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2015

When it comes to the management of inventory in value chains, frustration abounds. Executive after executive laments they have purchased many technologies, and sponsored many projects to reduce inventories, but they are not seeing results.  I have been studying the evolution of inventory technologies as an industry analyst since 2002. This week, I published an in-depth analysis on the topic. In this post, I share my reflections along with seven misconceptions.

 

Figure 1. Inventory Levels

Organizational Tensions to Reduce Inventory Levels

The supply chain is a complex system with increasing complexity. Inventory is the culmination of many business decisions. Few companies manage their supply chains end-to-end; and as a result, they cannot manage inventory holistically.  Only 10% of companies are making progress at the intersection of inventory turns and operating margin. There is no silver bullet. It is truly a case of process, people and technology. Notable exceptions, making improvements at the intersection of inventory turns and operating margin, are companies like Carlsberg, Cisco Systems, Hershey, and Novo Nordisk.

 

Tracking Progress


The supply chain leader manages performance at the intersection of inventory turns, operating margin and customer service. While we cannot access customer service levels for public companies, we can measure progress at the intersection of operating margins and inventory turns.

 

At Supply Chain Insights, this is our passion. We are systemically evaluating each industry in the Supply Chain Insights Metrics That Matter series of reports. Last Thursday, we published an in-depth analysis of the pharmaceutical industries and in May, we will focus on progress in the chemical industry. This is in preparation for the 2015 Supply Chains to Admire Report.

 

In Figures 2 and 3, we share orbit charts of progress. Let's take a closer look to see what progress looks like. In figure 2,  we compare Novo Nordisk versus Eli Lilly. Note the improvement in inventory and operating margins by Novo Nordisk and the lack of progress by Eli Lilly. In parallel, in Figure 3, note the progress by Carlsberg, and the lack of progress by Heineken. This type of benchmarking is the most powerful in the comparison of like competitors.

 

Figure 2. Novo Nordisk vs. Eli Lilly

Pharma Report 2015_InvTurns X Operating Margin_Eli Lilly and Novo Nordisk

Figure 3. Carlsberg vs. Heineken

carlsberg and heia

 

The Inventory Management Journey


Why is progress so hard? Over the last decade, most companies went through a multitude of changes. The increase in the item complexity, the lengthening of demand latency and the building of global supply chains with greater in-transit inventories top the list. To counteract these business shifts, companies have invested in Enterprise Resource Planning (ERP) and Advanced Planning Systems(APS), focused on projects in Lean Flow, and driven maturity programs for Sales and Operations Planning. These efforts are not enough.

 

The business drivers have outpaced the company's ability to manage inventory through new technologies and processes. Why? While we have talked about collaboration,  Vendor Managed Inventory (VMI) are not connected to enterprise systems, and less than 5% of companies have deployed multi-tier inventory optimization software to support a continual process (as opposed to an ad hoc) analysis to set inventory targets. Network design concepts are gradually gaining acceptance, but too few design their networks. And, when they do, the focus on network design is still on bricks and mortar--where to put manufacturing and distribution locations--not on form and function of inventory, and the design of inventory flows.

 

Seven Misconceptions


I find that when it comes to the management of inventory, misconceptions abound. This includes:

 

  1. Inventory Management Is the Same as Replenishment. Inventory management and replenishment are separate, but interrelated processes. While inventory management includes the design of inventory strategies to set inventory targets including the execution of supply chain processes to design and manage the form and function of inventory, replenishment is a about flow.  Replenishment is usually push-based logic, based on a series of rules, based on dependent, as opposed to independent, demand. As a result, traditional replenishment logic amplifies and distorts the demand signal. The greater the demand error, and the greater the supplier volatility, the greater the need for multi-tier inventory management.
  2. Inventory Is a Cost to Be Managed. Finance wants to actively manage inventory. A frequent mistake made in the management of inventory in the extended supply chain is a blanket reduction—a corporate mandate to reduce inventory— without rationalizing the requirements for inventory in the value chain. Inventory should never be managed to a financial target. Instead, it needs to be based on the requirements of customer policy and the supply chain strategy. For many, this understanding is the toughest to close. Finance needs education.
  3. The Management of Inventory Does Not Need Technology. To get good at the management of inventory, companies need technologies. The supply chain is a complex system that cannot be adequately managed through calculations on a spreadsheet. As a result, companies need to blow up their spreadsheet ghettos within the organization and challenge the supply chain team to think more holistically about the role of inventory in the market-driven value network.
  4. I Can Use New Technologies without Changing My Planning Organization. The use of new technologies requires time for planners to use them, and when implemented correctly leads to a new set of business processes. Do not make the mistake of buying and installing the technologies, but not getting the benefit because the planners did not have adequate time to plan, or you have not taken the time to rethink the processes to use the new technologies.
  5. Implement with Knowledgeable Resources. At first when you read this recommendation you might say, “DUH!?” However, let’s face facts. There are too few people in the world who are really knowledgeable about inventory management software tools. While many consultants will talk about inventory, we find few to be knowledgeable in the technologies. Instead, we find the technology’s provider to be the most knowledgeable on the use of the technologies. There are also a few boutique consultancies around the world that have built strong teams around inventory optimization. These are usually small, and focused consultancies with a strong inventory heritage.
  6. The Market Leaders in Inventory Management Technology Have the Best Solutions. The companies with the greatest market share—Oracle and SAP—have the weakest references. While both Oracle and SAP will hotly debate this fact, we find a growing gap between the vendors’ perception of the use of their solutions market and satisfaction levels of their clients.
  7. All of the Solutions Have the Same in Functionality. There are major differences in the technologies to manage inventories in the extended supply chain. It is too complex to be described in a four-box model. As a result, companies should buy inventory management technologies based on process requirements, IT standardization and cultural fit. While many think that solutions with a common name—technologies purchased from a common vendor—are integrated, often the situation in the market is vastly different. Most of the inventory technologies have been sold and resold multiple times in the market, with many best of breed solutions having better integration than the ERP providers touting integration.

 

The market for multi-tier inventory management was overhyped and largely underdelivered in the period of 2005-2007. Due to market size, and the highly competitive and fragmented market, the levels of R&D investment by technology providers has slowed. As a result, buyers should buy based on today’s functionality.

 

These are my thoughts. Any misconceptions to add? I look forward to hearing from you! We will be covering this and more at the Supply Chain Insights Global Summit. Will we see you there?

 

This is my third year of hosting the annual Supply Chain Insights Global Summit. I hold the event at The Phoenician in Scottsdale, AZ on September 9-10. It is an exclusive group of 150 supply chain leaders.

 

Baxter and Sawyer will be there! The robots are featured in the digital showcase on the opening night of the event.

 

Baxter and Sawyer

The Summit agenda focuses on even themes:

 

  1. Supply Chains to Admire. At this conference, we will unveil the results of our second study on supply chain performance and improvement. In this session, you will gain an understanding of which companies have driven the fastest improvement and highest level of performance. Understand what is possible as you listen to stories of these supply chain leaders.
  2. Race for Supply Chain 2020. Two leading economists—Richard Florida and Pankaj Ghemawat—will share insights on the future of world trade and the changing nature of world demographics. The world is not flat and there is more friction across borders than there was prior to the great recession. Learn what the future will hold and how to best prepare.
  3. Power Growth through New Technologies. Mobile. Augmented Reality. Corporate Social Responsibility. The Collaborative Economy. 3D Printing. Cognitive Learning. Robotics. There is a flood of new technologies and approaches to change traditional supply chain models. Join us the afternoon of September 9th, to understand how companies like Jabil, Green Eileen, and Sidecar are using these new technologies to power growth.
  4. Digital Supply Chain. Gain an understanding of what is a digital supply chain, and learn more about the capabilities of new technologies to drive innovation. Join us at the digital showcase during our Welcome Reception on September 8th to get hands-on experience and gain exposure to case studies by supply chain leaders that are driving outside-in transformations.
  5. Supply Chain Transformation. Join us the morning of September 10th to gain insights on how General Mills, Intel, Lenovo, Wright Medical,  and Seagate have driven supply chain transformation. This session will end with a panel discussion of leading experts sharing insights on building demand-driven processes as participants share their insights from the Supply Chain Insights planning benchmarking work.
  6. Power of Outside-in Processes. If you have played the beer game, and are looking for a new way to help teams understand the complexities of supply chain management, we have designed the afternoon of September 10th for you. Spend the afternoon enjoying playing the new simulation game built by Sterling Simulation and Supply Chain Insights to demonstrate the power of outside-in processes. Network with your peers on the insights and relax under the Arizona skies as you wrap up a couple of intense days with your peers at the final reception.
  7. Network with Leaders. This is the event where supply chain innovators talk to supply chain visionaries. It is unlike any other conference. If you are looking to stretch your thinking, you will want to put this conference on your calendar.

 

Registration for the event is now available, and there is a special discounted room rate at The Phoenician if you register early.  See you there?

 

All the best on your journey for supply chain excellence. Thanks for reading the Supply Chain Shaman blog, and I hope to see you at the Supply Chain Insights Global Summit…

 

Where is Lora?

As we move towards ‘The Third Act of Supply Chain Planning Software‘, my focus is to help line-of-business users make data-driven decisions. This is why we continue to fund surveys which we share openly and freely. Our mantra is “You give to us, and we give to you.” We are currently finishing up research on S&OP and Inventory Management technologies. Take our surveys. We never share the names of respondents, and we always share the results. The results will be shared in open roundtables with supply chain leaders. Here are the links to the studies:

Inventory Management

Sales and Operations Planning

_____________________

About the Author:

Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter, and is currently working on her third book, Leadership Matters. She also actively blogs on her Supply Chain Insights website, at the Supply Chain Shaman blog, and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, knitting and quilting for her new granddaughter, and doing tendu (s) and Dégagé (s) to dome her feet for pointe work at the ballet barre. Lora thinks that we are never too old to learn or to push for excellence.

Lora SpeakingYesterday, I presented to 700 global attendees on an APICS webinar. In the presentation, I shared data on the evolution of supply chain planning and the results on user satisfaction. The results confound me. They are not consistent with market perception. Let me share the story.

 

As shown in Figure 1, users are more satisfied, the implementations are shorter and there is greater Return on Investment of solutions from Best-of-Breed solution providers—especially if the best-of-breed solution providers used are industry-specific. However, in the polling data in the APICS webinar, we found that over 70% of the respondents had deployed solutions from the ERP-expansionists (either SAP or Oracle). The use of best-of-breed planning technologies was small at 15%. Today, SAP and Oracle have market share dominance; however, the data is clear. Neither technology vendor is an industry leader in delivering a solution that fits the needs of the supply chain planner.

 

So, why would a company deploy a solution that is more costly, with a longer time to value, to drive lower satisfaction ratings by the planner? The answer is interesting. The facts are 180 degrees out of sync with perception. The common perception is that SAP and Oracle supply chain planning solutions are superior to best-of-breed Advanced Planning Solutions. There is also a belief that SAP and Oracle provide a solution that is more 'integrated'.  I don't think either statement is true. User interviews do not support the market perception; but, this is a case where perception becomes reality.

 

Figure 1. Summary Data of User Satisfaction with Supply Chain Planning Applications

comparison

Background


Using quantitative surveys, we collected the data in Figure 1  in 2014. The data reflects user feedback from 93 companies with over 180 demand and supply chain planning instances. In the table, the figures in red are statistically significant at a 90% confidence level.

 

The study is primarily a comparison of best-of -breed solution providers (Logility, JDA, Kinaxis and OM Partners) versus SAP and Oracle.  Unlike many research studies, it is a panel that is known. We have validated each respondent as a user of supply chain planning. (This is unlike many studies that are fielded to B2B panel groups where the identity of the respondents cannot be ascertained.)

 

The research is a study of large manufacturers. Companies were disqualified if they were not mature in the use of planning, or if they were less than $1 billion in revenue.

 

Five Lessons to Learn


So, why would companies implement solutions that cost more, were longer to deploy, and had lower user satisfaction? Here are my thoughts:

 

1) Failure of the Industry Analyst Model. Buying these solutions is far more complicated than is represented in a simple four-box quadrant. It is complex. There are many parameters. There is greater satisfaction with demand planning than supply.

 

The fit of the data model to adequately reflect a feasible plan drives success. This requires an industry-specific data model. (The modeling of materials in Kinaxis is quite different than JDA, and the modeling of reverse bill of materials and co-products in Logility and OM Partners.) To have this discussion with the buyer of technology requires a mature analyst and a research methodology that analyzes user satisfaction. I struggle to find both in today's market.

 

The SAP and Oracle analyst relations groups are big machines. Taking a stance against a vendor and calling a spade a spade takes courage by the analyst. It is uncomfortable. The bigger the vendor, the tougher it is to publish a critical article. An old analyst, like me, has scars. I can tell you many stories.

 

This week, I am finishing two reports: Sales and Operations Planning, and Inventory Optimization. These two reports will make all the vendors in the industry angry. The phone calls to review factual accuracy will be tough. I will hate my job for about a month, and then the smoke will clear. Through it all I have to remind myself that my job is not to be liked. Instead, I will remind myself that I write independent advice for the line-of-business leader. It is more important to be respected than to be liked.

 

2. Follow the Money. Consultants recommended the  solutions by SAP and Oracle. The reason? The implementations better fit their models. The implementations were longer and more expensive. They had enough scale to invest resources and build a bench of expertise. The best-of-breed solutions were not as lucrative for the consultants. The implementations were smaller and the costs were less, and best implemented by the vendor.

 

The data tells us that independent of the solution, the worst scenario is to have a large system integrator implement a supply chain planning solution. Why? They are not good at it. For all vendor solutions (including SAP and Oracle), companies are better to have the technology implemented by the technology solutions vendor. While there are some exceptions (Cap Gemini has a strong practice in the implementation of Oracle transportation planning and E&Y has built some great technologies to augment the gaps in APO demand planning, and KPMG has some great knowledge of business networks), in general, big consultants are not good at implementing supply chain planning. I recommend the smaller, and more focused, firms like Bristlecone, MEI, Optilon, SCM02, Smartchain, Solventure, and Spinnaker.

 

3. Definitions Matter. The business leader wants an integrated solution. Likewise, the Information Technology director wants an integrated solution. However, when you ask each group for a definition of "integrated" the definitions are different. IT's definition focused on the movement of data with a defined context through an API, while the business leader wants a solution that can represent the end-to-end supply chain. Both groups believe that if the solution comes from the same vendor, that it is integrated. Nothing could be further from the truth. In many cases, the best-of-breed solutions are more integrated than the ERP Expansionist solution using both definitions. Definitions matter.

 

4. Overhyped Market with Bad Behavior. The solutions were expensive, and attracted a well-paid sales team that overhyped the solution and then under-delivered. The market is littered with stories of bad behavior. The buyer was wary: they wanted a new approach.

 

5. Best Software Does Not Always Win. It is now clear that SAP APO was inferior to the i2 Technologies' SCM suite (now owned by JDA), but that was not market perception. In parallel, we now know that the Demantra solution purchased by Oracle lacks scalability and usability, but the perception is that it is well-integrated into the Oracle suite.  Perception is reality. In the absence of data, marketing perception wins.

 

These are my thoughts. I would love to hear yours. I welcome your comments.

 

As we move towards 'The Third Act of Supply Chain Planning Software', my focus is helping the line-of-business user make data-driven decisions. This is why we continue to fund surveys which we share openly and freely. Our mantra is "You give to us, and we give to you." If you are interested in seeing a similar analysis of S&OP and Inventory Management technologies, take our surveys. We never share the names of respondents, and we always share the results. Both of these studies will be shared in open roundtables with supply chain leaders. Here are the links to the studies:

Inventory Management

Sales and Operations Planning

_____________________

Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter, and is currently working on her third book, Leadership Matters. She also actively blogs on her Supply Chain Insights website, at the Supply Chain Shaman blog, and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, knitting and quilting for her new granddaughter, and doing tendu (s) and Dégagé (s) to dome her feet for pointe work at the ballet barre. Lora thinks that we are never too old to learn or to push for excellence.

Where is Lora

I pushed aside Shane’s motorbike helmet and jacket to take a seat in his crowded office. It was a beautiful spring day in March in Basel, Switzerland. Shane is a stocky man of medium build who I love talking to. He is an engaging personality: definitely a people person.

 

He had recently returned from his stint as the commercial leader for Syngenta in Vietnam, and was excited to tell me about his beach-side investment in Australia. An Aussie by birth, Shane still speaks with an Australian accent.

 

syngenta

Syngenta AG is a global Swiss agribusiness that markets seeds and agrochemicals. The company's focus is on biotechnology and genomic research. The company formed in 2000 by the merger of Novartis Agribusiness and Zeneca Agrochemicals.

 

Shane's Story


I first met Shane in 2007 at the beginning of his work with Syngenta's value chain. At that time, his team was actively building a demand-driven strategy. I was working at AMR Research, and the group asked for help to understand the concepts of being demand-driven . It had been a whirlwind trip across Europe, and I was tired. I don’t remember what I said, but I do remember Shane. As I stood up to give my standard speech, Shane engaged me in dialogue. I loved his style and charisma with the team. It sparked a great debate.

 

I was excited to return on this windy, spring day to talk to Shane—seven years later—to ask him for reflections. Seldom do I see a commercial leader transition to supply chain, and I wanted to gain his insights.

 

Figure 1. Orbit Chart Comparing Syngenta and Monsanto Progress on the Effective Frontier -
Balancing Inventory Turns and Operating Margin for the Period of 2005-2014

 

syngenta_monsanto
Orbit Chart of Syngenta and Monsanto of Progress on Operating Margin and Inventory Turns

 

In 2007, Shane Emms was asked to take a Global Supply Chain leadership assignment at Syngenta. With a career in marketing, and very little understanding of supply chain, he was afraid that his new team would ask, “What does this guy know?” However, in 2008 when the business grew +20%, inventories declined substantially, and part of his team won a Syngenta internal award, it became clear. While Shane did not start out with a supply chain background, he was a fast learner and a great leader. (Use the orbit chart in Figure 1 to follow Shane's progress through the recession. He led the team during the period of 2007-2009. Note the improvement and the resiliency in supply chain performance.)

 

When I asked Shane, during my recent trip to Basel, Switzerland, to tell me how he orchestrated the transition, he replied, “There were two immediate actions. I pushed hard to get the supply chain team to understand the commercial challenge; and I also worked diligently to give the supply chain team an identity, and I then asked them to stand up to that identity.”

 

He smiled and laughingly said, “Supply chain guys are serious and smart folks, but don’t always know how to market their work. They are great problem solvers, but sometimes they do not understand the elements of the commercial enterprise." The Syngenta team, under Shane's leadership, built their identity around the slogan of ‘Deliver today, design for tomorrow’.

 

Shane continued, "We lived this identity and promoted it within the company. It was important: the lines were being drawn between commercial and operations teams, and we had to focus to help the two groups work better together—we were the most important link of the supply chain."

 

"It seems like yesterday because it is so vivid in my mind. The times were tough. In 2008 the market was ballistic. Commodity prices were driving high interest in agriculture and we had run out of a lot of product. To focus, we identified about 23 areas that we could tweak to improve the responsiveness of supply. We were out of capacity, needed to build it, and needed to redefine the supply chain. My goal was to ensure that each person on the team felt like they had a stake in the business and the opportunity. We focused on how to work with the commercial teams. Initially, it was in two areas.” Shane said.

 

He then described this work. “My first goal was to get the supply chain team and commercial teams working together, not one way. When it came to working with the commercial teams, I asked each person on the supply chain team, where appropriate, to consider saying ‘No’, and mean it, and stick to their guns.” With a twinkle in his eye, Shane said, “Getting along often means standing up in an astute way for the company's benefit, not any one function over another.”

 

He cleared his throat and continued, “My next focus was on building stronger business partnerships. I asked the team to get involved with the business. I think all supply chain leaders need to know where the money comes from, and customer's needs. So, I encouraged them to pull up their chairs with the commercial teams, and get involved, and better understand the business and continue to seek where we can create and add value."

 

" You know that our supply chain is complex. We outsource about 80% of the primary ingredients of our crop protection business, and pack it in finishing plants and ship to warehouses. The front-end of the supply chain performs very differently than the back-end,” he said as he rose from his seat to write on his whiteboard. With a black marker, he drew a series of boxes that represented the Syngenta supply chain. The emphasis was on making active ingredients and pushing them to a decoupling point to push finished products to market. He continued, “We needed to be responsive to the market. By doing this, our sales teams got an extra leg up on the competitors and drove sales, while we could bring working capital down.”

 

My Take


To understand supply chain excellence, and the impact of a leader, you need to compare the results of peers. In Figure 1, I share the orbit chart on the pattern of inventory turns and operating margin for two competitors: Monsanto and Syngenta. The potential of the Syngenta and Monsanto businesses is very different. Like most market leaders, it is based on product portfolios and market strategies. The goal of a supply chain leader is to maximize the potential. As can be seen in Figure 1, Monsanto outperforms Syngenta. However, take a closer look at the Syngenta and Monsanto patterns through the recession when Shane was leading the team. Note the resiliency in Syngenta's supply chain and the small incremental improvement under Shane’s leadership. While Monsanto has a higher overall performance, the Monsanto team lost control of the supply chain in the rebound from the recession.

 

Shane’s work on commercial and supply chain team alignment improved resiliency. The alignment between the commercial and operational teams is both difficult and important. This is why I think this is an important story.

 

In our research two years ago on supply chain alignment, as shown in Figure 2, the lack of alignment in most supply chains is a gap, and I agree with Shane... a missing link in most supply chains today.

 

Figure 2. Organizational Alignment: Closing the Critical Link Between Sales and Operations

alignment

 

Congrats to Shane and to the team for closing this gap. It was important in building resiliency and driving improvement in the Syngenta supply chain. What do you think? I would love to hear your story. Write and let me know how you and your team have tackled alignment and built strong relationships with the commercial teams. I know of very few of these stories, and I think that they are important.

 

To hear more stories like Shane's be sure to mark your calendar to attend the Supply Chain Insights Global Summit. We are finalizing the agenda and would love to see you there:

Baxter and Sawyer

Meet Baxter and Sawyer. They are attending the Supply Chain Insights Global Summit, and they're hoping you are too! They will be featured in our digital showcase and are a part of the Jabil story on digital manufacturing. We are busy putting the final touches on the agenda to help you Imagine the Supply Chain of the Future. In this year’s agenda, we are featuring some great case studies on new business models—Green Eileen and Sidecar—that I think that you will enjoy.

 

This is my third year of hosting the annual Supply Chain Insights Global Summit. I hold the event at The Phoenician in Scottsdale, AZ on September 9-10. It is an exclusive group of 150 supply chain leaders and is limited to 15% technology providers.

 

We are finalizing the agenda this week against seven exciting themes:

 

  1. Supply Chains to Admire. At this conference, we will unveil the results of our second study on supply chain performance and improvement. In this session, you will gain an understanding of which companies have driven the fastest improvement and highest level of performance. Understand what is possible as you listen to stories of these supply chain leaders.
  2. Race for Supply Chain 2020. Two leading economists—Richard Florida and Pankaj Ghemawat—will share insights on the future of world trade and the changing nature of world demographics. The world is not flat and there is more friction across borders than there was prior to the great recession. Learn what the future will hold and how to best prepare.
  3. Power Growth through New Technologies. Mobile. Augmented Reality. Corporate Social Responsibility. The Collaborative Economy. 3D Printing. Cognitive Learning. Robotics. There is a flood of new technologies and approaches to change traditional supply chain models. Join us the afternoon of September 9th, to understand how companies like Jabil, Green Eileen, and Sidecar are using these new technologies to power growth.
  4. Digital Supply Chain. Gain an understanding of what is a digital supply chain, and learn more about the capabilities of new technologies to drive innovation. Join us at the digital showcase during our Welcome Reception on September 8th to get hands-on experience and gain exposure to case studies by supply chain leaders that are driving outside-in transformations.
  5. Supply Chain Transformation. Join us the morning of September 10th to gain insights on how Lenovo, Wright Medical and Seagate have driven supply chain transformation. This session will end with a panel discussion of leading experts sharing insights on building demand-driven processes as participants share their insights from the Supply Chain Insights planning benchmarking work.
  6. Power of Outside-in Processes. If you have played the beer game, and are looking for a new way to help teams understand the complexities of supply chain management, we have designed the afternoon of September 10th for you. Spend the afternoon enjoying playing the new simulation game built by Sterling Simulation and Supply Chain Insights to demonstrate the power of outside-in processes. Network with your peers on the insights and relax under the Arizona skies as you wrap up a couple of intense days with your peers at the final reception.
  7. Network with Leaders. This is the event where supply chain innovators talk to supply chain visionaries. It is unlike any other conference. If you are looking to stretch your thinking, you will want to put this conference on your calendar.

 

Registration for the event is now available, and there is a special discounted room rate at The Phoenician if you register early.  See you there?

 

All the best on your journey for supply chain excellence. Thanks for reading the Supply Chain Shaman blog, and thanks to Shane for sharing his story.  I hope to see you at the Supply Chain Insights Global Summit...

 

Where is Lora?

_______________________________________________________________

Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter, and is currently working on her third book, Leadership Matters. She also actively blogs on her Supply Chain Insights website, at the Supply Chain Shaman blog, and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, knitting and quilting for her new granddaughter, and doing tendu (s) and Dégagé (s) to dome her feet for pointe work at the ballet barre. Lora thinks that we are never too old to learn or to push for excellence.

It is finally spring in Philadelphia. Yesterday, as I walked the streets on the way to ballet, I saw flowers for the first time in a year. I love spring. It is a time for awakening.

 

My body is decompressing from travel, but my mind is full of ideas. I have been on the road for the past three weeks speaking at seven events. Travel is both enriching and exhausting. As I walked, I reflected on the many discussions that I have recently had with multiple supply chain leaders on Supply Chain Excellence. Ahead, I have a week of writing. I am busy finalizing a report on the current state of the inventory optimization market, rewriting and updating a report on Sales and Operations technologies, and penning a new report on Supply Chain Centers of Excellence. (We are also finishing up quantitative studies on inventory optimization and Sales and Operations Planning. We would love your input.)

 

Today, I am deep into the recent research on the Supply Chain Centers of Excellence. We have pulled the data from the field on the Supply Chain Centers of Excellence survey; and to gain insights to finalize my thoughts for the report, I am sharing the data with two groups of supply chain leaders: those that have a center of excellence, and those that do not.  Last week I spoke to 26 attendees that had a center of excellence; and this week I will speak to 15 companies that do not have a center of excellence, but are considering the implementation of the concept. I am sharing charts like those in Figure 1.

 

Figure 1. Center of Excellence Elements

centers of excellence

What am I finding?

 

1) Origin. Most supply chain centers of excellence evolved from a multi-year ERP implementation, or the evolution of a strategy to form a global multinational supply chain.

 

2) Charter. For most companies, there is confusion on the charter. While the evolution of supply chain excellence is forward-looking and visionary, most have defined the center to focus on expertise or competency. The difference is the assumption that there are ‘supply chain best practices’.  The difference? A center of expertise works on the standardization of best practices, while a center of excellence focuses on the improvement of performance. In this world of supply chain practice, where processes are only 30-years old and still evolving, this is a very big difference.

 

3) Maturity. As shown in Figure 1, the processes are the most mature in the areas of network design. There is also intense focus on the implementation of demand and supply planning. However, the areas of talent development, inventory management, and the implementation of horizontal processes (Sales and Operations Planning, Supplier Development and Corporate Social Responsibility) are less mature.

 

4) Regional Global Governance. Most centers of excellence struggle with the issues of global governance. To be successful, it is important to answer the question of, “What is the role of the corporate planning team, and what is the role of the region?” Many learn this too late. Answering this early and often is essential to survival in a sea of corporate politics.

 

5) Supply Chain Excellence Work Is Important. For companies that have a mature Center of Excellence working on horizontal processes and talent development, there is greater alignment and organizational agility. A focus on excellence is quite different than a focus on expertise. I am trying to understand the drivers through my interviews with the leaders. So to get the full scoop look for the report….

 

If you and your team are interested in learning more, you will not want to miss the Supply Chain Insights Global Summit. Designed for supply chain visionaries, the conference is limited to 150 supply chain leaders. Held at the beautiful Phoenician Hotel in Scottsdale, AZ. on September 9th and 10th, it is an ideal place for leaders and visionaries to connect. Join us for the event which focuses on seven important themes:

 

  1. Supply Chains to Admire: At this conference we will unveil the results of the second year of analyzing supply chain improvement and performance by industry in our work on Supply Chains to Admire. Understand what is possible as you listen to the stories of these supply chain leaders.
  2. Race for Supply Chain 2020: Two leading economists—Dr. Richard Florida and Dr. Pankaj Ghemawat—will share insights on the future of world trade and the changing nature of world demographics. The world is not flat and there is more friction across borders than there was prior to the great recession. Learn what the future will hold and how to best prepare.
  3. Power Growth through New Technologies. Mobile. Augmented Reality. Corporate Social Responsibility. Collaborative Economy. 3D Printing. Cognitive Learning. Robotics. There is a flood of new technologies and approaches to change traditional supply chain models. Join the afternoon of September 9th to understand how companies like Jabil, Green Eileen, and Sidecar are using these new technologies to power growth.
  4. Digital Supply Chain. Gain an understanding of what is a digital supply chain, and learn more about the capabilities of new technologies to drive innovation. Join the digital showcase on the first day to get hands-on experience and gain exposure to case studies by supply chain leaders that are driving outside-in transformations.
  5. Supply Chain Transformation: Join the morning of September 10th to gain insights on supply chain transformation case studies. This session will end with a panel discussion of leading experts sharing insights on building demand-driven processes, and companies like Colgate, Land O’ Lakes and Procter and Gamble will share insights from the Supply Chain Insights planning benchmarking work.
  6. Power of Outside-in Processes: If you have played the beer game, and  are looking for a new way to help teams understand the complexities of supply chain management, we have designed the afternoon of September 10th for you. Spend the afternoon enjoying and playing the new simulation game built by Sterling Simulation and Supply Chain Insights to demonstrate the power of outside-in processes. Network with your peers on the insights and relax under the Arizona skies as you wrap up a couple of intense days.
  7. Network with Leaders. This is the place where supply chain innovators talk to supply chain visionaries. It is unlike any other conference. If you are looking to stretch your thinking, put this conference on your agenda.

 

We hope to see you there!

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Lora Cecere is the Founder of Supply Chain Insights. She is trying to redefine the industry analyst model to make it friendlier and more useful for supply chain leaders. Lora has written the books Supply Chain Metrics That Matter and Bricks Matter, and is currently working on her third book, Leadership Matters. She also actively blogs on her Supply Chain Insights website, at the Supply Chain Shaman blog, and for Forbes. When not writing or running her company, Lora is training for a triathlon, taking classes for her DBA degree in research, quilting for her new granddaughter, and actively taking ballet.