As many of our readers may be aware, the Supply-Chain Operations Reference Model (SCOR) was developed by the Supply Chain Council (now APICS Supply Chain Council) to assist multi-industry and organizational supply chain organizations make meaningful and rapid improvements in supply chain business processes. This model’s methodologies describe the Plan, Source, Make, Deliver and Return activities associated with supporting customer and business fulfillment needs and have become a common language to articulate industry supply chain capabilities.
We all know that today, industry supply chains are driven by customer requirements and service needs, and the SCOR model is a tool that helps organization’s with a single standard reference upon which to understand the processes that make-up the supply chain along with their relationships to performance metrics. The power of SCOR is that it does not document the supply chain in the lens of functions (planning, procurement, manufacturing, logistics, etc.) but rather that of business process inputs and outcomes.
This author has been both trained in SCOR methodologies and has volunteered in various positions of the Supply Chain Council, including being a prior member of that organization’s North America Leadership Team. I can therefore attest that SCOR is a rather versatile tool that has assisted many industry and service focused supply chain teams to describe the depth and breadth of their supply chains as well as provide the basis for supply chain improvement or transformational initiatives.
The multi-level SCOR framework maps all customer interactions, all physical and informational transactions, planning and fulfillment processes. SCOR is a hierarchical and highly defined model which can capture the detail of supply chain processes with their relationships to the all-important performance attributes of responsiveness, agility, cost or assets associated to a supply chain. Those teams that have had experience with SCOR know that the real power of the tool is in understanding how all processes relate to one another and where processes need to be adjusted or modified to meet changing business or customer requirements. SCOR is an important tool that brings detailed understanding of the entire makeup of a supply chain, including best practices derived from other multi-industry supply chains.
The power of a comprehensive process definition tool is in providing common taxonomy and detailed cross-organizational and management understanding of the many supply chains that can exist within a particular company. Too often, teams get bogged down in documenting and updating the SCOR framework models which takes away from broad cross-functional support and from the timeliness or effectiveness of the framework as a reference to support decision-making. This is where technology can provide needed assistance.
Supply Chain Matters has previously called attention to highly focused system integrators, such as Bristlecone, who have developed self-contained service offerings that address very specific business needs. These are fixed-cost, managed scope application accelerators developed from prior successful implementations and industry best practices.
To assist firms that utilize SAP’s supply chain management applications the BristleconeStore offers ProcessesNow, a series of pre-built process maps based on the SCOR framework. ProcessesNow provides a central repository of process maps that extend the SCOR model by additional three levels . It uniquely links these processes to the various transactions within SAP’s APO or Oracle’s Demantra planning application helping teams to better align the process maps with the transactions that enable them, hence, enhancing user adoption of the related planning solutions. Teams can interact with SCOR models both online and offline utilizing an easy to navigate expand and collapse structure.
Another neat feature is that Bristlecone has augmented ProcessesNow to support certain industry unique process needs. According to Bristlecone, this tool can typically save 4-8 months of framework documentation efforts, allowing teams to more productive time to analyze and iterate their SCOR models, and the tool itself typically can be installed in about a week. As with DemandPlanningNow which has previously highlighted, this application is built upon acquired knowledge, best practices and technical expertise acquired from prior supply chain implementations.
Disclosure: Bristlecone is a client of the Ferrari Consulting and Research Group
Today, business and general media have been echoing the blockbuster news of the Hewlett Packard announcement indicating that HP desires to split itself into two separate companies. In this posting, we share our initial Supply Chain Matters impressions of this proposed breakup from both a global supply chain and information technology provider perspectives.
According to HP’s announcement, the company’s recently combined personal computer and printer business will split from its corporate hardware and services operations. The former is proposed to be named HP Inc. and will have Dion Weisler, a current executive in that operation, as its new CEO while the latter will be named Hewlett-Packard Enterprise, and have current HP CEO Meg Whitman at the helm. However, most of HP’s current profits have come from the combined PC and printer side.
Both of the split entities would have an equal portion of upwards of $50 billion in revenues, but the various reports we have been reading indicate that the strategy for HP Inc. will be more about generating cash while HP Enterprise will be positioned for growth in enterprise and cloud computing areas. Reports further indicated that HP management has suggested that the current near $20 billion in outstanding debt may be placed on the HP Inc. unit itself, allowing the Enterprise unit more options in further strategic deals.
The stated goal for this split is to provide both businesses with a sharper, more focused response to changing customer requirements. We are not all convinced, at this point. Wall Street interests obviously will have a far different view.The proposed split has been targeted to be completed by the end of fiscal year 2015, subject to regulatory and stockholder approval.
Needless to state, there is no shortage of opinions regarding this significant announcement, especially since Ms. Whitman, three years ago, declared to customers and stockholders that HP will remain a single innovative company. Since that time, HP has already shed upwards of 36,000 people as a result of various subsequent re-structuring programs with the ultimate goal being a range of between 45,000-50,000 job cuts. With today’s proposed split announcement, the number is now pegged at 55,000 total job cuts.
In 2011, HP proposed a spinoff of its PC division, an announcement that ultimately led to the short CEO leadership reign of Leo Apotheker. Our Supply Chain Matters perspective at the time was that such a decision would unwind the global supply chain high volume leverage benefits that HP had garnered in the strategic procurement of hardware components, as well as raise yet another round of uncertainty for HP’s customers and supply chain partners. That view was later reinforced in a Wall Street Journal report published after our commentary.
The same concern remains with today’s announcement, although the combination of PC’s and printers retains some leverage. To calm such fears, we read one report stating that CEO Whitman has indicated that the two companies will have a “supply chain arrangement” that allows them to jointly negotiate strategic purchases. We are not that confident that such an arrangement has been all that successful among other large firms. Further, if one of the entities is burdened with the current total debt load that may not help in negotiating or consummating long-term, multi-year supplier agreements that often require up-front cash. Today, overall supply chain leadership is decentralized among HP’s business units. With this split, that model will have special significance.
In its reporting last week and this weekend, the Wall Street Journal revealed that for most of the year, HP held merger talks with storage systems provider EMC Corp, a deal that would have created an estimated $130 billion in combined revenues. Although those talks were reported as ended, the WSJ speculates that today’s proposed split could pave the way for a combination of HP Enterprise and EMC down the road. If that indeed is the strategy being played out, than the global supply chain leverage benefits from a combined HP/EMC, or another existing IT infrastructure hardware provider can buffer some of the loss of global supply chain volume leverage.
From an overall supply chain,B2B business network and applications perspective, the proposed split affords the HP Enterprise entity the opportunity to more aggressively innovate products in cloud-based systems, big-data analytics and decision-making as well as support for IT business process and cloud outsourcing. That may well depend on what ultimately transpires in further announcements in the coming months. There is the possibility that HP Enterprise could be adsorbed within another enterprise provider’s business strategy.
These past weeks, there has been speculation that HP’s printer business was in final stages of announcing some breakthrough technology directed at 3D printing applications in manufacturing and other uses. If that product comes to market, our speculation is that it will have dependence on HP Enterprise services. How such applications are apportioned under the proposed split is an obvious concern for HP’s current and future customer base.
Finally, in observing other high profile corporate splits, issues of how corporate-wide business shared services, such as procurement, data centers, B2B business network infrastructure and EDI systems, ERP, business and specialized supply chain focused applications, third-party logistics and online customer fulfillment are split out becomes a task of significant proportions. With so many job cuts that have already occurred to-date, and more expected to come, inherent business process knowledge and dedicated internal resources to shepherd the transition workloads are going to be challenging. With speculation of even more strategic changes down the road, the notion of two split companies that can respond faster to changing customer and market needs could be slowed-down by the need for adaptive business systems.
There is obviously more to come regarding the HP business split and we urge readers to stay tuned for further Supply Chain Matters commentaries and updates.
© 2014 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
Today marks simultaneous but select global-wide product availability release of Apple’s latest announced iPhone 6 models, and as noted in our previous Supply Chain Matters commentary, the supply chain is again being again put to the test in assuring customer fulfillment expectations. Consumers from Hong Kong, select European countries and the U.S. now have the opportunity to get their hands on the new models.
The Apple marketing gods pay special attention in hyping sales in the first weekend of iPhone availability. It adds to the optics of long lines of consumers queuing-up to get their hands on the latest and greatest smartphones and motivating consumers to buy now, while there is still some in-stock. Like other consumer focused companies, revenues in the upcoming holiday quarter can account for a substantial portion of expected financial results.
Thus far, published product reviews concerning the new models have been positive, which adds to positive consumer perceptions. At this same time last year, Apple set a record of 9 million iPhone 5 smartphones being sold on the initial full weekend. That performance came in the midst of ongoing production yield challenges with the premium iPhone 5s model, which demonstrated the highest consumer demand. In 2012, 5 million iPhones were sold on the initial weekend. Wall Street analysts are floating a number indicating an expectation of 10 million as the bogey for iPhone 6 sales in the first weekend. The bar of expectations grows ever higher.
Earlier this week Apple reported that it had more than 4 million preorders in-hand among the new iPhone 6 and iPhone 6 Plus models during the first 24 hours since the product launch event. Apple also indicated that many of these pre-orders will be delivered in October, a sign of setting proper supply chain realities. Indeed, smartphone carriers such as AT&T, Sprint and Verizon are quoting October availability with the U.S., with the Plus model being especially stretched-up for availability.
One rather critical difference this year is that Apple has not been able to extend planned availability of the new model iPhone within China. Last year, China was included in first weekend sales availability. A published article in the New York Times last week (paid subscription or free metered view) reported that Apple communicated a last-minute decision to delay availability to the three state-owned mobile service providers even though these carriers had already queued advertising and launch campaigns. Increased speculation across Wall Street and business media corridors is that China’s regulators are still voicing concerns regarding national security associated with the iPhone itself. No specifics as to when these concerns will be alleviated has led to added speculation that a grey market for both the new iPhone 6 and older iPhone 5 models will become rampart during the weeks leading up to the end of the year.
However, if Apple’s supply chain planners had factored availability of new models for China on weekend launch, they well may be scrambling to re-configure that inventory to satisfy pent-up demand in adjacent regional markets.
As a community, we often commiserate on the dynamic tensions and often conflicting goals among sales and marketing and supply chain teams which often manifests itself in the S&OP process. Apple’s supply chain teams are not immune to such tension. Over the coming weeks, as the marketing and sales machine cranks-up consumer motivations to buy, the supply chain will deal with the realities of limited supply, production hiccups and product allocation conflicts among various channels that invariably come up in such situations. Air freight capacity is already allocated and we can all look for the clear signs of scramble and response.
While some supply chains are challenged with collaborating with sales and marketing on stimulating and shaping product demand, Apple has the current challenge of meeting very high expectations involving an outsourced supply network with many moving parts. They have pulled miracles in the past, and the stakes get even higher.
Stay tuned for updates.
September is a unique month. Folks return from summer vacations, outings and getting closer to family, and then, the marketing juices ramp-up. These past two week alone have featured non-stop significant announcements concerning enterprise, B2B and supply chain management focused technology which we will capsule.
On the enterprise and ERP software front, the blockbuster news is the announcement that the founder of Oracle, Larry Ellison, is stepping aside, but alas, he is instead assuming a different role.
Larry Ellison to Step Aside
Business and social media is buzzing with today’s stunning announcement that Oracle founder Larry Ellison will step aside from his CEO role in favor of two Co-CEO’s. The Wall Street Journal’s alert story termed the announcement as: “one of the momentous corporate handovers in the history of Silicon Valley.” Well stated!
Other publications equate the significance to when Bill Gates gave-up the CEO role at Microsoft in favor of Steve Ballmer.
Both Safra Catz and Mark Hurd, two other senior leadership executives will assume the role of Co-CEO’s. But there’s more. Ellison will supposedly assume the role of Oracle’s Chief Technology Officer (CTO). Isn’t that interesting?
Twitter is lit-up with all forms of reactions, one tweet equates Ellison stepping down to assume the CTO position the equivalent of Vladimir Putin stepping down to become Prime Minister of Russia. Somewhat humorous but perhaps insightful.
Obviously, there is more to this announcement which is timed just before the kickoff of Oracle’s annual OpenWorld customer conference that begins this weekend.
Supply Chain Matters has been on-record of not inclined toward the Co-CEO model at technology companies. We did not see it as productive when it was previously practiced at SAP, AspenTech and other firms. The broader organization plays favorites as to whom will prevail as the ultimate successor and strategic initiatives suffer from internal political maneuvering and jousting. Just make a frikkin decision on whom is the top dog and let the chips fall.
Look for lots more buzz emanating from San Francisco and Redwood Shores in the coming days.
SAP Announces Next Iteration of Collaborative Supply Chain Management
The latest significant announcement from Walldorf concerns SAP Supply Chain Orchestration, an initial significant milestone from SAP’s prior acquisition of sourcing and procurement provider, Ariba. The application is described as integrating functionality of SAP Supply Chain Network Collaboration (SNC) and Ariba’s Collaborative Supply Chain application. The combined application will be made available as a private cloud-based delivery platform which includes the SAP HANA Enterprise Cloud service.
For existing customers utilizing either SAP SNP or Ariba Collaborative Supply Chain, the obvious questions will be on depth of support for both indirect and direct materials procurement collaboration, along with license pricing structures incorporated in this new application. There are obvious implications regarding other SAP applications supporting supplier network connectivity.
Supply Chain Matters is in the process of gathering additional data and will provide a follow-up commentary.
Infor Announces Updated Release Supporting Sales and Operations Planning
ERP provider Infor announced Infor Sales and Operations Planning 10x. The 10.4 version of the application is reported to feature Infor’s 10x technology platform and includes a built-in social collaboration engine, Infor Ming.le, to aide in facilitating and recording internal discussions across all process participants. The enhanced application reportedly features a single point to review planning alerts, exceptions, tasks and workflows along with enabling escalations from process stakeholders.
A rather neat feature is a termed playbook component to assist in organizing those time-consuming pre-S&OP meeting reports into structured chapters along with generating formatted Microsoft PowerPoint presentations. A built-in GIS capability provides users with a visualization of where various product demands are occurring, along with other data.
SPS Commerce and Bristlecone Partner for Cloud Transaction Automation
SPS Commerce, a technology provider with a focus on retail industry cloud services has partnered with specialty SI firm Bristlecone in expanded support for Oracle Applications to the SPS Universal Network, a broad retail industry trading partner network consisting of 55,000 members.
The announcement indicates that joint customer, Fruit of the Loom, recently deployed the Cloud Transaction Automation offering for Oracle. The Cloud Transaction Automation Solution is the latest addition to SPS Commerce’s portfolio of services.
Oracle Introduced Cloud Support for Transportation and Global Trade Management
Finally, we conclude our technology capsule commentary with news that Oracle has released Oracle Transportation Management Cloud and Oracle Global Trade Management Cloud applications. According to the announcement, Oracle has now made the functionality of its applications in this segment available for either on premise or cloud deployment. Both applications are noted to be designed for phased, rapid deployment from either Oracle Consulting or other Oracle specialized partners.
Readers may recall that the basis of Oracle’s transportation management support offerings is from the former acquisition of G-Log. These cloud-based deployment options were part of the multi-year product roadmap involving support in supply chain transportation, trade and supply chain execution areas.
Disclosure: Bristlecone is a current client of the Ferrari Consulting and Research Group
In previous Supply Chain Matters commentaries, we have observed that utilization of SAP’s supply chain focused applications can serve as both a blessing and a curse. The blessing comes from the structural rigor for integrating enterprise-wide transactional, operational execution and master data with supply and demand planning. This rigor is often cited as the curse, since today’s highly dynamic supply chain business processes are expected to respond to ever increasing levels of network-wide complexity. Adding supplemental supply chain suppliers, partners or planning locations can cause planners to fall behind and become the critical stumbling block. The problem exists both in rather large as well as growing supply chain organizations.
In the specific case of SAP’s APO (Advanced Planning & Optimization), many SAP customers have deployed the Demand Planning application incorporated within SAP APO. It is probably the most widely deployed module, and for good reasons. Many industry supply chains are focused on being far more product or service demand-driven, thus sensing and responding to various multi-channel demand is a critical process capability.
Highly experienced users of the various components of SAP APO are either often promoted to higher levels of broader supply-chain wide responsibility, or they jump to other organizations that are willing to compensate more for APO-specific skills. As less experienced supply chain planners step-in, productivity and planning effectiveness suffers because the new planners lack the experience to manage input data, master data synchronization, and planning optimization results. Planners revert to their more comfortable Microsoft Excel skills to massage planning data for the broader organization and APO begins to become an operational data store rather than a planning solution. These types of challenges will likely increase as SAP migrates many of its supply chain planning capabilities toward it cloud-based, S&OP Powered by HANA platform that has integrated business planning as its prime objective.
To specifically help industry supply chain organizations respond to these challenges, Supply Chain Matters has been raising awareness to a cadre of smaller but highly focused system integrators who have developed self-contained, capsulized service offerings that address very specific business problem needs, including those related to SAP APO. Their focus remains targeted scope technology and services that can springboard and overcome business process or systems challenges on a far more timely basis.
One such firm is Bristlecone, a laser-focused services company primarily addressing supply chain deployment and time-to-value challenges. The firm’s client list spans a broad swath of industry supply chains including consumer products, chemical, energy, high-tech, industrial, and pharmaceutical. As our readers are well aware, each has its own unique supply chain planning process needs and requirements. Bristlecone has been populating its Bristlecone Online Store with a collection of fixed-cost, application accelerators developed from prior successful customer implementations.
To specifically address the challenges of SAP APO Demand Planning productivity, the firm has packaged a fixed-price service, best practices and enhanced productivity offering termed Demand PlanningNow™ that augments SAP APO with offline and online augmented capabilities. Demand PlanningNOW provides a flexible Microsoft Excel front-end interfacing directly with SAP APO Demand Planning as the back-end. According to Bristlecone, the service offering helps SAP APO teams by providing added flexibility and versatility for working with large data sets and multiple partners utilizing Microsoft Excel as a more familiar user front end tool. The packaged tool further provides an offline mode that allows users to perform simulations prior to uploading data as well as tracking data changes, providing front-end data validation and user alerts to unaligned data. As an added plus, Demand PlanningNOW™ can leverage SAP’s built-in security and does not require additional system security capability.
Bristlecone informed Supply Chain Matters that this productivity accelerator has been deployed with user training and software in less than 2 days at some customer sites, although the documentation quotes a conservative two weeks. In either case, Bristlecone’s Demand PlanningNow™ provides yet another example of a fixed scope, fixed-price technology accelerator application built on a niche supply chain planning SI firm’s acquired knowledge, best practices and technical expertise acquired from numerous implementations and supply chain team interactions.Your SAP focused supply chain planning organization may want to explore these available collections of application productivity accelerators from smaller but highly focused SAP systems integrators as an alternative to more expensive wider scope services.
Disclosure: Bristlecone is a current client of the Ferrari Consulting and Research Group.
Today, Gartner published its annual regional listing of what the analyst firm considers to be ten of the best supply chains in the Asia-Pacific region. Gartner conducts this ranking as a supplement to its Top 25 Global Supply Chain Rankings that are traditionally announced in the fall. According to Gartner, while most of these regionally-based supply chains still need to elevate their supply chain capabilities to compete on a global level, many have dramatically improved their position.
The published ranking for Asia-Pacific Top Ten supply chains were noted as:
- Samsung Electronics (ranked 6th in 2014 Top 25 global ranking)
- Lenovo Group (ranked 16th in 2014 Top 25 global ranking)
- Toyota (reported to have moved up three places in the top ten Asia-Pacific and up 22 places in global ranking but not in current 2014 Top 25 global ranking)
- LG Electronics
Overall, Supply Chain Matters believes that this ranking reflects how we would have voted if we were part of the external or peer voting panel. Samsung is especially noteworthy since by many accounts its supply chain is supporting more product and perhaps process innovation than that of its arch competitor, Apple. It is quite interesting to note the appearance of three automotive OEM’s in the Asia Pacific ranking while there are no automotive OEM’s ranked in the global Top 25 rankings. We have been especially impressed with Honda’s global manufacturing sourcing strategies that have helped the company overcome currency challenges and better service global product demand.
At least three of the Gartner Asia-Pacific top ten, namely Samsung, Lenovo and Hyundai practice some form of supply chain vertical integration strategies.
However we were somewhat quite taken-back by the appearance of Sony’s in this top ten ranking, given its profitability challenges in the past few years. Sony has also been aggressively outsourcing parts of its television and certain parts of its consumer electronics supply chain to contract manufacturers in order to aggressively reduce costs. Gartner’s own admission is that Sony is lagging behind some of major competitors.
Again, we are shocked with the lack of recognition toward Foxconn Technology (Hon- Hai Precision), the world’s largest contract manufacturer by revenue and output volume. Foxconn is a major supplier and serves as the lead contract manufacturer for Gartner’s consistently ranked number one global supply chain of Apple. This CMS’s ability to respond to Apple’s intense product innovation requirements as well as rapidly scale volume production is highly noteworthy. We remain highly curious as to why Flextronics does not appear in this top ten regional ranking, let alone the global ranking, but then again, social responsibility strategies concerning workers may be a weighting factor. Another supply chain worthy of consideration is that of TSMC, the world’s largest semiconductor manufacturer.
Supply Chain Matters has featured commentaries on many of Gartner’s ranked top ten Asia Pacific supply chains. They can be accessed by utilizing our Search box: i.e. Samsung supply chain.