There is an article appearing In the March 7^th edition of Time magazine titled, How Germany Became the China of Europe,  which I highly recommend to our Supply Chain Matters readership.

This article, authored by Michael Schuman in Stuttgart provides insightful conclusions as to why Germany has been able to bounce back so quickly from the global recession.  Germany’s export surge allowed the country to respond far more quickly than major industrialized countries to global-based  market opportunities, and the country’s unemployment rate has actually improved in 2010.

Three of the important takeaways that I came away with from this article are:

• A firm belief that maintaining and enhancing manufacturing capabilities are the key to global competitiveness. German exports to China actually surged 45 percent in the first ten months of 2010, while other countries continued to struggle with their export volumes. German companies concentrate on equating market opportunities with competitive value-chain capabilities.
• While companies in the U.S. were quick to shed experienced workers, Germany’s industrial and government leaders came-up with innovate ways to retain workers, allowing for much more responsive plans for responding to global market opportunities. As an example, in late 2008, when demand for ethylene declined to a mere 14 percent of existing capacity, BASF tasked engineers to come-up with ways to keep the facility operating through complicated recycling schemes.  The article notes that while Germany’s middle-class may not be benefitting in parity with the current export boom, German workers are pragmatic in accepting smaller pay raises in return for forms of job security as opposed to “employment at will” arrangements.
• German companies understand the critical importance for being at the center of a network of regional suppliers and for nurturing value-chain capabilities not only in Germany, but in other countries as well.  The article notes that Germany’s imports from the rest of the Eurozone are expanding more quickly than exports.

While German corporate and political leaders do understand that problems still remain, including more growth in domestic product demand, they are willing at least to work together toward developing common and collaborative corporate and legislative policies.

That seems completely different than the constant litany of U.S. and Wall Street related executives who continue to bash political leaders for being “anti-business”, or for translating increased competiveness and job growth into needs for less regulation or lower corporate taxes.

The appointment of a U.S. presidential commission for manufacturing competiveness and jobs was long overdue and this advisory body needs to quickly redouble its efforts.  Applying some learning from Germany’s current track record of corporate and legislative collaboration would also be some required reading.

Bob Ferrari

We would also like to again remind our readers of our ongoing active interactive poll regarding the use of cloud computing platforms for supply chain related applications.

The poll is located on our right-hand panel, about half-way down the page.

Please take the time to participate in this interactive poll. You will also be able to view results to-date.

The following posting can also be viewed and commented upon on the Supply Chain Expert Community web site.

CSCMP’s recent Supply Chain Quarterly reported that a recent survey of supply chain executives, conducted by the Tomkins Supply Chain Consortium found that many executives have a high level of uncertainty about the future than they did in the past. Nearly 60 percent of executives polled expect business to be riskier, with those executives representing larger companies to be the most apprehensive. A majority of SMB executives also view high levels of uncertainty within their industry settings.

None of this should be a surprise to the Supply Chain Expert Community, since there has been a lot of sharing and exchange of information regarding the current uncertainties concerning many industry value-chain environments.  Supply and value chains are far more extended and many are supported  with very lean, just-in-time oriented resources.

We recently posted our own commentary regarding our view of the two most significant supply chain challenges in 2011.  Current social and political turmoil across the Middle East coupled with high volatility of oil prices, along with reports of thwarted terrorism attacks only add more uncertainty to global supply chains.

To add comfort, however, supply chain executives are not alone in their unease.

Accenture released the results of a recent survey representing more than 1000 CFO’s and senior finance executives across Asia, Europe and the Americas.  This report cites 79 percent of senior finance executives seeking more flexibility in their operations.  The authors also point out that three out of four of the respondents (78 percent) seek flexibility in planning and forecasting, rather than a traditional annual process. Also noted was that a majority (53 percent) of these same financial executives desire to expand their content and data (including analytics) in planning and forecasting, and 48 percent also indicating that they needed to modify their corresponding IT systems. Keep in mind that finance executives were also calling for reductions in overall supply chain costs these past two years.

This is, in our view, another endorsement of the need for many organizations to evaluate enhanced supply chain analytical, business intelligence and sales and operations planning (S&OP) process and IT support capabilities.  Uncertainty is unfortunately going to continue throughout the coming year, and executive consensus on heightened risk is already a foregone conclusion.

The real challenge is coming together with a timely set of plans for where sense and operational response plans need to be enhanced for short and long-term effectiveness.  Near term sensing and synchronization of activities is the most pressing capability today.

Supply Chain Matters recommends that overall cycle times of planning processes be examined and challenged, along with finding ways to conduct quicker, more scenario-based analysis of various options related to changing business conditions.  As an example, what is our response if customer demand suddenly drops by 10 percent, or better, increases by 10 percent because of some unplanned factor in the market? How quickly can we change our supply chain resource plans?

The good news in the midst of lots of news reflecting on uncertainty is that the senior executive suite already concurs.  The challenge is to position the organization for investing in the process capabilities that are needed now vs. sometime in the far distant future.

Bob Ferrari

I had the opportunity this past week to catch-up with Gopi Krishnan, Practice Lead, Supply Chain Management at Infosys Technologies.  Gopi is a periodic contributor of guest postings on this blog, and I always look forward to speaking and exchanging insights regarding global supply chain related process and technology developments with him.

The IBM Pulse 2011 conference kicks off today in Las Vegas, and Infosys is one of the designated Gold sponsors.  The Infosys exhibition booth will be # G305. (Disclosure: Infosys is one of other featured sponsors to this blog) .

Gopi will be delivering a talk addressing smarter asset management and was gracious enough to speak with Supply Chain Matters on interesting and important topics related to today’s asset management and supply chain needs.

Question: I noticed that your presentation involves smarter asset management in the energy and utilities industry.  The abstract indicates that traditional asset management is reaching end-of-life, and that the new focus is on interoperability and compliance.  Could you elaborate on what is meant by true enterprise capabilities in EAM?

Gopi noted that technology needs for enterprise asset management (EAM) are changing, and firms need to consider what are the true “enterprise capabilities” needs in asset management.  Today, many asset-intensive firms have profiled asset management technology either as:

• Single best-of-breed application;
• Core ERP module or application;
• Another best-of-breed application at division or business unit level;
• Custom built application.

An important consideration is that many of the older existing implementations are not enterprise capable and provide little standardization in accommodating and integrating enterprise-wide information needs. They may be locally installed with little ability to provide a global or corporate-wide view of assets, or asset-related process needs. This leads to challenges in the ability to assess asset up-time on a global basis.  Gopi observed that while many firms term their EAM implementations as global, by and large, it turns out to be local in capability. While companies note that they currently have 80-85% overall asset utilization today, it may not be enough to satisfy needs to be industry competitive.

A further aspect is that current asset management users primarily utilize work management functions, but today’s EAM applications enable integration to procurement and inventory management needs as well. An enterprise class EAM application allows firms to assess and manage efficiencies along with centralized procurement and inventory management practices.

Question: Could you briefly describe the Infosys SCM consulting resource capabilities specifically focused on EAM?

Gopi noted that Infosys entered the asset management area back in 2001, primarily in a project based focus, as opposed to a practice capability. The project involved a European based telecom provider. It wasn’t until 2005, after a number of significant projects, that Infosys began to evolve a practice capability. When MRO was taken over by IBM in 2006, the relationship with and capabilities involving IBM technology expanded.

In Gopi’s travels, many clients and prospects ask him why is asset management included under the SCM practice umbrella? His answer is that similar to a standard ERP application deployed in an asset-intensive company, if you were to theoretically add functions of financial and human resources management to today’s asset management technology such as IBM’s Maximo, you would have capabilities to manage many supply-chain and operational wide needs for asset, procurement and inventory management. There are aspects for mobility needs, safety stocks and other operational management process needs as well.  He indicated that Infosys supply chain consultants similarly have experience in SCM applications such as Sterling Commerce and JDA Software, which although different, are just as applicable to a successful Maximo implementation. Today, the practice has many business, functional and technical consultants working on upgrades, migrations or full deployments.

Gopi also believes that EAM applications are the most complex to master.  He explains that there are two consulting competencies to consider. The vertical industry uniqueness in business process enablement needs are very strong across different vertical industries. How EAM is deployed in asset intensive manufacturing is very different than utilities or retail based industry.  The processes are different, the asset types are similarly different with different requirements for supporting business process requirements such as mobility.  Secondly, the consultant needs to have depth in the three facets of EAM:

• Core MRO (maintenance, repair and overhaul), as it applies to capital asset management.
• Facilities management which could include aspects of HVAC, mechanical, carpentry and electrical characteristics. A lot of banks and insurance companies utilize these characteristics.
• IT services management.  The reason IBM placed Maximo under the Tivoli management umbrella was the ability to provide for the effective management of all kinds of assets, including IT.  That differentiates Maximo from other applications that may only excel in one of the above areas. The IBM approach is to view any asset as an asset is an asset, and users should be able to remotely manage and account for that asset.

The buyer centers for each of these three facets are also different notes Gopi, and the consultant needs to be able to understand and translate buyer needs across all of these facets.

This concludes part one of our interview commentary.  In our part two posting, we will share thoughts from Gopi on the changing perspectives of supply chain and IT executives regarding current supply chain technology initiatives, so stay tuned.

In the mean time, please feel free to share in the Comments section, what you feel are your organization’s more difficult challenges related to smarter asset management.

Bob Ferrari

Full Disclosure: Infosys Technologies is one of other paid sponsors of the Supply Chain Matters blog.

We would like to alert our readers to some upcoming Supply Chain Matters activities and special appearance within the upcoming March and April time period.

On March 10, Bob Ferrari will be participating in a featured Rapture World webcast, The potential of the social supply chain. Lora Cecere, Partner in Altimeter Group will also be an invited participant in this webcast which is co-sponsored by Kinaxis, Inc.  While from a business perspective, there has been an adoption of social media related technologies in marketing, what is their relevance in supply chain management? Where can the principles be applied and to what benefit?

Lora and I will explore some effective examples of companies utilizing social media technologies for effective purposes, on both the demand and supply perspectives of value chain business process activities.  Join us as we explore the pros and cons of this new dimension of business communication and interaction.  I will also be noting how blogs like Supply Chain Matters contribute to new forms of social communication. Registration is available by double-clicking on the webcast title above.

From March 22-25, Supply Chain Matters will be in Orlando reporting commentary from the Logistics and Supply Chain 2011 conference sponsored by SAP Insider.  This conference provides SAP supply chain customers the opportunity to exchange learning and insights focused on supply chain applications, and we look forward to annually attending this conference to check-in with the SAP installed base. Set your calendars to anticipate our commentary and if you are planning on attending, please say hello or drop us an email.

From April 11-13, Supply Chain Matters will be in Las Vegas reporting live commentary from the IBM Impact 2011 conference.  We are looking forward to hearing the IBM plans for the supply chain applications related to the former Sterling Commerce and ILOG as well as catching-up with past colleagues.

Finally, we remind readers that on May 24-26, Bob Ferrari will be attending the Supply Chain World North America conference in Baltimore. Bob will be moderating a panel discussion among industry analysts, pundits and influencers on the topic of supply chain capabilities required in the post-recessionary economy.  Already confirmed for this session are representatives from AMR Research/Gartner, IDC Manufacturing Insights and Cambashi, and others.  The registration page can be accessed by double-clicking on the logo appearing on our conferences tab, to the right.