Yesterday, in Part I, we re-introduced you to Kinaxis, one of the most interesting companies in the entire Supply Management space. Billing themselves as a platform for Rapid Response designed to assist supply chain professionals in managing their change-ready supply chains, it is actually a very extensive, but deftly integrated end-to-end cross-functional supply chain what-if platform designed to help supply chain professionals determine how to respond to various unexpected situations.
How do they do it? The built a platform that functions as a Global Control Tower for your supply management operation by integrating all of your cross-functional Supply Chain Management (SCM) applications into one centralized control center application that allows you to access all of your data through one centralized application and
- model current, projected, and variations to, demand,
- plan how production would have to ramp up, down, or shift to meet demand,
- determine what the impacts would be to other customers if a preferred customer’s order was filled sooner,
- understand the impacts to inventory and production if a certain raw material or part were unavailable for a short, or long, period of time,
- comprehend the impacts to new product development and introduction of there is a delay in production, raw material acquisition, distribution, or if marketing wants to introduce a last minute change, and
- manage the change process associated with demand, inventory, development, or production changes
among other capabilities. By integrating all of your key SCM applications, including your ERP, transportation and warehouse management, SRM (Supplier Relationship Management), demand planning, and S&OP systems, it can construct elaborate supply chain models that link inputs, outputs, and resources that can answer these questions.
For example, by integrating your ERP/Inventory System with your order management system, it can not only generate an optimization model that can be used to create a distribution plan that minimizes the number of late shipments or missed orders, but automatically generate what-if scenarios that demonstrate what will happen if a certain customer order is given priority. It might be the case that accelerating an order for one customer will cause orders for 10 customers to be late due to volume requirements or production times.
In addition, because it can model dependencies and production cycles, it can also immediately calculate what would happen if a raw material shipment to your supplier’s production facility is six weeks late. It can immediately calculate how many customer orders would be missed or late, the impact on revenue, and the associated loss based upon inventory carrying costs, overhead costs, and workforce costs, among others. Thus, if your organization has a good visibility solution in place, the minute that a disruption is detected it can begin to calculate the impact, and within an hour understand the extent of the associated loss. Plus, it can start modelling the extent that the loss can be countered with each mitigation option the organization can identify using the what-if modelling capability to generate variant scenarios and analyze the associated costs and profits. Thus, if the organization can identify three different sources of replacement supply with different lead times and costs, it can use the Kinaxis platform to determine which option is best in a matter of hours and get on it.
And the best part of all is that the application is as easy to use as a multi-tab spreadsheet. They built a spreadsheet like interface that is familiar to Supply Management professionals with extensive drill-down capability, a visual supply chain network model, and visual reporting capabilities. The interface, which can display multiple linked spreadsheets automatically, and highlight where you are in the master sheet when you are drilling into a sub-sheet, automatically highlights warning situations, including late shipments, overruns, and projected losses. And if you’re not sure what to do, the built-in help not only explains every column, shading, and warning, but how to easily create new what-if scenarios (as a copy of the current scenario) where you can calculate the impacts of adding orders, removing inventory, changing shipments, etc.
The modeling and real-time optimization of the inventory, demand planning, and order management functionality is unique in the supply management space, but its not for the feint of heart.
Although the application is available on-demand, it’s not like an e-Sourcing or e-Procurement solution where you can start using it as soon as they create an instance for you. In order for your organization to experience the full potential of the platform, which has the potential to save a multi-billion dollar Global 3000 hundreds of millions of dollars, a few things have to happen:
- all of your Supply and Operations Management applications have to be integrated,
- the models have to be tailored to your business rules, processes, and constraints, and
- the cross-functional team members critical to each function that is to be modelled and each task that is to be performed have to be trained on what the platform needs and how to use it.
This doesn’t happen overnight, and for the Global 3000, doesn’t happen for six figures either. While many of today’s on-demand Supply Management applications in e-Sourcing, e-Procurement, SRM, etc. can be obtained and implemented by a Global 3000 in the six-figure range, this isn’t the case for this type of a solution. Kinaxis has put ERP to shame where complexity is concerned. When you consider how much the application can do, ERPs, which are considered by most system integrators to be the most daunting integration projects in the private sector, look like simple App Store app installs in comparison. And, unlike ERP providers and integrators, they have a much better track record (with double digit revenue growth seven years running). They built their platform, and business, slowly — taking the time to understand the requirements and get it right. In other words, this isn’t a solution for an organization wanting a quick fix. It’s a solution for an organization that wants the ability to plan, and respond, in the long term. So where the mid-market is concerned, Kinaxis is for those organizations that are willing to make the effort and commitment it takes to become a market leader.