Category Archives: Technology

Achieving Supply Chain Visibility

Supply & Demand Executive recently ran an article by Aatish Goel & Murali Krishnan Sundararajan on “The Flat Supply Chain” that noted that globalization has created a massive increase in supply chain complexity and that supply chain visibility is emerging as a critical differentiator for companies to stay ahead of the competition.

The article also suggested that companies should manage supply chain visibility according to the process-technology-organization framework, and recommended the following from the process angle.

  • Effective S&OP Process Deployment
    An effective S&OP process brings the right information in front of all stakeholders in a timely manner.
  • Internal & External Inventory Turns Review
    Use a multi-echelon inventory visibility system that allows for regular review of inventory status inside the company and inside the supply chain as a whole.
  • Alerts & Exception Management
    The amount of data produced by a well-run supply chain at any point in time is huge and almost impossible for anyone to review manually (even with great analysis and reporting tools). Thus, it is important to have exception reporting and alerts to bring critical incidents and issues to the immediate attention of the right person.
  • Alignment of Supply Chain Metrics with Business Goals
    Use process-based metrics that complement business goals to monitor and improve the process.

This was a good starting list, but I’d also add at least the following:

  • Integrate PoS data and forecasting across the supply chain
    A supply chain view of inventory is not very useful if you do not know how much product you should have at any given location at any given time, and given that demand can fluctuate, using static forecasts to plan inventory is not optimal.
  • Use collaborative issue resolution processes
    When a critical incident occurs upstream in your supply chain that effects you, it’s important not just to insure your supplier, or your supplier’s supplier, starts working on a resolution immediately, but that you work with the supplier to not only insure a quick resolution, but to understand why the critical incident happened in the first place. Then, you can pass that knowledge onto your other suppliers and make sure it doesn’t happen to them.
  • Regular Review of Transportation Timeframes
    When calculating inventory requirements, it’s vital to understand how long, on average, it will take to restock a location in order to insure that you can handle demand spikes and not lose sales. If it takes 7 days, but a demand spike due to an upcoming promotion could wipe out inventory in 3 days, then it might be wise to temporarily increase the inventory requirements of that remote location.
  • Use Process Models
    Standardized, Integrated, S&OP processes are good – but streamlined process that are sound and complete are better. A process model will help you analyze your processes to make sure they are of just the right complexity. If your process is too simple, you could miss critical incidents or key data that could significantly change your forecasts and inventory requirements. Too complex, and you could lose the ability to react quickly.

From an organizational technology angle, the article had the following to offer:

  • Use an extended enterprise system.
    This will allow you to create a centralized data store, on which you can execute the data mining applications needed to detect exceptions and critical incidents, the analytic applications need to determine required inventory levels and transportation timeframes, and the reporting applications necessary to insure key information gets to key stake-holders in a timely and comprehensible manner.
  • Extend it with specific business solutions.
    The article recommends inventory optimization tools, business intelligence tools, and master data management tools.
  • Look at Service-Oriented Architectures (SOA)
    This can enable flexible collaboration at a lower cost.

This is a great start, but you should also consider the following:

  • Look at On-Demand SaaS
    Building a completely integrated supply chain management framework, even using SOA, will be a very time-consuming and costly endeavor even for the most technologically sophisticated organization. Starting with on-demand SaaS can allow an organization to get a fairly sophisticated system of supply chain management tools up-and-running quickly and cost-effectively.

In conclusion, the authors have it right – with supply chain complexity having increased exponentially in the last decade thanks to globalization and increased outsourcing, visibility is becoming key to managing risk and total cost and the time to do something about it is now.

the doctor Shall Also Remain Spaceless

While browsing the Supply Chain Management Review site recently, I stumbled upon the article “What Supply Management Can Learn From MySpace”, and I was scared. Although not as bad as Facebook, I still think of it as a time-sucking black hole filled with meaningless banter between teens, twenty-somethings, and the unemployed – with poorly designed pages that would burn a good designer’s eyes right out of their sockets to boot! (I did investigate it back when it was new – I signed up, looked around, quickly came to the conclusion that it was too much effort for too little return, and abandoned it.) The only thing it’s useful for, from a business perspective, is to discover new artists – which is only good for those looking for bands to book or labels looking for bands to sign. Not really supply management.

I read the article anyway, just to be sure they weren’t advocating its use and that my view of the SCMR as one of the better publications wasn’t misplaced, and it had a few good points. It noted that to succeed in this quickly changing tech-savvy world, companies must think, even “work”, differently. Which is true, but this doesn’t mean embracing every fad that comes along – it means finding new technologies and processes that actually improve productivity. The goal of business is to be productive and make money, not socialize with friends. (This may be the goal of most big business executives, but it’s not the goal of business. )

It also pointed out that communication, globalization, and on-demand collaboration is a good thing. I agree, but remembering that communication implies (a two-way) information exchange, I don’t often see much of that on MySpace. It’s not as global as you might think. And it doesn’t really enable collaboration the way that new sourcing and supply chain offerings from the leading on-demand vendors (like Arena, Iasta, Salesforce, etc.) do.

The article also pointed out a few technological trends that are important:

  • broader-based adoption of PLM technologies
  • emergence of CAD and PDM lite technologies
  • standardization of collaboration features
  • unilateral migration to service-oriented architectures

I agree that these are important, but I would question whether they are business equivalents of MySpace, for these achieve effective goals in the business world due to their differentiation from MySpace, not their similarities.

In short, while I will admit that the notion of examining new developments in social technologies as a means of drawing inspiration has merit, the notion of trying to create innovative business applications by creating something that is equivalent to a social networking sites does not. First of all, there’s no guarantee that it will bring any business value in terms of productivity or cost savings. Secondly, there’s no guarantee that it’s not a fad, and that people will want to use it by the time you have a business equivalent. Thirdly, you’re blurring the world between business and pleasure, which is a slippery slope to be sliding on.

So while I agree you should always be on the lookout for new and better technologies, I’d be cautious about jumping on the bandwagon of the next social network fad that comes along. Chances are that, in the long run, it will be nothing more than a drain on your time and resources. There’s a reason that a large number of organizations in the public and private sector have blocked access to sites like MySpace and Facebook. If I were you, I’d take the clue.

“Demand Shaping” or “Demand Sensing”?

The EE Times ran a great article by Romit Dey and Manoj K. Singh last month on “Demand Shaping” and how it aligns customer trends with supply. But I have to ask, is it really “demand shaping” or is it more “demand sensing”. Is not “demand shaping” what marketing and advertising does? It’s true that supply chain has a supporting role, in terms of letting marketing know how much a product can be produced for, how many units can be produced, and how fast the units can be in consumers hands. However, what supply chain really does, in a company that runs like a well-oiled machine, is sense the demand that has been created, and the demand that is in flux, and adapts to the situation.

So what is “demand sensing”? According to the article, which calls it “demand shaping”, it is a demand-driven, supply-constraining customer-centric approach to planning and execution that aligns process with customer demand at strategic and tactical levels and with an organization’s capabilities which helps optimize use of resources, reducing excess inventory and improving inventory turns. More specifically, at the strategic level, the emphasis is on aligning customers’ long-term demand patterns to long-term resource and capacity constraints and at he tactical level, the focus is on understanding demand patterns and then influencing customers’ demand toward available supply, using the levers of price, promotion and products/services bundling.

How do you sense demand? As the article points out, you need three key capabilities:

  • demand pattern recognition
    who is buying what, when, and in what quantity
  • supply supportability analysis
    how much can be made, when, and how fast can it be delivered
  • optimal demand steering
    if demand patterns suddenly change, and you do not have enough of product A, can product B be used as a substitute and can customers be steered to that product instead

The first skill is obvious – you need to manage inventory appropriately so you aren’t holding too much, and generating excessive inventory carrying charges, or holding too little, and selling out before supply can be replenished. The second skill is less obvious, but easily understood – you need to know how much you can make, and how fast it can be made, to appropriately plan your inventory level.

The third skill is what takes “demand sensing” to a whole new level, to the point that it is almost “demand shaping”, but not quite, and hence the source of confusion. It is, as it’s called, “demand steering”. The Dell example the authors use is the best. By maintaining real-time visibility into its supply chains, Dell knows its inventory levels now and in the immediate future on an hourly basis. If a customer configures an order for a 60GB drive on their web-site, and Dell knows they don’t have enough stock to configure the system immediately, then Dell informs the user of a delayed ship date and presents the customer with an opportunity to replace it with an 80GB drive at a discount – steering the customer towards another product that can meet their needs, even if it is more expensive, but Dell takes a discount on margin to make the sale and keep the customer.

The key to success, as the article points out, is to make sure that all three processes are part of a single, integrated loop. A supply supportability analysis is run on a regular, automated, basis; inventory is updated on a near real-time basis; and short-term forecasts are updated at least daily. Each of these numbers is compared on an automated basis, and as soon as forecasts exceed inventory and obtainable supply, an alert is sent to a planner who determines whether there are alternative products that can be used to meet the need or if marketing and sales needs to be informed that they need to take actions to steer demand on their end. Then, customers are steered towards the alternative products through the appropriate channels – in real-time.

The article also does a good job at overviewing what is required for a demand sensing framework. The elements it outlines are:

  • inter and intra organizational connectivity
  • the ability to capture, structure, and comprehend data from customers and channels
  • advanced business intelligence to identify demand patterns
  • optimization
  • common processes
  • a common data model
  • common performance metrics
  • available-to-process capabilities
  • exception management
  • electronic negotiation and collaboration

The best thing about the framework is that these are basic capabilities and processes a good organization should already have in place. It’s just a matter of tying them together and using them wisely!

the doctor Says There’s Nothing Wrong With Fat Client

I recently read an article over at Knowledge @ Wharton on “Software’s Future” where they said that there is a drive toward hybrid desktop/webtop software, that there are limits to both approaches, and that the future for software may be a blend of the best features of both, that really got my attention.

The focus of the article was on the fact that Adobe Systems, Microsoft, and Google recently made new product announcements around advancements that they believe will be the future of software. Adobe with its buyout of Virtual Ubiquity that created a web-based word processor on Adobe’s new software development platform, the AIR, that can run on-line or off-line; Microsoft with its Office Live Workspace that extends Office and allows users to store and edit documents on the web and share them with others; and Google with its “Gears” that allows developers to create web applications that can also work offline. Based on these offerings, the experts at Wharton are predicting that the hybrid software model is going to emerge and take hold and be long-lived.

Furthermore, they are predicting that this new hybrid software model will develop in two phases. In the first phase, web-based applications that offer the same features as current desktop applications will become common. In the second phase, web applications and desktop software will co-mingle and the functionality advantage of desktop software will erode.

Well, this would be a great prediction – if it wasn’t for the fact that phase 2 exists today and has existed for a long, long time. It’s called Fat Client, or Thick Client, and some on-demand software as-a service providers, like Iasta, have been delivering software in this model for years! Now, you might say that it’s not the same because browsers are ubiquitous and fat clients tie you to a single platform, but that’s just not true.

First of all, there’s nothing stopping you from writing your fat client application in Java, which is as multi-platform as you can get. Secondly, should you decide you’re going to use Flash or Flex, you’re not even going to be compatible with every major web browser, yet alone every platform. The most popular browser is still IE and, guess what, that’s Windows only. Microsoft abandoned IE support on Mac years ago. Opera, still not that popular, even though it had most of the innovative features that you find in today’s browsers first, is only PC, Mac, and mobile. Only FireFox comes close to covering today’s common platforms, namely PC, Mac, and Linux, but don’t expect every plug-in or extension you commonly find on the PC to be available cross-platform. Basically, the web-browser is not universal, as not all browsers even support CSS fully and identically, and has no advantage over a well-designed Fat Client in Java.

Thirdly, and most importantly, whereas web-browsers and plug-ins are encapsulated from the underlying operating system and don’t give you a lot of control over local processing and no capability to save or cache data locally, Fat Clients give you the best of both worlds. You can work locally, or over the web. And since there are a number of open source browser projects out there, including the Mozilla technology base that FireFox is built on, there’s no reason a Fat Client can’t include a browser if that’s what you feel you need for that web experience.

Let’s face it, the web isn’t what you see through your browser, the web is a set of services that can be defined and encapsulated in protocols such as HTTP, FTP, SMTP, etc. that constitute the application layer of the internet and that run on TCP/IP. The browser is one way you can view data that is available over the web, but it’s not the only way.

So next time someone suggests “Fat Client”, don’t dismiss it as current generation technology or something that isn’t “web” enough. Done right, “Fat Client” is the hybrid future of software technology. It’ll let you work locally on a document or your own spend data set and then let you collaborate over the web and share your document or data in real time when you’re ready. It’ll let you use your local laptop resources when you’re on the plane and without internet connectivity and a remote server when you’re online. And you don’t have to worry about downtime due to internet failure. Let’s face it – even if you’re SaaS provider does have 99.999% up-time, that’s useless if your local city construction crew accidentally slices through your T3 internet connection and takes your internet connectivity down for a couple of days. So forget about the Thin phase – it’s time to get Fat!

Sustainability Should Be Soldered Into Your Platform

I think we can all agree that sustainability is important – very important. You might be in business to make money, but the only way you’re going to make money is if you stay in business. The only way you’re going to stay in business is if you’re sustainable, because, otherwise, you risk running out of resources, money, or, and I’m not kidding, customers. The earth is finite, so it stands to reason that there is only a finite amount of any resource. A company has a finite amount of money, and wasting it is the quickest path to going out of business. Today’s consumer is concerned about the environment – harming it will drive them away, and with no customers, you have no business.

So how do you achieve this magic of sustainability? Well, you can achieve it the same way you achieve everything else in business – hard work, perseverance, and ingenuity. But the real trick comes in sustaining sustainability – and the best way to do that is to have not only supporting processes and methodologies, but a supporting platform as well.

A supporting platform can help you keep track of your initiatives which can range from your office recycling program to your global waste reduction initiative. Recycling efforts within a single large office building can save hundreds of thousands of dollars. As noted in “Building the Green Supply Chain”, the Boulder Community Hospital reduce, reuse, and recycle program saved the hospital $600K a year. On a global scale, Walmart saved 2.4M in shipping just by reducing packaging requirements. And Interface Inc, in their effort to move to a zero environment footprint, have saved more than 260M in the first decade of their sustainability program.

More importantly, it can also help you get control of your global sustainability initiatives when it comes to environmental impact reduction, social responsibility, and prevention of animal cruelty. Unlike internal waste reduction initiatives, which often do not exceed the complexity of making sure the used toner cartridges were shipped back to the manufacturer, global sustainability initiatives require you to also insure your supply chain does not violate the initiatives you commit to. Just because you don’t have a sweatshop, pump out toxic emissions in excess of the Kyoto protocol, or skin cows alive does not mean that your suppliers do not.

In order to insure that you have a supply chain in compliance with your initiatives, you have to track relevant information from your suppliers and have them track the corresponding information from their suppliers. This is an insurmountable challenge unless they can provide you with the information you need directly into your systems, as the average large company has dozens, if not hundreds of essential tier 1 suppliers and thousands of less critical suppliers. This requires a web based platform capable of securely collecting, storing, indexing, aggregating, and unifying all of the relevant information from each supplier.

Furthermore, depending on where you want to do business, sustainability might be more than just an initiative – it might be a fact of life. If you want to do business in the EU, you need to comply with REACH and RoHS, and possibly half a dozen other directives. California has introduced its own green legislation, and parts of Asia, suffering from severe pollution as a result of the rapid build up of manufacturing capability over the last few decades to meet the demands of American and European multinationals focussed on low cost country sourcing, may not be far behind. You have to not only maintain all of the documentation necessary for compliance purposes, but have to be at least 99.999% certain you are in compliance before making a shipment into the region. If even the tiniest removable part of your electronics system, such as the removable power cord, is not in compliance, your entire shipment could be blocked, seized, or destroyed.

This dictates the need for a platform that tracks not only all information related to your sustainability programs, but all product related information from raw materials through final production. This is the only way to minimize your risk of non-compliance. That’s why Aravo is Sourcing Innovation’s Vendor of the Week. As one of the first companies to offer a Sustainability Management Solution (SMS) tightly integrated with a Supplier Information Management (SIM) solution, I think they deserve to be recognized for tackling such an important problem.