This Supply Chain Matters blog posting serves as an update to our prior mid-February posting regarding supply chain B2B platform provider E2open’s announced merger with sales and operations planning (S&OP) and supply chain planning technology support provider Steelwedge. This latest deal follows prior acquisitions of icon-scm for supply chain planning simulation technology, Terra Technology for deeper levels of business intelligence and data management, and Orchestro for product demand sensing support.
This week, we had the opportunity to view an online webcast, anchored by E2open CEO Michael Farlekis, which was directed at both customer communities to serve as an update on strategic direction.
Both tech providers come together to serve a combined installed base of 160 customers with some stellar nameplates and diverse industry supply chain settings. The E2open side includes Cisco, Dell, HP, Kimberly Clark, Mondelez International, P&G, Unilever, Kraft-Heinz, among others. With the merger of Steelwedge, added industry vertical presence includes Nissan and Land Rover in automotive as well as some common customer among high-tech supply chains.
CEO Farlekis described the combined value proposition as universal cloud connectivity of the extended supply chain supported by a broad offering of applications. He reiterated that scale matters citing a host of numbers related to platform users, countries supported and volumes of transactions and item categories now supported.
With Steelwedge’s S&OP and baseline continuous planning support capabilities, E2open goal is for customers to be able to extend this process to include the inclusion of supply chain partners including key customers, suppliers, and trading partners.
SVP of Product Management and Strategy, Pawan Joshi, outlined the full application and user-centric capabilities of E2net platform and confirmed our prior belief that Steelwedge will provide augmented S&OP support capability, and that the existing technology will be fully integrated into E2open’s technology and platform stack over time, including the E2open Harmony Dashboard.
Plans call for integrating the Steelwedge data model and functionality into that of E2open’s, supported by the current singular platform sign-on and user interfaces. Regarding anticipated integration timelines communicated, initial data interface and user interface integration is expected to occur during 90-day release timelines this year, with full integration and rationalizing of planning functionality expected by early 2018. CEO Farlekis indicated there will be no change in existing support contracts with Steelwedge customers.
Given the above, the presenters declared that all existing Steelwedge customers will have access to the combined product portfolio and that E2open account managers will now serve Steelwedge accounts in their broader end-to-end platform support needs. We have learned that E2open plans to sell Steelwedge as a stand-alone offering until the integration process is completed, but that may present somewhat of a challenge given that prospective customers will want to understand the broader product integration.
There are subsequent individual briefings being planned with existing Steelwedge accounts and it would behoove these customers to seek more specifics regarding access to E2open’s platform capabilities, expected changes in functionality as well as the full integration timeline. Long-time pricing is another consideration, along with E2open’s ongoing efforts to improve its balance sheet.
Our prior observation that Steelwedge clearly needed an infusion of new capital and thought leadership coupled with more savvy marketing and sales execution resources was obviously reinforced by this customer update. Privately-held E2open seems to communicating the flexibility to be able to undertake this effort and hopefully, in an aggressive timeline. With its expanding B2B Business Network platform capabilities supporting procurement replenishment, continuous planning, execution, and collaboration, E2open will likely gain added market attention.
Before closing this commentary, this supply chain industry analyst would like to share an additional thought or two. We have long advocated that an S&OP process should be able to include and support the participation of key external partners in the overall process and in shared decision-making. That stated, such a capability does require some maturity in accurate master data and information management, scenario and what-if planning methods, collaborative based practices, and joint decision-making. With E2open’s platform, the opportunity exists to extend S&OP to extended supply chain partners, but change management and process readiness are important considerations to not overlook.
Supply Chain Matters will feature additional updates on E2open as developments warrant.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
In a prior Supply Chain Matters blog posting earlier this week, A Persistent Team- Be Prepared for a Year of Continual Analysis, we again urged readers and clients to be prepared for a year of continual analysis of the potential supply chain impacts of what could well be significant changing tax and trade policies involving the United States. We cautioned teams against do-nothing tendencies under a notion that political debates need to run their course.
Since we published our commentary, we have come across more reinforcing information.
On Tuesday, global strategy and consulting firm KPMG invited us to view an online seminar from the corporate and policy advisory unit titled: Will New Policies from Washington Disrupt Your Strategy? The session featured a Principal in C-Suite/Board level strategy, a Partner in Tax strategies and a Principal in procurement and operations value management. Also included to represent a manufacturing focused client perspective was the head of financial supply chain design for global contract manufacturing services provider Flex.
The primary message delivered by KPMG presenters was that given the current scope of pending U.S. changes in corporate tax and trade policies, it is imperative that companies reevaluate existing global footprints, supply chain, and business strategies. The dimensions of potential change were contexed as involving geopolitical, regulatory, and company-specific dimensions. There is also opportunity, in the ability to capitalize early on new policies to gain first-mover advantage.
The presenters presented sample scenarios of the potential net income impacts could be for a U.S. based manufacturer whose supply chain is externally sourced under potential tax reform scenarios, some of which were rather significant in bottom-line impact. What also caught this author’s eye was the potential impact of corporate strategies under current debt vs. equity allocation under a revised policy of potentially non-deductible interest expense. In essence, the weighted cost of capital could tip a lot higher for firms with current high debt loads.
The KPMG team provided some guidance on impacts and timing which, depending on specific area, could be as soon as now, or a year from now in cases of changed trade agreements or U.S. corporate tax policies. Online seminar participants were urged to not silo strategy discussions in finance alone, since the implications involve a revisit of existing and future business operating models. The primary message delivered: “Be agile enough to be able to adapt to changes.”
As we noted in our prior blog commentary, the KPMG presenters posed also the question of being cognizant of industry competitors, especially if new sources of qualified supply are required from U.S. based sources, where existing product value chain capabilities may be limited. The process of search and qualification should be underway.
A separate development to add reinforcement to the above message was today’s published report by The Wall Street Journal indicating that Samsung is now exploring the feasibility of expanded investment in U.S. manufacturing related to its home appliance product lines. Initially being planned is the shifting of oven range production from Mexico to the U.S., with potentially added capabilities for refrigerators, washers, dryers, and other home appliances. Samsung directly indicated to the WSJ: “However, this is a complex process that, like all strategic business decisions, will not be made final until it is determined through proper due diligence and planning, that is the best option for Samsung.”
Getting back to the webinar, Brant Miller of Flex indicated that many of their customers are already posing the question of what should our supply chain look like in the U.S., and what level of industry supply chain capabilities currently exist. An emphasis for increased investment in U.S. manufacturing comes with a strong emphasis on manufacturing automation to offset expected increased costs, and reinforcing perceptions for being a brand-conscious company. Miller reinforced the latter to include a brand that is vested both in sustainable business practices and in U.S. manufacturing to support domestic market needs.
Certainly, not all companies are suited to change major supply chain sourcing strategy. There are factors of product margins, cost of goods sold (COGS), overall product lifecycles, capital intensity, along with avoidance of higher transportation and inventory investment costs. The one clear message delivered by Miller was that planning is essential.
We urge readers, if they can, view the replay of the referenced KPMG online webcast. While we do not have a web link at this time, we will post one well available in the Comments section below.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
If our readers have had the opportunity to review all of our 2017 Predictions for Industry and Global Supply Chains, you probably picked-up on a dominant theme, that being the election of Donald Trump as President of the United States, and what that could imply for U.S. global trade policies and consequent industry supply chain impacts.
We presume that some readers might ask why raise such concerns so early, after all, legislative actions take time, especially when a change involves a lot of special interests. Industry supply chains have established global value chain links and in theory, should be able to respond to many forms of external-driven changes. However, we continue to submit that the changes being contemplated for U.S. trade and tax policies are far more potentially impactful to industry supply chains, from both an inbound supply and outbound product demand lens. We reiterate that sales and operations planning teams need to be prepared for the various implications that may come along sooner than one would expect.
We pen this posting at roughly two months into the Trump presidency, and already, the dizzying pace of news, speculation and editorial regarding the potential effects of a U.S. anti-trade policy are enough to motivate many a supply chain practitioner to have a drink or two at a local pub. Mr. Trump’s personal attacks on traditional and social media based news outlets adds more fuel to polarization of viewpoints and constituencies, and his actions to utilize Twitter as a personal attack medium against the media, legislators, or specific corporations has everyone on-edge, ready to pounce on the offense.
In the United States, the atmosphere smacks of confrontational politics. The opposition political party is of the belief that the Trump Administration agenda leans far to the right on trade, tax policy, immigration, and climate change, ignoring the realities of a globally based economy, the forces of globally dependent markets and the stark signs of climate abnormalities. Political discourse now focuses on floated proposals regarding double-digit import tariffs or a border adjustment tax. Recently, Warren Buffett termed such an approach as a “sales tax” on U.S. imports with consequent impacts for increased retail prices of imported goods.
Meanwhile, with major elections pending across Europe this year, right leaning candidates are now emboldened for change and attacking the status-quo of global trade, immigration, and economic growth.
If there is a benefit to the existing U.S. environment, it is that of broadened education on global supply chain flows and potential impacts. In a prior blog posting, we shared highlights from a briefing with the American Apparel and Footwear Association who provided us data on that industry’s supply chain flows. A published New York Times report indicates how ‘America First” policies could harm the U.S. aerospace sector citing data indicating that “more than 13,000 U.S. companies’ make-up the Boeing supply chain nerve center”, and are dependent on Boeing’s revenue growth. Boeing represents the single largest U.S. exporter in dollar value. China and Mexico combined account for $21.5 billion in U.S. aircraft related exports, while aerospace related imports from Mexico alone account for $2.4 billion. Our news desk has featured other published reports citing supply chain U.S. import data related to retail and automotive supply chains as well. The most pertinent data, however, is that related to various geographic sourced component costs contrasted to landed and customer cost to serve costs. In the end, supply chains need to best serve individual customers while meeting specific business or product margin goals.
The halls of the U.S. Congress are now congested with industry lobbyists. More than 25 major corporations have formed the Made in America Coalition which include pharmaceutical, chemical, and major equipment manufacturers. On the other hand, firms highly dependent on product imports such as major retailers and certain specific manufacturing companies are rallying to oppose forms of an import tax. Thus, there are industries currently pitted against other industries in a lobbying effort to educate lawmakers as to the real consequences of an American First trade and tax policy.
Once again, we reiterate that Supply Chain Matters is not a political focused blog.
Our role as a supply chain education blog compels us to alert industry supply chain teams to be prepared for continual analysis of potential supply chain impacts or revised product sourcing to better educate senior management on the cost and/or revenue impacts of different scenarios.
We are reiterating these messages because there may be some do nothing tendencies to let the political debates run their course, then, one can respond and act.
We would argue that such a strategy is ill-timed, essentially for two reasons. First, how up to date is your supply chain data related to component and landed costs? Do you have the capability to run multiple planning scenarios related to supply chain sourcing with the ability to update important data when needed? Hint- we are not referencing multiple spreadsheets passed along at various intervals. Do you have the trained people with the skills to perform such analysis on a continual basis, while multi-tasking on other job responsibilities as-well?
The other essential motivator is that an industry competitor or disruptor, who has amassed accurate data, and has completed and educated management as to all the analysis of different scenarios, already will have the head start on evaluating existing of new sources of qualified suppliers and supply chain services that can meet cost objectives, perhaps eliminating supply options from your organization’s consideration.
In today’s hyper competitive markets, one must be always prepared with the most accurate and insightful information relative to important decision-making. Preparedness and speed are the new table stakes.
If you have not already, be prepared for a year of constant supply chain network analysis and scenario-based planning.
The stakes are very high.
© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Supply Chain Matters has been attending the Oracle Modern Supply Chain Experience conference being held in San Jose California and drawing over 2800 attendees.
In our Part One posting, we provided some highlights from the first’s day’s keynotes.
In this particular posting, we wanted to highlight for readers, Oracle’s evolving efforts to develop a Cloud-based application dedicated to supporting a firm’s Sales and Operations Planning (S&OP) and Integrated Business Planning (IBP) processes which remain challenging areas for many companies, particularly in the current highly uncertain multi-industry business environments.
Candidly, Oracle itself has been somewhat of a laggard in developing a fully Cloud-based application to support these processes. Multiple best-of-breed supply chain planning technology providers have come to market with dedicated S&OP/IBP applications that are either behind-the-firewall or Cloud based. Similarly, other ERP providers such as SAP have announced such dedicated applications, but in the context of multi-year roadmaps of broader IBP based functionality.
After attending a particular conference session: Sales and Operations Planning Cloud: An In-Depth Look, this analyst walked away with the perception that perhaps being a laggard, can provide advantages as to what technology really needs to do to support today’s challenging needs in these process areas.
Co-presenter’s Kevin Elder and Michael Liebson stressed to attendees that Oracle’s development to this new application was a built from the ground-up effort, designed to leverage the best of Cloud-platform technology, along with the technology best practices garnered from Oracle’s existing ASCP and Demantra software technology offerings. The primary difference stressed was that development had a clean slate in its business process architectural and functionality approach.
Included was the perspective that S&OP should be a forward-looking process (outside-in perspective) focused on execution of strategy. The process should be scenario or simulation driven, grounded with the best available analytics and market insights, with a need to support enterprise-wide, cross-functional alignment to include financial business plans and objectives.
The presenter’s stressed Oracle’s S&OP Cloud application is anchored in a collection of Align-Analyze-Act process capabilities with the goal of providing businesses “out-of-the-box” best practice capabilities in managing their alignment processes. That would include built-in support for the five broad process stages of S&OP that can be supported by advanced planning and simulation technology along with the ability to leverage enterprise-level social collaboration tools to provide a genealogy of decision-making steps among all process participants.
A demo of the application featured the various best-practice dashboards, KPI’s and reports available for each S&OP stage. Planning capabilities include the ability to plan at different product levels but the process itself is anchored in high-level product plans, with drill-downs to more detailed levels as needed by the process. Rapid, on-the-fly scenario and simulation planning capabilities are featured to support the ability to run alternative demand and/or supply plans, along with the ability to iterate needed decisions among process participants to make any given scenario plan the ability to be the new supply chain resource plan.
This author was further impressed with the interoperability capabilities of this application. That was described as tight integration with existing Oracle Planning Central, Demand Management and Supply Planning applications. In the audience Q&A, the obvious question of interoperability with non-Oracle systems was asked. The response was yes; that the application can be architected with Oracle’s other Cloud platform capabilities that integrate various existing non-Oracle enterprise applications.
The Oracle S&OP Cloud application is currently scheduled for release to customers this summer. We venture an opinion that there will be a lot of customer and market-wide interest in this particular application.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Today, supply chain focused B2B business network tech provider E2open formally announced that it has 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.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters© blog. All rights reserved.