The following commentary can also be viewed and commented upon on the Supply Chain Expert Community web site where Bob Ferrari is featured as a guest contributor.

Is was not too long ago when many in our community were often frustrated by the lack of recognition by senior management to the impacts and positive effects that global supply chain capabilities can have on business results.  Where supply chain functional teams merely overhead cost centers? Many sought out academic studies that directly tied business or stockholder performance results to developments in supply chain.

Not so any more!

If you have been watching the various financial and traditional news networks these past days, you may have noticed all of the CEO, Wall Street analyst and reporter interviews all commenting on whether the devastating earthquake in Japan will have an impact on the particular company, industry, or least we mention, an Apple product like the iPad2.

This week I was viewing Bloomberg News and noted and interview with Timothy L. Main, the CEO of global contract manufacturer Jabil Circuits. The scrolling sub-title on the bottom of the screen was “Supply Chain Impact”.  Mr. Main’s message was that it is still too early to assess overall supply chain impacts, and it might take weeks to know the real impact.  Wisely stated, and no doubt Mr. Main was briefed by his supply chain planning and procurement teams. Similarly the CEO and Chairmen of General Motors and others have come forward to provide statements regarding the current state of supply chain impact.

IBM published an insightful Chief Supply Chain Officer study that was conducted a couple of years ago.  Of the five concerns identified by the most senior supply chain managers, the number two concern was the elevated sense of risk provided by extended supply chains.  It is a safe bet that if that survey were conducted today, risk would likely be the number one concern.  Of more interest however was an observation brought out by the supporting questions, which uncovered a disconnect between Chief Financial Officers, the majority of whom (in excess of 60 percent) stated their company has a risk mitigation plan in place, vs, the senior supply chain manager, who stated the opposite, that risk was an ongoing concern.

Today’s hyper-intensive world of Wall Street instant trades and hedging can brutalize any company’s stock with the hint of bad news, especially that related to a company’s supply chain.  It is therefore no surprise that CEO’s and CFO’s are speaking out about the status of their supply chains in the wake of the Japan crisis.

In the coming weeks we will all discover what the real impacts turn out to be, and how companies and supply chain teams rise to and overcome the challenges that will occur.  Thus far, the impacts are clearly pointing to be patterns of component shortages in lowest tiers of industry supply chain such as semiconductor, high tech, automotive and other others.  In the end, robust planning, supply chain analytics, responsive sourcing and strong ties with component engineering will likely be important differentiators in the weeks to come.

While it was not to long ago that supply chain recognition may have been taken for granted, another global in-process case study is now underway, which will once again etch that supply chains, and their planning and execution capabilities absolutely do matter for business results.  Japan will eventually get through this crisis. Supply chain and procurement teams will rise to the ongoing challenges.

In the end, we will all discover the importance of investing in supply chain people, process and technology capabilities.

Bob Ferrari

This is our fifth Supply Chain Matters commentary regarding the SAP Insider sponsored Logistics and Supply Chain Management conference being held in Orlando this week. Readers can review each of our previous commentaries at the following links:

One

Two

Three

Four

As the conference comes to a close, I will touch upon some summary impressions I’ve gathered from this conference.  Readers are certainly welcomed to share any of their own impressions on the comments section associated with this posting.

I’ll begin with some observations of SAP activities and direction within the logistics and supply chain management area.  It was good to note that SAP has finally acknowledged that technology needs to come in smaller, more manageable increments that can both be implemented in rather reasonable periods and deliver overall value in a more timely manner.  A previous marketing and deployment focus on end-to-end process management, such as collaborative demand and supply planning, logistics and fulfillment management was the initial SAP focus, but that is defaulting to the new Rapid Deployment Solutions (RDS) programs that are now beginning to rollout in the SCM area.

Many of the SAP speakers touched upon RDS in their presentations, but not with a lot of emphasis and conviction.  Other than the Howells/Peterson keynote, there was no overarching presentation outlining the full compliment of RDS offerings for SCM.  Richard Howells and SAP Analyst Relations did clarify the following:

The S&OP RDS (Level One) was made available at the end of 2010

Customer Collaboration (SAP SNC) and Warehouse Management will be delivered at the end of this month.

Several other RDS offerings related to Demand Planning, Global ATP, Supplier Collaboration, Transportation Management Event Management and Service Parts Planning will be delivered in the second half of 2011.

Some further observations:

The legacy of the rollout of Transportation Management continues, and hopefully, Release 8 will be the charm.  This has turned out to be the most frustrated area for SAP supply chain execution support, and hopefully Release 8.0 will be the charm.  Judging from the names I heard as part of the customer advisory council, the voice of the customer was not lacking.

I noticed at least two or three different versions of SAP Business Objects software being utilized in demos by SAP presenters.  The same for multiple user interfaces across some SCM related applications.  It might be wise to have a consistency in look and feel.

The best user-oriented presentation that I observed was the presentation on implementation of supply chain performance management at Coca Cola, which was ably delivered by John Chiang.  What impressed me was that Coke insisted on adopting standard, out-of-the box technology for implementing SAP Performance Management, and managed to do so within the existing SAP Business Warehouse environment, which also leveraged exiting IT infrastructure. Coke also adopted standard SCOR metrics and KPI methodologies which helped to springboard adoption. Also noted was that with 12 years of experience with SAP technologies, Coke was pleasantly surprised that this application worked right out-of-the-box.

Regarding end-user experience presentations, I was a bit disappointed that there were fewer in this year’s U.S. conference, but that may be a reflection of the current economy where SCM and IT professionals are rather busy.  Past Insider SCM conferences provided a balance between SAP represented and user-represented talks. I trust that will be adjusted for next year.  I noted a lot of attendance and participation in the various informal breakout sessions organized around common SAP technology topics.  The two that I sat in on were lively, interactive and informative.  I’ve noticed a trend in many conferences of late where peer learning and interactive exchange is gaining more interest and attraction for conference attendees, and this was yet reinforcement.

A tip of the hat to all of the SAP Insider staff who provided outstanding on-site services and assistance to a well-attended conference.  There were guides everywhere eager to help 1700 attendees find sessions and other venues or assist with needs. While Disney food is not what one would classify as ‘gourmet’, the on-site service was exemplary and friendly.

A final thought.  Supply Chain Matters has penned many commentaries related to the increased challenges being faced by supply chain and IT functions, and that is especially pertinent for the SAP-oriented community.  In our view, it is rather important to stay abreast of SAP direction in SCM technology and service offerings, since there are now a lot of moving parts.  The good news is that SAP is responding to needs in SCM, but the clarity is for customers to seek out.

Bob Ferrari

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