subscribe: Posts | Comments | Email

Supply Chain Matters Attendance at Oracle Modern Supply Chain Experience Conference- Part Four

0 comments

This week, Supply Chain Matters has been attending the Oracle Modern Supply Chain Experience conference being held in San Jose California, drawing over 2800 attendees. Oracle_MSCE_Jan_16

In our Part One posting, we provided some highlights from the first’s day’s keynotes.

On our Part Two posting, we shared impressions of the Oracle S&OP Cloud application currently in-development.

Our Part Three posting provided highlights of the second day’s keynotes that were focused on future dimensions of transformation.

My goal in this update is to share my updated impressions related to current needs for supply chain related transformation.

As our Supply Chain Matters readers are probably aware, this industry analyst and Editor has be afforded the opportunity to attend many supply chain management focused conferences, either industry or technology focused. This week’s Oracle Modern Supply Chain Experience conference is no exception.

At many of such conferences, supply chain team leaders often describe various key learning derived from transformation or business change initiatives. Many exhibit very consistent and all-important themes such as insuring top-management sponsorship, a strong emphasis on change management or addressing process and data before layering advanced technology.

Of late, I have noticed a further learning, one that I can best describe as external or outside-in forces that compel the need for change at a far different pace of change.

Let me further explain.

A number of supply chain industry analysts often communicate the notions of supply chain transformation from people-process-technology dimensions at various levels of defined maturity. The so-termed phases of supply chain maturity charts are what I reference. Four or five phased, they all have common purpose. They often serve as a meaningful way for helping industry supply chain teams chart their transformation end-goal visions as well as benchmark a current state of organizational maturity. While such maturity charting can serve as a tool for change, it can sometimes transmit a message that continuous improvement is ok, or that taking pause at a given phase is acceptable. I worry aloud about such notions since some analysts, are not addressing the building external pressures within many industry settings that are now being communicated.

What’s different about today’s needs for transformation?

Read any business journal of late and the words economic and business uncertainty are stark and all too common. The global economy struggles to grow 3 percent annually, the U.S. and Europe a mere 2 percent. The Economist recently questioned whether global wide market presence and consequent global stretched supply chains may be faltering due to increased complexities and cost.

Individual businesses have shareholders demanding near-term returns and profitability for their investment and it seems that no business is immune from the force of activist investors. CEO’s have no choice but to prioritize efforts at growing top-line revenue growth, adopting new, more profitable digitally based business models while continuing to reduce business costs.  Growth is often translated to acquisition. Oracle senior executive Mark Hurd has been masterful in communicating such trends to CEO audiences.

Cost reduction motivates needs for restructuring or the flattening of organizational layers. If readers have had the opportunity to review our 2017 Predictions for Industry and Global Supply Chains, you are now aware that a whole new dimension of geopolitical uncertainty and business risk are prominent in the coming months.

What I hear of late is a new consistent theme of an external force for change. Our business has a new CEO with a mandate for transformation. Our business executed a merger and acquisition that introduced even more supply chain process and technology complexity. Regarding the latter, complexity is leading to more inefficiency and added costs. We are lacking the right data and information and our S&OP and operational decision-making processes are not keeping up with the current pace of business change.

The bottom-line is that the pace of transformation may no longer be as optional as it once was. Organizations may have little choice but to increase the pace of transformational change and supply chain leaders are expected to lead such efforts at a quicker cadence, albeit sometimes at an uncomfortable pace. That is why the notions of Cloud based applications and more leveraged use of digital advanced technologies such as analytics and IoT are gaining increased interest and senior management sponsorship. Consider that 2800 attendees are gathering at this supply chain management technology focused conference, often with needs to gain more learning and education as to new software and information management technologies.

We as analysts need to communicate supply chain transformative process maturity measures in dimensions of internal or external forces of change. The former having some timing discretion, the latter not so much. We need to remind teams that crisis is often the best motivator and mandate for an organization’s need for change. Industry supply chain teams face a building talent crisis yet beg for training resources. Our supply chain leaders of tomorrow are less tolerant for complexity and far more-savvy in the leveraged use of technology in their everyday lives and in conducting work. They embrace teamwork and team based problem solving. If your organization is laggard in talent development, your industry competitor will seize the opportunity with trained talent.

Finally, a message to technology providers. Some our communicating that now is the time for fostering innovation and new business models.  Some, such as Oracle, communicate the implications of millennial workers in their interaction with technology and decision-making. All of this is fine, but do not at all, dilute the reality that industry supply chains must continue efforts in reducing costs and complexity while increasing productivity.

External forces of change surround, and supply chain teams are now communicating those forces of external change.

Bob Ferrari

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

 

 


Supply Chain Matters Attendance at Oracle Modern Supply Chain Experience- Part Two

0 comments

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.

Bob Ferrari

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


Deep Dive 2017 Prediction Six- A Renaissance in Supply Chain Focused Business Services and Technology Investments

0 comments

The following Supply Chain Matters blog is part of our ongoing series of deep dives into each of our previously unveiled ten 2017 Predictions for Industry and Global Supply ChainsSupply Chain Matters Blog

At the start of the New Year, our parent, the Ferrari Consulting and Research Group along with our Supply Chain Matters blog as a broadcast medium, provide a series of predictions for the coming year. These predictions are shared in the spirit of assisting industry specific and global supply chain cross-functional teams in helping to set management objectives for the year ahead. Our further goal is helping our readers and clients to prepare supply chain management and line-of-business teams in establishing impactful programs, initiatives, and educational agendas.

The context for these predictions includes a broad cross-functional umbrella of supply chain strategy, planning, execution, product lifecycle management, procurement, manufacturing, transportation, logistics and customer service management.

In an earlier Supply Chain Matters blog postings, we provided deep dives related to:

Prediction One- Subdued World Economic Outlook and Heighted Uncertainty to Test Industry Supply Chain Agility.

Prediction Two- A Challenging Year in Procurement

Prediction Three- A Supply Chain Talent Perfect Storm

Prediction Four- Increased Anti-Trade Geo-Political Forces Provide Added Global Sourcing Challenges

Prediction Five- Continued Global Transportation Industry-wide Turbulence

In this deep-dive series posting, we drill down on our next prediction.

2017 Prediction Six: A Renewed Renaissance in Business Services and Technology Investment

As industry supply chains enter 2017, we believe their there are distinct signs for a renewed renaissance in business services and technology investments that will specifically include compelling needs in supply chain related business process and decision-making needs. While current high levels of uncertainty in global markets persists, we believe that many organizations will not hold back on needed or overdue technology investments related to the broad umbrella that includes augmented supply chain management business process needs. The one gating factor to inhibit such investments remains the availability of talent to harness the benefits of the advanced technology, which opens the door wider for augmented business services.

Changing Business Environment

In the U.S., with the election of Donald Trump as President, and with a Republican Congressional majority, business leaders have turned more optimistic towards a period of expected lower corporate taxes, a means to repatriate cash profits currently held in foreign entities, and a climate of regulatory rollbacks. Within the Eurozone, a political climate fueled by increased populism and a need for more accelerated economic growth similarly lead to a more positive business investment support climate.

Across many industries, the trend of plowing excess cash into stock buyback or increased stockholder dividends have taken a noticeable toll on supply chain and manufacturing business process adaptability needs. Increased profit performance has subsequently been stymied by lack of top-line revenue growth or in increased worker productivity levels and continued reduced supply chain costs. By November 2016, the U.S. unemployment rate had dropped to 4.6 percent with active skilled labor force participation believed to be much lower. Many industry settings are further under pressure by upstart disrupters or more aggressive competition which additionally drives needs for added technology investments to support new digitally-enabled business models.

With advanced business process technology and services buying decisions more centered on line-of-business vs. singular based IT influence, Cloud based technology and services make such decisions more viable since many come with subscription or usage based expense costing vs. fixed capital appropriation.  That allows the flexibility to make changes as the business warrants or to augment technology needs based on required bandwidth at any given point. The overriding concern of potential business disruption looms large, which also weighs toward a Cloud-based target business process approach that minimizes significant disruption to mission critical business processes and reduces the managed scope of the technology investment.

Expected Investment Areas

Supply chain leaders have tended to be somewhat conservative, reluctant to embrace perceived new or unproven technology. The adage, “if it ain’t broke, no need to fix it” continues but we predict that will change regarding certain process areas in 2017 as CEO’s require enhanced, digitally-driven top line revenue growth. As noted in Prediction One, industry and global supply chains will be especially challenged by increased risk levels and needs for more informed, analytical-driven decision-making anchored in more predictive decision-making methods. Increased risk levels will manifest in more high-profile cyber and DDoS attacks on corporate networks which spillover or originate in supply chain focused systems.

The continuing effects of always-on online and Omni-channel customer fulfillment will additionally drive needs for added foundational investments in digital supply chain transformation, again focused in areas of mining information insights, more predictive analytics and data visualization trending from vast amounts of existing data. We anticipate further investments in achieving broader end-to-end supply chain network visibility, coupled to inventory, capacity and risk management process and decision-making needs.

In 2017 we concur with some tech vendors that anticipate additional attention from certain industry and supply chain segments in what is being described as “autonomous or low-touch planning systems” that allow the technology to take further control of supply chain planning activities without the need for constant planner intervention and involvement. That can free-up existing planner time for more strategic and tactical planning needs.  We anticipate similar autonomous concepts to gain traction in procure-to-pay and order-to-cash processes.

Internet of Things (IoT) Focused Technology

Despite ongoing information security and consistency of global standards hurdles, we predict that early phase or pilot line-of-business driven efforts to prototype new Internet-of-Things (IoT) enabled business models will continue. They will do so because of the need by industry competitors or disruptors to achieve first mover advantage in locking on to new customer revenue streams. Such initiatives will move forward because of needs to develop new competencies in a digital-driven business process and in addressing specific challenges related to data security, interoperability among various edge and core business systems. Initiatives supporting top-line revenue growth while augmenting information security processes are more likely to receive executive and board level approval.

Blockchain Technology

Blockchain technology is being identified by supply chain focused technology providers for applicability in providing higher levels of intelligence regarding the movement of materials across a supply chain or B2B network. Originally developed to support digital bitcoin currency use, this technology is a shared digital ledger, or a continually updated list of incremental transactions. This decentralized ledger keeps a record of each transaction that occurs across a fully distributed or peer-to-peer network, either public or private. The technology is likely to gain broader recognition in 2017 due to its applicability in recording and keeping track of assets and materials.

Industry supply chain teams will likely hear more from technology vendor efforts in developing blockchain technology methods in areas related to supply chain wide transactional automation or supply chain-wide product genealogy and authentication. While we do not anticipate wide-scale mainstream investment in this technology during 2017, industry supply chains should play close attention as to technology vendor developments and planned process support areas since this type of technology has breakthrough potential in certain process areas.

Increased Vendor Merger and Acquisition Activity

A renaissance in multi-industry business process and technology investment activity will surely lead to further merger and acquisition activity involving either the enterprise software, supply chain, Equipment Manufacturing, IoT, and management decision support vendor communities. Autonomous driving, shared riding services and artificial intelligence driven technology will remain of hot interest as will predictive analytics. The name of the game for tech vendors is current and future top-line revenue and profitability growth, specifically cloud and subscription based revenue flows. Signs further point to a more friendly IPO market in 2017 allowing up and coming new technology providers needed capital to expand.

We predict one or two acquisitions involving high-profile supply chain best-of-breed vendors along with a continuation of acquisitions surrounding IoT focused technologies. We anticipate that enterprise vendors will continue to be active in this area along with industrial companies transforming themselves to software companies.  Likely players will be Amazon, IBM, General Electric, Google, Oracle, PTC, Siemens, among others. There may well be one or two blockbuster M&A deals in the above segment.

This concludes our Prediction Six drill-down. In our next posting of this series, we will dive into Prediction Seven that calls for enhanced decision-support capabilities among B2B business network and managed services providers.

Stay tuned.

Bob Ferrari

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

 

 


A Non-Traditional Supply Chain and Capacity Planning Automation Effort Underway at Ford Motor

2 comments

This author had the opportunity to attend the Kinaxis Kinexions customer conference last week. Among the customer presentations there was a rather insightful talk from a supply chain executive at Ford Motor Company. This presentation delivered by David Thomas, Director of Global Capacity Planning at Ford was titled, Creating Global Standards Across Regional Sites, provided important insights on building and adopting global-wide data and business process standards without the use of traditional waterfall based program and change management methodologies. This technology effort underway at Ford is so different and novel, and conference attendees were citing this presentation as noteworthy and insightful.  Thus are we sharing the highlights with our broader multi-industry cross-functional supply chain readership community.

Since the global financial crisis of 2008-2009, the Ford Motor Company has been focused on “One Ford”, a series of foundational initiatives directed at overhauling unaligned management and business processes. This umbrella initiative was designed to address Ford’s internal tendencies toward regionally-based independence in P&L, product development and product value-chain strategies. Rather than operating as a single global based company, the emphasis was more toward disparate, top-heavy independent operating divisions. As was the case with many other manufacturing companies, the “near-death” experiences of the financial crisis provided the wake-up call to the requirement that Ford had to change.

Indeed, Ford was able to quickly bounce back from the financial crisis but Thomas described hitting another wall by 2011. Unforeseen global capacity restrictions were hindering growth.  The major supply disruptions brought on by the devastating tsunami that impacted Northern Japan, and the major floods that effected Thailand’s automotive sector were another reminder that the company’s overall sales and operations planning was not globally aligned for capacity and resource based decision-making. That prompted the need for a global capacity planning initiative that would be able to coordinate global response to capacity and supply alignment needs based on singular planning data.

This global capacity planning team soon concluded that there were no existing global standards related to product and capacity data across Ford. Spreadsheets were the dominant planning mechanism, with differing dimensions of data and information that hindered any global perspectives to dimension problems or to assess resolution actions. Thomas described the prior dominant atmosphere as being described internally as “dumpster diving for data.” The team quickly came to the conclusion that a global-wide set of data standards supported by a single global planning system had to be initiated as quickly as possible. However, the initial goal was to provide consequential evidence that global-wide data standards would result in far more effective capacity and resource planning.

Rather than traditional system program management, the steering team elected to focus on a faster innovation cadence, that of two-month development processes. A total of 14 cycles of fast innovation focused at building management credibility on the business value of a globally aligned data supporting a common S&OP framework. Thomas described the selection of a pilot development window as a purposeful effort to uncover needs and provide more positive evidence to the business value for global data and information standards to improve decision-making. These efforts included painful methods directed at mapping data tables and building simplified Excel based extraction tools. Eventually, a cobbled together single view of global and capacity that included all regions, markets and major components was developed, enough to convince senior management of the value of a singular, authored, S&OP framework. Thomas described this pilot phase as advocating that a lot of little adjustments with improved visibility can save hundreds of millions of dollars.

This initial pilot effort provided the impetus to secure formal approval to move forward in the development of a global-based S&OP systems support initiative that remains underway across Ford. It is being designed to move away from a current monthly planning process to more agile, better-informed and more predictive planning.

For the subsequent phase of off-the-shelf application selection and implementation, the steering team again avoided a big-bang, multi-year waterfall planning effort that would involve as-is and to-be state analysis, and instead elected to go with a tops-down approach. Thomas indicated that the steering team avoided waterfall global workshops to depict future state needs because: “nobody would ever agree.” Thomas’s described a viewpoint that people are often conditioned by the tools they currently utilize to perform their jobs. Instead the effort was directed at the expectation that Ford will have a global S&OP system framework that would launch on-time without major business disruption.

The agile development approach carried over, and development teams now work to what was described as continuous two-week development milestones. Rather than assemble and allocate on a full-time basis a dedicated global team of Ford employees to manage overall implementation, a decision was made to utilize dedicated externally based experts, those that were not anchored in Ford’s past practices. The people who will ultimately utilized the global system work alongside the external team during the review phases. The current effort is described as including 9 dedicated resources from Kinaxis along with resources from Deloitte, Prana Consulting and Ford’s internal IT staff. Efforts are now underway to build full data transparency across all product demand and supply, along with provisions for regionally-based S&OP efforts that are collectively based on a more timely, global based planning data.

Thomas indicated that Ford is about 6-9 months away from global launch of its singular S&OP process framework. It was described as a big-change for thousands of people who do not really want their existing jobs to change but do want their jobs to be easier in the needs for gathering common, more insightful and meaningful supply-chain wide data that can provide for more informed decision-making relative to line-of-business and functional supply chain goals. Then again, a continuous development cycle is already providing the evidence of the benefits of a singular planning data model along with the value of managed scope efforts that stream continuous economic benefits for the business. Gone are the days of big-bang implementations that risk business disruption and significant added costs of change management and implementation.

Supply Chain Matters extends praise to Ford’s ongoing transformational planning efforts and we look forward to learning more about the post implementation results.

Bob Ferrari

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


Tesla’s Revised Master Plan Provides More Product Engineering and Supply Chain Implications

Comments Off on Tesla’s Revised Master Plan Provides More Product Engineering and Supply Chain Implications

Last week, Tesla founder and CEO Elon Musk penned a blog posting that essentially updated the master plan for the company that called for a broader product development thrust into hybrid trucks and buses. This places a far broader emphasis on the firm’s supply chain ramp-up challenges, one with the implication that Tesla will, by our view, have to seriously consider adding to existing final assembly production capacity beyond its current Fremont California facility.Tesla ModelX_Live

The commentary itself not only provides an argument for why the electric car company must merge with SolarCity, but a further expansion of the master plan that includes:

  • Create stunning solar roofs with seamlessly integrated battery storage
  • Expand the electric vehicle product line to address all major segments
  • Develop a self-driving capability that is 10X safer than manual via massive fleet learning
  • Enable your car to make money for you when you aren’t using it

New product offerings were described as a new form of pick-up truck, and beyond the consumer vehicles market, an innovative heavy-duty trucks and high passenger density urban transport vehicle. Regarding the latter, Musk envisions a smaller footprint of urban busses with a transition from the role of individual bus driver to one of fleet manager. Both are noted as in the early stages of development at Tesla and should be available for unveiling next year, and will follow the availability of the more affordable Model 3 currently due in 2017.

Supply Chain Matters previously highlighted efforts of truck maker Nicola Motor Company in developing a Class 8, 2000 horsepower electric powered semi-tractor truck that will be named the Nicola One. This manufacturer has to-date booked 7000 reservations, each accompanied by a $1500 deposit, totaling more than $2.3 billion in cash to secure a reservation for this new vehicle, hence the sense of urgency for Tesla to enter such a market.

To state that the latest master plan is audacious or ambitious is an understatement. It places a far more concentrated focus on whether product development and the supply chain can rise to the challenge in such a short timeframe.

As noted, our last Supply Chain Matters commentary on Tesla concluded that the company remains challenged by supply chain ramp-up issues as it strives to meet aggressive short and long-term production and supply chain needs of existing announced vehicles. Musk has literally accelerated by two years, his goal to have the California final assembly facility output 500,000 vehicles per year. In his latest blog post, Musk once again re-iterated that this will be addressed as a function of engineering:

What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible. That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product.

The adding of commercial vehicles with more innovative hardware and software designs implies no choice but to accelerate capacity, strategic commodity and supply chain wide resources. Just today, The Wall Street Journal reports (Paid subscription required) that Tesla’s new $5 billion “gigafactory” near Sparks Nevada to produce the combined company’s battery component needs is currently one-sixth of its planned future footprint. Currently, 1000 construction workers are working two shifts per day, seven days per week to prepare for 2017 needs in the output of lithium-ion cells. Primary battery supplier Panasonic admits to the current challenges of finding qualified production workers, and with the addition of even more models of transport vehicles, the scale of the battery plant’s capability become crucial.  But so does final assembly and distribution as well, in an area that is noted for rather expensive real estate and distribution space.

Thus, any experienced or even entry level supply chain and manufacturing professionals that enjoy an environment of fast-paced innovation and creativity in business process and physical supply chain processes best route your resumes to Tesla. We anticipate a razor-like focus that harnesses the fusion of engineering, product development and supply chain management into a kaleidoscope of expansion that will test current norms and thinking.

Bob Ferrari


« Previous Entries