Category Archives: Supply Chain

UPS Has An Awfully Simple View of Supply Chains

A recent article over on Forbes.com presented 3 Ways to Manage A Global Supply Chain from UPS. The article focussed on how to ease the transition when a business is going global for the first time. It gave three pieces of advice:

  • Look to Local Experts
    When expanding internationally, find a partner that is a local market master who can guide you in developing the brand in that market. Whether it’s taking the time to seek out the right suppliers, or contracting with a skilled business consultant in the area who can do the same, there’s no replacement for local expertise.
  • Invest in IT
    Managing a global supply chain means a constant interaction with data. Furthermore, while a variety of supply chain best practices are available, but some can be ineffective if companies don’t select the IT solution that best meets their specific supply chain requirements.
  • Diversify and Appreciate Suppliers
    Developing good relations with all partners in your global supply chain will benefit everyone and lead to better negotiations, production, and delivery.

This is all valid advice, but it’s not how you manage a global supply chain. It’s how you improve a global supply chain. To manage a global supply chain, you have to first:

  1. Design a global supply chain.
  2. Create the technological infrastructure to manage and run it.
  3. Create a management framework.
  4. Staff up the management team.

then you find the local experts, work with suppliers, and make use of your IT and management assets. You can’t apply best practices if you do not have any best practices to apply them against.

Supply Chain Security Pays – Why Are You Still Not Doing It?

Recent studies have show that just one in six organizations have continuity plans in place 1 and that of the 43% of organizations that implement supplier codes of conduct, only 25% of these organizations perform even minimal monitoring 2. In other words, organizations are not implementing proper security-based risk management plans, even though they have a 98% chance of experiencing a major supply disruption in the next 24 months. And of the one in six organizations that are implementing security plans, only one in four of these organizations are making the effort to make sure their suppliers are conducting business in a proper, low risk way.

This is despite the fact that we’ve had hard data for over seven years that demonstrates the solid cost reductions for those organizations that invest in supply chain risk management and security. As outlined in this 2006 Sourcing Innovation Post on Quantifying the Value of Supply Chain Security Investments, the benefits of investments include:


  • Improved Product Safety
    38% reduction in loss; 37% reduction in tampering

  • Improved Inventory Management
    14% reduction in excess inventory; 12% increase in on-time delivery
  • Improved Supply Chain Visibility
    50% increase in data access; 30% increase in data access timeliness
  • Improved Product Handling
    43% increase in the automated handling of goods
  • Process Improvements
    30% reduction in process deviation
  • More Efficient Customs Clearance
    49% reduction in cargo delays; 48% reduction in cargo inspections
  • Speed Improvements
    29% reduction in transit time; 28% reduction in delivery time windows
  • Resilience
    30% reduction in problem identification, response, and resolution times
  • Higher Customer Satisfaction
    26% reduction in customer attrition; 20% increase in new customers

Just do it already!

1 The Weakest Link, UK Plc’s Supply Chain; Zurich
2 Safe Supply Chains Help Produce Sustainable Business, Zurich and Rockwell Automation, 2012
3 Innovators in Supply Chain Security: Better Security Drives Business Value, Stanford Global Supply Chain Management Forum and IBM, 2006

The Summer of … Music?

Not that long ago we indicated that today we can carry 40,000 songs in our pocket even though it has only been 125 years since you had to go see a live band to hear a song. It turns out that this is the summer of music since it has been exactly 45 years since the first music concert to have more than 100,000 paid attendees finished. On August 3 and 4th, 1968, The Newport Pop Festival in Costa Mesa, California was the first music concert to achieve the feat. Even though concerts were the primary means of spreading music for centuries, it hasn’t even been half a century since the super concert, that we now take for granted as they happen every summer all over North America. It was an organizational fiasco, but probably helped future planners and promoters of such events do a better job. One thing it did demonstrate was the importance of ensuring sufficient supply to meet demand. If you run out of food and water halfway through the first day of a two-day event, your planning has failed miserably.

Kinaxis – A New Paradigm for Real-Time End-to-End Supply Chain Management! Part III

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, Kinaxis 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. As discussed in Part II, by integrating all of your cross-functional Supply Chain Management applications into one centralized control center application, it has the unique ability to not only optimize production, distribution, and supply network models but to also allow a user to create what-if scenarios in real-time that will allow the user to, among other things,

  • 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.

The Kinaxis platform does this, and more, because they believe that the key to not only surviving, but thriving, in today’s dynamic, constantly changing, and constantly interrupted global market is to know sooner, act faster. When it takes two days to understand what the impacts of a supply disruption of a material already in short supply will be, that’s too long (as the chances are that your competitor will have locked up the remaining supply before your organization even realizes it needs it). And when it takes a week to understand what the impact of a requested feature change by marketing will be to new product development, that’s too long (as the decision will always be ‘no’ because delaying production will be too risky – and if that results in a key-feature being left out, like e-mail on the Playbook, the resulting lack of marketshare could be devastating). And if you can’t tell your marquis customer whether or not you can expedite their order the day they call, that’s too long (as the end result is that they won’t be a marquis customer for long). That’s why the Kinaxis platform was built to allow these business critical questions to be answered within two-hours or less, on average (in the hands of a knowledgeable user). Many simple questions (such as what if I add this order, change this ship date, or expedite this order) can be answered in just a few minutes — and the full details as to why can be understood in under an hour.

And now the Kinaxis platform does this on a global scale. When SI first reviewed Kinaxis, it was primarily deployed in the English speaking world and single currency. Now, with offices in North America, Asia Pacific, and Europe they are deployed globally in multiple languages and support multiple currencies. In addition, they have added mobile (tablet) support so users can access the application on-the-go, in-the-plant, and on-site when a disruption is detected and has to be dealt with. Furthermore, all of the data is accessed in real time in both the mobile app and the main application. This is another powerful enhancement as what-if scenarios can be re-run as soon as data is updated in the ERP, Inventory Management, or Operations Planning system. No more waiting for the regularly scheduled sync.

Other key enhancements include namespaces, which allow different environments to be set up for different processes, geographic locations, or what-if scenario sets; integrated project management that ties together the project management capabilities of both the Kinaxis platform and the integrated applications (that are already supported by Kinaxis which supports all of the major ERPs); attribute-based planning; variant Bill-of-Materials support which allows multiple options to be considered simultaneously; “fair-share” constraints and additional constraint modeling capability; and process orchestration (that makes sure processes that are supposed to happen in sync happen in sync and those that are supposed to happen in sequence happen in sequence) that allows processes and activities to be defined and compiled in a logical, project-like, manner (that is intuitive to anyone used to using traditional project management tools).

What Kinaxis has built is a framework for modern enterprise-class end-to-end Supply Chain Management through a consolidated control center. It doesn’t replace your ERP, e-Sourcing, e-Procurement, Logistics and Transportation Management, Warehouse and Inventory Management, Trade Management, SRM and Visibility solutions — it allows you to take your operations to the next level by orchestrating their capabilities in an entirely new way (and, in fact, the Kinaxis system won’t reach it’s true potential unless your organization has most, if not all, of these systems in place). If all you have is a suite of best-in-class Supply Management applications, even if each application is 2.0, or even approaching 3.0, your Supply (Chain) Management organization as a whole is still 1.0 as it hasn’t mastered true process orchestration and functional collaboration. This is what Kinaxis gives you, if you are ready and prepared to embark upon the journey.

Kinaxis – A New Paradigm for Real-Time End-to-End Supply Chain Management! Part II

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.