for teams to quickly make cross-functional decisions.

Can we Avoid another Concorde?

Mrs. Hughes died in July 2010 after 42 years of teaching. The Concorde is now legacy. It is my hope that I can apply what I have learned to help supply chain leaders redefine supply chain systems.  I am excited about the potential. What do you think? Do you agree? Do you think that we can now declare traditional supply chain systems legacy and start again? Or, do you disagree? Do you think that there is enough value to putting new in-memory forms of business intelligence under the traditional platforms and running them faster? I look forward to an engaging debate. 

I go back and forth. At times, I reflect on how fast things have changed; while at other times, I struggle with why supply chain processes cannot happen quickly enough, and be transformed faster. For me, it is a conundrum. I have been studying this for the past nine years.

I have decided that I think it is much like this picture of a man on a moving sidewalk. As we push forward, the supply chain processes are slowly evolving, and propelling us forward, but we are moving at a faster pace. After a year of studying supply chain excellence for the book Bricks Matter, I do not think that we have BEST practices. Instead, I think that we have EVOLVING practices. Here I want to share my insights.

What Is Supply Chain Excellence?

After studying supply chain excellence for a year, I do not think that companies can start with process. I think that the application of generic processes without a sound understanding of supply chain strategy has been a mistake for many companies. I believe that the best companies propel themselves forward with a clear understanding of supply chain strategy, a well-defined multi-year roadmap, and an unobstructed view of how to make trade-offs on the supply chain frontier shown in Figure 1. They invest in talent and they have a sound understanding that the best supply chain is not the most efficient. Instead, they understand that the most effective supply chain balances the trade-offs of growth, revenue and costs while managing working capital, corporate social responsibility and asset strategies. These trade-offs are made based on the corporate strategy. Companies that shine and are good at delivering value through their supply chains focus on the trade-offs at the top of Figure 1. This is in contrast with companies that are laggards and only look at the waste, or the symptoms of poor performance at the bottom of this figure. Leaders understand there needs to be balance and that the policies for channel strategy, product portfolio management and supplier development strategies make a difference.  They also understand that supply chain excellence requires the mastery, or the knitting together, of complex processes into a complex system. As shown in Figure 1, it must be managed as a complex system.

My Frustration

In the past month, I have worked with multiple companies that believed that they had a clear understanding of supply chain excellence, but they were only looking at a limited view of manufacturing or procurement excellence. I am frustrated because there are many companies that proclaim to help companies improve supply chain excellence.  When I visit manufacturers' companies and see these consulting surveys; I see poor work, over and over again, on supply chain benchmarking. I believe that 90% of supply chain benchmarking efforts are fundamentally flawed in three ways:

  • Self-reported Data Is Inaccurate:  Any time that you have self-reported data on forecast accuracy, customer service (on-time delivery or perfect order) or manufacturing reliability, expect problems. Each of these measurements lacks a clear industry standard for reporting; and, as a result, are based on very different definitions. In addition, based on real-world experience of supply chain benchmarking, there is usually a positive organizational bias to overstate results in each of these areas.
  • Peer Group is Essential: I believe strongly that supply chains must be compared by peer group. You cannot put all supply chains in a spreadsheet and shake them up.
  • Apples to Apples Comparisons are Fundamental: The data must also be from the same time period.  It must be current.

Making Trade-offs

As a result, I have started studying the financial trade-offs that companies have made in supply chain leadership by analyzing twenty-five years of financial balance sheets.  Working with Abby Mayer (Twitter: indexgirl), we have grouped financial ratios into four areas and we are studying company patterns on growth, profitability, cycles, and business complexity.  The financial ratios that we think matter are shown in the columns. To understand supply chain excellence, we are plotting peer groups at the intersection of these metrics and attempting to tie this understanding to the maturity models that are built into our research studies. Please join us on a webinar on September 24 to hear more about our efforts. (Visit our website's Webinar page for registration.) We believe that the companies with the best supply chains have three characteristics:


1) Positive System Momentum in Peer Group Performance: Each supply chain has its own unique potential, but the best supply chain has a positive upward momentum while balancing the trade-offs.

2) Balance: Supply chain leaders maintain balance of these metrics against a supply chain strategy.  They show positive momentum in peer group comparisons in each area.

3) Steady, Unfaltering Year-over-Year Progress: The supply chain journey happens over many years. The best supply chains are reliable and able to drive year-over-year progress.

A Case Study

Consider the results of two competitors, PepsiCo and Coca-Cola. When comparing year-over-year revenue/employee to cash-to-cash cycles, PepsiCo (red in the figure) shows a positive trend (revenue per employee shows steady progress without swings in cash-to-cash cycles) while the Coca-Cola (blue in the figure) results are erratic. (Which is why I was amazed at the rating of Coca-Cola over PepsiCo in the Gartner Supply Chain Top 25.)

We are deep into this research. If you would like to see similar cuts for your company on these ratios just ask. Join the Supply Chain Insights Community launching on September 5th, and submit your request to Index Girl. We want to help everyone that is trying to understand supply chain excellence. All we ask, is that you use that data to drive true improvements. Don't get sidelined by defining supply chain excellence too narrowly, or being lulled to sleep by some consultant's interpretation of self-reported data. And just remember, we are all on moving sidewalks. Remember that it is a journey not a sprint, and be clear on the final destination.     

In a recent post, Time to Paint Outside the Lines , I advocated that we needed to expand our current concepts of supply chain management.  I challenged readers to rethink conventional processes and to think outside the lines; to redefine them using the new capabilities of mobile, social, cloud-based computing and more advanced analytics.  The post was about the "what." In a discussion with a client, I was challenged to write about a third dimension. The client asked me to write about the delivery of the services or the "who."


Here I share my insights. When we start to paint outside the lines, we begin to enter the world of blue oceans. By definition, a blue ocean is a new market that is uncontested. For the deliverer of services, it is a vast opportunity. Full of hope and promise, the deliverer of services is bullish and aggressive on how they will cross the blue ocean. For the user of technology, it is a situation fraught with indecision, risk and uncertainty.

Blurring of Lines

The lines are blurring on packaged application delivery. (When I use the term 'supply chain management,' I am using the broad definition of defining cash, inventory, information and product flows from the customer's customer to the supplier's supplier.) My goal is to help clients build the end-to-end supply chain (E2E). Mobility, advanced analytics, cloud-based computing, advanced predictive analytics, and the Internet of Things offers us the ability to deliver new and improved solutions. By definition, Software as a Service (SaaS) applications open the door to enable this innovation. It allows us new opportunities to deliver value in the areas of pervasive computing and analytics. The traditional software licensing model--always held back by the delivery of user-based enhancements--can now be untethered and cast free to deliver new applications through SaaS delivery. Market requirements are driving it. The processes need to be designed outside-in and there is a need for horizontal business processes to enable a level of agility that is not possible in today's organization. As I attend conference after conference, for me, it seems that everyone is talking the talk, but they have one foot in the first phase and one foot in the next phase trying to figure it all out.  While Silicon Valley is still in a love-fest with social applications,  I see companies slowly realizing that social for the sake of social is too limiting. It is about SO MUCH more than digital marketing.  Likewise, it is not mobile for the sake of mobile. It is about pervasive computing and real-time information.  There is also a growing recognition that it will not happen through the sticking of mobile and social data in the outdated models of CRM and SRM. These applications were defined too narrowly to sense and translate market signals into enterprise workflows. The delivery of services and products in these new more pervasive models requires the redefinition of enterprise applications. The traditional definitions of Enterprise Resource Planning (ERP) and Advanced Planning Systems (APS) are slowly becoming legacy. After the first and second decades of digital marketing, companies are now starting to ask questions about digital business.  They want to know how to transform their very "transactionally-focused enterprise applications" into solutions that can sense and deliver a more agile response.  They want to turn to Oracle and SAP, but these very sales-driven solution organizations are well-tuned to deliver traditional solutions, not to help users cross these blue oceans. They would like to turn to the traditional supply chain planning vendors like JDA and INFOR, but they find that these organizations are busy trying to harmonize and rationalize many acquisitions and that they have lost many of their thought leaders. Deep within the IT groups of organizations, companies may reach out to the conventional analytical vendors like Teradata and SAS, but they quickly find that these organizations are used to selling servers and analytical tools and lack the deeper understanding of enterprise application processes.

The Phases

As we progress, I feel that there are three phases.  While we can argue about the names, please read past the labels to understand the broader discussion, and then let's engage in a discussion.

  • Phase I. The Efficient Organization.  The first phase of enterprise applications is ending. It is where companies have invested and know best. The focus was on transactional efficiency.  In this phase, the organization was defined from the inside-out and the order-to-cash cycle was automated. (In most cases, it was very rigid. The focus was on control.) Decision support was layered on top of the transactional systems to improve decision making using order and shipment data. This era is ending. Leaders now realize that the dream of ERP II and building the end-to-end supply chain on the back of ERP and B2B connectivity was too limiting.
  • Phase II. Digital Business. The redefinition of processes outside-in from market to market is the phase that we are entering. It will be enabled by cloud-based computing, business-process outsourcing, and pervasive computing.  New forms of predictive analytics will enable listening (e.g., sentiment analysis and text analysis) to understand the questions that we do not know to ask, and systems will be able to adapt through horizontal process orchestration. This movement to listen, test and learn and bidirectional horizontal process management is just beginning. It is the new blue ocean. It is the era of digital business.
  • Phase III. Systems of Commerce for E2E Value Networks.  As systems evolve, companies will come to realize that there needs to be a greater focus on value-based outcomes and inter-enterprise systems of record to better manage bifurcated trade. This phase will no longer be about industry-specific applications. Instead, it will enable the process flows of end-to-end value networks.  For example, in healthcare, the shift will move from efficient sickness (checking patients in and out of the hospital and lowering the admission rate) to sensing the body and focusing on health and wellness. Likewise, in transportation, the focus will shift from selling cars to safe transport using sensors to guide vehicles with improved safety and lower carbon footprints. We are already seeing this shift in Performance-based Logistics (PBL) in the department of defense.

Users are confused. They want to know, "Which horse do they ride to cross the blue ocean?" Simply speaking, the Best-of-Breed Service Provider will be the best bet. Here are my predictions:

  • Consultants Will Stumble. As the gravy train of ERP implementations winds down, more and more consultants are attempting to build software. This includes traditional consulting partners like Accenture, IBM, Infosys and Wipro. I do not believe that they will be successful.  The client model for consulting is just too strong. While they fundamentally understand the client relationship for the delivery of services, they lack the understanding of product marketing and product development. Of the four, IBM will do the best. They have a long history of building software, but they have struggled to market and capitalize on the software's potential.  While they will continue to have success in the areas of analytics and data mining, and retail, they will struggle in penetrating the deeper areas of enterprise applications. I believe that each will have some initial success selling SaaS solutions, but will wake up within the year and align their skills to contribute to the market in a greater ecosystem play (e.g., putting SAP solutions into cloud-based delivery systems). I think that they would be better served to combine business-process outsourcing with global centers of excellence targeting large business problems like the Race for Africa for consumer products or the Redefinition of the Cold Chain for biologic products.
  • Best-of -Breed Vendors Will Prevail. For me, the most exciting news is coming from the Best-of-Breed Providers. I am bullish about the opportunities for E2Open, Enterra Solutions, Llamasoft, Kinaxis, ModelN, Predictix, Red Prairie, Signal Demand, Steelwedge, Terra Technology, and SmartOps to bring industry-specific solutions with greater depth to the market. They will push the envelope on the delivery of industry-specific SaaS solutions. They will do it faster with support from their clients. I also believe that vendors like Arkema, Aspen Tech, John Galt, and Logility will continue to gain mind-share with mid-market companies with industry-specific solutions. These solutions are becoming mainstream, helping to fill the gaps that the extended ERP solutions cannot fill due to cost and depth of solutions.
  • Oracle and SAP Will Follow. While Oracle and SAP will talk "blue ocean talk," internally they will struggle to "walk the walk." Neither has been successful at driving partnerships and each is handicapped by a very strong sales-centered (as opposed to market-driven) model. I predict that consulting companies like Converge, Neoris, and Infosys will align with SAP to deliver on many of the blue ocean opportunities that are available through the SAP acquisition of Sybase in either the area of mobility or HANA into emerging markets. I think that they will be more nimble in their realignment than Accenture, IBM or WIPRO. With market success, Oracle will follow. will be relegated to improving sales efficiency and Microsoft, despite having promising software, will continue to struggle in penetrating the enterprise software market.
  • Conglomerates Will Circle the Drain. The JDA and Infor models will continue to consolidate, and the solutions will progress, but slowly. They will continue to be a good fit for software evolution of existing implementations, but they will not be the horse to ride across the blue ocean.
  • Analytic Companies Will be Best Supporting Actors. GreenPlum, SAS, Teradata and IBM will continue to help with analytic applications, but they will bring up the rear.  None of the analytic vendors really understand how to sell and market supply chain applications to line of business leaders.
  • Business Process Outsourcing Will Grow. The use of analytics and the evolution of business process outsourcing for multi-tier processing will continue to grow.  The work that CapGemini or Genpact is doing on retail deductions or Accenture on consumer insights will continue to grow.

My Take

So, as we set our sails for new places, and plan to navigate blue oceans, be sure that you are working with partners that can help you get there. Long term, it will take a village.  Short term, it will be hoisted on the back of best-of-breed providers.  Sailing in the waters of enterprise applications for supply chain management is always choppy, but it is time to look ahead. I look forward to your thoughts. Anchors aweigh!       

Yesterday, I met a friend for coffee. She started the discussion with a question, "How are you doing?  So, what is it like to write a book? What have you learned?"


I smiled. The question brought back so many flashbacks. My mind filled with emotion. It quickly short-circuited between the shear frustration of reading the seventh, and what I hope are the final round of edits on Chapter 5, and my rising excitement to soon hold a finished copy of the book that I have been working on for the past six months. While I have a co-author, Charlie Chase, it has been hard work. The book is titled Bricks Matter and it is currently listed on Amazon to publish in December 2012.


My answer to her was that "Writing 96,000 words is easier said than done. And, it can best be summed up through sharing the story of a pig and an elephant." We then discussed the story of the pig and the elephant.

My Journey:

The book is based on nine years of experience working with supply chain leaders. I thought that it would be easy. Prior to writing the book, I had penned over 700 articles, worked on over 80 quantitative studies and had the support of an administrative assistant and a researcher who helped me identify trends on financial balance sheets and annual reports. I love to write. However, it was not easy. It is easier to talk about the book that you are writing than to write one. I was excited to start. I remember the discussions at the start of the process of writing this book like they were yesterday.  I had written a book abstract and energetically shopped it around.  I was naive. I thought acceptance would be easy. I was wrong. No one was interested in a book about supply chain from an unpublished author. I was unknown and the consensus was that a book about supply chain would be "boring."


I have taken it as a personal mission to prove them wrong.  In the book, I have tried to make supply chain anything but boring. So, I smiled when my friend asked the question. For many, writing a book is a rite of passage; but it is not always a labor of love. For me, it has been both. In the winter, I attended a Monitor Event (Access to Minds).


It was a gathering with other thought leaders. We were speaking about book publishing.  I was naive. I was surprised how many attendees were published authors, but had outsourced the writing of their book to a ghost writer.  Not so for this old gal: I have pounded the keyboard on planes, in hotel rooms and at the end of my kitchen table for sixty hours/week for the past six months. To write the book, we analyzed twenty-five years of annual reports and seventy-five interviews. Each chapter took six weeks to write, and it has now been read by four editors. We have gotten approval on forty-one case studies/quotes and written and rewritten the book chapter by chapter. I can now roll out of bed and not have "write chapter X"

on my to-do list. It is gone from my desk and on its way to the publisher. So, here I thought that I would share insights from the book based on a question that another friend asked me at a strategy day in New Jersey last week. His question was, "So after writing your book, what is your advice for supply chain leaders?  What are the top points that you would highlight for them to consider?" That is the subject of this blog post.

My Advice:

I firmly believe that we do not have supply chain best practices. Instead, I think that we have emerging practices. In the interviews for the book, I spoke to 75 supply chain pioneers. It was good for me to reflect back, to think about the evolution, and hear the energy in the voices of the pioneers as they spoke of forging the processes that we know today. It gave me perspective. In the building of today's supply chain processes, I think that we "got sideways" in the evolution of applications.  We confused requirements for systems of record with systems of commerce and decision support. We implemented a lot of technology and continuous improvement programs without a long-term road map. Today, companies have a lot of systems that they just don't use. So, in short, my advice for a supply chain leader, in advance of getting a copy of my book, are ten points:

  1. Know Total Supply Chain Costs. This sounds simple, but it is not. I am amazed by how few companies really know their total supply chain costs. While they have had a myopic cost focus over the past two decades, it has been very focused on the vertical silos of manufacturing, distribution or procurement. They know the costs inside these silos very well. They do not know the trade-offs of the costs across the silos well. Very few (my estimate is 5%) know their total supply chain costs and can make decisions to effectively trade-off the costs of make, source and deliver. In the words of one pioneer, "My cylinders are firing hard, they just are not all firing together and in the same direction." The key is alignment of the functions to the supply chain strategy with a clear focus on total costs. Supply chain leaders just cannot get there without a strong supply chain finance group.
  2. Rethink Metrics. Start at the Ends and Work Towards the Middle.  The ends of the supply chain are fragile. One of the stumbling blocks is metrics. As long as we reward sales teams on volume and procurement organizations on purchased costs, progress on building the end-to-end supply chain will be fretful and slow. One of the companies that I admire gave me insights on this last week. They said, "When we changed our equivalent unit measurement from a volume-based to a profit-based unit, it became much easier to drive supply chain excellence." This happened for them fifteen years ago and I think that it has been a cornerstone of their success.
  3. Redesign Outside-in. This sounds simple. It is not. While companies complain about their lack of flexibility, and the slowness of the supply chain response, they have been slow to question historic practices and to use new forms of data to sense market conditions. They have clung to traditional forms of transactional data like they were tablets handed down by Moses from Mount Sinai. New forms of data along with new capabilities in analytics give us the ability to decrease latency, improve demand sensing and decrease the bullwhip effect. Yet, too few are trying.
  4. Define the CSR Program for Value.  The first Fortune 100 manufacturer to publish a Corporate Social Responsibility (CSR) program was Dow Chemical in 1996. Procter and Gamble followed suit in 1999. Since then, all Fortune 100 manufacturers have some form of a CSR program. However, most are disjointed. Most focus on cost control not on the greater proposition of using the CSR program to redefine value.  Some of my favorite stories for the book were Toms Shoes and IBM Global Asset Recovery (GARS). With every pair of new shoes sold, Toms Shoes distributes a pair of shoes to a needy child.  As of 2012, they have distributed  over 1 million pairs of shoes in 25 countries. It is part of their brand promise. In a similar vein of making corporate social responsibility part of the brand promise, in 2002, the IBM GARS group pioneered a reverse logistics process to refurbish equipment and prepare it for resale. Products are recycled through demanufacturing and manufacturing processes over and over again. In 2011, the GARS group processed 33,038 metric tons, or 73.4 million pounds, of high-tech and electronics products.  Less than 1% of the electronic materials are scrapped in landfills.
  5. Align and Coalesce Value Networks. When companies say the term 'network,' they think of 'supply networks.' However, I see leaders working on demand, supply and design networks in separate and distinct programs. I believe that the evolution of Market-driven Value Networks will see these coalesce to drive more value.  While supply networks are a natural extension of supplier development efforts, design and demand networks are newer.  In the book, I share insights on how leaders build demand networks to improve the transparency of demand data with channel partners. Taiwan Semiconductor Manufacturing Company (TSMC) is a good example of a company that has transformed its business model through the use of design networks.
  6. Define your Terms and Build a Supply Chain Strategy. Use Them to Build a Guiding Coalition. While all companies want to drive supply chain excellence, they are not clear what this means to them.  The problem is that most companies that I work with do not have a clear supply chain strategy and they unknowingly ask for teams to work on supply chain excellence using vague terms that are not actionable. I get to read many supply chain strategy documents; in 99% of supply chain strategy documents that I read, I see over and over again that companies want to have an efficient, agile and responsive supply chain. However, when I ask them to define what this means, they look at me with a blank stare. There are no industry specific definitions for the terms "efficient," "responsive," and "agile." They need to be defined.
  7. Initiate Continuous Improvement Programs in Demand Planning and Focus on Forecast Value-Added Analysis. My advice for all is to stop trying to get perfect on imperfect numbers. Instead, measure bias and error and try to reduce it, but design supply chain network and inventory systems to use the "probability of demand" not the "absolute number." I am a big fan of Forecast Value-added Analysis. It is explained well in Mike Gilliland's book, the Business Forecasting Deal.
  8. Understand your Supply Chain DNA and Build Supply Chain Potential. Each supply chain has its own supply chain potential. Leadership in the supply chain needs to drive the right mix of strength, agility and balance while managing the trade-offs of customer service, forecast accuracy, inventory management, costs, corporate social responsibility, and asset utilization. This is easier said than done. Supply chains are complex. The trade-offs are not intuitive. To meet this challenge, I recommend that companies invest in network and inventory modeling technologies.  One company's work that I am impressed with in this area is General Mills. They are using Llamasoft's new Supply Chain Sherpa (application on tablet) to help teams better understand supply chain trade-offs in decision making. For more on the work that they are doing check out this YouTube video.
  9. Go Horizontal.  By now this theme may be like beating a dead horse for the reader, because I know that I hit it hard and often. However, it is worth noting that the processes of the last decade were vertical supporting the strong silos of make, source and deliver. To build the end-to-end supply chain from the customer's customer to the supplier's supplier these strong vertical silos need to be connected by horizontal processes. The most common are revenue management, sales and operations planning, supplier development and Corporate Social Responsibility. Without strong horizontal processes, you cannot achieve balance or drive agility.
  10. Processes are Evolving. We do not have Best Practices. Instead, we have Evolving Practices.  I started my career as an industry analyst believing that we have "best practices." After studying the evolution of practices for the last ten years, I now know that the practices are evolving. It is like riding a moving sidewalk. They evolve right underneath our feet. I hope that the book gives you and your teams some perspective for the journey.


As for the pig and the elephant, my lips are sealed. Their stories lie deep within the book. They are light-hearted stories that I hope that you can use to better understand how to drive supply chain excellence. They enrich the story of Bricks Matter.  To learn more,  you will just have to read it for yourself. On a side note, I am now building training modules that will launch with the book. Each chapter will have interactive training and will come complete with experiential exercises. The training is designed for teams that want to learn more about what drives supply chain excellence.  You can follow the development of the training modules through the Supply Chain Insights Community that launches on September 5th, 2012.  Let me know if you would like to try it out with your team. This week, I have a week at home to write reports. Look for three new reports to go up on our website this month.  We publish reports openly on SlideShare and at Supply Chain Insights.  Let us know your thoughts. We would love to hear from you.