We want to alert Supply Chain Matters readers that Bob Ferrari, our Founder and Executive Editor will be featured as a kickoff speaker at an upcoming series of Sales and Operations Planning (S&OP) Executive Breakfast Briefing events sponsored by Steelwedge Software.
This series has been designed to provide attendees with advanced understanding of technology being applied to support the S&OP process, including the important insights for integrating information and more predictive decision-making capabilities for process participants. There will be time allocated for ample interaction with speakers.
Bob Ferrari’s presentation is titled: A Practical Guide to Using Predictive Analysis to Take Your S&OP and IBP Process to the Next Level. In this talk, Bob will address how many S&OP processes become stalled because they are trying to assimilate information that is most external to existing information system or spreadsheet capabilities. S&OP processes are literally drowning in data but starving for decision-making insights. Three significant industry converging forces are coming together to allow S&OP teams the ability to incorporate use of more predictive decision-making as well as to achieve goals for integrated business planning. Along with Bob, both the Boston and Chicago breakfast series events will feature Bruce Richardson, Chief Enterprise Strategist at Salesforce.com as a speaker.
These breakfast series events will be conducted in the following cities with more information and conference registration information provided at the below web links:
Join Bob Ferrari and other distinguished speakers at either of these upcoming Steelwedge focused events for insights on taking your organization’s S&OP process to the next level.
Supply Chain Matters has opined in prior commentaries that significant high-stakes battles are underway among the major enterprise-level technology vendors as to which provider will ultimately dominate the cloud computing paradigm. This battle involves incredible amounts of money and big strategic bets. Vendors such as Amazon Web Services, EMC, Microsoft, Oracle, SAP, Salesforce and IBM, to cite just a few, are placing big money stakes into this computing dimension.
By our lens, IBM got a late start in the area of cloud, but has dedicated much more effort and resources since. In June 2013, we featured a commentary reflecting on the announcement of IBM’s intention to acquire privately held SoftLayer Technologies Inc. at a deal estimated to be around $2 billion. At the time, IBM signaled its intent to establish a Cloud Services division positioning SoftLayer as an anchor technology. Our commentary further wondered as to when cloud computing strategies would make a more profound presence in IBM’s Smarter Commerce portfolio which includes elements of Buy, Sell, Service, business analytics and intelligence.
A new data point to IBM’s intent and commitment is IBM’s CEO Virginia Rometty’s published letter to IBM stockholders that, in essence, outlines efforts to invent a new and very different IBM. Ms. Rometty is clear and concise in acknowledging that short-term performance in 2013 did not meet the company’s expectations and that significant business change is underway in two dimensions. The first is shifting IBM’s hardware business to new, more lucrative market opportunities. A part of that strategy was the January sale of the Intel-based x86 server business to Lenovo. The second strategy component is renewed concentration on future growth markets in specific global regions such as Africa, Asia, Latin America, the Middle East and other growth regions.
A broader agenda involves three declared strategic imperatives, each betting big on what IDC defined as the “Third Platform” of computing, namely Big Data Analytics, Cloud and Mobile.
The first IBM imperative is to leverage market opportunities in an all-in effort to transform industries thru leveraging use of advanced Big Data, analytics and applications technologies. Stated is that two-thirds of IBM’s Research efforts are now devoted to data, analytics and cognitive computing. Over $24 billion has been invested thus far in this area, with 15,000 consultants and 400 mathematicians focused on data-driven initiatives. This includes IBM Watson Group which alone consists of 2000 people and a $1 billion investment in ecosystem partners.
The second declared strategic imperative relates to transforming enterprise IT infrastructure for the new paradigm of cloud computing. The letter notes that in 2013, $4.4 billion in revenues originated from IBM’s cloud segments, a 69 percent increase. Approximately $7 billion on 15 acquisitions have been invested to-date to support this initiative. That includes the acquisition of SoftLayer, noted above, which is now characterized as the foundation of Big Blue’s cloud infrastructure level moving forward. Other elements are noted as a “cloud-first” approach for all IBM software development labs globally coupled with a new class of “cloud middleware services” to manage complex environments. IBM is further expanding its global cloud footprint from the current 25 data centers to 40 data centers strategically spread globally. This is obviously an effort directed at countering cloud computing providers Amazon, Apple, EMC, Oracle and others.
The third strategic imperative is to enable “systems of engagement” for enterprises. That should be music to many supply chain and B2B/B2C focused teams. Quoted are forecasts that in just two years 57 percent of companies now expect to devote more than a quarter of their IT investments in this specific area. Unstated but implied is that the implication is that business focused teams will drive and own more of the final say in technology selection and adoption. This area is about leveraging social media based tools, mobile based interaction and computing needs. Over a dozen acquisitions have been initiated thus far to support this imperative. IBM is further leading by example, launching an internal Connections social platform supporting 300,000 users and 200,000 communities. Client Collaboration Hubs have also been formed to support collaboration and coordination directed at IBM’s top 300 accounts.
Many of today’s enterprise technology vendors hype their efforts for investing in cloud and other “Third Platform” computing support strategies and the reality is that this is indeed a high-stakes effort as to which vendors will dominate the future technology landscape. IBM is not the only vendor that is quickly altering its strategic agenda, betting over $30 billion to-date on the new technologies that will form the landscape of future IT technology needs. Not all vendors have that clout as well as existing reach and mind-share, and this represents the high-stakes of this massive competition for technology dominance.
In prior commentaries, Supply Chain Matters noted that IBM’s most significant challenge was in cutting through layers of organization to harvest strategic investments into compelling solution offerings for customers, much quicker than others in the market. It would appear that the company is starting to internalize that very need, including leveraging the use of “systems of engagement” for its own internal needs to accelerate time to benefit for its B2B and B2C customers.
For the product management, supply chain, and B2B/B2C networks community, the added proof points are the declared IBM strategic imperatives applied to the key competency components that make up IBM’s Smarter Commerce portfolio. This coming May, the annual Global Smarter Commerce Summit once again convenes, and we, along with others, will be seeking and probing for evidence of harvesting strategic investments to dramatically enable faster, smarter and more timely value-chain business process capabilities for manufacturers, retailers and services providers. That is where the rubber truly hits the road in strategic imperatives.
© 2014, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
B2B cloud-based network provider E2open reached a significant milestone today with the announced availability of E2 Planning and Response version 11.2 which includes enhanced supply chain planning capabilities including “what-if” scenario and simulation planning, network planning visualization and analytics.
Readers will recall that in late July of last year, the supply chain planning technology market was stunned by the announcement that Icon-SCM, a German based private provider of supply chain rapid planning and simulation capabilities, and a preferred partner to SAP at the time, was acquired by E2open. At the time of this announcement, our Supply Chain Matters commentary opined that with the addition of Icon-SCM and its vision of network-wide rapid planning and simulation, the product roadmap for E2open would vastly accelerate in the areas of advanced supply chain planning. Today’s announcement represents a significant step in that direction.
It is further evidence that the technology community is hearing your desire to provide a B2B network that provides support capabilities well beyond supplier connectivity, visibility and basic collaboration. The ability for a cloud-based provider to incorporate responsive planning, what-if and simulation capabilities, coupled with collaborative execution brings customers far closer to the ability to enable supply chain control towers supported by deeper, predictive and more informed supply chain wide decision-making capabilities.
Readers familiar with Icon-SCM will probably recognize the augmented capabilities included in the latest E2open release. That includes in-memory creation and comparison of planning scenarios, the ability to perform multiple what-if simulations of various product demand and supply situations, a configurable planning cockpit with drill-down capabilities to analyze exceptions or alerts. The new release further provides a certified SAP adapter to provide proven connectivity with SAP data sources and hubs.
Our belief is that this latest release is one of others to follow that will add even more supply chain predictive planning and business intelligence support capabilities and it will be interesting to observe the market uptake as E2open begins to compete more directly with existing supply chain planning and execution providers. This will afford manufacturers and brand owners enhanced opportunities to align direct procurement, supplier based management, customer fulfillment and logistics capabilities on a single network, perhaps far sooner than any existing ERP provider.
Disclosure: E2open is a sponsor of the Supply Chain Matters blog.
On the eve of the beginning of the chronological New Year, it is our time to reflect, look back and scorecard our Supply Chain Matters 2013 Predictions for Global Supply Chains which we published nearly a year ago.
Readers are welcomed to review our predictions for 2014 which we outlined previously in a series of detailed commentaries. But now is the time to look back and reflect on what we previously predicted and what actually occurred in 2013.
In our previous Part One posting, we scored our first five predictions for this year. We now move toward the final five of our predictions and how they fared.
As has been our custom, our scoring process will be based on a four point scale. Four will be the highest score, an indicator that we totally nailed the prediction. One is the lowest score, an indicator of, what on earth were we thinking? Ratings in the 2-3 range reflect that we probably had the right intent but events turned out different.
2013 Prediction Six: Supply Chain Organizations Must Either Embrace and Augment Resiliency or Deal with the Consequences of Poor Business Outcomes.
This particular prediction was motivated by the constant volatility in product demand, supply, and other unplanned events impacting industry supply chains. Volatility exposes the vulnerabilities of existing planning, execution or S&OP processes. Throughout 2013, there were increased incidents of supply chain disruption including a major port strike, the threats of port strikes on involving the U.S. west and east coast ports, major factory and warehouse fires along with continued incidents of unprecedented natural disasters. Just this weekend, a fire destroyed the workshop of internal movement parts-making supplier to Swatch Group and other competitive watch suppliers. Swatch supplies roughly 60 percent of movements used in all Swiss watches. As we pen this update, it remains unclear as to the extent of the damage or parts disruption.
Throughout 2013, we observed more and more evidence of manufacturers investing in people, process and technology augmentation that would address resiliency and more predictive decision-making capabilities. This was further reflected in robust software sales from vendors and services providers that concentrated in enabling resiliency, risk-mitigation and more responsive supply chain decision-making capabilities.
We predicted that Supply Chain Control Tower (SCCT) initiatives, beyond those in high tech and consumer electronics supply chains, would come more to the forefront this year. That turned out to be not the case. There were various reasons including the need for further education, organizational readiness to take on such as an initiative and technology vendors themselves who moved away from articulation of SCCT concepts in their product marketing. This area was a missed prediction for us but we continue in our efforts to provide broader market education in this area.
2013 Prediction Seven: Chinese based Manufacturing and Service Firms will Markedly Increase Their Presence and Influence within Industry Supply Chains
The essence of this prediction stemmed from China’s leadership which was encouraging more companies to buy assets overseas and to make strategic investments across targeted industry supply chains. Having in excess of $3 trillion of foreign-exchange reserves helped in the bankrolling of such investments. While natural resource and energy continue to be the predominant strategy our belief was that other industry or geographic penetration strategies would play out in 2013, and that indeed turned out to be the case.
Chinese firms indeed turned their attention toward machinery interests across Europe, making select investments in distressed companies. Zoomlion Heavy Industry Science and Technology, a state owned construction equipment producer acquired German equipment maker M-Tec inDecember. Sany Heavy Industries has quietly acquired two German based firms, Putzmeister and Intermix and entered a joint venture with Austria based Palfinger. In the United States, Sany invested in a $60 million office building and adjoining warehouse outside Atlanta in an effort to develop a more significant presence in the U.S. construction equipment market. According to a Wall Street Journal report earlier in the year, Sany has been “scouting for acquisitions and joint ventures to gain a broader product line, more sales and rental outlets.”
Tianjin Pipe has invested in a $1.3 billion manufacturing plant in Texas to produce seamless-steel pipe for the oil and gas industry. That plant is expected to be completed in 2014. Hisense USA, the subsidiary of home-appliance and electronics producer Hisense Electric is branching out to become a stand-alone brand of flat panel TV’s and mobile handsets from a plant in Georgia. A growing number of China based textile producers including Keer Group and JN Fibers have been investing in new production facilities in the U.S. southeast to supply fabric yarn to Central America apparel producers. Energy costs in the U.S. have become far cheaper not to mention transportation cost advantages for shipping yarns and industrial fibers to Central America, an evolving low-cost manufacturing alternative for the Americas market. These strategic investments allow Chinese yarn and fabric producers a means to overcome existing U.S. tariff barriers for fabric composition.
The most visible and noteworthy investment was the acquisition by China’s largest meat producer, Shuanghui Group, of major pork producer Smithfield Foodsfor approximately $4.7 billion. The primary purpose of this acquisition was stated as fostering more export of Smithfield branded pork products towards China’s booming consumer market. The reality however is now the presence of a prominent Chinese based food producer within an important segment of the U.S. pork products supply chain. The deal also won approval from U.S. regulatory bodies. Since the Smithfield acquisition, there has been added speculation about added acquisitions in the dairy sector.
We believe we nailed this prediction and thus provided ourselves a generous rating.
2013 Prediction Eight: The Executive Level Voice and Shared Accountability of Supply Chain will Extend into Three Broader Areas
Rating: 2.0 (see below qualifier)
The basis of this prediction was our belief that evolving needs for product design, customer fulfillment and customer service now umbrella, voluntarily or involuntarily, more accountability for the supply chain leadership executive. Visible incidents of botched new product introductions because of initial quality issues or premature component failures across automotive, aerospace and consumer electronic brands during 2012 led us to this broader prediction. The new era of Service Lifecycle Management where OEM’s or capital equipment manufacturers offer customer pay by use or pay by hour leasing options was yet another motivator for broadening the accountability umbrella of the supply chain organization.
Throughout 2013 there were continued developments of premature quality and component failures among the above mentioned industry groups. While Ford Motor has introduced quite a number of new vehicle models, its quality indicators are slipping precipitously. Business media headlines were consumed with continuous reports of additional component failure incidents involving Boeing’s 787 Dreamliner aircraft. Other incidents that have escaped media visibility continue.
Candidly, our rating of this prediction has been a challenge since we have had difficulty in securing anecdotal or hard evidence of clear increased or broader functional accountabilities among industry supply chain teams. Our intent was to develop a detailed research study to explore this area in 2013 but a lack of time and a specific research sponsor thwarted our efforts. Therefore, we cannot in good conscience provide ourselves an overly positive rating even though our gut belief is that we were on the right track with this prediction. We therefore defer to our readers to add further commentary and perspectives as to whether broader and increased accountability indeed occurred during 2013. Look for flash poll early in the New Year to ascertain if a broader umbrella of accountability is underway.
2013 Prediction Nine: Higher and More Expensive Incidents of Counterfeit Products, Physical and IP Theft or Grey Market Activities Would Motivate Stepped-Up Mitigation Efforts.
The incidents and challenges surrounding the continued existence of counterfeit products, physical and intellectual property theft, and grey market activities unquestionably continued across multiple industry fronts throughout 2013. In 2012, U.S. Customs and Border Protection alone seized over $178 million in counterfeit goods coming into the United States. Among pharmaceutical and healthcare supply chains, the U.S. Food and Drug Administration (FDA) had to once again alert physicians and healthcare providers to yet another batch of the cancer fighting drug Avastin early in 2013. In March, U.S. Customs officials seized $3.6 million in counterfeit Viagra and Cialis in a warehouse in South Carolina. That same raid also uncovered a large quantity of counterfeit golf clubs within the same warehouse. Counterfeit drugs were not just in proprietary but generic versions of drugs as well. Generic manufacturer Teva Pharmaceutical had to step-up quality inspections of its off-patent heartburn drugs across Europe after healthcare providers and patients noticed miss-spellings in the drug labels. The World Health Organization (WHO) disclosed that there is still no accurate estimate of the global scale of counterfeit medicines. Reports by others groups suggest that the size of the global counterfeit drugs industry could run into hundreds of billions of dollars.
The United Nations Office on Drugs and Crime concluded in an April report that counterfeit goods, mainly originating from China, have become as profitable as illegal drug trafficking for Asia based criminal gangs. The UN agency concluded that counterfeit goods traced to China are the direct source of about two-thirds of the world’s counterfeit goods. Many watchdog agencies have concluded that counterfeiters have become far more sophisticated in their methods of production and distribution. China is also the primary area of the most concern regarding intellectual property (IP) protection, and has become a primary motivator for current decisions to near source design and manufacturing to other consuming regions such as the United States.
Despite all the above evidence and incidents, industry supply chains such as the pharmaceutical industry continue to battle a rising tide. While many firms have specific compliance leadership and staff resources, efforts generally were directed at certain controls within current budgetary parameters. They include early detection, audit and product packaging techniques to make it more difficult for counterfeiters to distribute fake goods. Calls from governmental agencies for stricter or mandated tracking, inspections and controls remain muted and subject to political lobbying. Private industry must step-up and come up with enhanced solutions.
Meanwhile, consumers, patients and services providers continue to remain the victims. While we correctly predicted the wide-scale scope of the ongoing problem, stepped-up mitigation efforts apparently lagged.
2013 Prediction Ten: Cloud Computing and Managed Services Options Continue to Gain More Traction Provided that Vendors Resolve Lingering Customer Concerns.
The year 2013 featured the ongoing shift of influence and the ultimate decision in technology buying moving away from IT and towards the business side, with the continued counsel of the CIO and IT teams. The fate of technology investments to enable expected and more timely business outcomes is quickly shifting into the hands of business and supply chain teams. At the same time, huge multi-year technology transformation initiatives were shunned in favor of targeted, tactical business process change initiatives of average 3-6 months duration that phase-in capabilities toward a desired multi-phased end-goal. This fostered a greater attraction toward cloud computing, managed services or best-of-breed selection options that
provided teams managed scope and much quicker time-to-benefit.
During the year, industry analyst and other published surveys pointed to less resistance for certain supply chain mission critical processes moving toward hybrid or public clouds, provided that vendors could ensure strict security standards, less onerous contract language and quicker implementation methodologies. However, the November-December incident involving the security breach of retailer Target’s point-of-sale systems will most likely significantly re-ignite security concerns again in 2014.
In 2013, many supply chain technology vendors continued their wholesale shifts at providing customers broad cloud-based options in planning, B2B collaboration and execution management. Thus far, customers seem to be comfortable with adopting such options, but again, in managed scope. Tight budgets for technology adoption also contributed to the attractiveness for cloud-based options since technology investments can be funded within business operating budgets.
This concludes our 2013 Predictions scorecard. We trust that you, our readers, secured benefit from these predictions as they transpired this year. While we did not hit a home run on every prediction, we were certainly in the game.
Readers are invited to add their observations in the Comments area regarding our predictions for this year and our self-rating.
Sincere thanks for your continued loyal readership throughout 2013 and we extend our wishes for a productive and rewarding 2014.
Bob Ferrari, Executive Editor and Managing Director
© 2013 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
On Tuesday of this week, this author had the opportunity to anchor a webinar titled: Your S&OP Analytics: Crystal Ball or Ball and Chain?
In my presentation I addressed the forces that that are converging for S&OP teams to consider more leveraged use of predictive capabilities. I trust our readers had the opportunity to tune-in to this event sponsored by Steelwedge Software. Over 250 registered for this webinar and we were able to conduct some live polling exercises. We also received some great questions from the audience.
If you did not have the opportunity to tune-in, a recoding has been made available for playback. I also authored a guest blog posting on the Steelwedge blog where I summarized the key takeaways from this webinar, along with a response to attendee questions. we were not able to fully address at the conclusion of the webinar.
You can view tall of these by clicking on this web link.
On July 30th, Supply Chain Matters attended the Infosys 2013 Global Analyst Summit meeting held in Boston. This is an annual event held each year with invited industry analysts representing multiple coverage areas. It was a great briefing event, held at a scenic facility overlooking Boston Harbor and filled with insightful information.
Bottom-line, we were surprisingly impressed at the consulting efforts that Infosys’s manufacturing and supply chain teams have made in the past twelve months.
Infosys itself has undergone some turbulent changes in terms of lagging growth, culminating with bringing back its founder N.R. Narayana Murthy as executive chairmen. During the opening session, Co-founder, Board Member, Managing Director and CEO S. D. Shibulal reviewed the accomplishments of the Infosys 3.0 re-alignment that has been executed over the past 18 months. He acknowledged that last year provided some challenges for the firm with growth below industry average. Since that time the firm has re-aligned both its industry and geographic organizational focus and has assembled 14 offerings around products and platforms. Last year, a significant percent of the firm’s new deals around business outcomes came as a result of the new platforms strategy with the Process and Platforms business unit reaching $725 million in Total Customer Value last quarter alone. The re-alignment and re-focus has begun to demonstrate other improved performance. Shibulal re-iterated that Infosys maintains a 98 percent customer retention rate among nearly 600 core clients. The CEO also highlighted some key client accomplishments across multiple industries and it was rather clear that he was personally involved in overseeing some of these engagements. Also made clear was the firm’s renewed focus on assisting clients in major business process transformation that extends beyond just information technology, with broader measures of engagement performance. Infosys is in the process of transforming to both a services and platform consultancy.
The remaining morning briefing sessions featured a combination of Infosys senior executives and select customers discussing areas termed Insights-Driven and Agile Enterprise, along with Cloud and IT Outsourcing implementation efforts. What we found most interesting was how these clients described their business objectives, which included:
Building a smarter organization
Digitizing the enterprise for growth
Fail fast and win faster- iterated by more than one client presentation
Harnessing the power of real-time decisions
Managing disparate global operations effectively
Enabling guest experiences
Re-architecting the entire data environment
These are terms that connote broad cross-functional and enterprise initiatives. The other common theme we picked-up on was a sense of urgency for industry change in either maintaining or up-ending industry leadership in business capabilities, or seizing business opportunities in new markets.
Our afternoon time centered on a series of dedicated briefings from various Infosys executives within the Manufacturing Industry practice business unit, chaired by Sanjay Jalona, Infosys Senior Vice President for Hi-Tech and Manufacturing, along with his associated manufacturing industry leaders. This business unit stated that it works with more than 100 global 2000 clients and that 40 percent of engagements are led from a business process consulting framework. While we are restricted from the mention of client names, we can relate that the names are impressive. Once more, the described engagements are far reaching, many with multiple-year timetables for innovation.
More importantly, Infosys has shifted to a shared-risk outcomes-based client engagement model where end results are predicated on specific client specified business outcomes. Infosys has now discovered that its core capabilities lie in combined services that span engineering, business process outsourcing and IT transformation. The firm’s broad global presence across multiple countries is further leveraged to assist manufacturers and retailers in implementing capabilities on a global scale, including needs in higher-growth emerging markets.
Five areas of investment capability and client transformation focus were described that include: Information, Digital, Infrastructure, Business and Supply Chain. Beyond IT and business consulting, the manufacturing practices have also focused on the delivery of specific services including product engineering and industry specific customer services. The firm is also developing impressive capabilities in the area of leveraging predictive analytics applied to supply chain and online fulfillment needs.
Our briefing emphasized the increasing importance that manufacturers currently place on transforming to more services focused business areas particularly in discrete manufacturing and aerospace settings. In some specific engagements, Infosys has assumed the ongoing management of a client’s legacy products that frees-up client resources to work on more innovative product offerings. Client names were again impressive, many of which Supply Chain Matters has featured in specific supply chain, B2B, and online fulfillment capabilities.
As outlined above, we were obviously impressed, and we were not the only analyst firm with that impression. The firm has clearly shifted toward delivering strategic capabilities for its clients, a theme that was candidly not the top-of-mind impression for India based firms.
One of the current shortfalls of Infosys is its ability to effectively market its broader array of capabilities for global based manufacturers and retailers and that conclusion was openly echoed by other attending analysts as well. We were informed that this will be addressed.
The takeaway for our readers is that we were impressed by the renewed focus of Infosys, particularly its Manufacturing practice area.
Disclosure: Infosys is a former sponsor and client of the Supply Chain Matters blog