Supply Chain Matters will be mobile next week, traveling to Orlando to attend the FOCUS 2015 conference on Monday and Tuesday, sponsored by JDA Software.
This conference brings together upwards of up to 2000 professionals to share best practices across multiple supply chains, learn about new technology and network with fellow supply chain focused peers.
This year’s conference will have a special emphasis on the needs to support Omni-channel customer fulfillment needs. In aggregate, 18 of the conference sessions will have an Omni-channel focused theme. That will include a spotlight and report of progress on JDA’s Retail Me assortment and pricing application, a software-as-a-service and consulting offering, unveiled at the NRF Show in January. There will be unveiling of new capabilities to the JDA Intelligent Fulfillment and Transportation portfolios, including more granular, warehouse aware item definitions to improve load building, support for dynamic shipment splitting and prioritization, as well as other enhancements to integrated fleet and transportation management. JDA will further announce this year’s winners of its annual JDA Real Results Awards in various categories.
This author recently conducted a JDA Software sponsored webcast: Supply Chain Segmentation- The Key to More Predictable and Profitable Business Outcomes. (Now available on-demand at the JDA Software web site) I will be available at next week’s conference to speak to attendees and their teams regarding specific questions related to this topic.
Stay tuned to Supply Chain Matters for upcoming FOCUS updates. If you will be attending this year’s event, do seek us out, say hello and share your impressions of supply chain accomplishments and challenges.
Disclosure: JDA Software is one of other sponsors of the Supply Chain Matters© blog.
The term Predictive Commerce has been brought forward in the context of connecting up and downstream, Omni-channel product demand sensing with an integrated, single-model, end-to-end supply chain planning and execution. In some sense, it can be viewed as an enhanced iteration of demand-driven supply chain response capability for complex distribution and long-tail product demand environments. Supply Chain Matters is of the view that this capability warrants further consideration by supply chain and sales and operations planning (S&OP) teams, in the context of a transformative effort requiring careful thought and investment.
Predictive Commerce was most recently brought forward in a recent published white paper from supply chain planning technology provider ToolsGroup, titled Predictive Commerce: Helping Companies Return to Growth.
This paper defines such capability as:
“Predictive Commerce is a strategy that enables this shift (in planning methodologies) and revolutionizes the way companies think, see and plan their end-to-end supply chain. It connects supply chain strategy, planning and execution into an end-to-end planning process. The key technology enabler is a single underlying model”
This paper describes examples of predictive commerce applications that include real-time product demand sensing linked to dynamic replenishment processes. The example brought forward is a large coffee shop brand, namely Costa Express, leveraging machine telemetry feeds from 3000 self-dispensing coffee machines to trigger coffee bean, cups and flavored syrup replenishment needs among supporting distribution replenishment centers. In another retail industry example, product demand sensing is linked to dynamic replenishment and product segmentation to minimize last mile delivery costs by utilizing existing channel inventories. A further example is connecting product demand sensing and predictive orders with the needs for transportation capacity and optimization.
We concur and re-iterate that the most important takeaway for industry supply chain teams to ponder is that Predictive Commerce or other similar type capabilities that fuse supply chain planning and execution in a single information model require a transformative strategy that brings together such capabilities. This is particularly important in an environment where legacy applications or ERP backbone systems were implemented under the notions of planning and execution being two separate hierarchical processes and data sets that fed different information streams back and forth. Today’s Omni-channel and online fulfillment demand streams are far more concentrated in SKU level and location specific planning and execution dimensions. That implies a single data model with far more granular data and information streams as well as requirements to plan inventory investments at multiple tiers of the supply chain.
The good news is that advanced information technology now available in today’s marketspace can provide such capabilities in a less disruptive manner. A single data model approach opens far more enhanced capabilities in leveraging analytics and deeper supply-chain wide intelligence. It further paves the way for the ability to leverage more predictive and prescriptive planning methods for supporting near real-time customer fulfillment execution requirements.
In addition to technology, there are important people and business process elements to consider in such a transformation. Business processes, whether internal or externally focused, need to be well understood by all participants and have an “outside-in” perspective. Deep collaboration among customers and suppliers is essential. Do not neglect the change management and skills impact for people in managing an overall supply chain environment. Especially those that are driven by complex by faster-moving, exception-driven events vs. day-to-day sequential business processes.
Predictive Commerce can indeed be a meaningful competitive differentiating capability for distribution and online fulfillment sensitive supply chains. Such a capability requires a transformative strategy, often aligned with supply chain segmentation. It is indeed a “crawl-walk-run strategy anchored in people, process and advanced technology.
© 2015 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters® blog. All rights reserved.
Disclosure: ToolsGroup is a current client of Supply Chain Matters ® parent, the Ferrari Consulting and Research Group LLC.
There is some noteworthy supply chain technology news this week which we wanted to call attention to Supply Chain Matters readers.
LLamasoft Acquisition of IBM’s LogicTools Supply Chain Business Unit
Supply chain network design provider LLamasoft announced this week that this provider had acquired IBM’s LogicTools supply chain applications business unit, including rights to LogicNet Plus, Inventory and Product Flow Analyst and Transportation Analyst.
There is somewhat of a history to LogicTools and this provider’s associated product suite. The company was originally founded by MIT Professor Dr. David-Simchi Levi as a result of his work in supply chain optimization. As an industry analyst, I first encountered LogicTools and its emphasis on supply chain network design mapping and analysis in the 1999-2000 period. The company was then acquired by France based ILOG in April of 2007, where the plan was to assimilate LogicTools applications among other ILOG technology. Professor Levi became a member of ILOG’s management team for a period of time. The essence of LogicTools and associated applications were then a part of IBM’s acquisition of ILOG in 2009. Since that time, it would appear that the strategy and focus of supply chain network design within the much broader IBM Smarter Commerce strategy lost attention and focus.
According to the announcement, LLamasoft will immediately assume software maintenance, support and services to all existing LogicTools customers. A Customer FAQ document available on the LLamasoft web site indicates that customers with standard IBM contracts will be assigned immediately while other contracts with legal restrictions will have a sub-contracting relationship. LLamasoft indicates it will rename the LogicTools applications after the closing of the transaction.
Our initial Supply Chain Matters view of this announcement notes that current LLamasoft design applications include a lot of design functionality support, and thus this deal may well be one more related to customer acquisition, ongoing support and opportunities to up-sell existing LogicTools customers with broader LLamasoft applications coverage.
This author is reaching out to LLamasoft management and we will have further perspective in a future commentary.
FusionOps Secures Additional Funding
Supply chain cloud-based analytics provider FusionOps recently announced the raising of an additional $12 million in Series B financing led by Enterprise Associates and participation from Series A investors. The latest investment brings total investment within this analytics provider to $19 million since its founding. According to the announcement, this additional financing will be applied to accelerate development and global expansion.
This provider was founded in 2000 as iSpring, developing and marketing supply chain collaboration tools and was re-branded to the FusionOps in 2005 with a focus on supply chain analytics. Current named customers include Brocade, Columbia Sportswear, Merck, Mahindra, among others. The product offering includes a proprietary multi-tenant cloud-based business intelligence stack with expertise in supply chain performance attributes. Supply Chain Matters initially brought reader attention to FusionOps in a July 2012 commentary as a business intelligence alternative for specific SAP environments particularly for mid-market firms.
Noteworthy within this latest funding announcement are separate announcements indicating support for other application backbone environments, namely Oracle Enterprise Business Suite and Salesforce.com. In the case of Oracle, analytics support is extended to procurement, sales operations, inventory and production planning intelligence needs. In the case of Salesforce, a new application launched on the Salesforce AppExchange plans to provide sales teams with infographics and analytics related to customer transactional history related to customer inventory, order and service-level fulfillment.
By our observation, this latest round of funding and associated announcements implies a strategy shift reflecting diversification beyond SAP installed base customer analytics needs. This may set the stage for broader strategic options down the road.
Earlier this week, this author had the pleasure of delivering a JDA Software sponsored webcast titled: Supply Chain Segmentation- The Key to More Predictable and Profitable Business Outcomes. We have since received positive feedback regarding the content.
- Industry supply chains increasingly cannot support one-size fits-all supply chain fulfillment
- Supply chain segmentation continues to garner increased interest and multi-industry deployment
- This is a transformative level strategy and needs to be approached in this context
- Advanced technology is an ever more important key enabler
- Consider more predictive and prescriptive planning capabilities within your strategy framework
In the one-hour webinar, I provide grounding perspectives for today’s industry and business environments, convergence of technology trends, as well as insights on analytics focused strategies. I further provide a more succinct definition of supply chain segmentation and address the various process components to this strategy.
Among the key takeaways for supply chain segmentation teams were:
- Segmentation strategy has to be grounded in detailed analysis and intelligent on the entire value-chain.
- Consider the need for the process to be oriented toward externally focused, predictive and responsive capabilities focused on expected business outcomes in contribution margin, service levels and other key metrics as well as the velocity, clarity and context of information needed for more timely decision making.
- Focus on smarter data strategies when considering analytics in this process.
- Do not neglect the all-important skills impact that segmentation requires.
There is certainly much more and JDA Software has graciously made this webcast available on-demand, for viewing at your convenience. The webcast is available by accessing this web link and providing some basic registration information.
If your organization is considering a supply chain segmentation strategy or if your current efforts in this area are in need of a re-look, I believe you will gain some insightful learning within the webcast.
Bob Ferrari, Founder and Executive Editor
Disclosure: JDA Software is one of other sponsors of the Supply Chain Matters blog.
Announcing an Upcoming Webinar: Supply Chain Segmentation- The Key to More Predictable and Profitable Business Outcomes
Supply Chain Matters Lead sponsor JDA Software recently released the results of its first annual JDA Vision 2015 study of supply chains. This study provides a detailed quantitative look at the top supply chain issues facing various industry supply chains today and includes collected responses from executives across a wide range of industries company sizes and geographies.
Within this report’s Executive Summary there are conclusions related to the support of today’s customers. Whereas, not long ago, firms focused on operational efficiencies, today, it is all about the customer and meeting ever more demanding customer expectation and service needs. The summary notes in part: “Saving time and money remains important, but the name of the game now is how to meet customers’ ever changing expectations and keep them coming back.”
From this author’s lens, one of the more important strategies for supply chain and sales and operations teams to consider within today’s unprecedented aspects of supply chain complexity is the continued realization that one size fits all supply chain fulfillment strategies do not add to the need for meeting higher customer expectations while delivering on expected business outcomes. This is why considerations for supply chain segmentation strategies have become more important.
To explore such needs, JDA Software and Supply Chain Matters will be hosting an upcoming webinar: Supply Chain Segmentation – The Key to More Predictable and Profitable Business Outcomes, where this author will provide perspectives on the increasing importance of linking supply chain segmentation and more predictive planning and analytics capabilities. I will further address how elements of supply chain advanced technology that can aide in linking supply chain segmentation efforts.
This complimentary webinar is scheduled for Wednesday, April 1st at 11am Eastern. Joining me in this webinar will be Puneet Saxena, Vice President, Manufacturing Planning at JDA Software.
Readers can register for this webinar at this registration link.
Join us as we discuss today’s process and business requirement needs related to supply chain segmentation.
Today’s front page headline article of The Wall Street Journal, Weaker Euro Ripples Around the World, reflects far deepening foreign currency headwinds for producers whose supply chain costs and operations are weighted in U.S. dollars. For senior supply chain, procurement and sales and operations planning (S&OP) process leaders, it is further compelling evidence that existing supply chain cost and product sourcing strategies will come under enormous scrutiny and pressures in the weeks and months to come.
Supply Chain Matters has already called reader attention to recent corporate quarterly financial results reflecting substantial impacts to earnings as a result of the strengthening U.S. dollar against major foreign currencies. B2C and consumer product goods companies are especially impacted, but so are many other industries as well. The headwinds are strong and concerning.
To cite but a few examples, Procter & Gamble recently reported a 31 percent drop in profit as the stronger U.S. dollar diluted the effects of a modest 2 percent organic sales growth. Foreign exchange pressures had the effect of reducing net sales by a significant 5 percentage points. Mondelez International recently reported that foreign currency headwinds delivered a $149 million hit to its operating income in its prior quarter, in spite of recently rising prices across the board. Conversely, globally diverse CPG firm Nestle was able to sustain a 4 percent organic sales growth in that company’s first-half.
The European Central Bank (ECB) has embarked on its own form of quantitative easing, similar to what the United States embarked on after the severe global economic crisis that began in 2008-2009. The ECB is prepared to print upwards of €1 trillion to buy the bonds or assets of various Eurozone countries to boost their economies and keep European interest rates low. The immediate result is that value of the Euro against the U.S. dollar reportedly has declined by more than a fifth since June, and has now reached its lowest point since 2003. That is obviously good news for European manufacturers and service providers, as well as other foreign based producers not pegged to U.S. dollar costs. This situation is expected to continue for many more months.
Companies whose supply chain and operational costs as well as product pricing is anchored in U.S. dollars now face considerable financial headwinds, motivating some U.S. based firms to quickly raise prices within foreign markets. Many U.S. based manufacturers have upwards of half of existing revenues stemming from export markets.
The compounding effect is added costs and potentially lower export sales as foreign based manufacturers take advantage of a pricing advantage within their export markets. According to the WSJ, business leaders, economists and policy makers are becoming convinced that the Euro’s drop is helping to turn the tide in Europe’s favor. There is further concern that the U.S. Federal Reserve will have to ultimately raise interest rates as well.
For procurement, supply chain and sales and operations planning process leaders, the current financial challenge to the business requires that various planning scenarios and subsequent options be developed to ascertain ways and means to reduce costs or mitigate currency impacts in cost of goods sold (COGS) or in back-up sourcing strategies that are anchored in other than the US dollar. Teams need to able to assess various options to meet quickly and considerably changing sales and product margin goals. Without such plans and subsequent supply chain actions, previous cost and productivity savings efforts can be neutralized.
As to how long this current challenge continues it very much an individual industry or corporate decision. One thing is clear, however. This is a period where analytical and data-driven decision-making capabilities will prove to be rather important.
© 2015 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.