Category Archives: Product Management

Proper Project Planning is Key to Procurement Project Prosperity! Part 1

Ten years ago we wrote about the importance of Project Assurance, and how it was a methodology for keeping your Supply Management Project on Track (Part I, Part II, Part III, Part IV, and Part V).

We told you that Project Assurance, which takes a proactive approach and tries to identify issues, and implement mitigations, before they arise, involves the organization periodically stopping to objectively assess project failure points as they arise, typically with the help of an outside third party who can be completely objective, to identify what is and is not being done well and what could cause failure later if not adequately addressed now.

In traditional Project Assurance, there are six health assessments at six critical points in every project (for each of the six initial project phases defined by the classic waterfall project methodology). In particular, there is an assessment at each of the following steps:

  • Strategy (Pre-Presentation)
  • Acquisition (Pre-Vendor Selection)
  • Planning (Pre-Design)
  • Design (Pre-Acceptance)
  • Development (Pre-Testing)
  • Testing & Training (Pre-Acceptance)

And that the right assurance expert can help you with

  • expectation management during the strategy development
  • narrowing the procurement gap during the acquisition phase
  • aligning the troops during the planning phase
  • delineate the disconnect during the design phase
  • evaluate for acceptance during the development phase
  • tame the transition during the testing and training phase

And we stand by these posts and the importance of a third party expert helping you with the assurance ten years later, because we feel that if more companies adopted the methodology, we might not be in the situation a decade late where we still have a ridiculously high failure rate in procurement technology projects (as well as technology projects as a whole), that, depending on the study quoted, still exceeds 80% in some cases.

But we also recognize that, given the complexity of both modern Procurement (which hasn’t had so many issues to deal with simultaneously in over two decades), and modern technology, project assurance isn’t enough to save a project that isn’t planned right from the get go. (You just don’t have time to identify and fix all the problems once things get underway and you have the army of grunts simultaneously doing the implementation, all the integrations, and training as they try to rush an enterprise project that used to take two years and get it done in 9 months so they can promise payback within a year (which never happens when they do this — but that would be a different rant).

So, in this short series, we are going to dive into the project steps and help you understand what you need to do to get it as right as you can and greatly increase your odds of success.

Algorhythm: Twenty Years Later and the Optimization Rhythm Has Not Missed a Beat

It’s been almost a decade since we covered Algorhythm (Part I and Part II), and that’s because the last time the doctor caught up with them mid-decade, they were deep into creating their new accelerated cloud-native rapid application development platform, called AppliFire, with native mobile-first development support capabilities. And while it was very interesting, it was not Supply Chain focussed at the time, and not the core of what SI covers.

But fast forward about five years later, and Algorhythm has re-built their entire Supply Chain Planning, Optimization and Execution Management platform on top of this new development platform and now has one of the most modern cloud-native suites on the market — which not only has the capabilities of big name peers like Kinaxis, E2 Open and Infor, but also the ability to run on any mobile platform with seamless integration across modules and platforms.

And their optimization capabilities are still among the best on the market, and possibly only rivaled by Coupa Sourcing Optimization (powered by their Trade Extensions acquisition) — demonstrated by the fact that whether you are dealing with a demand plan, manufacturing plan, production plan, supply plan, logistics plan, route plan, or any other plan supported by the system, their system can find the optimal solution no matter how many demand locations, plans, sites, suppliers, products, lanes, etc. — and can do so rapidly if the user doesn’t overload the scenario with unnecessary constraints. (Even without constraints, these models can get huge, as the doctor knows all too well, but yet they solve rather rapidly in the Algorhythm platform.)

The Algorhythm suite of twelve (12) integrated Supply Chain Planning, Optimization, and Execution Management Modules is not only one of the most complete end-to-end suites on the market, but one of the most seamlessly integrated as well. It’s very easy to take the output of the “Demand Planner” (which allows the entire organization to collaborate on forecasts) and pump it into the “Manufacturing Network” (which integrates with the “Distribution Network” and “Inventory Planner”) to create a manufacturing (site) plan and then pump that into the “Production Planner” to create a manufacturing schedule by site and then push that into the “Logistics Planner” to determine the best logistics plan and then push that output into the “Route Planner” to optimize lanes and so on. (The suite also includes a “Supply Planner” to optimize individual shipments for JIT manufacturing; a S&OP planner to help sales and operations balance demand vs. supply; a “Manufacturing Execution System” to break PDI (Production Parameters) down, fetch actual production data, and validate results; a “Distributor Ordering” Management module to automatically create distributor orders across thousands of distributors; and a “Beat Planner” to optimize last mile delivery for outbound supply chain for distributors or CPG companies in geographies — like Asia — where last mile is difficult (due to inability to send large trucks, need to restock daily, etc.) With the exception of strategic sourcing and initial supplier selection, they basically have inbound demand to outbound supply covered in terms of supply chain optimization and management once you know the suppliers you are going to buy from and the products that are acceptable to you.

The UI is homogenous across the suite, and the modern web-based components such as drill-down menus, buttons, pop-ups, and so on make the suite easy to use — especially when it comes to tables and reports. The application supports built-in dynamic Excel like grids and tables which can be altered dynamically on the fly with built-in pagination to make navigation and view-control navigable, especially on tablets (for users on the go). It also supports standard (Excel-like) charts and graphs with drill-down, as well as modern calendar and interactive Google Map components. Navigation is easy, with bread-crumb trails so a user doesn’t get lost, and response time is great. It’s powerful and useable, which is exactly what you need to manage your supply chain on-the-go.

There’s a reason they have some of the biggest names in the F500 as clients, and that reason is their unique combination of

  1. power,
  2. ease of use, and
  3. and understanding of the Asian supply chain needs (especially around last-mile delivery).

The last point is especially relevant as many of the big name American (and even German) supply chain companies don’t really understand the unique complexities of (last-mile) supply chains in India and Asia. However, Algorhythm’s unique capability combined with their understanding has made their platform a force to be reckoned with in a market that is one of the hardest in the world. And as a result, they have built a platform that is more than sufficient for every other market as well. the doctor is looking forward to seeing more of Algorhythm outside of the Asian market as, at least in his view, the supply chain market in general needs a good kick in the pants as innovation there-in has considerably lagged the Source-to-Pay market that we primarily cover here on SI.

So if you need a good Supply Chain Orchestration solution, the doctor strongly encourages you to check out Algorhythm … you won’t be disappointed.

Time for Alternative Design!

The US President slapped 16.1 Billion of tariffs on Canada. Canada retaliated. The US slapped Billions on the EU. The EU retaliated. Trade is getting quite expensive between these countries, especially since the US slapped tariffs on goods and services it needs (because it just doesn’t have enough of them) — which is kind of contrary to one of the main purposes of tariffs, to prevent the market from being flooded from lower cost goods you don’t need.

Now global companies that can are moving production out of the US to other markets when they can to produce goods for sale in those markets in those markets to avoid tariffs — home manufacturing. (At least the US can say it’s tariffs are helping to deliver on job creation — it is creating jobs, in other markets.)

But what do you do if your primary market is the US and your factories are also in the US but you currently rely on raw materials, goods, and/or services where the home-based supply is not enough? Well, right now you pay more, but at some point this could price your product out of the range of your target market, and put your organization out of business.

You could try making a different product, but if it’s not one the market wants, that could also put it into bankruptcy.

Or you could get creative and find an alternate design that uses alternate materials that are lower cost. This is not easy, but it is possible. You’ll just need some creative thinkers, good engineers, and an open mind. (And if they need a methodology to get started, check out SI’s classic post on The Operations Research Process which gives you some hints, including the possibility of adopting TRIZ.) Or, if that’s too onerous, you could always try crowd-sourcing. Post a challenge on a secure platform that uses blockchain where researchers or groups can post responses (that can be unarguably traced back to them) and offer a guaranteed contract or reward if the response is chosen.

With a lot of elbow grease, you’ll find that you probably can successfully home-source, even if the best answer would be to near-source (as that option might not be available for a while).

BFC or IND? Which is better? And Why Does Procurement Care?

If you want to increase market share, the standard strategies employed by marketing typically fall into the:

  • BFC: Better, Faster, Cheaper bucket and the
  • INP: Innovative New Product bucket

In the first case of BFC, you pick a product out there (which could be one of your own) that people like, and figure out how to make it better, faster, cheaper and sell them a must-have upgrade.

In the second case of IND, you pick a product (like a cell phone) and figure out how to revolutionize it (like a smart phone) or how to add a feature (like facial recognition) that no one has yet and make it a must have.

In the first case, if the company makes a version of the product, Engineering picks the preferred supplier and starts a collaboration to try and take cost out of production while adding quality and features. In the latter, they undertake research into current products, production processes, and material requirements and try to find a design and a production process that can lower costs and improve quality or attractiveness to the market.

In the second case, a brainstorm is done to figure out what the market would want that might be possible, R&D is called in to see if it can be made a reality, Engineering is called in to get some production data for costing, research is done to see if the market will bear it, and a decision is made.

Sounds like it’s all Marketing, R&D, and Engineering — so why do you care? Because if the stakeholders involved decide something can be produced at cost X, they are going to expect you to beat that cost, whether or not its reasonable.

Moreover, when they have the option of BFC vs INP, they will often choose based upon their market projections of profit which comes down to their views on cost. So if you can’t meet the cost, the organization will lose and will be blamed. But more importantly, they can overestimate one cost and make the wrong choice, where you could win big, or, even worse, they can overestimate the supply market when there are really only two or three suppliers, all at capacity, and all without the time to do the necessary production line upgrades. Not only do you have a cost issue in the latter situation, but you also have a supply base issue.

Procurement needs to be at the table as part of all BFC and/or INP product considerations, especially when pricing and projections of market AND supply market are being made. Only Procurement can bring the proper knowledge, calculations, and projections for the company to make the right bottom line decision. And while Procurement will likely want to, and probably should, stay out of discussions of what the market will want, what R&D can do, etc., it can’t stay out of the cost and projection discussions. Otherwise, it’s the organization that will get burned in the end — even though it’s not at fault.

3-D Printing Will Bring Changes to Direct Sourcing

But not overnight, at least not for the changes being touted as the future of direct sourcing.

Print a part on demand? Not likely. Not soon.

Print a sample part on demand for evaluation — you could have that tomorrow.

What’s the difference?

First of all, today’s 3-D printers can only work with very specific plastics. Generally speaking, these plastics will not be suitable for the vast majority of parts the organization needs.

Secondly, most 3-D printers cannot mass produce parts fast enough to be useful to an organization that needs the parts in quantity.

Thirdly, the economics of 3-D printing today are not nearly where they need to be for mass production compared to current production techniques.

It will be a while before each of these criteria are met, and until they are, 3-D printing won’t be the future of direct sourcing.

But they do have their uses. Let’s say you are collaborating with a supplier halfway around the world in the design and development of a new part. If it requires regular review of a physical part, and getting that part on a regular basis requires global expedited shipments that cost hundreds of dollars a shipment and take up to a week to arrive, then the organization will be spending thousands of dollars on shipments and losing weeks, if not months, of production time while it waits for a part to arrive.

But with 3-D printing, an almost exact replica of the part, down to at least 2mm, even if it’s a metal part, can be printed locally from the CAD/CAM design files. And this can be done for a few dollars in a few hours. This is a significant contribution to the NPD process. And a considerable change to direct sourcing as life-cycles, and costs, can be considerably compressed and quality improved before the first part is delivered.

This simple change alone is significant, and we don’t need to wait for the future to get results. As long as we go in with an understanding of what those results will be.