Category Archives: Supply Chain

Why Imitation may be the Best Form of Supply Chain Innovation … For Many

A recent article over on Forbes on how imitation with innovation reduces risk in startups had some great reasons why imitation with innovation is often superior to pursuing disruptive technology — reasons which are just as applicable to supply chain for the average company. While its true that some companies will need a next generation disruptive supply management strategy to get a performance gain, this is only true of the roughly 10% of companies that have been applying leading supply chain practices for close to a decade. Until a company has maximized value from current supply chain practices, it is likely that the company is not going to be ready to maximize value from next level supply management techniques.

Plus, as per the article, for an average company, imitating the leaders:

  • avoids large initial investments until the ROI is there
    which is important as Supply Management is not going to look good if it spends Millions of dollars before it realizes the savings to justify the investment
  • and reduces the cost of Supply Management innovation
    as the costs to be the first inventor are always a third higher statistically and any attempts to patent just make imitation easier due to disclosure requirements (as a smart technologist can work around any patent using techniques such as innovation on demand)
  • while learning from competitors and early adopters
    who will be the first to encounter the gotchas associated with implementation screw-ups and perfect the techniques
  • who are actively progressing the state of the art
    because once a couple of big players prove a new technique has value, they will find more and quicker ways to extract maximum value from the technique

Plus, initially it will be easier to get funding for the technology and resources you need to make Supply Management a success if you can point to a respected competitor and say that this technology or methodology saved them millions. And then, when Supply Management has proven itself, it will be much easier to get investment for next generation disruptive Supply Management technologies and methodologies. Just don’t lose site of the ultimate goal — Next Generation Supply Management — and the organization will eventually reach its goal with persistence and smart, initial, application of imitation with innovation.

Probabilistic Chips ARE NOT Going to Improve Your Supply Chain Software

It simultaneously humours and scares me every time non-technical folk decide to write about a new piece of technology and how it is going to revolutionize whatever domain they regularly write about. The latest example is this recent piece over on Supply Chain Brain that says one should look for breakthrough technologies this year.

The article, which correctly notes that adoption of ERP systems led to:

  • Stumbling
    as a lack of depth in planning functionality in ERP systems did not lead to integrated planning
  • Failed Promises
    as the ERP is not the de-facto data model for the enterprise or even the end-to-end supply chain
  • A Lack of Agility
    as it has failed to deliver any sensing capabilities that would drive supply chain agility

went on to say that 2011 would be the year when breakthrough technologies using probabilistic chip logic, parallel processing for near-real time response, and artificial intelligence would hit the market. WHAT THE FRACK? Are you kidding me? Did Supply Chain Brain really publish this? Was it written by the Scarecrow from the Wizard of Oz? Let’s examine these technologies in more detail.

  • Parallel Processing
    Your average solution is already taking advantage of this. It’s called a multi-core chip which has been standard in every server for years now. Sure most applications are not written to be multi-threaded or take advantage of multi-cores, but, in order to allow the developers to handle increasing complexity and code-sprawl, most applications are written as multiple modules that are assigned their own processes, and the OS will balance the processes among the cores to speed up overall performance.
  • Artificial Intelligence
    We have been promised (true) AI for 55 years and it has never materialized. What makes you think the next 55 are going to be any different? And how are supply management applications going to deliver a technology that does not even exist yet?
  • Probabilistic Chip Logic
         Obviously the author has no fracking clue what PCL is. Because if the author did, the author would know that PCL, by its very definition, CAN NOT improve computational results. In fact, what PCL actually does is WORSEN computational results. (It will make a decision optimization model worthless since optimization requires millions of calculations and the propagated error would soon be so bad that there will be no accuracy left.) In some applications, like video and audio compression and decompression, small losses in accuracy are not only acceptable but often unnoticeable. It turns out that if you are willing to accept small losses in accuracy, you can do the computations with significantly less energy.
         Most of the voltage required by a computer chip is used to overcome the electrical “noise” created by constantly moving electrons in the chip materials. If this noise is not drowned out by a high enough voltage, then a chip may not be able to accurately determine if an electron flowed through one of its transistors. (Chips produce their bits, 0s and 1s, by measuring the absence or presence of an electron in a transistor.) If the voltage is decreased, the signal-to-noise ratio decreases and the probability of registering an incorrect bit increases. It turns out that the nature of electricity means that voltage (and energy) requirements can be significantly decreased if one is willing to accept an increase in the probability of a bit being mis-read x% of the time, which for some applications (like video and audio signal processing) only results in a small loss of precision.
         Thus, the use of a probabilistic chip can decrease your energy requirements (and corresponding operational costs of computing machinery), but cannot improve the processing accuracy of any applications so using it (although it can speed the chips up slightly since lower voltage utilization means they can run faster without overheating). And, at least for now, one will get (considerably) more speed from parallel processing.

Mobile Supply Chain Management: The Dream Will Take a While to Manifest

A recent article over on the Technology Evaluation Centers site on “mobile supply chain management: the dream is becoming reality” started off by making a great point — ultra-portability still means restricted ease of use and functionality, and even though the release of the iPad by Apple last year began a hardware revolution that opens up a new horizon for supply chain management (SCM) systems for businesses, it’s going to take a while before tablets become common place in the supply chain. While possibilities are opening up for mobile devices now that we’re seeing true touch-screen tablets hit the marketplace, we have to remember that enterprise platforms are typically a few years behind consumer applications, and we’re only starting to see consumer applications use the features of these mobile devices.

First of all, the Android tablets are only starting to hit the market place. Until there are a number of affordable options that match the iPads power, there’s only one tablet option — the iPad, and it’s not really an option when you consider Apple’s closed ecosystem and the fact that any app can be rejected any time for literally any reason.

Secondly, resolutions are not much better than what you find on a small laptop display, which limits the amount of data that can be displayed on one screen. This means that, until the 10″ tablets get better resolution and / or 3D display capability, the analytics and reporting abilities will be limited, and this will limit the usefulness of a tablet for analytics and/or reporting applications.

Thirdly, computing power is limited, so not only are you limited to SaaS platforms, but due to the data requirements, you’re limited to wherever you have good wifi.

Of course, once the Android tablets take off, resolutions improve, wifi is more universal, and more business applications appear that are designed specifically for mobile devices, it will be a different story. But that’s still a few years away.

If You Trim Your Supply Chain, It Will Grow

In some ways, a supply chain is like a bonsai tree. It must be regularly pruned, shaped, and defoliated if it is to take on an aesthetically pleasing shape that is sustainable in the long term. This is especially true if the supply chain is going to be the foundation of corporate success. As per this article over on Supply & Demand Chain Executive on how “most companies [are] paying a ‘Coherence Penalty'”, companies with very few (one to three) firm-wide strategic priorities are the most likely to … have above average profitability and revenue growth.

Furthermore, if the company’s capabilities — namely the supply chain — support the company’s strategy, profitability and revenue growth will most likely be above average. And if the company is coherent, which is only true for about 13% of companies, it is twice as likely to have above-average profitability.

Thus, since there must only be a few strategic priorities, and since the supply chain must support those priorities, the supply chain must be lean and focussed on those priorities — and those priorities alone. If the supply chain sprawls, it will not be sharply focussed on the strategic priorities, and, chances are, the lack of focus will lead to a sprawl in priorities which will, in turn, lead to a sprawl in strategy. This will cause the company to lose coherence which will in turn stunt revenue growth and profitability.

So keep trimming that supply chain. The reward will be worth it.

When Do You Consider the Customer?

As the following image from the AbleBrains blog indicates, at every single step:

Customer Focus

Because if you don’t, yours will be the company that sees its supply chain get a lot leaner — fast. Consumer confidence may be rising, but discretionary spending — with the rising cost of food, clothing, and fuel — is falling. It’s not a good time to be in an optional CPG category — so you better make sure everything that you do is about the customer.