Supply Chain Matters Sustaining Sponsor E2open, Inc. announced last week that it is the first dedicated, cloud-based supply chain Software-as-a-Service (SaaS) technology provider to achieve International Organization for Standardization/Electrotechnical Commission (ISO/IEC) 27001:2005 Security Certification.
The internationally recognized ISO 27001 standard certification addresses the protection of information within an individual system. The ISO 27001 standard itself was first published in October 2005 and provides specifics for security management, governance, controls and compliance. The company joins many leading, global businesses that have earned the prestigious ISO 27001 certification, including Amazon, Microsoft, and Salesforce.com. E2open further maintains SSAE16 certification for controls for processes for the past seven years.
Corporate business, functional and IT teams continue to be diligent to the security of data, whether it resides inside or outside the firewall. Supply chain and B2B focused cloud-based systems must therefore protect such data, and achieving this level of ISO certification helps to assure customers that proper measures and controls regarding data have been outlined and are practiced.
Congratulations to the E2open technical teams for this important achievement and milestone.
Disclosure: E2open is one of other named sponsors of the Supply Chain Matters Blog.
Supply Chain Matters Sustaining Sponsor E2open recently contacted us regarding a research report they recently commissioned that was focused on vendor managed inventory (VMI) strategies. The study results present interesting supply chain related business process and information technology insights for many industry supply chains that we will share in the commentary.
In terms of background, VMI programs are often predicated on the management principle of a vendor or supplier managing appropriate inventory levels of products based on either a product demand forecast or an actual order flows. The goal of many VMI programs is to drive more efficient and responsive inventory management. Many programs are triggered by replenishment based systems triggered from EDI messaging. Depending on the terms of the program, inventory ownership may transfer to the buyer either upon receipt of the product or when the buyer sells the inventory. (consignment based program).
A September study, conducted by Gatepoint Research, included 200 responses from senior IT, supply chain, finance and logistics executives from manufacturing, retail and telecommunications industry sectors. The majority of the respondents (98 percent) held CxO, Vice President or Director titles, thus the opinions were weighted from an executive viewpoint. Respondents overwhelmingly worked at large firms which included revenues in excess of $1.5 billion (67 percent).
The report authors draw some of the following observations based on the survey responses:
- Nearly half of responders employ VMI programs with buy-side suppliers. The utilization of both buy and sell side VMI fulfillment programs (partners, distributors, retailers, etc.) was cited by 30 percent of respondents. Nearly a half (49 percent) use consigned inventory at their buyer’s VMI location. Surprisingly, 22 percent indicated no plans to implement any VMI program.
- 28 percent of respondents indicate the sharing of inventory information manually (email, fax, etc.) while 20 percent indicate direct use of the resident ERP system, and 15 percent utilizing B2B integration among inventory systems.
- Most responders indicate a lack of access to real-time information. A majority (63 percent) indicate that they do not always have adequate visibility into their current inventory levels, while more than three quarters of respondents rely on batch reporting for inventory and order information.
- A stunning 69 percent rate themselves without differentiation from competitors regarding inventory turns. About one-third of respondents feel partner collaboration is adequate. Our supposition is that the other two-thirds feel partner collaboration is inadequate.
Reviewing this survey data, Supply Chain Matters can add other observations and insights. The data implies a high utilization of VMI among large enterprises, yet most responders indicating a lack of access to real-time order, inventory and order forecast information. (see below chart extracts) There should be little surprise that nearly 69 percent of responses indicate too much cash tied up in inventory, or too much excess inventory. Only 20 percent of responders felt that their inventory turns were better than the industry average.
How timely are the Forecast, Inventory, and Order information that you and your partners share?
Copyright 2013, Gatepoint Research, Used with permission.
Assess your ability to manage inventory levels.
Copyright 2013, Gatepoint Research, Used with permission.
Our other observation reflects on how respondents rate their inventory management collaboration with partners. Nearly two-thirds indicate high collaboration with partners while about a third feel partner collaboration needs improvement. We therefore conclude that while partner collaboration is rated high, other indicators point to a lack of adequate technology tools to actually leverage the meaningful business outcome benefits of the VMI program. Notice that collectively. 58 percent of respondents rely on either a daily batch, less than daily batch, or ad-hoc order based information. Similarly, 66 percent collectively rely on these same tools for inventory status while 80 percent collectively rely on these tools for inventory forecast data. That implies a lot of information latency, especially when readers consider current industry challenges to conduct business 24 by 7, as well as the massive movement toward online and multi-channel commerce.
By our lens, the most important takeaway from this study is the need for a leveraged use of an online B2B platform that not only serves as the basis of electronic data exchange, but more importantly, near real-time information related to the trending of orders and inventory. An online network or platform can serve many purposes. Besides connectivity, content and the on-boarding of suppliers, it can also serve as the basis of integrating more real-time information related to the status of orders, forecasts and inventory.
The path toward expanded supply chain business process capabilities is not as important as the all-important B2B network platform that forms the foundation of end-to-end connectivity, visibility and decision making capabilities. Why not take advantage of that platform?
What’s your view? Are your VMI programs being stymied by latency of information? Does this current research data surprise you in its conclusions?
The study itself can be downloaded at this E2open supported web link.
Disclosure: E2open is one of other named sponsors of the Supply Chain Matters blog and no additional compensation was rendered to highlight the above study.
This Supply Chain Matters commentary is our third update concerning our attendance at Kinexions 13, the annual customer event sponsored by Kinaxis, Inc. held last week in Scottsdale Arizona.
Readers can view our previous two commentaries by clicking on either of the two web links below:
The focus of this commentary reflects on the product strategy side of Kinaxis.
At the conclusion of last year’s 2012 Kinexions event, this author concluded that Kinaxis stood at an important crossroads. With the 2013 Kinexions checkpoint, the transition continues from both a product and organizational -wide perspective. At this year’s event, CEO Doug Colbeth again stressed Kinaxis’s ability to consistently grow its revenues 30 percent each year, while continually to delight customers. Yet that growth path, by our view, continues to present challenges of scale and cadence. Kinaxis is a company that has successfully anticipated market needs for supply chain responsive planning and simulation capabilities across multi-industry supply chain environments. Each year, Kinaxis RapidResponse, the application, matures to support these needs, while the Kinaxis product development and solutions teams continue to address even more complex customer challenges along with other opportunities for market growth.
This year’s product presentations identified 3 released RapidResponse product updates in 2013, with another 2-3 product updates planned for 2014. Functionality breadth includes the addition of attributes-based planning support including shelf-life and expiry based planning which are highly important considerations for life sciences and pharmaceutical focused supply chains. Support for feature-based bill of materials has been added specifically for automotive industry needs, while both single and multi-echelon inventory optimization support is being introduced. The cadence of product functionality releases is dramatically accelerating, along with added opportunities. . In one session, we heard customer banter related to losing track of what are now major vs. other releases and keeping-up with the cadence.
After viewing four product strategy sessions focused on product development we tend to summarize current RapidResponse development efforts in the following buckets:
- Enhanced functionality requested by specific industry customers
- Added scalability, reliability and speed
- More simplified RapidResponse configuration tools
- Enhanced data and systems integration including master data management interfaces with external systems, and out of the box SAP iDoc interface support.
- Increased support for mobile devices
- New opportunities for growth beyond supply chain planning and response management
A scan of this listing will indicate a company responding to multiple needs for breadth, depth and coverage of functionality. They are classic signs of the growing pains of a technology company responding to increased opportunities for market growth while attempting to preserve a high-touch customer culture. That in itself is not an easily achievable objective without increased scale, industry partnerships and laser-like focus on product development and support activities.
In his keynote session, Kinaxis Chief Products Officer, John Sicard, showed a slide that traced the current history of the company from its origins as Web Plan, the “fast MRP company” to today’s far different Kinaxis that is tackling multiple dimensions of more predicative supply chain planning and decision support. We believe that this specific slide, along with the associated messages and implications to the future path of company growth is the most important takeaway from 2013 Kinexions.
The Robert Frost poem, The Road Not Taken, is sometimes cited as an analogy to a crossroads. Frost cites his conflict as to which road to take in the forest and decides to take the trail path less trodden as the chosen path:
And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.
I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood and I—
I took the one less traveled by,
And that has made all the difference.
That is the current analogy for Kinaxis,- which road to take. The one less traveled or the path often traveled.
We pen this commentary from Scottsdale Arizona and our attendance at Kinexions 13, the annual customer event sponsored by Kinaxis, Inc. This is our second live commentary and readers can review our initial commentary by clicking on this link.
In our summary commentary from last year’s Kinexions, we noted one of the consistent and somewhat unique themes that we have consistently and objectively observed at past Kinexions, namely customer’s open articulation of their enthusiasm concerning the value that Kinaxis RapidResponse software has provided in their business and decision-making processes, coupled with the ongoing existence of a positive partnership with a software vendor, one that consistently demonstrates responsiveness to their needs. Trust me in the statement that while many software and services vendors consistently attempt to achieve this state in a customer focused event, it is something that cannot be consistently scripted or orchestrated. It has to be organic and living.
This year, as in previous year’s that presence of customer’s articulation of value continues. Both in the invited session for analysts and industry influencers, and on the conference main stage, customer’s describe how Kinaxis technology has delivered on its purpose and how the vendor itself remains responsive to their individual needs.
In the on-stage keynote session from First Solar, Shellie Molina, Vice President Global Supply Chain, Shannon Rawlins, Director, Sales and Operations Planning, and Mark Zeni, AE Fulfillment, each articulated both the unique industry and supply chain business challenges that were encountered. In the specific case of First Solar, it was the radically changing business environment in alternative energy that required the company to be highly responsive to a rapidly changing dynamic of market and customer demand. In 2006, the company’s solar panels were on a steep growth projector, but the magic carpet ride changed rather quickly thereafter. The history of involvement with Kinaxis RapidResponse began in the termed glory days of huge industry demand that later culminated in industry-wide consolidation and a highly re-focused First Solar. Shellie Molina described the prior state as no one really concerned with state of inventory, but highly concerned and focused in the latter stage. She knew in her gut that the supply chain team had to be ready and responsive to that need, and needed the right tools to be able to navigate lots of change. Shannon Rawlins described how S&OP planners had developed great Excel spreadsheet models and skills, while struggling with the need to keep up with changing data requirements for these spreadsheets. She described the challenge as: “Moving on to the business of planning vs. honing Excel skills.” Mark Zinney who manages First Solar’s new Solar Systems business described how the revised business model led to the need to link the First Solar supply chain to multiple solar field installation projects, and how the new RapidResponse project management turned out to be the best option. Each of the presenter’s described bedhow Kinaxis remained responsive to their individual needs and work with the team through these various iterations. As Molina described, even though it has been a challenging journey of business change, they knew that RapidResponse was the right technology to help support their supply chain decision support needs.
Jim White, Vice President Operations, Applied Materials described the case study of RapidResponse utilization at the Varian Semiconductor business unit. Applied Materials and its associated business units support capital and production equipment needs for today’s highly dynamic and changing semiconductor industry. The industry landscape was described as narrowing margins, changing industry dynamics and constant need for product innovation. “Speed is what matters and you differentiate on time-to-market and customer service. Growth is mandatory.” In case of many of Applied’s products, customer requested lead times were shorter than actual design and production lead times, requiring the need for accurate and responsive planning processes. This business also tends to be highly cyclical in nature, driven by either customer production innovation or investment budgeting cycles. The Varian Semiconductor case study involved a concentrated make-to-order planning process involving complex bills of material. The challenge was described as constantly syncing with the “technology nodes” of customers and not getting locked out of a technology investment cycle. Kinaxis RapidResponse is utilized to plan engineering phase in and phase out cycling, to focus on specific needs for supplier collaboration and prioritization modeling for constrained parts. White admitted that he was initially a skeptic to the described benefits, it sounded too good. He and his CFO were won over . Now every Wednesday, Jim and the Varian senior management team conducts a weekly operations review to target key customer delivery objectives. Scenarios developed in Kinaxis RapidResponse are reviewed and evaluated and decisions are made based on identified options.
In the invited influencer session, three other Kinaxis customers articulated their individual experiences. The themes were similar:
- Constantly changing business and supply chain environments requiring more responsive and more predictive planning
- A realization that the majority of today’s supply chain information exists outside of an organization’s backbone or legacy systems.
- Either frustration with attempting to implement an existing ERP based planning application, or current gaps in required planning capabilities needed.
- Seeking a trusted partnership with a technology vendor and insuring that the vendor is responsive to ongoing needs.
- The critical need to insure user acceptance and adoption of any tool selected, and that the system actually does what it is supposed to do.
To be fair, advanced technology and vendor relationships, even those related to Kinaxis do tend to have challenges, and behind the scenes, there are such challenges. From our view, it’s the relationship that matters and those relationships continue to be communicated in positive tones.
For its part, Kinaxis must continue to adapt to a rapidly changing and consolidating technology market. In our next commentary, we will share some observations in that area.
Full Disclosure: Kinaxis is one of other designated sponsors of Supply Chain Matters
Each October since the founding of Supply Chain Matters in 2008, we have had the opportunity to attend Kinexions, the annual customer conference of our lead sponsor, Kinaxis, Inc. We are penning this initial commentary from Scottsdale Arizona where the weather has been stunning and beautiful.
Readers will recall from our coverage of last year’s Kinexions, and for that matter, other previous occurrences, there has always been a consistent theme of customers articulating their experiences with both Kinaxis, and the Kinaxis RapidResponse technology, and that theme has definitely continued. Throughout these years, there has also been an added element of education, learning something you did not know previously. Industry analysts, market influences and invited prospective customers are provided unrestricted access to all of the conference sessions and allowed to mingle with all attendees, something that unfortunately, all software or services vendors do not practice. Our one restriction as an independent industry analyst and supply chain social media mechanism is to respect the stated confidentiality needs of specific customers or Kinaxis, which is appropriate.
The theme of last year’s conference was stated as The Power of One. This year’s Kinexions featured the theme of Know Faster – Act Sooner, and it seemed, at least to this author, to be rather appropriate. The overall scheduling of the event was rather different this year, in that it was pretty much a weekend event. Pre-conference training sessions for customers began on Thursday, and main conference activities have been scheduled for Friday and the Saturday morning. Attendance does seem to be slightly down this year although we have not had the opportunity to view the actual numbers. With today’s rather hectic work schedules across multiple industry supply chain environments, software vendor events scheduled during a weekend present challenges. None the less, the enthusiasm of customers that are attending and presenting content has been enthusiastic.
This author was invited to attend the dedicated session for industry analysts and market influencers that was scheduled Thursday afternoon where Kinaxis executives shared direction and a select group of customers articulated their experiences with Kinaxis RapidResponse. We will feature some observations from this session in a later commentary, but there where restrictions as to how much we can comment related to certain shared information.
For the remainder of this commentary, this author wanted to highlight on the welcome and opening remarks from Kinaxis President and CEO, Doug Colbeth. In his remarks, Colbeth re-iterated what he believes to be the unique business model of the company, one totally focused on the needs of supply chain management. It shared that his leadership principle for Kinaxis remains and has always been building something that does not exist in today’s market,. He described the Kinaxis corporate culture as: “extremely innovative and extremely focused.” Further shared with the audience was that at Kinaxis board meetings, the discussions are always focused on ways to add value for customers vs. existing customer’s in the market: “Why would we want to emulate the competition?” By our view, those comments indeed provide the true descriptor of the unique fabric that makes up Kinaxis and its approach with customers.
Stay tuned for further commentaries.
Full Disclosure: Kinaxis is one of other designated sponsors of Supply Chain Matters
We have a busy upcoming week here at Supply Chain Matters.
On Monday, Founder and Executive Editor Bob Ferrari will deliver the keynote presentation at the 2013 PRISM User Group Meeting being held outside Boston. The topic of that presentation will be: Most Significant Trends Impacting Supply Chain and Manufacturing Teams in the next Five Years. This presentation will address five specific areas of important mega-trends and we will make this presentation available for no-cost download via our Research Center or SlideShare outlets.
On Thursday and Friday, Supply Chain Matters will be in Scottsdale Arizona for Kinexions 13, the annual user conference conducted by our Lead Sponsor, Kinaxis. The overall theme of this year’s event is Know Sooner, Act Faster. We look forward each year to attending Kinexions which often attracts a distinctive audience of supply chain planning and leadership professionals. As always, we will be featuring some live updates as well as full coverage of the conference. As we noted in a summarized impressions of Kinexions 2012, this event continues to reinforce year after year that software provider conferences do not have to take on a high gloss sales-driven image, but rather one that attendees can conclude that they truly enjoyed attending, gained knowledge, networked with other professionals will similar challenges and shared in some good humor and funny skits.
If you are attending either of these events, please seek us out and say hello.