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Breaking Supply Chain Tech News- E2open to Merge with Steelwedge

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Today, supply chain focused B2B business network tech provider E2open formally announced that it E2open_logo_JPG_highres_125x125has merged with supply chain planning and S&OP technology support provider Steelwedge. From our lens, the announcement is of little surprise and provides some interesting new dynamics in the market.

We note that the announcement is to be expected since two of our specific published 2017 Predictions for Industry and Global Supply Chains (available for complimentary downloading in our Research Center) called for either increased M&A activity or increased business intelligence investment in the B2B business network platform areas  in the supply chain tech area.

Today’s announcement is of little surprise since of late, Steelwedge has by our observations and sources, been struggling to gain further market momentum in the supply chain planning area. The company clearly needed an infusion of new capital and thought leadership as well as more savvy marketing and sales execution resources. Privately-held E2open continues its track record for augmenting its B2B network capabilities for synchronizing supply chain execution with augmented advanced supply chain planning, business intelligence and simulation capabilities. Since being taken private, prior planning and business intelligence acquisitions included Icon-SCM, and Terra Technology, both smaller providers providing augmented technology to add to the E2open platform, along with broader capabilities for E2open to offer in the market particularly those related to augmented sales and operations planning (S&OP) business process support. Both providers have been prior sponsors of this blog.

There is little information in the announcement regarding how the two organizations will come together in terms of organizational teams and strategy moving forward. We expect that will change and that E2open management will reach out to the existing Steelwedge user base with some added information. Obviously, this latest acquisition is part of a broader strategy to move E2open into a more augmented capability.  However, this provider has its own set of challenges in marketing and sales execution. The open question still remains as to the effectivity of current messaging to the market.

We initially advise existing Steelwedge users to take a wait and see perspective since the upsides far outweigh the downsides in terms of new capabilities.  One area to really focus upon is any future impacts regarding pricing strategies along with global support. We expect some eventual fallout in staffing.

In 2017 Prediction Six, we predicted a renaissance in supply chain focused business services and technology investments, That prediction called for one or two acquisitions involving high-profile supply chain best-of-breed vendors along with a continuation of acquisitions surrounding IoT focused technologies involving existing enterprise class providers. In Prediction Seven, we called for the existence of enhanced supply chain intelligence capabilities among B2B network platform vendors paying dividends for industry supply chains. That prediction called for supply chain B2B platform providers such as E2open moving in the direction of blending supply chain wide planning and execution related transactional data with analytics, cognitive and business intelligence capture across both horizontal and vertical extended supply chain networks. Such analytics and predictive trending information would then be moved to and from various existing business application systems related to planning and customer fulfillment.

We view this latest announcement a clear reinforcement as to both predictions.

Supply Chain Matters will provide further analysis on this development once further information is available. We view this to be one of other announcements to come in the supply chain focused tech area in the months to come.

Stay tuned.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters© blog. All rights reserved.


2017 Predictions for Supply Chain Management- Guest Contributions

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We just completed our unveiling and deep-dives on our 2017 Predictions for Industry and Global Supply Chains and the complete 44-page Research Advisory report is now available for complimentary downloading in our Research Center.

We now feature compilations of the many external guest contributions that were received from our readers.  holding-the-future

A Thailand and Southeast Asia Perspective

In mid-January, this author noted a published report from Thailand’s Bangkok Post, The state of supply chain management in 2017.   This article was penned by two supply chain consultants with extensive experience in Thailand and the rest of Southeast Asia and observed: “that most supply chains still struggle with the basics and are not in any position to realise benefits from new tools and technologies.” We reached out by email to authors Barry Elliott and Chris Catto-Smith, (acknowledged  readers of Supply Chain Matters) and received very insightful additional feedback comments. Each has been practicing supply chain management consultants in this region for the best part of 20 years. Responding to our specific question as to whether their observations vary from one industry or another, or in upper or lower tiers of the supply chain, the response was no, it does not. “Little advantage is taken of the SCM body of knowledge, partly due to not knowing what they (SCM teams) don’t know and partly due to NIH (not invented here).” Clarified was that there are certainly shiny exceptions but interest levels to learn and implement the basics are somewhat challenging.

We share this input because it provided us a grounding to the realization that not all geographic regions feature the same capabilities and tendencies toward transformation, and that should remain an important context towards planning of 2017 initiatives and skills development.

 

Supply Chain Skills and Talent Management

Employee reference check provider AllisonTaylor shared Noteworthy Trends to Watch in the Career and Work Balance area to share with Supply Chain Matters readers.

  • Workplace well-being and flexibility has risen dramatically in importance and becomes critical for attracting new talent.
  • As highly tech-savvy employees continue to enter the workplace, new internal communications tools such as text messaging, live chat and instant messaging will increasingly replace traditional email.
  • Blended workplaces, where freelance workers team up with full-time employees, become increasingly predominant.
  • The reference checking process takes an unconventional turn as employer’s are more likely to call job seeker’s former supervisors, rather than follow traditional routes of contacting HR.
  • References become a powerful extension of a job seeker’s resume.
  • Virtual reality tools begin to revolutionize recruiting and training.

 

Business and Supply Chain Technology

Fusion Worldwide Chief Operating Officer Paul Romano shares his predictions for 2017.

  • Memory will continue to be an issue. Memory manufacturers have finally gotten what they wanted- increases in ASP’s after years of drought and cuts. The good news for them is that the end does not seem to be in sight. A convergence of factors will continue to    drive issues in memory. We may see things let up there and there but expect problems to exist for much of the year.
  • The pace of mergers and acquisitions will not let After a year that saw some blockbuster M&A’s, many are hoping to take a ‘wait and see’ attitude. Not so fast. With business picking up in many sectors, companies are looking for ways to expand as well as round out portfolios and offerings. Expect the M&A activity to continue     unabated into 2017.
  • The sharing economy comes to the supply Companies such as Uber and Airbnb ushered in the      sharing economy. Next up, the supply chain. Most efforts have been directed towards the consumer. However, as interconnectivity and the concept of the digital supply chain gain traction, expect to see attempts to create efficiencies and opportunities around the supply chain. Uber is already in the package delivery business; could we see an Airbnb app for  short-term use of unused factory, warehouse, or line space, perhaps?
  • 3D Printing becomes the disruptive technology many predicted two years ago.
  • The outcome of the Brexit negotiations is already affecting trade flows between the UK and the EU and leaves a big question mark on how big or small the impact will be.    This can potentially devaluate the Euro even more against the dollar which will impact European OEM’s trading in USD.

 

2017 Predictions Related to the Food Industry

We spoke with Bill Michalski, Chief Solution Officer at ArrowStream, A SaaS technology provider for food service supply chains, concerning his predictions for the food industry. His input was that the number one priority for 2017 is making food safety and traceability a top priority and would remain the largest area of focus in the near future as-well. In our discussion, Michalski emphasized that the year ahead will reflect the notions of when urgency meets the reality of food safety in terms of full product traceability for any given restaurant chain. A further challenge remains off-contract purchasing and non-vetted suppliers among larger food chains. Michalski concurs that traceability and supply chain sustainability initiatives can be linked for broader business benefits.

 

Service Parts Inventory Management

Synchron’s CMO Gary Brooks’s 2017 Technology Supply Chain Predictions calls for service parts inventory management and pricing optimization to grow in interest because of the increasing realization that both capabilities are key revenue levers for the aftersales supply chain. Brooks further predicts that Cloud-based technology has become critical for the supply chain and that adoption rates will rise further. “Supply chain players will need to embrace the full potential of cloud technology or risk falling even further behind in 2017.” Other predictions are that predictive analytics will finally be mainstream in the supply chain and aftersales market, and that driverless vehicles and drones play a bigger role in supply chain.

 

If there are any other 2017 Predictions that readers would like to share, please send them along and we will compile them for sharing.

 

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


2017 Industry Specific Predictions- Pharmaceutical and Drug Supply Chains

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Thus far, we have posted deep-dives on the first nine of our 2017 Predictions for Industry and Global Supply Chains.  The one prediction remaining is our final Prediction Ten, which for each year, dives into what we foresee as unique industry-specific supply chain challenges or environments for the coming year.

As Editor, I have also decided for the purposes of brevity and reader interest, to present each industry in a separate Supply Chain Matters blog posting. We will be also posting these industry-specific predictions in a faster cadence.

In prior industry-specific predictions posting, we dived into Automotive Supply Chain Residing Across North America.

We then dived into Commercial Aerospace Manufacturing Supply Chains.

Next came B2C, B2B-to-C and Traditional Retail Focused Supply Chains.

We then moved to Apparel and Footwear Producers and Respective Supply Chains.

Next-up:

Pharmaceutical and Drug Supply Chains _DSC0083

For the first time, we are including pharmaceutical and drug supply chains in our industry-specific predictions for 2017. The principal reasons are twofold and somewhat inter-related. The increasingly global reach of the industry’s various supply chains is adding continued possibilities for risk and disruption. Second, within the U.S. especially, there remains an enormous groundswell of political and social backlash directed at what is perceived as artificially high and inflated pricing stemming from conflicting buyer self-interests across the industry’s extended supply chain.

Global Sourcing

Today’s manufacturing and drug capacity profiles among proprietary or generic drug brands span countries such as Ireland, India, Israel, China, Singapore, and the United States. Some produce drugs for their immediate regions, while many export globally. Of late, there has been a shift of manufacturing away from the U.S. to take advantage of lower manufacturing cost and tax savings. The bulk of active pharmaceutical ingredients, the primary raw material compounds related to other drugs, are sourced in China and India.

According to the U.S. Department of Commerce, the United States is now the biggest importer of pharmaceuticals from other countries. Incidents of counterfeit drugs and medicines have been a constant challenge and lately, conformance to generally accepted production practices have become troublesome from production facilities across India, where many generic drug production facilities are located. The government of India recently cited 200 India based drug manufacturers for high risk in compliance standards.

Ongoing Business Challenges

In 2011, the industry reeled from an average of over 250 shortages of critical drugs as monitored by the U.S. Federal Drug Administration.  Much has been accomplished to alleviate drug shortages since that time but continued work remains. As of the end of January 2017, the FDA was reporting 57 drug shortages, the bulk of which were included in categories such as Pediatric Medicine (26), Oncology (6), Gastroenterology (9), Endocrinology (6), among others.

For years, the industry has danced around or delayed responses to mandates for implementing item-level traceability and tracking of life-saving drugs and medicines. By November 2017, pharmaceutical companies will be required to mark their products with a National Drug Code (NDC), serial number, lot number and expiration date in both machine-readable and human-readable format according to the Drug Supply Chain Security Act (DSCSA) of 2013. A diverse group of 44 companies, from manufacturers to wholesalers to solution providers, have further come together to develop updated GS1 guidelines on the use of GS1’s Electronic Product Code Information Services (EPCIS) for lot-level management and item-level traceability of pharmaceuticals. DSCSA is planned to be implemented over the next 10 years in three different phases while companies are transitioning their systems and preparing for the various requirements. Ten years is a considerable amount of time and some on the customer and patient side continue with frustrations as to the industry’s overall progress.

This is an industry that continues to demonstrate a general lack of common goal collaboration across an extended supply chain with conflicting stakeholder interests. Thus, the challenge of business transformation or faster momentum can continue to be bogged down.

A recent wave of high-profile, large global-scale mergers and acquisitions have further disrupted individual supply chains in areas of assimilating business and supply chain processes, procurement software systems technology and talent.

Geopolitical Forces

The new Trump Administration and the U.S. Congress have cited the pharmaceutical and drug industry in the context for both new healthcare care reform, excessive drug pricing and in current sourcing practices of drugs globally. In late January 2017, President Trump, at a meeting in the White House with a group of high-lever pharmaceutical drug company executives, indicated that he wanted more manufacturing to occur in the United States.

As noted in our other industry-specific predictions, if the U.S. Congress were to adopt business tax reform legislation that could impose a multi-industry import tax, pharmaceutical and drug companies importing raw compounds and medicines could be financially impacted. We therefore predict the need for a lot of product sourcing scenario planning and analysis in the coming months.

For all the above, we include pharmaceutical and drug supply chains in our 2017 Industry Unique prediction category.

 

This concludes our Supply Chain Matters series of ten 2017 Predictions for Industry and Global Supply Chains, predicting a year that promises to be:

  • Consumed by global uncertainty
  • Somewhat challenged in terms of supporting business top-line growth
  • Sure to place supply chain sourcing teams in constant scenario analysis and business advisor roles to senior management
  • Noticeably higher in the supply chain risk potential

Again, our goal is to provide clients and blog readers insights and helpful information in setting agendas and initiatives for the existing year. Throughout 2017, Supply Chain Matters will be publishing periodic updates related to each of our predictions.

Our full 44-page Research Advisor Report is now available for complimentary downloading in our Research Center. We do ask that you provide basic contact information as well as a valid email address and phone number. As a reminder, we do not sell or offer reader and contact information to any third-party.

If we can be of any assistance to your organization in the coming year, give us a call or email us at: info <at> supply-chain-matters <dot> com .

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


2017 Industry Specific Predictions- Apparel and Footwear Producers and Respective Supply Chains

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Thus far, we have posted deep-dives on the first nine of our 2017 Predictions for Industry and Global Supply Chains.  The one prediction remaining is our final Prediction Ten, which for each year, dives into what we foresee as unique industry-specific supply chain challenges or environments for the coming year.

As Editor, I have also decided for the purposes of brevity and reader interest, to present each industry in a separate Supply Chain Matters blog posting. We will be also posting these industry-specific predictions in a faster cadence.

In prior industry-specific predictions posting, we dived into Automotive Supply Chain Residing Across North America .

We then dived into Commercial Aerospace Manufacturing Supply Chains.

Next came B2C, B2B-to-C and Traditional Retail Focused Supply Chains.

Next-up:

Apparel and Footwear Producers and Respective Supply Chains

Somewhat like the automotive industry, there is no industry as globally supply chain linked as that of apparel.  Apparel supply chains are global in nature with many interlinked flows and sometimes, hidden flows. Because of the high content of direct labor involved in the production of apparel and footwear, the cost of direct labor is a prime determinant as is the overall cost of transportation to move goods to designated geographic markets.

U.S. consumers have become very accustomed to expect cheaper apparel prices.  More affluent consumers demand higher and latest fashion and have been willing to pay a premium price for availability. The Trump Administration policies to initiate business tax reform and protect U.S. jobs will likewise have a significant impact to apparel and footwear supply chain sourcing and pricing strategies.

The geopolitical forces of increased trade protectionism is expected to hit U.S. apparel producers and retailers rather significantly in 2017. High volume, lower-margin apparel and footwear producers must continue to rely on global lower-direct cost manufacturing sources such as China, Bangladesh, Indonesia and other lower-cost regions for production of goods. Similarly, U.S. based apparel brand owners can source fabrics and yarns in the United States while Mexican or Central America based apparel firms perform cutting and sewing operations. Under the existing NAFTA agreement, the goods flow freely and duty-free across borders in North America.

Any threat of a trade war among the U.S. and China, or a border adjusted tax on goods imported from other countries, will have a dramatic impact on apparel and footwear financial margins.

At the same time, traditional retailers are under enormous profitability pressures in 2017.  Retailers with volume buying clout may well force suppliers to shoulder the burden of increased footwear and apparel costs. They likewise can continue to turn a blind eye to the ongoing and elusive practices of hidden sub-contracting of production among low-cost region apparel producers. Similarly, industry efforts directed at better and fairer enforcement of social responsibility practices related to sub-standard factory working conditions and excessive daily labor hours’ burdens of apparel workers in low-cost global manufacturing regions could be re-railed by a new round of industry cost burdens.

Smaller, more specialty retailers may have little choice but to pass along cost increases in higher prices. More popular branded or in-demand producers may be able to pass along price increases as-well, but that can be risky.

Industry disruptors focused on “fast fashion” business strategies have been leveraging supply chain near-shoring strategies to provide far more agile responses to the latest and most prominent fashion trends. Their appeal to higher margin, in-demand fast fashion supports higher pricing and thus flexibilities to support near-shoring of fast production. The key to fast fashion has proven to be more agile supply chain sourcing strategies and that will expand in 2017. That may prove to be a significant strategic advantage and opportunity in 2017, but here again, if the existing NAFTA agreement is changed or eliminated in 2017, such strategies will need to be revisited or altered.

This concludes our 2017 prediction related specifically to apparel and footwear industry supply chains. Next up in the industry-specific category will be pharmaceutical and drug supply chains.

A final reminder, all ten of our 2017 predictions will be available in a full research report which we expect to be available for downloading in our Research Center by February 10th.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


2017 Industry Specific Predictions- B2C, B2B-to-C and Traditional Retail Supply Chains

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Thus far, we have posted deep-dives on the first nine of our 2017 Predictions for Industry and Global Supply Chains.  The one prediction remaining is our final Prediction Ten, which for each year, dives into what we foresee as unique industry-specific supply chain challenges or environments for the coming year.

This year’s industry-specific challenges were especially challenging in that we contemplated adding a lot of industries, more so than prior years. In the end, we will hone in on those industries that merit additional monitoring and updates in the coming months.

As Editor, I have also decided for the purposes of brevity and reader interest, to present each industry in a separate Supply Chain Matters blog posting. We will be also posting these industry-specific predictions in a faster cadence.

Our prior Prediction Ten posting, we dived into Automotive Supply Chain Residing Across North America .

We then dived into Commercial Aerospace Manufacturing Supply Chains.

Next-up:

B2C, B2B-to-C and Traditional Retail Focused Supply Chains  hands-typing-4

In August of 2016, The Ferrari Consulting and Research Group, published a research advisory titled: The Beginning of a New Phase of Online and Omni-Channel Fulfillment for B2C and Retail Supply Chains. (Available for complimentary downloading in our Research Center) The prime takeaways from that advisory was that 2016 marked the beginning of the newest phase of B2C online retail fulfillment, namely the consequences of permanent changes in consumer shopping habits beginning to impact the long-term presence of brick and mortar retail and their supporting supply chain strategy frameworks.  Consumer preferences and desires have permanently changed in retail, and online platforms and consumer loyalty programs such as that of Amazon are rapidly garnering consumer loyalty and dependence. Amazon itself continues to pose a serious threat to traditional retailers as well other consumer-facing businesses, but the increasing cost challenges of online fulfillment and transportation also present an ongoing challenge for the industry as-well.

In early 2017, with the bulk of results of the industry all-important 2016 holiday fulfillment quarter now reported, the implications of permanent reductions in physical foot traffic among traditional retailers have become ever more profound. While retail sales grew an overall 4 percent during the holiday period, online sales will likely have increased in a range of 16-20 percent. Traditional retailers such as Kohls, Macys, Sears and Target reported declining sales involving physical stores.  Additional store closings are planned for 2017 as our efforts to invest more in online capabilities. Wal-Mart announced two rounds of headcount reductions in 2016, one involving retail store support positions and one involving a trimming of corporate staff including some initial online commerce executives an IT support staffers.

Amazon’s juggernaut as a dominant online retail platform notched more consumer market-share with one estimate indicating the online retailer captured nearly 40 percent of total online holiday focused sales.  The online retailer further demonstrated the first clear signs of integrated logistics, transportation and last-mile fulfillment that has been deployed since late 2015. Traditional retailers have now learned that competing head-to-head with Amazon is a daunting and rather expensive effort, with a likely better strategy being that of a differentiated strategy that emphasizes customer fulfillment capabilities that Amazon cannot. Retailer Best Buy has been the best example among specialty retailers while Dollar Shave Club served as a great example in the online services segment. There are opportunities and they will more than likely be focused segments that emphasize the brand and the experience.

As predicted in 2016, and now again in 2017, the retail industry will continue to come to grips with the notions that the physical store is now the virtual online store, and that the physical store may be one advantage over Amazon.  In this new online dominant environment, merchandising is now about analytics-driven knowledge of customer needs and inventory management is anchored in more sophisticated item level planning that involves the end-to-end supply chain supporting all retail fulfillment channels, both online and physical.

The physical store now serves as an extension of online, and supply chain strategy and business process must accommodate or influence this changed thinking. The supply chain is not a cost center to essentially support inventory warehousing and store replenishment, but rather a collection of collective capabilities directed as supporting an Omni-channel customer fulfillment capability.  In 2017 and beyond, the alternatives are in-house, outsourced, or hybrid capabilities.

The same principles apply to outsourced logistics, transportation and customer fulfillment partners. In addition to customer-facing capabilities, it is now clear that what Amazon has been building is a well thought out, customized online retail logistics, transportation and last-mile fulfillment capability to support multiple merchants in addition to Amazon. Third-party logistics and transportation providers seeking continued partnerships with retailers need to think more innovatively as well.

We predict that retail industry supply chains will begin to improve capabilities at supporting analytics-driven, demand-driven planning, multi-channel and more intelligence based customer fulfillment capabilities, supported by advanced inventory management with flexible and adaptable logistics. The concepts of supply chain segmentation strategy will continue to take hold among traditional retailers supporting both online and physical stores.

The industry is already experiencing higher turnover and shorter tenures of CEO’s and C-Suite executives. Supply chain leaders will either get on board with integrated capabilities or suffer the same consequences.

The industry implications and trends are compelling as well as inescapable in 2017 and the retail industry and its associated supply chains must adapt or suffer the consequences.  It’s tough messages, but then again, this an industry dealing with unprecedented forces of change.

 

This concludes our 2017 prediction related specifically to retail industry supply chains. We are still in the process of finalizing data and inputs for other industry specific supply chain sectors and expect additional postings next week.

Readers are reminded to review all our prior 2017 predictions postings.  And a final reminder, all ten of our 2017 predictions will be available in a full research report which we expect to be available for downloading in our Research Center by February 10th.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


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