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This week, I will speak at Llamasoft's conference on improving supply chain network design. I am also busy this Saturday writing reports for our Tuesday newsletter. One of the reports that I am writing is on the state of Supply Chain Planning (SCP). While other analysts may put the vendors into a four-square evaluation model and declare it magic, I think that this approach does a disservice to the industry. Why do I feel this way?  The SCP market is a fruit basket of vendors with very different capabilities. It cannot be adequately equated in a four-box model. The capabilities are just too different. (Bear with me on this rant. This old gal has built hundreds of four-box models in her decade of being an analyst.)


By and large, no one is happy with SCP as it exists today. In the recent study of the Voice of the Supply Chain Leader, we find that the gaps are large, and growing. As shown in Figure 1, the gaps with the major categories of supply chain planning are great. I recently presented this slide to a group of consultants, and a person that I love in the audience raised his hand and said, "Lora, let's just face it. No one likes what we have today. This slide supports that what we have today just sucks. What can we do about it?"





Figure 1.


My advice to him, and to all my readers, is to focus on what drives value. The gaps in our technologies are a barrier, but should not stop us from redesigning to improve performance.

While innovation has slowed in Enterprise Resource Plannning (ERP) and Supply Chain Planning, I am bullish about some of the innovation coming from the supply chain network design technology providers like JDA, Llamasoft and Solvoyo. These tools are now enabling new capabilities to make trade-offs between volume and cost while helping companies to redesign flows and decoupling points. I also think that Quintiq's leadership in concurrent planning to solve new problems is promising, especially in the design of transportation and inventory flows.


Interview of a Supply Chain Leader: Redesigning for Value


While technology is both an enabler and a current barrier, for me, the journey is less about technology and more about leadership. One of my favorite interviews on this topic, that I recently completed for my upcoming book Metrics That Matter, was with Amway's Chief Supply Chain Officer George Calvert. He is the head of operations for the direct-selling leader of health, beauty and home care products. They had just implemented a number of changes, and were proud of their progress.


Here are some excerpts from the interview:


Tell me about yourself.


My path into managing operations is different than most because of my background in chemistry. The path I took came through R&D where I had many different roles including R&D management and quality assurance. When my boss retired, I took over the combined functions of R&D and supply chain operations. You don’t often see R&D and operations together, but for me it is a perfect fit.


My skill set is really more focused on pattern recognition, and operations is a numbers-based business, making that easy to do in Supply Chain. I look at patterns to construct business models to deliver both on efficiency and effectiveness.


What have you learned?


Before we took on the supply chain redesign, we had a whole series of ideas that we thought we should be doing. When we started, we developed this big list of ideas on things that we could do. Turns out many of the ideas were wrong because they were not based in fact, just perceptions.


It wasn’t that easy. In researching the ideas, like moving a business to the point of sale, we discovered that the base numbers of the business revealed new strategies. For example, we discovered that transportation and duties are 5x the expense of labor and overhead. This is a very different mix of inputs than the garment industry where labor would be a major driver. The opportunity was in reducing the transportation and duty cost, not in moving to low-cost labor markets.


In prestige beauty and nutritional supplements, the cost to ship the product is minuscule. The product is light, compact, and high value.  However, this is a different story in home care where an item is mostly water. As a result, we had to analyze what the drivers were of the supply chain cost. And what the opportunities were by business line that were unique to our model.


We found that in addition to each country’s nuances, each business line had specific requirements. For example, people want prestige beauty from the US, Europe or Japan. Customers are not looking for prestige beauty from the emerging economies. Take another example – few people know where their TV was made, but the buyer cares greatly about the reliability of that product. Product reliability, in the case of durable goods, is the driving factor for product satisfaction. So, when you are designing your supply chain, it is just as important to analyze distribution costs, material variability, and the costs of labor, along with the perception that the consumer has with the country of origin. Through this analysis, you are able to develop an effective and efficient supply chain.


How did you redesign to improve value?



It took six to nine months to look at the numbers. To do this, great modeling is critical. The strength of your decisions is directly dependent on having accurate data going in. For example, we produce in Vietnam and China. We produce there because the regulations say that you need to manufacture there to sell there. Vietnam is a low-cost market to produce products. Our factory is efficient; yet, it costs us more to manufacture the product in Vietnam because of a lack of local raw materials – compared to manufacturing it in the US, shipping it, and paying duties on a landed basis. You have to have a model that helps you to see the interrelationships. Free Trade agreements also matter. In our business, there is not one lever, there are 20 levers.


Our operations serve the globe. We are in 100 countries and territories around the world. Our activities are broad. We are engaged in everything from raising crops to making home deliveries.

Service level is our most important metric. If someone is building an Amway business, they may choose to primarily focus on selling water treatment systems.  If we do not have them in stock and available, that Amway Business Owner is out of business. We must be responsive to demand, and be diligent to reduce demand interruptions. We must also have a consistent supply of quality product. As a result, our focus is to make it right the first time. Reliability in both of these metrics is critical.


Most companies inherit supply chains. To a great extent, we inherited the supply chain that we had. When we got into it, some things did not make sense. If you are not going to add value, why do it yourself? The question we always asked was,  "Why?" For example, we made our own corrugated packaging. The equipment was 20 years old. It did not make sense, so we outsourced it and focused our efforts on what we are good at – nutrition, beauty and home/personal care products.


We invested, where it made sense. We grow and process many of our own crops. Our investment focus shifted to getting the right seed, controlling the planting, and ensuring quality conversion all the way through finished products. We have three large-scale farms heavily invested in the production of botanicals and an ongoing $332 million manufacturing expansion supporting the many new nutrition plants needed to support our growth.


What suggestions do you have for others?



Communication to the work teams is critical. Go slow and be clear. Don’t expect that something that took you nine months to figure out is going to be effectively communicated in one meeting. It has to be communicated in the right way. Our restructuring of operations meant a lot of communication. We believe in transparency, and we told people why we were making the decision, and shared the drivers. We were going to invest where it made sense.


My second suggestion to other supply chain leaders is to seek to understand your model and the fundamental drivers of your supply chain. Find out what it is. Is it labor? Is it duties, or is it transportation? Actively define both efficiency and effectiveness.


We started with consultants, but we kicked them out after a few days. I trusted my team to know the business. Collecting the data is not easy. I suspect that many companies have great capabilities to get data, but we did not. We spent the time to overcome our data challenges. We made better decisions doing it ourselves because we know the business. We were not impatient. We asked ourselves hard questions. I think that our results are better because of it.





I love George's wisdom in this interview. I especially value his quote, "Communication to the work teams is critical. Go slow and be clear. Don’t expect that something that took you nine months to figure out is going to be effectively communicated in one meeting." When he said that in the interview, I softly whispered, "Amen" under my breath.


In closing, I want to thank all of my readers for their help during my 2 1/2  year journey as the founder of Supply Chain Insights. On this Saturday, I will write our 45th report, and ready all of our blogs for our monthly newsletter. It is a monthly cadence of working on what we hope you believe is insightful research. It is never pay-for-play, and it is always available for you, and your teams, in front of the firewall. We believe that research should be actionable, independent, and accessible.


It is a process where you give to us and we give back to you. In the process, we keep all of our responses and contacts confidential. Interviews like this one with George Calvert are based on a detailed process of interviews, edits and approvals. We do not take this process lightly. We value the input and support of supply chain leaders. We want to give supply chain leaders a voice through our webcasts, blogs and podcasts. (We now have 95 podcasts available through iTunes and Stitcher.)


We are on countdown for our Global Summit of 230 supply chain leaders that is limited to 15% attendance of technology and consulting providers. It is designed for supply chain leaders to network with supply chain leaders. It is deliberately located at the Phoenician to enable the networking in a beautiful place where you can hike, golf and even complete a 5K with other supply chain leaders.


During the countdown for the Summit, we are completing research studies on Big Data Analytics, Supply Chain Talent, Supply Chain Planning, and Digital Manufacturing. If you complete one of our surveys, we will share the results with you and your team in a one hour call.


We are also releasing the work that we are doing on the Supply Chain Index in a series of reports and webinars. It is a methodology that is applicable to all public companies to judge supply chain improvement against peers. We think that the definition of a measuring stick is important. In the countdown for the summer, we will be getting your input to understand which supply chains have made the most progress for the period of 2009-2012. In the spirit of open research, as we learn, we share it with you. We would love to hear from you on the methodology.


This week, I will be in Chicago on Monday and Ann Arbor at the end of the week. Next week, it will be time in New York. I would love to catch up and hear your thoughts on what we are doing. Until next time....

Hoax: An act intended to deceive or trick.

Was it intentional? Or accidental? We will never know. However, what is clear from our recent study of 73 manufacturers using supply chain planning is that companies using best-of-breed solutions implement faster, achieve a quicker Return-on-Investment (ROI), and are more satisfied. When companies tell me that they need to exchange their current Supply Chain Planning (SCP) from a best-of-breed provider to get a leg-up, I ask, “Why?” It makes no sense to me. In this post, I want to make my argument and stir a debate.


In the market, there is a false belief that an SCP system which is tightly integrated  to Enterprise Resource Planning (ERP) delivers greater value. However, this is not supported by the facts of the study.



Background: My Personal Experience



In the period of 1985-2000, the SCP market was defined by a list of best-of-breed vendors that included names like American Software, Chesapeake, Demantra, Fygir, i2 Technologies, Logility, Manugistics, Mercia, Numetrix, Red Pepper…. The list is long, and most are history. Today, in many organizations, these solutions are legacy.

The SCP market has consolidated. These companies were merged into other entities and/or changed their names. JDA acquired Manugistics and i2 Technologies; Fygir and Mercia rolled up into the INFOR platform, and Oracle combined the assets of Demantra, Red Pepper, and Numetrix through their multiple acquisitions. Webplan changed names to Kinaxis. Only Logility and American Software have the same name and business structure. We now have new technology players entering the market like AIMMS, Enterra Solutions, OM Partners, Quintiq, ToolsGroup, and Terra Technology. For many, it is confusing. It keeps old gals like me in business.

The period of 2000-2010 was turbulent for these best-of-breed APS technologies. Their available market contracted. There were several forces:


  • M&A: Through many mergers and acquisitions, the available market for solutions shrunk. This is a barrier for innovation.
  • Competition: The aggressive marketing of the Enterprise Resource Planning (ERP) vendors introducing planning suites (led by SAP with a product named SAP APO) took the market off course. As SAP APO skyrocketed to capture the dominant market share, the best-of-breed vendors could not shake the perception that an “integrated solution” was better. It did not matter that most of them had integrated to SAP suites for over a decade.

During this time, I worked for Manugistics. As I watched the hype of “integrated planning" swell, I asked, "Why?" It did not make sense to me. After Manugistics, I worked for two analyst firms; Gartner and AMR Research, and I continued to question if the extended ERP platform that included SCP delivered greater value. I did not see it. The implementations were longer, the purchase costs were higher, and the functionality was less robust and lacking flexibility. Yet, the positive market perception continued. It was largely sustained by consulting partners that made more money on the implementation of larger, and more costly projects of less capable solutions.

During this period of time, I tried to highlight the gap in my writing. However, it is tough for an analyst to take a stand against the larger ERP vendors. The ERP public relations machines are mighty; and they invest heavily in the larger, more established analyst firms. As a result, it is hard to take a tough stand in the more established analyst worlds. Not so today, I am independent. I can voice the truth. I can call a spade a spade. I have raised the ire of both Oracle and SAP multiple times in an effort to help businesses identify the best partner for SCP to propel their supply chains forward.


Study Results


In early 2014, using the principles of open research, we at Supply Chain Insights hosted a study on Supply Chain Planning. We currently have 73 company respondents, representing 133 planning instances. We have left the study open, and would love to hear from you. If you share the data from your implementation, we promise to never share your or your company's name. All of the results are reported in aggregate. Here are some of the results that we have collected so far:


  • Extended ERP Solution Implementations Are Longer with a Less Favorable ROI. The implementations of extended ERP solutions for demand and tactical supply planning is 20 months while the best-of-breed solution deployments are averaging 11 months. (The predominate ERP SCP solution for the respondent in the survey is SAP APO. There are few implementations of Infor and Oracle.) The time to achieve ROI averages seven months for a best-of-breed provider and over 13 months for the extended ERP solution.
  • Demand Planning Implementations Are Faster with Fewer Issues Than Supply. Demand planning is less industry specific than supply. While 67% of the demand planning implementations were at and under budget, 55% of the implementations of supply planning are over budget. My take? Supply planning requires a more detailed understanding of SCP. The models are industry specific. These solutions require greater insights and understanding by the manufacturer and implementing company. Over the last decade, many consulting partners have not been equal to this challenge.
  • Does Integrated Planning Make Sense? Really? The average company greater than $5 billion has five ERP instances, three instances of demand, and three instances of supply planning. The enterprise environment is complex. It is not as simple as one ERP instance connected to a single SCP implementation. As a result, there is a greater and greater need for a visualization layer and planning master data system. As a result, the basic tenants and assumptions of integrated planning dissolve and become less relevant. The argument is becoming less and less germane.
  • Organizations Are Not Static. If this is not complicated enough, just when many IT managers build a system for tightly integrated planning, there is an M&A event making the IT environment even more heterogeneous. In addition, with over 30% of manufacturing and 55% of logistics outsourced, it is now a business network, not an enterprise, planning problem.
  • Ability to Use Data. While the extended ERP solution architectures make look nice on paper, the reality is that line-of-business users struggle to use the data for "what-if" analysis or business analytics. The supporting analytics around the extended ERP packages have not been equal to the business requirements.


What Should You Do?

This post is part of my series of “Do No Harm” which is a focused series to help line-of-business leaders get their supply chains unstuck. (In prior posts, I have written how nine out of ten supply chains are stuck in their ability to improve operating performance on the Effective Frontier of managing growth, profitability, inventory turns and business complexity.) To move forward, I recommend the following:


-Recognize the Facts. Each of the ERP providers is at a very different place.

  • SAP. The SAP team has built an incredible system of record to enable flows from ERP to SCP, but has failed to deliver a solution to deliver SCP planning excellence. In companies with an SAP APO environment, companies should use SAP APO as a system of record and buy other optimization solutions that are industry-specific to improve decision support. In addition, line-of-business leaders should push for clarity on the SCP footprint and the supporting business intelligence strategy to ensure that they can get data in, do "what-if" analysis, and get data out. Question the consultants that come to your door stating that, "... 80% is good enough." The study clearly shows that it is not.
  • Oracle. The Oracle solution is strong in demand and transportation, but weak in tactical supply and production planning. It is not a good system of record. Oracle has cobbled together the acquired assets from the SCP market. Oracle has delivered neither a system of record, nor differentiation. It is integrated only by the words on the contract. Instead, what you have is one throat to choke; but, by and large, the references are unfavorable.
  • Infor. In contrast, Infor has done a better job. The ION integration layer attempts to provide a system of record and the many SCP solutions acquired through their mergers are being rolled up into a framework that is starting to make progress.

-Don't Wait. A ROI in less than a year in today's market is an opportunity. Why wait?

-Use Talent from the Technology Provider to Implement. The participants in the study that use consulting talent from the solution providers are more satisfied than those that implement using larger consulting firms. Use the large firms for program management and change management, but let the SCP providers tune  and implement the technologies in the SCP market.

Next Steps:

Is this a fluke, or a market reality? We are trying to gather more data. We would love to hear from you. If you fill out our survey on integrated planning, we will be glad to share the results with you and your team. Your responses on our survey are always kept confidential. We do not share the survey results of any individual. All of the responses are reported in aggregate. In addition, with more responses, we want to correlate these results to the corporate financial ratios to see the impact of supply chain planning choice. We hope to hear from you!

In addition, at our Global Supply Chain Summit in Scottsdale Arizona, on September 10th and 11th, we will have a facilitated breakout session for business leaders to network with each other on the future of demand and supply planning. It is a closed-door session with no technology or consulting partners. With SAP APO moving to a HANA architecture, the business leaders have requested this, and we want to help. We would love to see you there!

This week, we also kicked off our Supply Chain Planning Benchmarking Service with a webinar yesterday. We have five customers signed up and we are hoping for another twenty. We want to kick-off this project during the summer to gather more data around "What Drives Supply Chain Planning Excellence."  Let us know if you are interested.


Do No Harm ...

Posted by lcecere Jun 17, 2014

"...I will apply dietetic measures for the benefit of the sick according to my ability and judgment; I will keep them from harm and injustice....

...If I fulfill this oath and do not violate it, may it be granted to me to enjoy life and art, being honored with fame among all men for all time to come;

if I transgress it and swear falsely, may the opposite of all this be my lot." —Translation from the Greek by Ludwig Edelstein. From The Hippocratic Oath

Text, Translation, and Interpretation, by Ludwig Edelstein. Baltimore: Johns Hopkins Press, 1943.



Today, nine out of ten supply chains are stuck.  Despite two decades of advancement in supply chain technologies, companies are struggling to gain balance at the intersection of operating margin, inventory turns and case fulfillment. Market volatility is increasing and supply chains can respond, but they cannot sense. They are slow to adapt.


Over the course of the last year, I have written about this extensively. The research that I have conducted has enabled me to look at this holistically. For me, this has been discovery.


I am an old gal. Like an artifact, I have kicked around in the supply chain space since the 1980s. I believed that the first generation of supply chain systems would improve operations to a greater degree than actually happened. As an analyst, I had predicted great things that did not happen. Recently, I did a mea culpa. I am sorry. 


As a result, I am trying to be more careful to not overhype the market. When I left AMR Research I invested over 400K in building a database of supply chain financial ratios to correlate supply chain results. My goal is to understand the impact of technologies and processes. It is easier said than done. After three years of research, I have just refined the methodology to start to pull the trends.


I have learned that supply chain systems are more complex than I originally thought, and that the relationships between supply chain metrics are nonlinear. I have also learned that you need a large data pool to derive the type of analysis that I want to publish. It takes more than one or two respondents from a company.


I need to finish the work, but in the process—like the Hippocratic Oath above—I want to do no harm.


Why It Matters


Today, we have a number of burning platforms. Recently, I spoke to a major European retailer that lost 5% of their grocery revenues to Amazon in the first quarter of 2014. It is clear to them that Amazon is going to be anything that they want to be, and that they need to defend their turf. In a similar vein, a major 3PL that I spoke to last week at Eye for Transport is considering discontinuing the traditional storage of spare parts and initiating a new service to do 3D printing of parts on demand. There are many tipping points happening together, and companies want to know what can drive the greatest value.


What I See in the Data


In my work on the Supply Chain Index, I see that companies I recognize as doing network design well are rising faster on the list of the Supply Chain Index work. The network design technologies have changed a lot in the last decade. (I sometimes wonder if I should create a new class of technologies for the network design tools because they have changed so much.) The older tools from CAPS Logistics, SNO from Oracle, and Manugistics Network Planning are giving way to new technologies like the Logictools product (purchased from IBM), the Solvoyo product for concurrent planning, the Quintiq technology for concurrent optimization, and the Llamasoft technology platform for optimization and simulation.


These technologies are applicable to solve many problems. These tools allow us to look at sell, source, make, and deliver together. They also enable the evaluation of networks for both sales and procurement relationships to optimize the flows upstream and downstream. The technologies enable the evaluation of both volumetric flows and cost.  And optimization, as well as simulation, can now be done together.


I am a big fan of the use of these types of technologies. The work on the Supply Chain Index shows me that the companies that I consider to be the most mature in the use of these technologies—General Mills, Intel, Cisco, and Seagate—are outperforming their peers. Is it coincidence? I don't think so. I think that it matters.


Next week I will be speaking at the Llamasoft Summercon conference (follow this link to see the slides). On October 15th, I will be speaking on the Qunitiq World Tour in Philadelphia. Along the way, I will be doing more work on network design case studies. In preparation for these speeches, I have recently completed some quantitative research on network design. Here I share a cut of the data.


Figure 1.


Where Would I Start?


In figure 1, from the research, I share the current state of network design usage. As you can see from the data, while companies have increased the frequency of network design work from yearly to quarterly, most of the work is still focused on basic network design. The focus is on physical assets. I feel that the opportunities are in flows. The greatest gap is in the design of supplier and manufacturing networks. I also think that there is a great opportunity for increased focus on flow-path analysis and a shift from optimizing inventory levels to optimizing the form and function of inventory in value networks.


Anyway, in my effort to do no harm, this week, in a series of blog posts, I outline what I would do if I was a supply chain leader managing a company that was stalled at the intersection of inventory turns and operating margin. My first investment would be in network design to holistically design the network. I would not stop with the physical design. Instead, I would look at network flows, the form and function of inventory, cost-to-serve analysis, and the determination of the supplier network. I would infuse it into S&OP, risk management, and supplier development. I would build an expertise system in the Supply Chain Center of Excellence. I believe that it matters. While there are many factors that affect corporate performance, I can see that the leaders in the implementation of network design technologies are rising up the ranks on the Index and outpacing their peers.


If you are interested in some of our other studies on supply chain planning excellence, consider participating in our study on Supply Chain Planning: Is Faster Better. And, in our Digital Manufacturing Study. Both of these studies are slated to close in a week to be available for our July newsletter. Companies participating in the planning study will be able to benchmark the number of planners needed by supply chain complexity and better evaluate the rate of implementation. In contrast, the digital manufacturing study evaluates the rate of adoption of new technologies like The Internet of Things and 3D printing to change manufacturing strategies. As always, when you give to us, we give to you. We never release the names or the individual responses of the respondents, but we always share the results in aggregate and offer a one-hour call for those that want to better understand the data.


All of these studies that we are doing this summer will be showcased in a series of infographics at our upcoming Supply Chain Insights Global Summit on September 10th-11th in Scottsdale, Arizona. We hope to see you there!

"We live in a world where supply chains, not companies, compete for market dominance.

But companies often have diverging incentives and interests from their supply chain partners, so when

they independently strive to optimize their individual objectives, the expected result can be compromised. ”


Hau L Lee, Triple-A Supply Chains, Harvard Business Review, October 2004


"The idea of the value chain is based on the process view of organizations, the idea of seeing a

manufacturing (or service) organisation as a system, made up of subsystems each with inputs, transformation

processes and outputs. Inputs, transformation processes, and outputs involve the acquisition and consumption

of resources - money, labour, materials, equipment, buildings, land, administration and management.

How value chain activities are carried out determines costs and affects profits."


Institute for Manufacturing, 2013



Tipping points are fascinating to watch. They are even more fun to create.


I want to be part of the evolution that helps leaders to redefine strategies based on the changing physics, electronics and capabilities in value networks.


Tonight, I am stranded in a hotel in Chicago. Facing a string of canceled flights yesterday at O'Hare airport, instead of fighting the mayhem, I opted to pull my bags to the hotel across the street.  It is 3:00 AM. The Chicago airport is closed for the night. It is quiet and a good time to think. So, on this Friday night, I find myself typing away on my keyboard on what is another sleepless night.


So, bear with me as I throw down the gauntlet for the high-tech value chains to seize new levels of effectiveness.


What Is Value?


When I wrote the book Bricks Matter, I cavalierly penned a chapter on the evolution of supply chain thinking from cost to value. It sounds simple, but it is not. I found this out the hard way when Keith Harrison, contributor to the Forward of the book, asked me to define what I meant by "value." Keith is the former Global Product Supply Officer for P&G, and a person that I greatly respect. So, I swallowed hard and began the discussion.


It is one thing to write it, but it is a horse of another color to defend it. I think about this discussion with Keith often as I work on the Supply Chain Index and edit the chapters of Metrics That Matter.


I believe that value is what you create. You know when you have created value when it drives improved brand perception, increased sales or improved market capitalization. Easier said than done. You might say.... Yes, I agree.


How do you know when you have created it? And more importantly for supply chain leaders today, how can we create new levels of value from new business models that are happening based on the tipping points within the extended supply chain?


Let's Take a Hard Look at Value Chains


To understand value creation, we have to understand how companies have made trade-offs. In Figure 1, I share a composite orbit chart of progress of Cisco Systems, Intel, Samsung and Flextronics on the Effective Frontier at the intersection of inventory turns and operating margin for 2006-2012. What can we learn? I think three things:


1) A Hard-Fought and Tough Journey. This is a group of leaders. I have great respect for each of them. However, no company in this chart is on a linear path towards improving both margin and inventory turns. Instead, it is a gnarly road with each company struggling to make trade-offs.

2) Efficient Supply Chains, Not Effective Networks. Each company operates within its own plane, improving its own potential. We are still very early in the true adoption of value chain concepts. Our current processes and dependencies on Excel spreadsheets cannot get us to our goal.

3) Risky Business? Contract manufacturers operate at low margins and lack resiliency. The value chain depends on the contract manufacturers to drive value, but the lack of stability of the business model is a risk for the system.


Figure 1. High-Tech and Electronic Supply Networks

The investment in technologies has made companies more efficient, but not more effective. This is an important distinction. Why? All of the companies in the chart have improved revenue/employee.


Across the industries, this is the case. Our historic supply chain practices have made companies more efficient, but we have not made them more effective. Sadly, we also need to admit that we have not progressed very far on the creation of value networks. We have talked the concepts, but not enabled the processes. So, my question this morning as the sun comes up is, "Could we?


But, Could We?


My thought is yes. I think that this industry is poised for a tipping point. As we think about this value network, and the potential redefinition through new business models, I think that we are ready to change the equation. Three things are happening, that I think are significant:

  • Flextronics has invested in the development of Elementum. This is a new start-up in the B2B network technology space.
  • E2open last week announced the purchase of Serus. This purchase increases E2open's capabilities for visibility into the processes of the outsourced semiconductor network of foundries.
  • Kinaxis successfully orchestrated an IPO. New money into Kinaxis, a wider portfolio for E2open and the evolution of a new player with Elementum could change the equation.


As we move forward, I think that it is important to take a hard look at Figure 1 and ask ourselves the question, "How can we drive greater value into this value network through more effective data sharing, market sensing and translation and the enablement of the digital supply chain?" I am stepping forward to throw down the gauntlet.


My Advice:


  1. Kinaxis needs to briefly congratulate themselves—it was a tough fight—and then move on. It is time to move to a many-to-many data model. The Kinaxis model is an enterprise solution. It lacks the community infrastructure and the canonical integration layer of E2open. The current work on data sharing and control tower for Kinaxis is inside-out, not outside-in. It is an enterprise solution, not a network solution. As a result, it works well for a singular company connecting with its trading network; but, not with the interaction needs of the greater community.
  2. E2open needs to better define the value proposition, and the go-to-market messaging, and continue to add value at the application level. They have fought a hard fight to evolve through a turbulent decade. It is now time to build-out the model.
  3. Elementum is the new kid on the block. It is important for Elementum to build a community. It needs to be more than Flextronics.


So, as we think about the drivers for the tipping points—and the coalescence of new forms of analytics with big data systems, 3D printing, and the Internet of Things—there is a need in this value network to quickly to automate the supply chain moments of truth. This is the clear articulation of when and how to make, source, and deliver for the community. It needs to be multi-tier and many-to-many.


Without this, the players are stuck. Their current performance is stalled, and their interdependencies are too great to not improve through automation. It is about the network, not the enterprise. It is about the new definition of the digital supply chain. It is about new models.  This is the challenge.

So, here, I throw down the gauntlet. The race is on. Let's see who delivers. I look forward to your thoughts.


How to Learn More:


At Supply Chain Insights we are having fun exploring and understanding these trends.


We are currently doing research on the evolution of new forms of analytics in the hype cycle that many people refer to as Big Data, and we are completing our survey on digital manufacturing. We would love to hear from you. As with all our research, when you share with us, we share with you. If you respond to one of our surveys, we keep all of the responses confidential and only report the findings in aggregate.


In the Big Data research study, we are analyzing the adoption rate of Big Data Analytics of concurrent optimization, streaming data, cloud adoption, and cognitive learning. For more on this tipping point, please see my last blog post Dreaming of Clouds, Lakes and Streams. When it comes to digital manufacturing, it is a new world combining the Internet of Things with 3D Printing. We will be showcasing case studies of both new forms of analytics and the use of 3D printing at our upcoming Supply Chain Insights Global Summit on September  10-11, in Scottsdale, AZ. We hope to see you there!

It is morning in Chicago. I crave coffee. The sun shines brightly out the window, but the noisy city is quiet. My mind is moving to the click-clack of my keyboard on this quiet morning.


I cannot sleep. It is hard to quiet an unquiet mind. Somewhere deep inside me is the need to write this post.


Yesterday, I spoke at the Eye for Transport conference on the Big Data opportunity in supply chain. (The slides are available on slideshare.) Before I start, let me give a preamble. I hate the term Big Data. It is overhyped and overused. As a result, it has lost meaning. I writhe in my seat when I hear it. It is even more painful when I hear others speak about it to drive commercial aspirations without a firm grounding in reality.


When I go to an analytics conference today, I feel like the dumbest person in the room. The rate of change is incredible. I firmly believe that the Supply Chains in the next decade will look vastly different from those we see today. I think that we are poised for the third act of supply chain technologies. It is a new world of Best-of-Breed Technologies. The reason? Today, we are stuck. Nine out of ten companies are not making progress at the intersection of inventory turns and operating margins.  Our supply chains are not able to meet the requirements of the business. Frustration abounds.


For the supply chain leader, the noise of change is deafening—rising complexity, demand volatility, new business models, commodity volatility, ethical supply chains, collaborative economy—yet, our processes and technologies are staid and unwielding. We are paralyzed by history that has been transcribed into a canonical myth of "best practices."


"Rubbish!" I say.


So, in summary, today, we don't have a big data problem. Instead, and more exciting, I believe that we have a big data OPPORTUNITY! It is not driven by data volumes. Few companies that I work with have databases larger than a petabyte. Instead, it is driven by the opportunity to use new forms of data, and to improve the speed of decision making with increased data velocity.


The Real World


Yesterday, Abby Mayer and I presented an update in a webinar on the two-year research project, The Supply Chain Index. As I look at the progress of the companies that I have worked with over the last decade, the stories hop off the page. They are stories that I can never tell because of NDAs. My voice is caged by my promises to my customers.

In one peer group, there are two companies. One company is outperforming the other in very volatile times. The company that is exceeding was an early adopter of in-memory analytics for self-service by business users. This company can do "what-if" analysis and on-demand reporting. They implemented ERP early and stabilized the implementation. They are now working on the adoption of new technologies that many would call "Big Data." The other company has implemented ERP three times, and badly. In this second company, it takes five days for a business leader to get a custom report. All of the custom reporting is a service through IT.


The first company sits on one of the largest databases of channel data in the consumer products industry. They can see daily channel data daily by item. The second company reads market data through syndicated sources. They can see more aggregated data with a two-week latency. I believe that data matters. Every company that I work with that has invested in channel data sensing tells me that it is a project that pays for itself in days not weeks. Yet, the number one question that I get is, "What is the business proposition of building a demand signal repository?"


In the real world, we don't wake every morning knowing what questions to ask. The markets are ever-changing. We see data, observe patterns and want to learn more. The business leaders at the second company are at a clear disadvantage. I can see it in their numbers. However, it is hard to package what I see into a nice, neat ROI package to delight a CFO.

Some Context

When I think about the big data opportunity, it is not the world that we have today. Instead, it is about the advantages that we can garner in this next generation of technologies. For me, it is about data lakes, clouds and streams. The financial, insurance and e-commerce industries are leading. They are paving a way for manufacturers to rethink their processes. I want to break down the barriers for adoption. What do I mean?

  • Clouds. In supply chain circles, data clouds get the most buzz. We have seen the impact and the effects are far-reaching. It enables new business models for B2B network providers, in-memory optimization and new forms of virtualization. Concurrent optimization allows us to paint outside of traditional Advanced Planning System (APS) frameworks. It is powerful; however, this is the concept that I find the least exciting when I think about the big data opportunity.
  • Data Lakes. The ability to mine data in data lakes or pools to unearth new opportunities through new forms of analytics using nonrelational techniques is exciting. The mining of structured and unstructured data together ignites my thinking.  Today, we do not have an average customer; yet, we broad-brush markets. Our abilities to sense outside-in and to listen to the market are too limiting. For example, why are we not using Google search trends as a causal factor for forecasting? Or mining sentiment data for quality insights? The market data is there. We are not using it. Why? It does not fit into our paradigm. We are frozen in our thinking on inside-out processes that are powered by relational database thinking of traditional enterprise applications. Our functional silos are struggling to get the technologies of yesteryear to work.
  • Streams. This is the concept that I find the most exciting. Streaming data is pervasive in e-commerce and also core to the future of  supply chain technologies. Why do I feel this way? Most companies are so busy recording transactions into nice, neat rows and columns that the streams are hidden. But, encased in the data, we have order streams, shipment streams, payment streams.... The list can go on and on. The evolution of big data techniques can allow us to sense changes in these streams quickly and change course. The same principle of streaming data from a temperature sensing RFID device can be applied to streaming data within the enterprise. The ability to write APIs to data streams and the possibilities for supply chain excite me.

I believe that we are attacking many business problems too narrowly. Let me give you an example to use these three concepts. Does master data management give you a headache? We are hard-coding master data into relational systems; and as we do, we lose the context. What if we could place enterprise reference data into a data lake that can be assembled through rules-based ontologies and cognitive learning?


What Are the Barriers?

The problem is us. There are three primary obstacles for the line-of-business leader:

  1. The first barrier is that we , as manufacturers and distributors, are cheap. The great minds working on big data opportunities are working in industries where investments in technologies are viewed as mandatory to drive innovation. They are not hampered by having to have a fixed ROI with a three-year payback proven by a two-year pilot.
  2. The second barrier is that we have to retool our minds to understand the opportunity. It requires a new language and embracing new concepts. It requires education. Spend time teaching your team about the new concepts. Here are some to start with: Hadoop, Yarn, MapReduce, R, Nonrelational Data, Unstructured Data, Rules-Based Ontologies, Canonical Integration and Cognitive Learning. Business leaders need to spend time learning the concepts and brainstorming the use cases. This shift will not come from the IT department. They are too constrained with fixed budgets, mountains of requests, and traditional vendor interaction. It will also not come from discussions with the traditional vendors that you find pasted all over the airports. Instead, it is found in conferences that are primarily attended by e-commerce pure plays, home entertainment companies, financial, and insurance institutions. Form a small team to go learn about the new opportunity.
  3. The third barrier is how we think about technology. We are hard-wired to think about technology as a fixed project with a set of defined deliverables. As a result, we cannot be open to the outcome of what we can learn by testing and learning with new forms of analytics and techniques to seize the big data opportunity. The companies that are doing this well have cross-functional teams that are funded with innovation seed dollars to test new technologies against a business problem. However, there is a major difference. The projects are small and iterative. They are not the massive, large consulting projects of yesteryear. I love my podcast with Fran O'Sullivan from IBM that explained this very succinctly.

I will stop now. Room service is knocking. Coffee is in my future, and soon....


This morning, I will be presenting on the opportunity for social data in the supply chain. A subject that many of you know has been top of mind for many years. Hopefully, I will sleep tonight....


How Can We Help?

If you would like to better understand the Big Data Opportunity in Supply Chains, please join us in our quest to help others think differently. Join us in our research study on Big Data and join us at our Global Summit in Scottsdale, AZ on September 10-11, 2014. It is only 89 days away...

At this conference, a number of business leaders have asked to have a private whiteboard brainstorming session. It is private. It will be a session amongst peers to rethink the opportunity in supply chain analytics. I am looking forward to it. I hope that it is standing room only. I hope to see your face in the room....

The deserts of the southwest sprawl below me as the plane ascends from San Diego. It is such a very different landscape than the green mountains of my farm in West Virginia or my city streets in Philadelphia. It appears SO barren from my window in seat 4D.


It has been a good week. I now have a working manuscript for the entire book of Metrics That Matter. Writing this book has been like a black cloud hanging over my head. Working on it, and completing the writing while managing a start-up, has been tough. But, then I have never been one to shy away from a challenge.


I jeopardized the release date of the book by taking an extra three months to finish the Supply Chain Index work. The book is now 98,482 words and eight chapters. It is a fictitious story of a guy named Joe that does not want to be an average. He is trying to figure out the answer to these questions:

  • What defines supply chain excellence?
  • Who has done it best?
  • How has progress changed over time? What does it mean for the future?


Since supply chain can be a bit boring, I made it into a narrative. In the story, Joe and his leadership team work together to learn the answers to these questions through a series of strategy days.


Writing a book is a bit daunting. Definitely a labor of love, I have pored over digital pages on my laptop for many days. It is tough to write on airplanes. During the process, I have flown more than 120,000 miles. On the journey, I have lost five wireless mice, used over six reams of paper, and damaged three laptops. It is hard to write on the road, but I am now down to final editing. So, as my plane takes flight today, I breathe a bit better and walk a bit faster. A milestone is completed. It is time for reflections.


Yesterday, in the middle of completing charts and graphs for Chapter 7 of the book, I facilitated a webinar for Kinaxis. The topic was on mentorship and sponsorship of women in the workplace. When the offer came across my desk, I did a Marmaduke moment. <Remember this cartoon character? He is one of my favorite. Marmaduke is a lovely Great Dane. When he heard something startling, he would always raise his ears and make a sharp sound.> This was me when I was asked.


Why, I thought, would Kinaxis be interested in doing a webinar on women in supply chain? In my opinion—it is a very biased opinion, I admit—the role of women in the workforce in supply chain has come sooooooooooo far during the time of my career. There was no line in the bathroom at the Kansas City CLM conference in 2001, but there will be at the CSCMP conference in San Antonio in 2013. In fact, it will probably be a long line.


Today, based on our studies, women compose about 43% of the supply chain workforce. I was on the cusp of the transition. I was a first generation female pioneer. When I went to engineering school at the University of Tennessee in 1974, there were two women in my class. I still remember the professor throwing down my Statics and Dynamics midterm test on my desk with a red "D" on the top and asking to see me after class (90% of the class had failed, and none of my male classmates were asked to stay). The follow-up conversation was not pretty. He basically told me that women did not have the ability to be engineers. This was a story that he did not recount when he quietly laid the final test with a red "A" on my desk at the end of the term.

The Webinar


At that time, my friends and I felt that we needed to deny our femininity to be accepted in the workforce. It was a hard battle fought with grit, determination and chagrin. The stories were poignant. It was before the days of sexual harassment policies, but not before sexual harassment. Being female in an all-male world was difficult. It would was not the world that fathers would wish for their daughters. Several of my friends ended up in therapy with an identity crisis.


Not me. I was just so busy fighting the fight that I forgot to enjoy the journey. Tough as nails and focused, I plunged ahead. There were many years that I just could not let myself feel anything. But yesterday, as I put my manuscript to the back of my desk at the Omni hotel in San Diego and took a break to facilitate this webcast with a panel of four wonderful women, I took time to enjoy the journey. I heard advice that I wish someone had shared with me on my journey:


  • Be Thankful for Feedback. Shellie Molina, now VP of Global Supply Chain at First Solar, told the story of learning how to receive feedback. She told the audience to ask for feedback often and thank the receiver. As a crusty gal that was fighting the hard fight to be accepted in a man's world, this would have helped me immensely. I needed so much feedback and fought the people who tried to give it. I give thanks to people who persevered. I am a better person for it, but I fought it all the way. Her advice, "It takes guts for colleagues to give you feedback. When it happen, thank them and ask for clarity. Use it as a time to build the relationship." Great advice. Don't make the mistake that I made.
  • Outperform and Then Ask for More. When asked how to get a sponsor, Laura Dionne, Director of Worldwide Operations at TriQuint, replied, "Outperform and then ask for more." She shared that this had helped her to get sponsorship from her managers. Laura also shared that she was promoted three times while taking pregnancy leave to give birth to her children. It made me reflect on how important sponsorship is and how it can shape others' lives. It made me think. As a result, I sent three Thank You notes over the weekend to my prior sponsors.
  • Don't Be Afraid to Be Female. Elisabeth Kaszas, Director of Supply Chain for Amgen, shared that women should not be afraid to be female in the workplace. This was advice that I sorely needed as an entry-level employee. I loved Elisabeth's perspective that women have a level of modesty and pride that helps the workforce, and that other women should encourage their women peers to speak at conferences, participate in programs, and stretch their aspirations.
  • Pull Up the Chair at the Table. In the practice session, the panel often talked of encouraging other women to pull up a chair to the table and participate. Verda Blythe from University of Wisconsin spoke of the building of soft skills in the academic setting  to help both women and men embrace diversity.


All of the panelists shared that the world today is a very different place for women in supply chain. It is their belief that the opportunity is with filling senior roles; and in this regards, they were not sure that the supply chain roles are that different from other senior roles. The facts as the panel sees them: there just are not enough senior women sitting at the boardroom table. I agree.




So, as I look from my window, and look at the desert below, I smile. The workforce today, for female supply chain leaders, is no longer a barren, hostile landscape like the view stretching beneath me on my way back home. For that, I give thanks.  Paving the way was hard. I am glad that I survived. However, I am thankful that other women will not have to face the hostility and unforgiving world that I persevered in. It was tough. I am glad that it is behind me.

Countdown to the Summit


If you are interested in the Supply Chain Index, and the research that we are doing on understanding supply chain excellence, and the Index methodology prior to the book being published, join us to hear the research insights on a series of webinars over the summer:


Consumer Value Networks webinar on June 12th on 11:00 AM

Healthcare Value Networks webinar on July 17th on 11:00 AM

Industrial Value Networks webinar on August 12th at 11:00 AM


Our Global Summit is 95 days away, and we are busy preparing. Lots to do. There are about 60 seats left. We expect to sell out on this exclusive networking event for 230 supply chain leaders. Make sure that one of the remaining seats is yours!


In preparation, we are finishing up research on supply chain planning excellence, big data and supply chain, supply chain talent, and digital manufacturing. As always, we would love your insights on our research studies. When you give to us, we give back to you  through open research. We share the research openly, but we never share your name or your individual responses. Working with us on surveys is a good way for you to get insights for your team. And, if you give us ten minutes of your time in filling out a survey, we will be glad to share the responses with you and your team on a one-hour call.


The open research studies that we are working on for the summit include:


Supply Chain Planning: Is Faster Better? A way to benchmark supply chain planning implementation times and planning productivity.


Digital Manufacturing: How are process manufacturer's using the Internet of Things to automate process manufacturing, and how are digital manufacturers embracing 3D printing?


Corporate Social Responsibility. What is the role of CSR in defining supply chain strategies in the race for supply chain 2020?


Big Data Supply Chains. How are companies embracing data lakes, streams, and clouds to use a growing variety and increasing velocity of data?