In late May, Supply Chain Matters posted a commentary regarding the building of supply chain control (SCCT) capability. Our primary takeaway from that commentary was that in your organization’s plans for building SCCT capabilities, it is rather important that you spend time in assessing the B2B network platform that will form the all-important foundation of these capabilities. Enabling SCCT is not about ripping out existing IT investments but rather building-out enhanced decision-support capabilities from more streamlined sources of planning, execution and fulfillment information.
In this follow-up commentary, we outline the various approaches that the broader community of technology vendors will undertake to enable various aspects of supply chain control towers. We will declare up-front that this commentary is not to be considered in in any shape or form as judgmental, but rather to provide an aide toward helping your organization assess which approach makes the most sense for your business and your particular business outcome needs.
Our foremost recommendation is that before beginning to engage with any vendor, take some quality time to assess the following: What is the prime or immediate need for your organization’s supply chain wide decision-making? In turn, what are the more long-term needs?
A. Is the business need primarily focused on end-to-end planning and bringing supply chain planning and execution processes together into a contiguous process that includes more predictive and insightful decision-making capabilities spanning product demand and supply?
B. Is it primarily focused on B2B or B2C operational fulfillment synchronization that can support, daily, hourly or near real-time decision-making?
C. Is it primarily focused on B2B supplier based decision-making where product demand and supplier responsiveness processes are continually monitored and managed in a controlled and more predictive environment?
D. Is the business need to ultimately enable all three (A, B & C) of the capabilities noted above over time?
We declare up-front that in our view, no vendor can deliver (D) right now, but that does not preclude consideration that that any particular vendors are in better position to deliver all over a reasonable time period.
There are three broad categories of technology vendors positioning to support SCCT capabilities. They are:
- Supply chain best-of-breed or specialty vendors
- Cloud-based B2B
- Enterprise ERP or Business Intelligence
The supply chain best-of-breed vendors respond to SCCT needs from their position of business process functionality support strength, whether that is supply chain planning, response management, supply chain execution or fulfillment synchronization. The planning vendor will tend to extend and integrate supply and demand planning with supply chain execution flows, including order fulfillment, transportation, logistics and inventory movement. Planning and response management vendors have also extended their capabilities in scenario-based planning and execution, along with more predictive supply chain business intelligence. Supply chain execution best-of-breed vendors take the opposite approach, building on their core strengths in execution and extending into deeper planning and decision-making support.
As noted in our previous posting on this topic, a cloud-based B2B platform vendor builds out from the B2B platform utility, integrating various planning and execution information to support both predictive and context-related decision-making capabilities for both the customer-facing and supply-facing aspects of the end-to-end supply chain. Some cloud-based vendors add social workplace capabilities to support team-based decision-making.
ERP or enterprise vendors tend to approach SCCT enablement as some form of extension to existing supply chain planning, execution or business intelligence software applications. The approach, in our view, reflects an add-on perspective vs. a holistic set of capabilities that were designed around the specific needs of SCCT. While ERP and enterprise vendors may be in a better position to support the most holistic aspects as noted in option (D) above, it may take these vendors considerable time to both re-design existing applications and build-out required extensions.
Regardless of what family of vendors your SCCT technology selection team ultimately decides to partner with, we at the Ferrari Consulting and Research Group advise that you consider a technology checklist of capabilities that will be required. That checklist should minimally include:
- Multi-organizational and trading partner connectivity, visibility and collative decision-making support
- Near real-time integration of events and information flow vs. batch or periodic refresh
- Integration of supply chain planning, fulfillment, execution and B2B/B2C decision-making needs
- Support for scenario-based, what-if and/or simulation decision-making processes
- Advanced visualization, drill-down and/or heat-mapping
- Augmented information discovery tools
The framework for enabling Supply Chain Control Towers requires a holistic set of required capabilities that span organizational, people, change management and enhanced technology dimensions. It is not about ripping-out existing systems but rather building enhanced more time-sensitive and extensible decision-support capabilities. Invest in an up-front framework and do your research.
Finally, you cannot assume that the broadest end-to-end supply chain control tower capabilities can be delivered in one implementation, but rather in manageable segments that are designed to accommodate business flexibility and scalability needs.
If we can be of assistance in your efforts, call or email.
© 2013 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Supply Chain Matters has dedicated lots of time to speak with clients and audiences regarding the purpose and benefits of a supply chain control tower (SCCT) capability, along with key design principles building the overall framework of an SCCT. Today’s global supply chains are far more complex with fast moving business events. They need the ability to foster more responsive and timely decisions across the extended supply chain with the context of these decisions grounded in customer, operational and/or financial priorities.
This author will often stress that any control tower needs to be anchored with a singular information utility that spans the cross-organizational business processes and physical boundaries of the extended supply chain. (See below figure).
This backbone utility needs to support both predictive and context-related decision-making capabilities of both the customer facing or demand-sensing aspects as well as the supply facing or responsive replenishment aspects of the supply chain. In essence, the supply chain control tower must foster both a synchronized planning and fulfillment execution capability coupled with deeper two-way customer and supplier collaboration. SCCT can further be a rather important facilitator for responding to major supply chain disruptions such product recalls or natural disasters.
Supply chain teams are sometimes confused as to whether the roadmap to SCCT includes an extension of current supply chain planning, integrating into fulfillment execution, or the other way, supply chain execution integrating with overall planning. The path toward expanded capabilities is not as important as the all-important B2B network platform that forms the foundation of SCCT capabilities.
Those supply chain organizations that are planning to invest in SCCT technology support should therefore spend extra time in architecting the architecture of the network backbone. Make doubly sure that the backbone can support both structured and unstructured information integration needs. The good news is that the vendor community has begun to respond to these needs in both the backbone as well as the supporting software applications that leverage advanced SCCT capabilities.
Here are some examples.
Last week, E2open announced a new capability the vendor has termed as E2Rapid Resolutions. This capability builds on the foundation of the E2open B2B network by adding pre-designed demand/supply fulfillment, and replenishment workbench capabilities to synchronize activities and/or decisions among network participants. The capability is designed to help organizations match both inbound and outbound product demand with changing supply plans, and to promise inventory to the most profitable channels.
A little over a year ago, Kinaxis partnered with supply chain execution network provider GT Nexus to provide SCCT like capabilities by integrating more predictive planning with execution. The Kinaxis Rapid Response Control Tower planning and response capabilities are permeated across the GT Nexus execution network to facilitate more informed decisions.
Similarly, enterprise vendors such as IBM, Oracle and SAP are now beginning to understand the importance of providing supply chain teams with an enhanced B2B network backbone that enables supply chain teams to synchronize planning and execution, support more predictive decision-making and build control tower like capabilities. These vendors however have more work to do.
Any house, big or small, austere or grand, is built upon a well -designed and solid foundation. When initiating an SCCT roadmap, insure that the foundation and supporting information architecture will meet your needs.
©2013 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.
Disclosure: Both E2open and Kinaxis are current named sponsors of the Supply Chain Matters Blog.
This author recently had the opportunity to provide some expert commentary regarding today’s supply chain software vendor landscape which Supply Chain Matters would like to highlight.
In the published SupplyChain24_7 article, Supply Chain Software’s Top 20, I observed that the leading supply chain management software vendors stand out on their ability to innovate, adapt and flex to constantly changing customer needs. They are constantly investing in their technology, investing in thought leadership and listening to customers. Today’s software marketplace is undergoing its own set of significant changes, and buyers have become much more sophisticated and demanding. What differentiates leading-edge providers is their ability to provide customers the broader set of software deployment models they seek, including cloud-based, hosted, on-demand, private or public cloud support options. Why invest in up-front capital expense in software and IT infrastructure when there are different options for amortization of that expense in a cloud-based deployment?
The article further describes the new emphasis on supply chain analytics, risk management and control tower capabilities.
Over the coming weeks, Supply Chain Matters will be updating our readers on the progress that specific leading providers have made, so stay tuned.
I am once again pleased to announce to our readers that E2open (NASDAQ: EOPN), a provider of strategic, cloud-based software solutions for collaborative execution across global networks, is a continuing Sustaining-level sponsor of this blog in 2013. We are pleased that this innovative technology provider has elected to associate itself with the ongoing global supply chain-focused thought leadership being provided by Supply Chain Matters.
E2open provides cloud-based, on-demand software solutions enabling enterprises to procure, manufacture, sell, and distribute products more efficiently through collaborative execution across global trading networks. Collaborative execution is the ability of all partners in a global trading network to work together to continually resolve real or potential problems with the right information, faster, and more profitably. E2open helps brand owners develop a competency in collaborative execution, accelerating success across a number of key business initiatives and supply chain processes, including S&OP, new product introduction, consolidated global procurement, VMI, parts shortage management, risk management, and supply chain control tower.
Brand owners and manufacturers use E2open solutions to gain visibility into and control over their trading networks through the real-time information, integrated business processes, and advanced analytics that E2open provides. E2open customers include Celestica, Cisco, Dell, HGST, IBM, L’Oréal, Land O’Lakes, LSI, Motorola Solutions, Seagate, Vodafone, and many others. E2open is headquartered in Foster City, California with operations worldwide.
During 2012, E2open became a public company trading on the NASDAQ Global Market, a sign of its continued market momentum. In 2013, we anticipate enhanced product development and services announcements as the company expands both its network and vertical industry presence.
If your organization has needs related to overcoming existing systems and communication barriers, unifying suppliers and trading partners with common information, or multi-tier process orchestration, we recommend you place E2open on your short list.
For more information, visit www.e2open.com.
Bob Ferrari, Founder and Executive Editor
The Role of Technology in Innovating Supply Chain
The following guest posting is contributed by Infosys Limited, one of other named sponsors of the Supply Chain Matters Blog. It is authored by Rakhi Makad, Industry Principal and head of consulting for Information Transformation in the Manufacturing Industry practice at Infosys.
Continuing from Part One, where we discussed the need to innovate supply chain, in this posting we explore how goals translates to business and technology needs:
What does the office of the Supply Chain need?
In the words of a supply chain executive – “I need up-to-minute visibility of end-to-end supply chain, integrating data from external partners and internal systems, to be able to identify bottlenecks and risks, and work together with all stakeholders to mitigate and optimize them swiftly”.
Asking for too much?
As you go higher in the supply chain hierachy, these needs become more strategic in nature but the essence is pretty much the same
What does this mean in technology terms?
- up-to-minute: in near real-time
- integrating data: variety of sources, high data volumes, different types of data
- identify bottlenecks and risk: visualization
- work together: collaboration
- mitigate and optimize: simulation, prediction, extreme processing
- swiftly: fast
Here enters in-memory computing and in-memory database technology. Let’s briefly look at how this provides for the requirements:
- in near real-time: replication of data, on the fly calculations
- variety of sources: heterogeneous systems including sensor/machine data
- high data volumes: column and row storage, data compression, partitioning
- fast, extreme processing: multi-core architecture, massively parallel processing
- simulation, prediction: in-database functions
While supply chain KPI frameworks, reporting, analytics, performance management systems have been around for a while and most organizations would have some means in place for evaluating the performance of their supply chains, however, as said before, most of these solutions are built around technology constraints and moreover, most of these solutions are reactive or provide after the fact information on supply chain performance. Now, how can we leverage the capabilities that in-memory technology provides us for innovating our supply chain such that we can eliminate the inefficiencies that we saw earlier?
At our manufacturing innovation hub at Infosys, we have put together a workbench -“Supply Chain Optimizer” – based on SAP’s in-memory database technology platform SAP HANA. This workbench provides for applications that address different processes of the supply chain function – planning, inventory management, procurement, manufacturing and order fulfillment. The four areas piloted with very positive results include:
- Supply Chain Performance Simulation
- Supply Chain Risk Management
- RFID Applied to Supply Chain Visibility and Counterfeit Detection
- Asset Utilization Optimization
At Infosys we are proactively working towards innovating our customer’s supply chain using in-memory computing technology. All of the above use cases address the key needs for in-memory computing i.e. data volumes, real-time decisions, online simulations, predictive capabilities, extreme processing and speed.
Other technology trends in the manufacturing industry, like 3D printing, Robotics, Internet of Things and Augmented Reality are also catching on and bringing in their own impact to the supply chain world. A lot of these technology trends generate huge amounts of data that can be analyzed for further improving the supply chain using Big Data/In-memory Analytics lending for further use cases for information driven efficiency. Infosys is also researching these technology trends, their impact on the supply chain function, our customers and the industry and building mathematical and statistical algorithms as a part of its innovation lab mentioned above.
Technology, and leveraged use of the most pertinent technology applied to supply chain responsiveness, will continue to be a disruptive force for every manufacturing and supply chain organization. Is your organization adequately prepared to leverage today’s technology?
This concludes Part Two of this two part series.
For additional information regarding these concepts please visit:
About the Author:
Rakhi Makad, Industry Principal, Information Transformation, Manufacturing Consulting & System Integration, Infosys Limited
Rakhi heads consulting for Information Transformation in the Manufacturing vertical at Infosys, this includes Business Intelligence & Analytics, Enterprise Performance Management, Enterprise Data Warehouse, Information Management and Big Data. In her current role, she leverages her extensive BI experience in giving directional guidance across BI strategy, performance management, BICC set-up, architectural framework, governance, business blueprinting, implementation and program management and delivery excellence across multiple clients. Rakhi represents Infosys in most external forums like MIT Supply Chain Innovation, SAPPHIRE, SAP Insider, ASUG etc on topics of thought leadership and innovation in the Information space, she regularly interacts with client IT and Business leadership and with analysts and industry experts.
She can be reached at firstname.lastname@example.org”
Once a year, just before the start of the New Year, the Ferrari Consulting and Research Group and the Supply Chain Matters Blog provide a series of predictions for the coming year. We have maintained this tradition since the founding of the blog in 2008.
In our Part One posting, we explored our first two predictions for 2013, the overall economic and business challenges, and our prediction of inbound commodity prices.
Our Part Two posting explored predictions #3 and #4, which noted a continued renaissance in U.S, based manufacturing and the very important challenge of supply chain skills development and retention.
Our Part Three posting explored Prediction #5, our industry specific supply chain challenges prediction.
In the following posting we address the critical need for supply chain resiliency and responsiveness in 2013 as well an increased penetration of Chinese companies in other industry supply chains.
Prediction #6: Supply chain organizations must either embrace and augment resiliency and responsiveness capabilities in 2013 or deal with the consequences of poor business outcomes.
Since its inception in 2008, Supply Chain Matters has outlined numerous events where industry supply chains became significantly disrupted. We have provided quantification of the negative impacts to the business, either in people, service or financial dimensions, and have incorporated predictions for continuous disruption in prior years. Many supply chain senior executives and their teams are now coming to the understanding that volatility and rapid business change are the new normal. This may perhaps be an overused term, but is one with important meaning. Constant volatility in product demand, supply, and other unplanned events are exposing the vulnerabilities of existing planning, execution or S&OP decision-making processes. In 2013, we elevate our prediction to umbrella the more compelling need for holistic needs for supply chain wide resiliency and responsiveness.
In our polling, discussions and research in 2012 we have come to conclude that while many supply chain teams desire these capabilities, they lack articulation of a well-defined and pragmatic roadmap. Investing in these capabilities takes on important people, process, change management and technology augmentation connotations. Process becomes an understanding that the current clock speed of business requires that supply chain planning and execution must come together as a continuous, synchronized process. Rather than forecasting models, responsiveness requires decision-making capabilities that are anchored in predictive analytics, the ability to assess and respond to various likely business scenarios. It implies deeper cross-functional, customer and supplier collaboration and engagement processes, and not passing the problem along to another tier of the supply chain for singular resolution. It further implies more leveraged use of social based, systems of engagement. Rather than drowning in all forms of data, it is about mining and visualizing needed insights as to what needs to occur, and when. The term “big data”, in our view, is overhyped IT and vendor term, and lacks clear understanding for action among supply chain functional teams. Finally, a smarter and more responsive supply chain requires different sets of people and team skills.
In our 2012 Predictions, we pointed to the capabilities incorporated in “supply chain control tower” (SCCT) which addresses the need for quicker, more timely and informed supply-chain wide decision-making as coming to the forefront in terms of market education and early adoption. SCCT will continue to come to the forefront in 2013. The motivation for this market interest was to insure supply chain wide resiliency and responsiveness and we predict that SCCT interest will begin to shift from user education to the initial roadmaps for enabling people, process and technology-enabled capabilities. SCCT initiatives that were primarily originated in the high tech and consumer electronics industry will spread to other industries in 2013.
Likewise, supply chain teams must provide more visible leadership to other parts of the business as to what augmented capabilities are required to enable a smarter and more resilient supply chain, along with a time-phased roadmap of measurable milestones.
The takeaway of this prediction is that the visible gaps among global supply chains with more resilient and responsive capabilities vs. those that are not will considerably widen in 2013, and will be reflected in more negative outcomes for the broader business and for stockholders.
Prediction #7: Chinese based manufacturing and service firms will markedly increase their presence and influence in global supply chains during 2013.
According to a July 2012 Bloomberg article, China, which holds in excess of $3 trillion of foreign-exchange reserves, has been encouraging companies to buy assets overseas, particularly in securing commodity resources, advanced technology or building more internationally focused businesses. We would add that by our view, the strategy includes strategic supply chain process and product component capabilities. The Wall Street Journal ranked China sixth in both number of deals and in acquisition value, behind countries such as the U.S., the United Kingdom, France, Germany and Japan. It expects China to double its acquisitions over the next five years.
While resources and energy have been the predominant strategy to date, industry supply chain penetration strategies are also evident. With multiple years of financial stress eating at the global economic climate and with access to cheap and abundant financing, Chinese manufacturers and other firms are primed to continue moving into other geographic regions and associated industry supply chains. Current double-digit growth rates in direct labor costs within China have motivated manufacturing firms to shift manufacturing to other countries, while Chinese suppliers are now compelled to invest more advanced process and product innovation.
The most active area to date has been in the U.S. based automotive industry, where the major financial crisis that hit in 2008-2009 made many distressed suppliers attractive for acquisition. As we pen these predictions in December 2012, the latest acquisition prize has been Wanxiang’s acquisition of U.S. car battery manufacturer A123 for $256 million in a bankruptcy auction. Some industry groups and U.S. lawmakers immediately voiced concerns, given that A123 developed advanced battery technologies via investment from U.S. fiscal stimulus funds. Wanxiang officials are actively responding, by not including any of A123’s military business in its acquisition efforts and listening to concerns.
In the high tech and consumer electronics sector, Lenovo has set a blazing trail not only in market growth, but also in blending both owned and outsourced manufacturing presence. The company serves as the current benchmark for China’s industries in acquiring an international marketing, product and supply chain presence. Its product portfolio has widened beyond computing to include smartphones. The company has also made significant manufacturing presence investments in both Brazil and the U.S., working proactively with legislative leaders to assuage political and economic security issues.
These strategies certainly come with major political hurdles existing in the resident acquisition focused country, as witnessed by previous acquisitions being derailed by Canadian, European, or U.S. lawmakers. However, Chinese firms have begun to exercise more patient and pragmatic approaches to appease political concerns. Some political leaders in economically distressed regions are actively recruiting Chinese companies to invest in their communities. This month, China’s energy giant Cnooc was finally able to close on an $18 billion purchase of Canada’s energy group company Nexen after a lengthy period of negotiations and concessions. This deal is being noted as a milestone toward the growing maturity of negotiation practices.
Other industries of acquisition activity have included alternative energy, where Chinese firms were able to scoop-up the assets of bankrupt companies Evergreen Solar and First Solyndra and now position for U.S. based manufacturing presence.. According to the Financial Times, Chinese firms are also turning their attention to machinery makers in Europe, including Germany. As of this writing, one of the largest homebuilders in the U.S., Lennar Corp. has secured financing from China Development Bank to develop two major residential real estate projects amounting to 20,000 homes near the city of San Francisco. There is reported speculation that this deal stipulates that China Railway Construction Corp (CRCC) will play a role as either a supplier or contractor. CRCC is also a interested bidder for the planned project to build a high-speed rail line connecting the cities of San Francisco and Los Angeles, which is currently undergoing a delay because of lawsuits.
For these reasons, we believe that 2013 will feature even more of an outreach from Chinese manufacturers and suppliers into broader geographic and industry supply chain presence.
This concludes Part Four of our 2013 Predictions for Global Supply Chains.
As always, readers are encouraged to comment on these predictions as well as add additional thoughts as to what to expect in 2013.
© 2012 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.