http://forums.industryweek.com Perspectives on innovative supply chain management strategies. en Sun, 08 Nov 2009 08:59:44 GMT vBulletin 60 http://forums.industryweek.com/IWImages/misc/rss.jpg http://forums.industryweek.com http://feeds.penton.com/~r/21stCenturySupplyChain/~3/GI2TTDxzzLo/showthread.php Thu, 05 Nov 2009 13:26:25 GMT Kinaxis has just published its latest white paper: “PROVIDING CARBON FOOTPRINT VISIBILITY AND PLANNING CAPABILITIES ACROSS THE SUPPLY CHAIN : WHY YOU NEED TO DO IT, AND WHAT YOU NEED TO DO IT” (http://info.kinaxis.com/content/providing_carbon_footprint) Carbon is challenging business in many... Kinaxis has just published its latest white paper: “PROVIDING CARBON FOOTPRINT VISIBILITY AND PLANNING CAPABILITIES ACROSS THE SUPPLY CHAIN : WHY YOU NEED TO DO IT, AND WHAT YOU NEED TO DO IT”

Carbon is challenging business in many ways and companies will continue to be pressured to better manage their carbon emissions. Companies that get ahead of the curve will be rewarded by investors and consumers alike. Companies that lag the curve run the risk of losing investor confidence, consumer trust, and falling behind in product development.

It is estimated that between 40 and 60 percent of manufacturers’ carbon emissions reside in their supply chains. As such, new supply chain visibility and planning tools need to be adopted in order to be able to consider carbon emissions as an additional factor in the decision making process.

This paper provides a brief exploration of the current carbon landscape and will outline the attributes of an ideal supply chain carbon management application.

John Nafis is a business consultant for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=9341 http://forums.industryweek.com/showthread.php?t=9341 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/x7c9SBFaHCs/showthread.php Wed, 04 Nov 2009 15:52:23 GMT Having spent many years selling and delivering services for a major ERP vendor, I can say with experience that just implementing a module (or suite) just because it comes as part of your ERP solution doesn’t always make sense. The ERP vendors are always selling the “vision” of single vendor... Having spent many years selling and delivering services for a major ERP vendor, I can say with experience that just implementing a module (or suite) just because it comes as part of your ERP solution doesn’t always make sense. The ERP vendors are always selling the “vision” of single vendor accountability to an organization and if you buy into that then it comes naturally just to implement all the software from that vendor. Generally speaking, this is not usually a problem if you are performing basic functionality such as Human Capital Management (HCM) or Financial Management, but where the breakdown occurs is when implementing software that is associated with the company’s strategic direction and competitive differentiation such as Manufacturing and/or Supply Chain Management (SCM) software.

During my tenure implementing the true ERP suite vision (everything included; HCM, Financials, SCM, Mfg, CRM, etc.) for a company, the company would always struggle during the SCM and manufacturing part of the project. This was generally because every manufacturer runs their company differently in order to maintain a competitive advantage and trying to fit a one size fits all product into a company doesn’t work. In addition, the ERP vendors would sell the company on a single platform for integration, and many times some of the SCM products were really acquired products that are more like bolt ons and the integration doesn’t necessarily exist. So, not only is there generally more work to integrate the product, but the functionality may not exist that the customer requires for their business. These were difficult customer situations to manage.

I believe that customers should really do a thorough vendor selection when looking to procure SCM or manufacturing software, and I don’t think I am alone in this belief. In an ErpPandit.com article entitled “Basic ERP Features” the author gives a primer on comparing mid-market ERP providers and when discussing SCM module states “Of all the ERP modules, SCM has the greatest variability between vendors: It is vast and varied, yet often adapted to the needs of specific industries.” If that is true (which I believe) then how can a company not do their due diligence when selecting software? Certainly you don’t want to be a food and beverage manufacturer and implement a product which is designed for the high tech industry.

This of course doesn’t mean that the SCM software from your ERP vendor won’t work for you, all I am suggesting is that it is worth the time to look at alternatives. Companies should not fall into the trap in assuming that just because the SCM software was part of an ERP solution that fits your company that the SCM software either works for your unique business or is tightly integrated into the back office ERP functions.

There is another post on the Adexa blog entitled “Cost of ERP vs. Best-of-Breed Supply Chain Planning Systems” which also does a nice job educating the reader as to what to consider when performing a software evaluation data integration, planning analytics and configuration cost. There is now a lot of evidence out there of failed SCM implementations and I personally don’t want to have to be on the hook to deliver an SCM software implementation for a company where the software doesn’t match the requirements.

Monique Rupert is vice president, professional services for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=9321 http://forums.industryweek.com/showthread.php?t=9321 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/WTcW4cRhZjo/showthread.php Mon, 02 Nov 2009 17:57:50 GMT Supply chains are getting good business press lately. On a daily basis, I come across quotes like the one in a recent BusinessWeek article stating, “The ones [companies] that manage supply chains best will come out ahead as the recession eases.” Is the supply chain finally being recognized by the mainstream as a strategic capability of a company, rather than merely a function to execute? And is there agreement that it’s not just a cost center, it can be a revenue generator too?

In this particular article, it quotes the Chief Executive of Nokia as saying “We would have sold more phones in the third quarter without the capacity constraints.” Because production was lowered dramatically during the recession, some companies - in consumer electronics in particular – are now seeing spot shortages due to unexpected demand increases. As the article points out, “ The coming months could be tricky…Manufactures must gauge demand accurately among economic uncertainty.” Therein lies the rub: How to balance the opportunities to capture all demand while mitigating against the risks of excess and/or obsolete inventories.

Demand planning is going to be key without a doubt, but equally important will be demand responsiveness – acting quickly to the unexpected - and overall supply chain agility. Even before the recession, companies struggled with demand volatility because of increased competition, decreasing customer loyalty, constant new product introductions etc. But in today’s grave economic climate with major demand swings and declining spending overall, planning for future demand based on historical data is now virtually impossible. With inventories at an all time low, retailers and suppliers will need to respond rapidly to actual demand. Companies need the ability to detect demand trends early so that they can ramp up production accordingly in order to avoid the situation Nokia described in the article.

Solving the rapid response challenge will require:

• accurate and timely demand sensing to quickly understand demand shifts
• collaboration: both with customers to gain consensus on true demand, and with internal colleagues and supply partners to develop and analyze resolution alternatives; and
• decision support that drives profitable responses through shaping demand and allocating finished goods supply as appropriate

I believe achieving excellence in responding to changing customer demands has become the number one challenge facing enterprises today and can represent the largest opportunity for companies to increase customer service, enhance margins and attain more predictable revenue across the entire value chain.

Trevor Miles is director of industry and applications marketing for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=9191 http://forums.industryweek.com/showthread.php?t=9191 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/hBr5A4JyFG8/showthread.php Tue, 27 Oct 2009 13:18:48 GMT Dan Gilmour of Supply Chain Digest in his newsletter for Oct 22, 2009 published a list of “things” that will change in supply chains by 2015. There were a number of things that Dan identified that really boil down to the blurring of operational supply chain planning and execution. We have been seeing this trend for some time, driven by the volatility of demand and outsourcing, which in turn drive the need for greater responsiveness. My full response to Dan’s article is below. I would welcome your comments.

__________________________________________________ _

Great article, Dan.

I liked your identification of the drivers, and wished that there had been more prediction of what the consequences would be. For example, how will companies reconfigure their supply chain? In this particular case, I think we only have to look at Apple and Cisco to see some direction. Both of them outsource virtually all their production. And of course Apple, as you state in your article, is at the forefront of the “digitization” of the supply chain.

What really fascinates me is the rise of the brand owners in China and India. I saw an article today in McKinsey Quarterly that China’s economy grew 8.9% in Q3 this year. Even in the boom period before 2000, growth rates in the US fell short of this number. Of course, this is even more startling when comparing the growth rate in China over a similar period.

I think we are missing the effect this will have on the Western brand owners such as Apple. It might seem counter-intuitive given Apple’s record quarter and I have no idea of the product strategy, but I wonder how much they are designing products for the Western world and how much they are assuming the Eastern consumer needs are the same.

As you correctly point out, there will be huge impacts on “product design, pricing, logistics and much more.” I am fascinated by the growth of Eastern brand owners such as Acer, Lenovo, and Huawei. We have weathered the storm of the Japanese companies in the 1980’s – Sony, Toshiba, Toyota, Matsushita, … but those were different economic times when those companies were designing products for a western market.

I am not yet convinced that Western brand owners are paying sufficient attention to the needs of Eastern markets. These have been very Western focused, but I suspect as the pride in their countries economic performance grows, so will their confidence and demand for products to meet their specific needs.

We have a number of customers who are the forefront of the blurring of operational supply chain planning and execution. Of the 10 things you identify, I think this is a consequence of many of the others. And you are correct, this blurring is reaching up into tactical planning too with more and more companies running S&OP on an as-needed basis.

The factors you identify, specifically reduced inventory levels and pervasive visibility, are driving this blurring. We all know that inventory has been used as a buffer between the demand and supply chains. Reduced inventory levels require a much more agile supply chain that is very responsive to change. And of course the supply chains need to be reconfigured to be more responsive.

Dashboards are of course a necessary precursor to understanding whether or not one is on-track to meet future objectives and any deviations need to be addressed before they become “actuals” and appear in a scorecard.

Once again, thanks you for a great article.

Trevor Miles is director of industry and applications marketing for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=9091 http://forums.industryweek.com/showthread.php?t=9091 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/yBz3qSfUVWo/showthread.php Thu, 22 Oct 2009 13:03:14 GMT In a recent Wall Street Journal article, “September Sales May Foreshadow Holidays,” it is stated that stores are slashing inventories to avoid price cutting. Inventories are at an all time low. How will retailers and suppliers respond when demand changes?

Per the article “Retailers and analysts will be closely watching September sales reports due Thursday from key store chains for any sign they may need to adjust their already-gloomy holiday forecasts. ”

There is always a fine balance between meeting profitability targets and revenue. In the retail business, competition is fierce and retailers need to have the product ready to ship. With the current economic uncertainty, retailers are choosing to stock less with an expectation that they will be able to respond to the market demand when it improves. However they are faced with global supply chains, long lead times and there will be a capacity constraint on suppliers when the demand increases.

There are a number of approaches that retailers need to consider:

• Get closer to customer demand. Analyze point of sale data
• Analyze demand trends (units and $) by product, by region, by time
• Apply supply risk management strategies (minimize single sourcing, establish VMI hubs, standardize on components or materials across products, identify product configuration alternates)
• Have the ability to make the appropriate decisions regarding allocation (by region, customer segmentation)
• Perform contingency planning scenarios – adding capacity, alternate shipping methods
• Have the tools in place to remove the latency from the change in consumer demand through the supply chain to the individual manufacturer. Ensure that any change is communicated throughout your supply chain in minutes to hours, versus days or weeks.

History will not predict the future in consumer spending. Crystal balls won’t work either. Retailers will need to watch consumer demand patterns very closely and be ready to engage their supply chain at a moment’s notice. Collaboration will be required between the trading partners. In today’s economic climate, speed wins.

Carol McIntosh is a business consultant for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8961 http://forums.industryweek.com/showthread.php?t=8961 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/o8al2dQ_DuI/showthread.php Fri, 16 Oct 2009 12:54:45 GMT Kinaxis has just published its latest white paper, Five Ways Your Procurement Could Be Leaving Money On The Table (http://info.kinaxis.com/content/five-ways-procurement) Enterprises that provide their strategic procurement teams with proper tools can expect them to deliver year-over-year cost... Kinaxis has just published its latest white paper, Five Ways Your Procurement Could Be Leaving Money On The Table

Enterprises that provide their strategic procurement teams with proper tools can expect them to deliver year-over-year cost savings, close to 10 times their expenses.

This white paper

• lists five key pieces of intelligence that enable strategic sourcing professionals be more effective
• describes a real-life negotiation in which superior supply chain visibility and collaboration helped minimize a dramatic price hike attempted by a supplier
• presents a recent analyst’s report that confirms the value of strategic procurement, and describes several key characteristics of the top-performing teams… especially how they exploit technology to gather this strategic intelligence and avoid leaving money on the table.

Click here to download a free copy

Chuck Thomas is director of professional services for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8901 http://forums.industryweek.com/showthread.php?t=8901 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/GxQmFuUeHa8/showthread.php Thu, 08 Oct 2009 13:57:44 GMT I was asked the following questions the other day about companies positioning themselves for the recovery, I thought I would share my thoughts with all of you too. *1. Bill, what are you hearing on your prospect and customer calls?* We are seeing companies that are taking advantage of... I was asked the following questions the other day about companies positioning themselves for the recovery, I thought I would share my thoughts with all of you too.

1. Bill, what are you hearing on your prospect and customer calls?

We are seeing companies that are taking advantage of current conditions to improve processes and put themselves in a position to capitalize on demand opportunities when they happen.

Consider AMR Research’s Supply Chain Top 25 for 2009 for example. AMR observed that, “Despite the fragile world economy, many of the companies on this year’s list remain convinced that winners will be those able to position for a return to growth. Privately, these companies will say that they expect to gain market share from their weaker competitors. Most saw the signs of trouble early and secured their cash positions well enough to maintain momentum on vital initiatives. 2010-11 will show where such foresight pays dividends, with greater supply chain agility enabling survivors to knock off competitors for good and deliver huge earnings in the climb out.”


2. Are there any specific areas companies are looking to improve?

In my position as a business consultant, I have the opportunity to hear directly from companies where their focus is. Quite often we hear from companies that are looking to improve their S&OP process. Demand planning and collaborative forecasting are among the top inquiries too. Inventory rationalization and reduction, plus improving supply chain performance are also up there.


3. What are you hearing when people inquire about improving S&OP?

People are realizing they have to let go of the anchors that are weighing them down and will keep them from being positioned for recovery. When we ask manufacturers how long it takes to complete an S&OP cycle, most reply at least a month. People can’t wait that long anymore to respond to a change that could negatively affect their strategy or to an opportunity that may present itself.

Getting access to the data that supports S&OP, running analysis, collaborating and conducting what-ifs (like price decreases or early new product introductions) and communicating that strategy to the rest of the organization, has to be as easy as searching for New York City on Google maps. Cycle time reduction of the S&OP process will be key to positioning for recovery.


4. Anything else people are asking for?

Sometimes it is surprising but people are still asking for visibility.

I like to call this “What-is” information. This continues to be a challenge in the global organizations, especially if different sites have different ERP systems or other sources of data. This consolidated view is much different than BI or a data warehouses. The visibility people are asking for will allow them to answer questions like, are there stranded inventories that could satisfy shortage conditions at other locations. Are there open PO’s with no demand? Are there integrity issues with my data I could easily fix? Are there period ending shipment misses I could avoid?

This isn’t about comparing history but simply understanding the current state and where there are opportunities to reduce inventories, increase deliveries, and improve the integrity of SC data, all of which ultimately increases profits and customer satisfaction. Turning data into information is always something people need to do but struggle to do with current tools.

Bill Dubois is a business consultant for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8671 http://forums.industryweek.com/showthread.php?t=8671 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/IrTr31wESX0/showthread.php Wed, 07 Oct 2009 12:43:53 GMT Does the word “chain” accurately reflect the required communication flow of supply and demand throughout the supply network? In actuality, the “Supply Chain” reflects a series or sequential set of steps that are required to build and deliver products to customers. brand owners or manufacturers... Does the word “chain” accurately reflect the required communication flow of supply and demand throughout the supply network?

In actuality, the “Supply Chain” reflects a series or sequential set of steps that are required to build and deliver products to customers. brand owners or manufacturers need to order and receive products or materials from suppliers, who in turn need to receive materials from suppliers and so on through the multiple tiers of a given supply chain. In addition, at each tier in the supply chain, manufacturing operations and/or assembly/test operations need to be accomplished, which in many cases are represented as levels in the respective bills of materials at each tier in the supply chain. This is what has to occur for products to be manufactured and delivered to customers.

In a lot of cases, the communication of supply or demand changes tend to follow this same linear, sequential series of steps up and down the supply chain. Communication of a demand or supply change is initiated by the brand owner or manufacturer and this has to be communicated sequentially through the multiple tiers of suppliers. In addition, the assembly or manufacturing at each tier are represented in multiple bill of material (BOM) levels at each tier. At these BOM levels, there can be production orders, firmed orders or master production schedules that hold the current schedule until a planner changes them and allow these changes to continue flowing through the chain.

Therefore, if this same linear, sequential series of multiple tiers of suppliers as well as multiple BOM levels need to be followed to communicate and collaborate changes required of supply and demand, then weeks and even months can go by before the changes reach the end of the supply chain. Obviously, by this time, another series of changes can be rippling through the links in the chain and the supply chain cannot respond to these changes in a timely manner.

This problem is only magnified when you consider the risk factors associated with increased outsourcing that can result in more supply disruptions/issues. And strikes, political issues, recessions and even natural disasters can all cause minor to significant supply disruptions that will throw off the normal chain of activities. The end result can be excess inventory or lost sales due to not having products available for delivery to the customer.

So while obviously the concept of the supply chain is certainly not obsolete, the information flow and collaboration throughout the supply chain needs to flow seamlessly and not as a linear, sequential series of steps.

So don’t shackle yourself to the notion of a chain.

Max Jeffrey is an integration consultant for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8631 http://forums.industryweek.com/showthread.php?t=8631 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/g_9f5alvbrA/showthread.php Tue, 06 Oct 2009 13:32:12 GMT The two major ERP vendors are facing a more rapid decline in licensing revenues due to IT cutbacks. In fact, they are essentially facing a “Reset” - more so than a recession. CIO’s are very tired with ERP vendors raising maintenance and throwing acquired software products at them left and right.... The two major ERP vendors are facing a more rapid decline in licensing revenues due to IT cutbacks. In fact, they are essentially facing a “Reset” - more so than a recession. CIO’s are very tired with ERP vendors raising maintenance and throwing acquired software products at them left and right. Once a software vendor decides on pursuing a “financial engineering” acquisition strategy – it is never good for the end customer. It improves earnings for the vendor. Any large company has challenges when it comes to innovation – even if R&D monies are allocated to development teams. Politics alone can kill innovation inside a large vendor.

CIO’s are even more disgusted with what I call the “Suites are Sour” paradigm promoted by the ERP vendors. They want to solve business problems, not spend millions on integrating suites of modules. Once maintenance fees hit a high enough level and innovation is absent – it creates a positive environment for a “disruptive” offering. We have seen this happen time and time again in the hi-tech market.

Douglas Colbeth is CEO of Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8611 http://forums.industryweek.com/showthread.php?t=8611 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/aTHKiIk91og/showthread.php Fri, 02 Oct 2009 13:18:12 GMT I was interviewed recently for a ‘Kinaxis Quick Take’, which are short video interviews (http://community.kinaxis.com/community/manufacturing_industries?view=video)posted on the Supply Chain Expert Community. I was asked about Customer Co-planning (http://community.kinaxis.com/videos/1299). ... I was interviewed recently for a ‘Kinaxis Quick Take’, which are short video interviews posted on the Supply Chain Expert Community. I was asked about Customer Co-planning.

Take a look and chime in with your opinions. How would you have answered these questions…

• What is co-planning and why are companies embracing this strategy?
• With co-planning becoming a growing priority for customers, what are the barriers to it?
• What does it take for companies to be successful in their co-planning efforts?

Kerry Zuber is director of business consulting for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8531 http://forums.industryweek.com/showthread.php?t=8531 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/VqGZpJVxol8/showthread.php Thu, 01 Oct 2009 13:56:46 GMT The other day, I was discussing with some colleagues what elements were needed for a successful S&OP implementation. There have been arguments made that successful S&OP is all about process and that tools don’t matter. Looking back at those S&OP implementations that were successful and those implementations that failed, I have discovered that a successful S&OP implementation is supported by three pillars; Process, executive commitment and effective S&OP tools.

If any of these pillars are removed, the S&OP process will at best be ineffective and at worse collapse into a smoking heap of failure. Let’s take a look at each of these;

Process: Trying to run sales and operations planning without a clearly defined process is like driving in a city where no one obeys the rules of the road….you probably won’t get where you are going. If there were no process driving S&OP, then there is a very good chance that key information would not be presented, key people would not be in attendance and that critical decisions would not be made. It is important that the structure, timing and agenda of S&OP is documented, published and adhered to. If the process needs to change due to changing business requirements, those changes need to be documented and published.

Executive Commitment: It is very difficult (bordering on impossible) to implement an effective S&OP process without executive commitment. Why? First let’s ask what is the purpose of S&OP? The purpose of S&OP is to align supply and demand and the various departments contributing to that alignment. Departmental alignment can only occur if the top level department executives are involved in the key decisions…because those top executives have the decision making authority. Sales and Ops is a failure if the representative at the meeting needs to go back to their executive to get a decision.

Effective S&OP Tools: This includes the tools to analyze the data, present information and make decisions. Effective S&OP tools also include the ability to integrate the data that drives S&OP. Without effective S&OP tools, the implementation process can be very slow and frustrating because so much time and effort is spent getting to the data and building the tool. This frustration leads to failure. This is where I want to focus the rest of my post.

S&OP tools are often ignored in S&OP discussions. Most companies start down the path of using Excel for S&OP. Excel is often chosen because it’s flexible and companies aren’t quite sure what their S&OP process will be. However, with that flexibility comes a cost. In a previous life, I used Excel to build and present our S&OP plans. This is what I’ve learned;

• Excel is a blank slate…you have no guidance as to how to design an S&OP process. One company I visited didn’t do a rolling S&OP plan because they couldn’t figure out how to write the macro to roll the months (which is actually more complex than you might think!). They had 12 months of visibility at the beginning of the year and 1 month of visibility at the end of the year!
• Large sales and ops spreadsheets are very fragile. If someone doesn’t update it when they should, or if someone puts information where they shouldn’t, the process breaks and people are working from bad data.
• Excel is notorious for having multiple versions. It’s very easy for people to make copies of the excel spreadsheet to model their own version. The problem is that these different versions get out and get used as the official version.
• Complex spreadsheets (or any fully customized solution) is typically created and owned by a single person in the organization. If that person leaves the company or changes jobs, it is very difficult for a new person coming into that role to learn how the spreadsheet works. Very often, the S&OP process stumbles while that transition occurs.
• It is very difficult to accelerate processes based around Excel. In today’s fast paced world, monthly S&OP is simply not enough (more on this in a later blog post!)…Mid-cycle adjustments will become more and more necessary and those companies that cannot leverage the full S&OP framework mid-cycle will be making decisions based on incomplete data.
• The last nail in the Excel coffin is scalability. As a company grows, it can be very difficult for the S&OP process to keep up. Adding new divisions often involves significant effort to re-engineer the excel workbook.

So I’ve made a case for why Excel isn’t a great tool for S&OP. What characteristics then, would be present in an effective S&OP tool?

Visibility: An effective S&OP tool integrates with, and pulls ERP data from, all areas covered by the S&OP plan. If you do an S&OP plan for the division, then the S&OP plan will provide information for all areas of that division. If you do an enterprise wide S&OP plan, then the tool needs to pull data for all areas of the enterprise. An S&OP plan that doesn’t represent all products and product families is not a complete plan and your executive team is making decisions based on incomplete data. Data should be easy to navigate. While S&OP traditionally is done at the family level, having the ability to view your S&OP plan at any level from the all-up divisional or enterprise level, down to individual end-items allows you to identify potential issues earlier in the cycle and create a far more achievable plan. The S&OP tool should present data graphically so that your team can see at a glance where trends are going and what periods are out of balance.

Real-time data: An effective S&OP tool is one that is continually refreshed with live data. The official plan stays static unless a change is agreed upon by the S&OP team; however, the S&OP tool must have access to current live data as well. This is critical for two reasons. 1) You can monitor performance to the current S&OP plan and be alerted if you are not executing your plan. And 2) The data is live and ready to go when you need to do a mid-month adjustment. Waiting to extract data and import that data into a tool like Excel can cause days, or in extreme cases, weeks of lost time.

Modeling: An effective S&OP tool models more than just supply and demand at the family level. If you adjust the supply for one family, what is the impact on key component availability? What is the impact on capacity? At a minimum, your tool needs to support Rough Cut capacity planning, or Resource Requirements planning. Ideally though, your sales and operations tool can model the entire supply chain and eliminate the approximations and guesses inherent in both Rough Cut and Resource Requirements Planning.

Simulation: An effective S&OP tool will encourage simulation to model new conditions and to model various resolutions to supply demand misalignment issues. Notice I said “encourage”. Some tools say that they offer simulation, but it can be a difficult, time consuming task to create a new scenario for simulation. You should be able to create and use a new simulation – that has all of the information from the parent scenario - immediately. It’s no good if you have to wait for hours for a database to be copied – because then no one will simulate.

Collaboration: In addition to simulation, you need to be able to collaborate. The demand side needs to collaborate with the supply side. The supply planner needs to collaborate with the master scheduler, buyer, planner etc. to ensure that a viable plan has been created.

Monitoring and Alerting: As already mentioned in the 2nd point, you need to be able to monitor performance to the current S&OP plan and alert team members when actual execution performance will fall below or is expected to fall below the targets set by the current plan.

What tool do you use for S&OP? If you use Excel, have you run into any of the problems I’ve described? Can you identify other essential characteristics of an S&OP tool?

John Westerveld is a product manager for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with the collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8501 http://forums.industryweek.com/showthread.php?t=8501 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/DTV80rsGAEk/showthread.php Tue, 29 Sep 2009 13:45:28 GMT Kinaxis has just published its latest white paper, Supplier Collaboration: Why it’s vital to treat key suppliers as an extension of your organization (http://info.kinaxis.com/content/supplier-collaboration) Here is the abstract: As companies outsource their manufacturing operations, they... Kinaxis has just published its latest white paper, Supplier Collaboration: Why it’s vital to treat key suppliers as an extension of your organization

Here is the abstract:

As companies outsource their manufacturing operations, they increase the number of tiers in the supply chain , greatly reducing their supply chain visibility and making them dependent on remote suppliers for operations performance results. To be truly effective, supplier collaboration needs to go far beyond the tactical exchange of data. Key suppliers must be brought into the decision-making process, so that brand owners can exchange early warnings and help resolve supply chain risk issues.

This paper discusses the value of a closer and more collaborative relationship with key suppliers and what is required to make that happen. Click here to download a copy.

Trevor Miles is director of industry and applications marketing for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8431 http://forums.industryweek.com/showthread.php?t=8431 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/lC0MksXS7ek/showthread.php Thu, 24 Sep 2009 14:27:28 GMT You don’t have to be a fan or even keep up with the entertainment news to know about the stunt Kanye West pulled when he interrupted Taylor Swift’s acceptance speech for a video music award. Now, I’m no Kanye West fan and I know millions of people enjoy Taylor Swift’s music but I could not name one... You don’t have to be a fan or even keep up with the entertainment news to know about the stunt Kanye West pulled when he interrupted Taylor Swift’s acceptance speech for a video music award. Now, I’m no Kanye West fan and I know millions of people enjoy Taylor Swift’s music but I could not name one of her songs. I did however feel sorry for her when in a moment of glory she was hit with an unexpected, pain it the butt disruption that should just never have happened.

Now, if there was the “Kanye West Supply Chain Award” what or who would be deserving of such an award? Remember the criteria, unexpected, pain in the butt disruption. Here are my nominees;

1. Customer Request to Increase Demand. Yes, this can be unexpected and sometimes it can be a pain in the butt with the shortage conditions that are possibly created. You may think of it as a disruption but it is really part of doing business. You need to be ready to handle these types of requests since only good things come from a customer coming back for more.

2. Supplier De-commits an Order. This is always unexpected and as far as a pain in the butt, you’ll feel like you just got kicked on the backside by David Beckham. Although it is disruptive, again it is just something that supply chains need to respond to in time to make the right moves. Maybe you expedite, transfer or use an alternate. Although it feels like it is unexpected, you do know that eventually it will happen so you need to more prepared than Ms. Swift was when Kanye grabbed the microphone.

3. ERP Implementation. Certainly not unexpected but what it lacks in the unexpected makes up tenfold in pain in the butt disruption. What can take months or even years to complete can turn a choir boy into a Kanye West impersonator. The unexpected may come in delays and cost overruns.

4. Scope Creep. This is a risk for any supply chain software project and when it happens it can throw delivery dates into a tailspin. Sometimes it is unexpected and many times will cause disruption but can be avoided with the advice of some other blog posts on this site that tackle the subject.

5. Forecast Decrease. Do you look like a deer in the headlights when this happens? This is a pain nobody wants and those liability discussions are even worse than the Kanye West rant. Unfortunately it is yet another supply chain reality that you need to respond to in time to avoid, or at least minimize, the pain in the butt disruption that comes with it.

Should any of these qualify for the “Kanye West Supply Chain Award?” Did I miss something?

You know, maybe there is no room in supply chain for Kanye West? For supply chain professionals, unexpected change is simply a way of life and disruptions are handled with class and in time to make a difference. What do you think?

Cast your vote and maybe we will have the first winner…or loser…of this award.


Bill Dubois is a business consultant for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8301 http://forums.industryweek.com/showthread.php?t=8301 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/ar6QRYpND9w/showthread.php Wed, 23 Sep 2009 13:39:23 GMT The article “Supply Chains and Demand” (http://www.cfo.com/article.cfm/14290335?f=singlepage) in the September issue of CFO Magazine points out that ‘One aspect of supply-chain management that is likely to become a legacy of the recession is a much more careful assessment of the financial... The article “Supply Chains and Demand” in the September issue of CFO Magazine points out that

‘One aspect of supply-chain management that is likely to become a legacy of the recession is a much more careful assessment of the financial viability of suppliers and customers.’

Heck, if twenty-five US banks including Indy Mac, Washington Mutual and Silver State can fail in 2008 and the number of US bank failures in 2009 is 89 and counting, why can’t my suppliers or customers fail? It’s a sign of the times that you can’t count on the financial viability of any partner, large or small and in fact, size doesn’t really matter.

What does matter is how critical each partner is to your supply chain. A key tenet of risk management is to segment your markets and products into groups based on dimensions that are relevant to your business. For example, products can be segmented by their relative contribution to revenue and margin, their stage in the product lifecycle, and whether they are strategic for entering a certain market. Customers can be segmented based on their revenue contribution, or whether they represent a significant potential for sales growth or portfolio expansion. Degree of exposure is a key dimension for segmentation of suppliers. As the article points out Corning does this for their supply base: “The more we spend with a supplier the higher the potential risk, particularly if it’s a sole-source supplier,” says Mark Rogus, senior vice president and treasurer of Corning.

It would also be useful to look at what suppliers have relatively high correlations between the components they supply and your strategic products and/or customers. If you spend a relatively low amount with a given supplier, but that supplier can impact the delivery of your most strategic product or service level with your largest customer, they may represent a relatively high risk in your supply chain.

As the article points out, procurement has found that they need to turn to the finance group for credit analysis which is where the expertise resides. Product, customer and supplier segmentation is a logical first step in understanding what partners you need to assess first. Whether this additional assessment continues to be part of the procurement process going forward or if it gradually fades as the economy moves out of the recession, it’s important that the process stays focused on the partners that have the biggest potential impact on your business.

Agree?

Bob May is a senior product manager for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8271 http://forums.industryweek.com/showthread.php?t=8271 http://feeds.penton.com/~r/21stCenturySupplyChain/~3/zF8dC-_-Wi0/showthread.php Mon, 21 Sep 2009 13:25:55 GMT I was very pleased to read the Supply & Demand Chain Executive article entitled “AT&T Readies Its Supply Chain for the Future” because its central theme is the benefits of working more closely with suppliers. AT&T, as we all know, used be the behemoth in the telecoms space until the US government decided in the 1984 that it constituted a monopoly and should be broken up. There was, and continues to be, a great deal of discussion about the benefits, costs, and risks of the break up. For example, in his blog post on Network World, Brad Reed stated that:

But while technological innovation has made the old world of local landline carriers increasingly less relevant to modern telecommunications, there is still a question about whether breaking up Ma Bell has helped or hampered innovation in the telecommunications market. A. Michael Noll, a professor emeritus at the Annenberg School for Communication at the University of Southern California and a former researcher at Bell Labs, says that breaking up AT&T has actually been detrimental to the advancement of technology in the United States. In particular, he cites the negative impact that the breakup had on his former employer Bell Labs and its ability to innovate.

I think it is fair to say that a very similar debate can be had in terms of outsourcing and off-shoring. Much of the article focused on the design process and AT&T’s access to intellectual property and the latest technologies. However, it is very clear that the total value to AT&T includes manufacturing and other supply chain processes. Nothing exemplifies this better than the statement from AT&T, with my emphasis, that

“The Domain Supplier program will facilitate a more collaborative relationship with our network technology suppliers,” Harden said. “It also enables AT&T to minimize risk to our supply chain, improve supplier performance, and increase the speed of introduction of new products and services while offering AT&T the best technologies to serve our customers.”

What is great about this statement that it captures the benefits of closer collaboration to all the participants in the value chain, most of which are supply chain related even though the strategic need is to get the latest technology into AT&T’s customers hands. There are any number of companies which would echo these benefits. But many companies struggle with the level of commitment required to establish and maintain this level of collaboration with suppliers.

What are your experiences with outsourcing and off-shoring? Has this reduced your companies visibility and flexibility? What are your experiences with collaboration?

Trevor Miles is director of product marketing for Kinaxis, provider of the on-demand RapidResponse service that empowers multi-enterprise manufacturers with collaborative and integrated demand-supply planning, monitoring, and response capabilities. ]]> 21st Century Supply Chain Lori Smith http://forums.industryweek.com/showthread.php?t=8191 http://forums.industryweek.com/showthread.php?t=8191