Category Archives: Supply Chain

Are All of Your Supply Management Planning Processes Aligned?

A recent article over on Supply Chain Brain from JDA software on Building the Supply Chain of the Future made a great point when it noted that in any supply chain there are … core business processes that must be closely synchronized in order to enable organizational agility and market responsiveness. Unless business processes are aligned in closed-loop planning processes, the organization will be unable to sense demand shits and … balance a number of priorities, including costs, customer service levels, supply risks, production constraints and environmental targets in its quest to achieve the best possible outcome.

The article from JDA indicated that six core planning processes must be synchronized in order to achieve agility, market responsiveness, and success. And they are right. The following six planning processes must be synchronized:

  • Sales & Operations Planning (S&OP)
    A good S&OP process provides a disciplined cadence for monitoring and synchronizing demand, production, supply, inventory, and financial plans via a rigorous Plan-Do-Check-Act process as a foundation for allowing the supply chain to share a common perspective on issues and potential resolutions.
  • Demand Planning
    Typically involves the utilization of advanced statistical and predictive modelling to ensure that sourcing, production, inventory, transportation, and distribution models are optimized on a shared forecast.
  • Inventory Planning
    Good inventory planning allows for tailored “designer” models for each category and commodity to minimize overstock, out-of-stock, and financial risks based upon key commodity and category attributes.
  • Master Planning
    That allows for S&OP, inventory, and demand-based supply plans to be analyzed and updated daily in response to demand and supply changes.
  • Factory Planning & Scheduling
    The creation of optimized production plans by plants by scheduling backward from the requirement date, with material and capacity constraints simultaneously considered for feasible plan creation.
  • Collaborative Supply Planning
    That allows manufacturers to monitor multiple tiers of the supply chain and each supplier that is supplying a raw material, component, or service necessary for the creation of each product being sourced from a tier 1 supplier and work with multiple suppliers simultaneously to identify minor hiccups before they become major issues to collaboratively resolve a problem before it becomes a major headache.

But this is not enough to ensure success in today’s fast-paced fickle global marketplace. Not only do we have extreme demand, supply, and cost volatility across materials, components, products, and markets, but we also have extreme competition on the sales side as penny pinching buyers, short on cash, are looking for the best deal possible. As a result, your organization not only has to be leaner and meaner than ever before, but it has to be more focussed on the value it can provide. As a result, your S&OP, demand, inventory, factory, master, and collaborative supply plans have to be linked to, and reinforce, your organizational strategy. As a result, each of these plans need to be aligned with organizational:

  • Strategic Planning
    which is the process of defining the organizational strategy and direction and the allocation of resources, financial and human capital, to pursue this strategy.

If these seven planning processes are aligned, your organization just might have what it takes to make it through this decade and emerge a supply management leader when the smoke clears.

Open Up Your Supply Chain With E2Open

Today is the official launch of E2Open‘s new Collaboration Center, E2Open Version 8.0. The focus of this release are their new supply dashboards with real-time KPIs, predictive analytics and exception notifications designed to allow an organization to manage its global trading network across multiple supply tiers.

E2Open was founded in 2000 with the vision to provide supply chain managers visibility into their entire supply chain network — beyond just the first tier of suppliers because problems often start with your suppliers’ suppliers and your suppliers’ suppliers’ suppliers. Getting visibility into a late shipment or raw material shortfall as soon as it happens gives an organization time to find an alternate supply or alternate go-to-market strategy, as opposed to finding out the day after your supplier was supposed to ship. Since then, E2Open has gone through multiple versions of its platform and its E2open Business Network (8 to be precise) and now offers solutions in Collaborative Supply Planning, Demand Management, Logistics Visibility, Order Management, Inventory Management, and B2B Managed Services with a customer list that includes Blackberry, Dell, FoxConn, Hitachi, Motorola, and Seagate to name a few.

However, today we are only going to focus on its new collaborative platform and its supply management dashboards to be precise. Why would I do such a thing, especially since I repeatedly claim that Dashboards are Dangerous and Dysfunctional in full agreement with Robert D. Austin? Because the reason they are dysfunctional is that they lull you into a false sense of security when you see a lot of green. As I said in SI’s now classic post:

a dashboard can not tell you how well you’re doing … the best it can do is capture the data it’s been programmed to capture, roll-up the metrics it’s been programmed to roll up, and do the built in calculations of efficiency based on those roll-ups.

As a result, even if it tells you that 90% of spend is “on contract”, that doesn’t mean it is. It won’t tell you that 10% of spend has been misclassified under the wrong code and is being reported as on-contract when it’s really, really not. The truth is that:

a dashboard can only provide an upper bound on how well you’re doing, and this is useless. Reporting that my efficiency is at most 98% when it is in fact 92% is useless and unactionable.

However, if the goal is reversed from trying to tell you how well you are doing, and giving an inaccurate upper bound, to how poor you are doing, and give an accurate, minimal lower bound, it becomes useful. And if you can then define metrics such as inspected orders, reviewed invoices, verified shipments, etc. and report on the uninspected orders, unreviewed invoices, and unverified shipments (etc.), then you not only know everything that’s wrong but how many dark corners could be holding problems waiting to materialize but where to look when the problems you know about have been solved.

And that’s why E2Open’s new dashboard, developed in HTML5 and available through your browser, is useful. Not only does it provide deep, near real-time insight into your global supply network, with data aggregated across the multiple tiers of your supply network as fast as the platform can get access to it (which is real-time if the suppliers are using a modern supply management system with real-time query / export capability or once a day if the supplier is still on an old ERP/MRP that does a daily export in CSV to a secured FTP directory), but the drill-down dashboard can be configured to display whatever KPIs and metrics you want, however you want.

You can choose the standard indicators that show that 98% of your orders are expected to ship on time, based upon tier-1 and tier-2 suppliers shipping their components and raw materials on time, or you can invert it and show that 2% of your orders are late. Every metric can be reversed and you can filter what is displayed. So, if you want, you can set it up to show ALL RED and just show you

  • all the problems the system has identified that need an investigation and/or resolution and
  • how many records, products, shipments, etc. have not been manually reviewed, tested, verified as this will tell yo exactly where problems could be lurking and, if the count is high, where more oversight might be required to prevent new problems.

It’s not the standard configuration, but it is supported — and the ability to razor sharp focus into issues two levels down into your supply chain within 24 hours of your supplier’s supplier reporting a delay is fantastic. And, unlike most “dashboard” products, they support the creation of multiple public and private “dashboard” pages, at different levels of visibility and granularity, to allow each user to track all KPIs, metrics, and issues relevant to them. It’s not trying to be a one-size fits all solution because E2Open recognizes that, in supply chain, one size does not fit all.

Furthermore, 90% visibility at each tier is possible very quickly as they have done over 400 ERP / MRP / Supply Chain system integrations to date and can on-board suppliers on all of the major platforms very quickly. And they even have the ability to do trending and predictive analytics to identify where problems might occur — which is useful when you know that somewhere in a certain data blackhole there is likely an issue but are unsure where to start.

E2Open’s new release is worth checking out. The platform strives to give you a single version of the truth across your supply network and does a good job at doing it. And the inventory management / collaborative forecasting drill down capability is just as detailed as some of the best inventory solutions on the marketplace.

GoTradeLive: A LinkedIn eBay on Steroids for Small Business Procurement to Groupon To.

GoTradeLive is launching its new, global, trading platform targeted at small and medium businesses in the US today. Its new free social commerce and commercial trading platform is poised to be as disruptive to the small business Procurement market as Coupa (Cabana) was when it was launched back in 2007 on Procurement Independence Day. This is not something the doctor says lightly.

So what is GoTradeLive? It is, simply put, a power-auction platform for small businesses on steroids. And what’s so great about that, you astutely ask because there are dozens, and dozens, of auction platforms out there ranging from free to seven figures in cost? It’s social. It’s networked. It’s mobile. It’s easy to use. It’s global (and multi-currency). It’s Free. It can be branded. And it’s proven — as it’s already been tested in Australia, New Zealand, China, and the UK, where they have offices.

Let’s take the benefits one-by-one.

  • It’s social
    You can create your own trading networks using a Facebook / Linked-In type interface and these can be public or private for public or private sales or trades.
  • It’s networked
    While the build-your-trading network ability of the Ariba or Ketera networks are not yet there, the building blocks are and you can see it’s coming. But the ability to define custom trading networks is unique.
  • It’s (a) mobile (platform)
    Like the consumer social networks and e-Commerce platforms, they have a mobile app that allows you to monitor your trades and bids from your mobile device.
  • It’s easy to use
    It’s as easy to use as Facebook, eBay, and other consumer sites.
  • It’s global.
    It has already been launched in Australasia and the UK and further global launches are already planned. It supports automatic currency translation for global buying and selling.
  • It’s Free.
    It’s using the Freemium model pioneered by sites like LinkedIn, DropBox, and BaseCamp. It literally costs nothing to use. No registration or account fees. No listing fees. No transaction fees. (However, if you don’t pay, you are subjected to ads and there is nothing to prevent an advertisement for a competitor’s product or auction appearing on your listing page.) Given that the cost of some platforms include transaction fees of up to 15%, this is a great deal.
  • It can be branded.
    For as little as $15 a month, which gives you one-user access, you can brand the site into your own trading platform (with your logo, colour scheme, etc.) and eliminate advertisements. Small Business Pricing is coming soon, and will start at less than $100 / month.

It’s a great social commerce platform for quickly moving slow, excess, or end-of life inventory and a great platform for many small businesses, especially those in retail, construction, and similar goods-based verticals, for spot-buying product needed at irregular intervals. And it has a lot of promise. This is one platform the doctor will be watching closely.

The Global Agenda — It’s Coming!

One of the key takeaways from Hackett’s 2012 Procurement Agenda is Globalization and Global Operating Models. Why? The Hackett Group 2011 Key Issue Study found that not only is globalization critical for enabling revenue growth but the level of planned transformation over the next two to three years is such that the respondents’ ambitious plans will nearly triple today’s level of globalization within two to three years. Wow!

Within three years, the percentages of organizations with the following key activities at the maximum global level achievable is expected to enter the double digits almost across the board. Specifically, Hackett expects to see the following improvements:

Activity Current Saturation Projected Saturation
Development/Management of Product/Service Lines 4% 11%
Go-to-Market Strategy 6% 13%
Supply Chain 6% 13%
Organizational Culture 4% 8%
Internal Operations 3% 11%
Average 4.60% 11.20%

So what does this mean to your (Supply Management) organization? First of all, it is going to be a tough fight if the organization’s goal is to be world class in Hackett’s rankings, as only 8% of organization’s make the cut and over 11% of organizations will be leading in the globalization of their core activities.

Second, the organization, and each professional in the organization, is going to have to brush up on its CQ (Cultural Quotient). Not an easy task, as chronicled in SI’s series on Overcoming Cultural Distances in International Trade and Cultural Intelligence, but a necessary one.

Third, as Hackett points out, supply chain flexibility is going to have to increase. Disruptions and disasters are pretty much guaranteed at least every 12 and 24 months, if not every 6 and 12 months, the changing regulatory landscape will throw a wrench into the organization’s best-laid plans, and demand surges will play havoc with traditional shipping lanes and practices.

Fourth, selling into a given country is going to be as important as buying from the given country as the need to be perceived as a truly global organization, and not just an American or British back-office, will be real for those organizations that want to attract the best talent.

Fifth, attracting and retaining top talent will be more critical than ever as the complexity of tomorrow’s global sourcing will be much more involved than the complexity of today’s.

Today Is A Historic Day For Extra-Planetary Supply Management

One year ago today, the Space Shuttle Discovery (OV-103) made its final landing after 39 flights. Discovery, which flew the Hubble Space Telescope into orbit, performed both research and International Space Station assembly missions.

It was the first operational shuttle to be retired and its decommissioning was a historic event. It’s good that it will soon be on display at the Smithsonian Institution‘s National Air and Space Museum at the Steven F. Udvar-Hazy Center in Virginia (even though it will replace Enterprise which, hopefully, won’t be lost in the archives) as it’s an important piece of scientific history and supply management history. The official welcoming ceremony will take place next month on April 19th and it will be on public display soon after.

With the creation of the International Space Station, Supply Management, for the first time, became an extra-planetary concern in November of 2000 when the first resident crew, Expedition 1, arrived. Since then, the five cooperating space agencies (NASA, RKA, JAXA, ESA, and CSA) have had to insure not only the capability to continuously supply the crew with the supplies they needed, but have had to insure that the materials necessary for the station’s maintenance and continued instruction arrive in a timely fashion. Discovery was a key component in the station’s maintenance, having delivered modules and supplies over the last twelve years.

The twenty-first century introduced us to the beginnings of Solar Supply Management, and if Space Adventures has its way, the ISS and the Supply Management challenges it created are just the beginning. Space Adventures is proposing a Lunar Mission and the International Lunar Exploration Working Group (ILEWG) is proposing a Lunar Ark. If either of these projects, or a replacement project, come to fruition, we may soon be managing orbital supply chains. It could be a very interesting century for Supply Management indeed!