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E2open Latest Release- A Step Closer to One Network Integrated Planning and Execution

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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.

Bob Ferrari

Disclosure: E2open is a sponsor of the Supply Chain Matters blog.


Report Card on Supply Chain Matters 2013 Predictions- Part Two

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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.      Supply Chain Matters Blog

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.

Rating: 3.0

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

Rating: 4.0

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.

Rating: 3.0

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.

Rating: 3.0

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.

 


E2open’s Acquisition of icon-scm- An SAP Response

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This Supply Chain Matters commentary is a follow-up to our previous breaking news commentary regarding E2open and its acquisition of supply chain planning, collaboration and response management technology provider icon-scm.

Our initial commentary noted the previous favored Solution Extension partnership that icon-scm had in the area of SAP capabilities in response management or what is sometimes referred to as fast planning. I

In the interests of fairness, we noted that Supply Chain Matters had reached-out to SAP for comment in formulating our commentary, but had not heard back at the time of publishing.

This afternoon, SAP proactively responded and provided additional perspectives which Supply Chain Matters would like to share 

We were informed by SAP representatives that the Solution Extension partnership with icon-scm and the application SAP Supply Chain Supply Chain Response Management by ICON-SCM has not officially be dissolved as yet. There is a prescribed process for winding-down such a relationship in terms of communication with existing customers, attending to existing sales cycles and other matters, but we were informed that the partnership is in all practicality is likely to be closed. 

SAP confirmed that existing customers that have secured SAP support will be assured  that they will continue to receive that support until maintenance contract renewal, or for the life of the application  SAP customers utilizing icon-scm will likely have the option to renew maintenance with SAP or opt for another alternative including that of E2open. Existing customers should rest easy that both SAP and E2open have affirmed a transition support plan.

Regarding some background to the partnership, SAP indicated rather positive customer interest and uptake in the initial year of the icon-scm partnership, not so in the second and third year. Mark David, who has supply chain planning solution management responsibilities for SAP affirmed the importance of customer interest in supply chain response management capabilities.

While a lot of icon-scm interest came from customers from the high tech sector, SAP was challenged to generate customer interest from other industries.  This was not from a lack of effort from the SAP Supply Chain Management Solutions Management team. a muted admission that SAP sales teams did not have either the domain knowledge or patience to ride out elongated sales cycles. SAP customers were apparently demanding a more harmonized approach in integration to the broader array of the SAP Supply Chain Management applications suite and thus willing to continue use of existing SAP planning applications such as APO, awaiting such harmonization.

While SAP viewed icon-scm as strategic down the road, there was apparently not enough momentum to justify a corporate acquisition decision at this time.  SAP however affirmed to Supply Chain Matters that the company has been working on a full harmonized supply chain response management collection of capabilities that would address today’s challenges manifested by multi-channel fulfillment and more outsourced activities. That approach could likely include leveraging of the B2B networking patform provided by Ariba, SAP’s most recent acquisition concerning supply chain and procurement support.  

Obviously, the timetable of that effort has a renewed emphasis and urgency.

Since our initial commentary, Supply Chain Matters has received additional background and other information from E2open which will be shared in a later commentary.

Stay tuned.

Bob Ferrari

Disclosure: E2open is one of other named sponsors of the Supply Chain Matters blog.


Breaking Supply Chain Technology News- E2open Acquires Icon-SCM

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In what Supply Chain Matters would context as a sudden and stunning announcement, E2open Inc. announced late last night that it has acquired supply chain planning, collaboration and response management software provider icon-scm in a transaction valued at approximately $34 million in total consideration. (Disclosure: E2open is one of other named sponsors of this blog)

According to this morning’s briefing call with analysts, the transaction itself involves $18 million in cash, $9 million in stock and the assumption of $7 million in existing debt. The transaction is expected to close over the next 90 days. It was disclosed that icon’s calendar 2012 revenue run rate was $10 million in revenues, thus E2Open has apparently secured the company for 3 times earnings, a rather attractive sum by today’s standards. However, the $10 million revenue run rate contrasted with $7 million outstanding debt points to other problems that forced icon to act.

Founded in 1992, icon-scm was a privately held company and is current headquartered in Karlsruhe Germany. Our SAP readers should be familiar with icon-scm because back in 2010-2011, SAP had elevated the icon capabilities into the preferred partner status and announced its intention to incorporate the company’s response management capabilities into its supply chain management support capabilities.  Subsequently, SAP announced the product, SAP Supply Chain Response Management by ICON-SCM with a listing on the SAP price list for the sales team to sell. SAP offered the capability as an augmentation for SAP supply chain management customers, especially those residing in high technology, consumer electronics industries.  Among current icon-scm customers are Avnet, Foxconn, Hewlett Packard, Pratt & Whitney, Western Digital among others.

This morning’s briefing from E2open disclosed that the initial conversations began in March and accelerated to last night’s announcement. E2open managed to have icon-scm sign a no-shop agreement during these discussions.  There was also a revelation in the analyst Q&A that SAP may have had intent to acquire but became distracted by other events occurring. For icon-scm, turning over the entire sales process to SAP may not have helped generate desired sales growth.

Supply Chain Matters has reached out to SAP to secure a comment regarding how this announcement will affect previous announced icon-scm capabilities for SAP customers. 

E2open CEO Mark Woodward indicated his belief in this morning’s briefing that SAP will henceforth discontinue its partnership with icon-scm but will continue to support any existing customers.  Woodward further indicated that all current employees and offices of icon-scm would be retained by E2open.

The announcement itself vastly accelerates the product roadmap timetable for E2open, with an indication of as much as 24 months. The roadmap calls for the first phase of data integration to occur in the first 6 months with plans to integrate icon-scm capabilities into the E2open network in 2014. The balance of icon-scm capabilities will be provided as subsequent versions of Rapid Deployment applications in a timetable that extends across 2014-2015.  It is E2open’s desire to convert all existing on-premise customer agreements to a hosted, subscription based model, which will be the model of engagement going forward.

Obviously this announcement has significant impact to the existing supply chain planning, collaboration, response management and B2B network vendor base. It is another endorsement of the need for integrating supply chain planning with real-time execution in order to make more timely supply chain end-to-end resource decisions.  For manufacturers and retailers contemplating the need to deploy such capabilities, the announcement provides further evidence that the vendor community is hearing your desire to offer such capabilities in a single vendor capability.

Supply Chain Matters will provide additional insights related to this announcement in subsequent commentary when further information comes forth.  In the meantime, we believe this is a positive development for the market.

Bob Ferrari

Disclosure: E2open is one of other sponsors of the Supply Chain Matters blog.


Supply Chain Matters Impressions of MIT Crossroads 2013 – Part Two

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Supply Chain Matters recently had the opportunity to attend the MIT Crossroads 2013 conference sponsored by the MIT Center for Transportation and Logistics (CTL).  In our Part One commentary, we highlighted both a UPS presentation and a multi-industry panel discussion of supply chain management futures.

For Supply Chain Matters, Tom Linton, Chief Supply Chain Officer for global based contract manufacturer Flextronics provided the one of the highlights of the conference in his vision of supply chain evolution. Mr. Linton provided a deep level of experience and insights in many aspects of supply chain management along with perspectives of having been based in Asia for nearly 22 years.  At Flextronics, his responsibilities span all of procurement (direct and indirect materials), materials management operations, logistics and fulfillment, including managed supply chain for customers. Mr. Linton, in a Dave Letterman Late Show Top Ten delivery style, provided his Top Ten listing of the trends driving the future of supply chains.

We will not steal all the thunder of Linton’s delivery but will highlight what we believe were highlights of his insightful observations.  Number 10 on his listing was the adoption of cloud computing, along with his message that this is indeed an emerging low cost and reliable trend in technology adoption, that “apps” for supply chain is an up and coming trend that most firms will utilizing within the next five years. Number 8 was the prediction that global labor costs would equalize, the implication being that labor arbitrage is a declining trend.  According to Linton, we are reaching a point where direct labor costs across major geographic manufacturing regions is reaching parity and that leaders of tomorrow will leverage and manage a regional geographic footprint predicated on customer and product fulfillment needs.  Strongly related to this prediction was number 5, the new emergence of regional and local sourcing.  Mr. Linton observed that as many manufacturers shifted manufacturing sourcing to China, the component supply chains of many industries also shifted toward a China concentration.  With the emergence of a renewed manufacturing presence in the U.S. , the challenge is to re-building a competitive supply ecosystem becomes more important.  Readers may recall that Supply Chain Matters has observed these same implications and has called for similar investment in supply eco-systems.

Number #6 reinforced the need for supply chain skills specialization and new areas of skill needs in cloud computing, supply chain design, supply chain cost analysis and other areas. The  number 4 prediction was the emergence of control towers, described as virtual integration of the supply chain supported by advanced cloud technology.  For further descriptions of what is implied in control tower capabilities, readers can review any of previous Supply Chain Matters commentaries tagged with the “supply chain control tower” category. Number #3 prediction concluded that predictability becomes the competitive advantage. For Linton, predictability is defined in three fundamental questions:

  • How safe is my supply chain?
  • How fast is the supply chain/
  • How cost efficient is the supply chain?

Finally, Linton’s number one prediction was that non-zero supply chains win, that transparent supply chain ecosystems focus on win-win balance for success vs. win-lose.

We want to also highlight the presentation delivered by Jim Cafone, vice-president of supply network services at Pfizer, who spoke on the challenge of managing highly flexible supply networks in healthcare markets, and how a cloud-based system backbone deployed by Pfizer has helped to overcome challenges of information latency and integration. Like other pharmaceutical and life sciences manufacturers such as Johnson & Johnson, Pfizer has centralized its global supply organization to help drive acceleration in required transformation. One of the unique challenges for Pfizer  and pharma supply chains is that because of regulatory requirements, recipes are country specific. As an example, four variants of the highly popular cholesterol control drug Lipitor translate to 800+ global sku’s.  Lipitor has recently come off global patent which moves the strategic focus toward a more cost-efficient and effective supply chain. Centralized control helps Pfizer to move toward more agile, cost-focused supply chains, built on enterprise supply platforms.  Pfizer has also identified  both transactional and analytical supply chain control towers as a long-term capability.

The Pfizer supply chain team has moved toward the cloud to provide what is described as a “device agnostic’ layer of information retrieval, one that spans current existing backbone ERP systems.  Pfizer now requires all of its highly specialized logistics providers to automatically send tracking information into the Pfizer cloud that is supplied by GT Nexus. The described advantage was the ability to “plug and play” logistics providers into the network, drive differentiated operating parameters and a new “network” information model.  A previous Supply Chain Matters commentary on building foundational supply chain control tower capabilities, stressed the critical importance of a singular information utility that spans the cross-organizational business processes and physical boundaries of the extended supply chain. The Pfizer presentation was a great example of that principle in action and garnering positive business outcomes.

For us, the MIT Crossroads 2013 presentations were the manifestation of industry supply chain executives reinforcement that our community has reached important crossroads into even newer and expanded dimensions of needs for agility, responsiveness and risk mitigation. We once again extend appreciation to the MIT CTL team for inviting Supply Chain Matters to this great annual event.

Bob Ferrari

 


Supply Chain Matters Impressions of MIT Crossroads 2013 – Part One

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Supply Chain Matters had the opportunity in late June to attend the MIT Crossroads 2013 conference sponsored by the MIT Center for Transportation and Logistics (CTL).  This was the 9th annual Crossroads event and as in past events, did not disappoint in terms of quality of the content and insights shared from the various presentations.  Previous Crossroads events we attended were weighted towards an emphasis on select MIT faculty members’ talks on advanced supply chain topics along with faculty panel discussions on these topics.  This year’s event was more weighted toward corporate level presentations, and the quality was just as insightful.

Among the highlights, Randy Strang, Vice President, Customer Solutions at UPS spoke of the current and future trends expected in Omnichannel online fulfillment and the single customer experience.  One significant statistic shared was that 7 out of 10 shoppers prefer to access retailers via online channels. Nearly 84 percent of shoppers use at least one social media site to research a product in terms of other consumer reactions to the product. Most online shopping occurs between 6-9pm, which has an impact when customers request a next day or same day delivery option.

Many retailers and consumer focused producers are all too aware of the Amazon effect to online buying habits, and UPS has been shrewd enough to benefit from both sides of that equation.  On the one hand, Amazon provides lots of revenue opportunities, on the other, retailers who desire to adopt omnichannel methods also seek UPS expertise and assistance in spring boarding their implementation efforts.

As Supply Chain Matters has noted in previous commentaries regarding UPS’s business results, the global logistics provider has been a major beneficiary of consumer’s flocking to online channels to purchase goods.  UPS has been working closely with many of its retail clients to help them prepare for the omnichannel fulfillment experience which includes the ability to buy and return goods anywhere, in any channel. One of the biggest impacts cited by UPS is the need to leverage all inventory as a pool, available for multiple buying channels. This area is so critical that UPS helps retailers to perform network inventory optimization analysis in order to determine the most cost and service efficient stocking points. As we have long suspected, UPS also admitted that retail store associates at individual store locations are not necessarily efficient at pick/pack/ship activities, thus UPS is willing to add its time-tested expertise to help setup more efficient mini-distribution fulfillment centers at store level locations. One example cited was that store associates sometimes need aides in picking the right color of garment that the consumer has ordered. What’s the difference in color between malikite and autumn haze? Darn if we know.

There was a rather interesting panel discussion reflecting on the evolution of supply chain management practices in the coming years among various industries.  The panelists included:

Raja Doddala, 7-Eleven Inc., representing retail industry supply chains

Mani Janakiram, Intel Corporation, representing high tech and consumer electronics industry supply chains

Caarl Flatley, Johnson and Johnson, representing pharmaceutical and healthcare supply chains

Jake Barr, Blue World Consulting and former Procter and Gamble, representing consumer goods supply chains.

Among the insights that these panelists converged upon were:

The clock-speed of business has dramatically increased and that translates into needs for a more responsive and risk-aware supply chain capability applied to accelerated new product introductions, online commerce and round-the-clock business operations.

The explosive growth in emerging markets has presented expanded revenue and profitability opportunities but has also brought about needs for significant process innovation. A new awareness is that the global supply chain is the point of differentiation for the business.

There is no such thing as information arbitrage, everyone knows everything, including your competition. Speed becomes the most important differentiator.

The talent gap in supply chain management skills is real.  Leaders of tomorrow must be able to connect with customer needs,  bring end-to-end process and cross-functional knowledge to the table with the ability to quickly analyze large amounts of data for inherent trends. Foundational skills were described as being both a problem-solver and analytical, the implication of a solid math and science foundation.

This concludes part one of our Supply chain Matters impressions from the MIT Crossroads 2013 conference. In our part two posting, we will highlight other presentations and important takeaways.

Bob Ferrari

 

 


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