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Added Information Leaks from Apple’s Supply Chain Clarify New iPhone Production Plans

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This week, there is an indication that rumors about a potential product introduction delay for the speculated Apple “iPhone8” model may be unfounded. Then again, we have seen this movie before.  Apple Logo Added Information Leaks from Apples Supply Chain Clarify New iPhone Production Plans

The statement emanates from KGI Securities analyst Ming-Chi Kuo, and amplified by a posting appearing on Apple Insider. Kuo’s supply chain monitoring has been frequently cited by Apple followers, and he is noted as being insightful in predicting Apple’s product and supply chain plans.

According to the analyst’s latest report, three iPhone models are to be announced simultaneously in September. However, the so-termed 50th Anniversary Model “iPhone8”, rumored to be priced in excess of $1000, will reportedly be in short supply at time of announcement.

According to Kuo’s estimates, the supply chain is expected to support the production of between 2 to 4 million units in the September-ending quarter, ramping-up to an estimated 45-50 million units by the end of this year. That is obviously a significant production ramp-up in a matter of three months, implying that multiple production lines will be operating around the clock pumping out these smartphones.

That notion is supported by a separate Korean media report, and cited by 9 to 5 Mac, that indicates that OLED LCD producer Samsung Electronics Samsung has been building the world’s largest OLED production plant as it chases further Apple orders. That report indicates that Samsung will by the end of this month, operationalize seven simultaneous production lines to increase capacity output to a reported 700 percent in order to support the model’s ramp-up requirements.

Earlier reports indicate that Apple is reportedly paying LG Electronics, another current LCD supplier, $2.7B for OLED production lines exclusively dedicated to iPhone screens.

Apple is one of few global manufacturers that can support the funding of such an extreme supply chain and manufacturing response.

According to the latest Apple Insider report, the other two models planned for announcement and unveiling in September, the termed “iPhone 7s” and “iPhone 7s Plus” are noted as already in volume production with three color options. The KGI Securities analyst is forecasting that planning for the 4.7 inch “iPhone7s” supports production of between 35-38 million units, and 18-20 million units for the 5.5 inch “iPhone 7s Plus” phones.

Given all of these current production forecasts, Apple product management along with Sales and Operations Planning teams are placing a special emphasis on more anticipating far higher channel and consumer demand for the higher priced “50th Anniversary” model. Recall that during last year’s holiday fulfillment quarter, Apple reported that the supply chain was supply-constrained in meeting consumer holiday orders for the iPhone 7 Plus model, which later recovered in the first-half of this year.

Again, we have seen this movie before. Apple’s marketing and PR teams are masters at creating market hype prior to new releases of iPhones. But 2017 provides a significant added challenge, promoting and managing the correct demand mix among three simultaneously released models, in addition to demand for any existing or phase-out models. Competition among other global-wide smartphone manufacturers such as China local smartphone manufacturers Oppo, Vivo, and Xiomi, along with global manufacturer Samsung which has already released its newest Galaxy 8 model that includes new OLED screen technology.

In the next several months, we all get to observe Apple’s supply chain response and agility in-action.

Bob Ferrari

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


Announced Availability of Oracle SCM Cloud Release 13

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This week, Oracle announced the introduction and availability of Oracle Cloud Applications Release 13, a further effort to extend broad functionality in a public or private based Cloud platform.  Oracle logo sized 300x38 Announced Availability of Oracle SCM Cloud Release 13

As outlined in prior Supply Chain Matters blog commentaries, Oracle’s supply chain management focused development teams have established design goals to eventually provide availability of all existing on-premise SCM support application to Cloud-based offerings. The new Cloud-based offerings now being released include an emphasis on exceptional user experiences, more seamless upgrading for future Cloud application releases, and are being designed to include far more leverage of analytics, business rules orchestration and workflow management.

Within this new release are further enhancements to Oracle SCM Cloud and Oracle ERP Cloud, many of which were premiered at the Oracle Open World Conference held last fall.

Release 13 of Oracle SCM Cloud provides more than 200 added features and six added applications that now include Demand Management, Sales and Operations Planning, Supply Planning, Quality Management, and Maintenance.

The release of Oracle Demand Management Cloud builds on the capability of Oracle Demantra. In addition to the ability to Sense, Forecast, Manage and Predict supply chain product demand, Release 13 provides the availability of pre-built integration between Demand Management and other Oracle SCM Cloud applications including data related to customers, sales orders, or other master data needs. There is added support for integration of external data sources as-well.

Newly released is Oracle Sales and Operations Planning Cloud, described as a complete S&OP planning application to align organizations to an integrated operating plan and to meet strategic business goals. Oracle designed this new Cloud-based S&OP application to support the full process spectrum from detailed analysis to high-level Executive- level S&OP reporting, avoiding the need to constantly generate augmented summary reports for S&OP review meetings. What impressed this author in prior software demos was the ability and flexibility for users to configure analytics and planning dimensions in a variety of screen-based modes including planning dimensions and hierarchies, or tables for multidimensional data analysis.  Users can run quick product demand or supply simulations or compare various operating plans. This application further supports the ability to not only integrate data from internal Oracle applications but external data and application sources such as multiple ERP systems including SAP, by way of flat-files. This represents Oracle’s newest response to existing ERP and best-of-breed software providers offering dedicated S&OP support applications.

For Release 13, Oracle product management provides for the transition for Oracle Planning Central Cloud to the combination of Oracle Supply Planning Cloud and Oracle Demand Management Cloud. Existing Planning Central plans are automatically available for viewing, editing and supply planning, along with a comprehensive listing of supply planning functionality including the ability to plan for multiple customer fulfillment strategies.

Oracle Quality and Maintenance Cloud is described as supporting an end-to-end quality management system, something that Oracle has not offered previously.

Cloud ERP

Oracle ERP Cloud, is essentially a financial support platform, but further includes baseline supply chain management support capabilities including those involved in Order-to Cash and Procure-to-Pay process flows. Cloud ERP includes Oracle’s support for sourcing and procurement business process and analytics needs. As-such, ERP Cloud can be viewed as an entry-level application toward total Cloud adoption, with migration to SCM Cloud as a consequent next step. Release 13 builds on Public Cloud functionality particularly in procurement process support, adding enhanced user experience and functionality capabilities for strategic sourcing support, supplier management Coverage for manufacturing based industry is enhanced in this latest release. Supply Chain Matters will feature additional blog commentary related to the procurement support needs at a later date.

Summary Takeaway

In prior commentaries, this analyst has expressed the view that Oracle SCM Cloud represents one of the broadest, end-to-end supply chain business process and full-featured Cloud-based offerings.  Release 13 significantly adds to this dimension.

Earlier this year, Oracle indicated that over 1000 customers have already embarked on SCM Cloud adoption. We suspect that by the end of this year, and now with the availability of the assortment of new applications and added functionality in many different areas, that adoption numbers will likely be somewhat higher.

Bob Ferrari

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


Supply Chain Matters Blog On Summer Pause

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This posting is to alert readers that the Supply Chain Matters team will be taking a summer vacation pause to partake of some needed rest and rejuvenation.Supply Chain Matters Blog 350 100 J Supply Chain Matters Blog On Summer Pause

While we may post an occasional important or critical update, our normal cadence of blog posting activity will resume the week of 23 July.

During this pause, readers are welcomed to explore our vast amount of content related to multi-industry supply chain management business processes, information technology and other related topics. We know there is significant content because we recently had to add additional data storage to the blog.

To assist readers, below is a select listing of some of our most-read blogs so-far this year, as-well as in 2016. Perhaps these can be part of your summer reading.

 

What are Specific Skill Needs and Gaps in Supply Chain Management? (February 26, 2016)

Supply Chain Matters highlights results and an infographic from a supply chain skills survey conducted by Canadian based Argentus Supply Chain Recruiting outlining what specific hard and soft skills are organizations looking for in their hiring and recruiting efforts. Supply chain skills and talent development content has consistently drawn reader interest.

 

The Future of Supply Chain Planning (May 2, 2017)

The first in a market education series that explores changing needs in supply chain planning, what is termed concurrent supply chain planning, and why it is becoming a more important capability to support today’s multi-industry supply chain business environments.

 

A Path Towards Internet of Things Enabled Service Management- Service Parts Planning Realities (June 13, 2017)

A content education series on building the foundations for robust, more efficient, less costly service and aftermarket parts planning capability while building the foundation for IoT enabled service management business models.

 

Articulating Supply Chain Needs in the Language of the C-Suite (May 11, 2017)

The latest economic and business data reinforces that supply chain leaders must more than ever, be able to translate investment needs in the language of the C-suite and in the notions of delivering desired business outcomes.

 

Airbus and Boeing Continue to Experience Supply Chain Scale-Up Challenges (May 2, 2016)

After announcing Q1 financial and operational performance results, both Airbus and Boeing addressed ongoing challenges related to their supply chains and expected performance for 2016 total aircraft delivery commitments. We shared candid comments from Airbus’s CEO as to the global producer’s most critical new product introductions and clear signs of concerns related to various supply chain challenges.

 

The Value Proposition for Cloud Computing is Broader in Scope and in Business Implications (January 22, 2016)

Our commentary explored the implications of a full Cloud-based technology suite in supporting broad supply chain business process needs after industry analyst Bob Ferrari completed nearly two days of briefings and conference presentations related to Oracle’s Cloud based technology offerings. One takeaway provided was to view Cloud from the perspective of a broader focus on an engineered suite of pre-integrated software applications that are continually updated to reflect changing business needs.

 

Technology Addressing the Convergence of Internet of Things and Smart Manufacturing Deployments (March 23, 2017)

As a follow-up to Supply Chain Matters attendance and coverage of Oracle’s Modern Supply Chain Experience Conference, we highlighted some sessions that addressed Internet of Things (IoT) enablement of future smart manufacturing, supply chain and service management business processes.

 

Sports Authority- A Disturbing Twist to Consignment Inventory Management Practices (March 17, 2016)

Characterized as one of the largest sporting-goods retailers, Sports Authority was weighted down with debt from a prior leveraged buyout a decade ago. We called attention to a disturbing development in the ongoing bankruptcy process, as the retail chain filed lawsuits with more than 160 suppliers challenging supplier claims to consigned inventories. We opined that this development had significant ramifications for supplier collaboration practices within retail as well as other consumer goods focused supply chains.

 

Chipotle’s Consumer Trust Crisis Enters a New Critical Phase (February 9, 2016)

One of our early blogs in a series of ongoing commentaries we outlined from a supply chain lens regarding the business, brand and supply chain crisis that impacted Chipotle Mexican Grill after hundreds of consumers were sickened by a series of varying incidents ranging from E-coli outbreaks to norovirus that date back to the summer of 2015. We opined that too much attention was being applied to corporate marketing vs. supply chain and restaurant risk mitigation efforts.

 

Look to the Cloud to Support the Modern B2B Network (September 1, 2016)

This blog commentary addressed an organization’s journey toward mature B2B information integration and how this is made possible by today’s advanced cloud-based platforms, applications and infrastructure. We opined that there is no question that analytics and broader, more predictive business insight capabilities are opportunities to transform B2B business and supply chain business networks. The opportunity — and indeed the necessity — is to leverage an end-to-end business network to synchronize planning, execution, customer fulfillment and more predictive decision-making needs.

 

Thanks again to all our globally located Supply Chain Matters readers for their continued readership and frequent visits. Thanks as well to our sponsors, clients, and network contacts for their continued support.

Bob Ferrari, Founder, and Executive Editor

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


A Path Towards Internet of Things Enabled Service Management- Service Parts Planning Realities

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This blog posting represents the second of a four-part market education series, in collaboration with supply chain planning and service parts technology provider ToolsGroup.

 In our initial posting in this series, we declared that one of the most promising line-of-business areas that will benefit from Internet of Things (IoT) enabled technologies applied to supply chain management will be equipment services management, especially service and spare parts management.  Planning 3 shutterstock 394279114 300x184 A Path Towards Internet of Things Enabled Service Management  Service Parts Planning Realities

A longstanding challenge in service or replenishment parts planning and management has always been the ability to forecast item-level demand when such demand is sporadic or sudden.  Now consider the opportunities to have demand-driven or predictive failure data and information emanating directly from the physical equipment.

But with any major business transformation, there are always foundational capabilities that come first. In the specific area of IoT enabled equipment and services management, a foundational capability is usually the need for a robust, responsive, and analytically-driven service parts planning (SPP) capability.

Yet an unfortunate reality is that many manufacturing and services organizations with lower levels of process maturity have not recognized the differing process and decision-making needs required for responsive and effective SPP.  Considering a leap to an IoT enabled service management business model will likely expose this weakness.

 

What Makes Service Parts Planning Different?

Three fundamental differences often found in SPP are the following:

  • Contracted service levels and customer contracts determine the overall parts distribution and required service response network. When there is either equipment downtime, caused by a failing part, or when equipment consumables are suddenly out-of-stock, equipment is no longer generating value for end-customers. There is very little tolerance for inventory back-orders since non-performing equipment results in downtime costs that can far outweigh the cost of the replacement part.

 

  • Service parts component demand is often manifested in intermittent or lumpy demand signals, caused by actual equipment operational conditions or changes in operating environment. That means planning in an environment of long-tail demand, parts that exhibit larger numbers of variability, lumpy or seasonality focused demand patterns. Traditional forecasting or demand planning techniques are often ineffective in planning parts demand in such environments. That’s because SPP is far more concentrated in individual item-level planning as contrasted to product family or aggregated planning techniques. SPP planning models feature higher stock keeping unit (SKU) counts and associated long-tail demand planning computations than traditional supply chain planning models. Algorithms that capture actual parts demand, or plan for future demand need to be far more sophisticated in item level and shipping location mathematical modeling.

 

  • Service parts networks require the need for multi-echelon and multi-tiered inventory stocking strategies tied to more predictive parts demand. Long-tail demand can be best managed by planning that factors item level and shipping location simultaneously. SPP must therefore be able to effectively manage and optimize inventory within such multi-echelon stocking environments.

 

A Path to the Future

Three to five years from today, even more equipment will be acquired by “services by the hour” payment methods, saving on front-end capital equipment costs for equipment operators. Physical objects such as complex equipment, engines, motor vehicles and other forms of equipment will be communicating operational performance and service needs via IoT enabled data and information flows. For equipment manufacturers, the opportunities are new lines-of-business and incremental multi-year top-line revenues flowing from such models.

The good news for IoT enabled service management processes is that the equipment itself can provide more proactive or prescriptive indications of when a part is scheduled to fail, as well as actual maintenance data related to parts failure. Such capabilities will provide added intelligence and more accurate parts demand information that will provide additional service uptime and operational cost savings for customers and service parts providers. In addition, the ability to link the physical equipment and operational data related to equipment with a robust SPP environment adds important benefits in the ability to capture and plan more accurate, and more predictive information related to service parts or consumable parts needs and requirements across a service management network.

However, the savviest businesses recognize that the end-goal is not IoT per-se, but in building the foundational people, process and technology capabilities that can best leverage the digitization of supply chain management and decision-making processes. An IoT front end isn’t much good without an equally responsive back end planning system.

Businesses that recognized the critical differences in more effective service parts management and made the initial foundational investment in more responsive SPP process capabilities will be far better positioned to harvest the benefits of smarter and more efficient network wide inventory levels, more timely decision-making and most important of all, more responsive service and satisfaction levels for equipment customers.

 

Bob Ferrari

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

 


Apple’s iPhone Supply Chain Begins Ramp-up for the Big Release

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Several published reports are indicating that Apple’s supply chain is now gearing-up for the release of the new family of iPhone models later this year.

Asia based DigiTimes recently reported that semiconductor fab producer TSMC has received orders from Apple for production of the next generation 10nm A11 processor chip that will be included in the new models. The report cites sources as indicating that production was once affected by issues involving stacking components in the backend integrated fan-out packaging process, but have subsequently been resolved. The open question is when TSMC will be able to support full-scale chip production. Citi analyst Roland Shu has indicated that volume production is expected by July.

The South China Morning Post reports that Foxconn has been designated by Apple to be the sole contract manufacturer for the planned top-of-line model also due out  later this year. This most expensive and full-featured iPhone Pro model is reported my multiple sources to include a 5.8-inch light-emitting diode (OLED) touch screen, 3D facial recognition, front and back glass casing and augmented reality applications. There are indications that the Pro model could retail in the $1000 range.  According to the report, Foxconn was selected as prime manufacturer for the Pro because of its demonstrated experience in this CM’s ability to ramp-up Apple’s more complex new products.

The MacRumors site features a chronicle of all three of the rumored iPhone 8 models, including features and functions.

Other CM’s mentioned for the other planned model variations are Pegatron and Wistron respectively.  Supply Chain Matters is of the belief that this upcoming iPhone 8 model cycle will the largest test to-date of Apple’s supply chain segmentation strategy, specifically the three CM’s and the suppliers feeding component parts.

Other suppliers mentioned in the report include:

  • Samsung Electronics for the OLED panels.
  • Sharp and JDI for LCD panels.
  • AAC Technologies for miniature acoustic systems.
  • ASM Pacific Technology for the alignment bonding system used on camera modules.
  • Luxshare Precision Industry for wireless charging componentry.
  • Corning for glass screens.

 

Given the current streaming information, it would appear that product design has been solidified and the iPhone supply chain is now engaged for manufacturing ramp-up activities.

From our Supply Chain Matters lens, one thing is certain, Apple’s Sales and Operations and supply chain planning teams are going to be very busy in the coming months. If all goes according to plan, the 10th Anniversary of the iPhone will wow aficionados with one of the most expensive and full-featured devices to-date, along with other models at different price points. If any of the usual hiccups or snafus occur, teams will perform their usual response plans to ensure that global channel available meets plan. The biggest challenge will be in planning the proper model-mix plans among all planned three models.  During the last holiday season, the premium iPhone 7 Plus became supply constrained because planners did not initially plan for the actual demand for the full-featured, more expensive model. This year, the stakes are higher, along with the ability to gage and sense expected consumer demand.

It will all be fascinating to observe.

Bob Ferrari

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


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