We want to alert Supply Chain Matters readers that Bob Ferrari, our Founder and Executive Editor will be featured as a kickoff speaker at an upcoming series of Sales and Operations Planning (S&OP) Executive Breakfast Briefing events sponsored by Steelwedge Software.
This series has been designed to provide attendees with advanced understanding of technology being applied to support the S&OP process, including the important insights for integrating information and more predictive decision-making capabilities for process participants. There will be time allocated for ample interaction with speakers.
Bob Ferrari’s presentation is titled: A Practical Guide to Using Predictive Analysis to Take Your S&OP and IBP Process to the Next Level. In this talk, Bob will address how many S&OP processes become stalled because they are trying to assimilate information that is most external to existing information system or spreadsheet capabilities. S&OP processes are literally drowning in data but starving for decision-making insights. Three significant industry converging forces are coming together to allow S&OP teams the ability to incorporate use of more predictive decision-making as well as to achieve goals for integrated business planning. Along with Bob, both the Boston and Chicago breakfast series events will feature Bruce Richardson, Chief Enterprise Strategist at Salesforce.com as a speaker.
These breakfast series events will be conducted in the following cities with more information and conference registration information provided at the below web links:
Join Bob Ferrari and other distinguished speakers at either of these upcoming Steelwedge focused events for insights on taking your organization’s S&OP process to the next level.
This author recently had the opportunity to conduct an interview with Abe Eshkenazi, the CEO of APICS. Many of our reader audience is probably aware of the APICS organization, primarily from the organizations array of local chapter educational and certification programs. However, some may not be aware that APICS has been undergoing its own transformation as a professional educational organization. Most supply chain professionals probably have awareness to APICS from its various certification programs. But as Eshkenazi clearly communicated, the organization is much more, and its DNA is about “investing in content”.
This author has prior knowledge of the organization, having been recruited by APICS in 2008 to serve as a three year member of the original CSCP Certification Exam Review Committee.
In October 2013, APICS rebranded itself to position the organization as the: “professional association for supply chain and operations management and the premier provider of research, education and certification programs that elevate supply chain excellence, innovation and resilience. “ Throughout our Interview, CEO Eshkenazi provided an enthusiastic endorsement of the many dedicated members of supply chain and operations management professionals who continue to make-up both the past and now, future educational outreach programs of APICS. He described them as “second to none”. We would add from our Supply Chain Matters point-of-view, that indeed, this is the secret sauce to APICS and its efforts as an active provider of professional education.
The APICS organization is evolving to be more responsive to the future needs of corporations with needs for experienced professionals along with individual members who find themselves with needs to constantly hone and refine their overall skills and competencies. These competencies are quickly moving beyond operational and tactical, to include more aspects of bigger picture and critical thinking skills. One of the most impactful statements communicated by Eshkenazi is that supply chain management itself has an awareness problem for what contribution the discipline provides for businesses. According to Eshkenazi: “Today’s supply chain management professional needs the ability to understand every aspect of the company. With the exception of perhaps Finance, no other function has such a broad sphere of impact. “
We could not agree more, which is why our blog banner was titled Supply Chain Matters back in 2008, and why we continue to provide readers reference points for how professionals who have cut their teeth in operations and supply chain management have risen to C-level and senior leadership roles in multiple industry settings.
Our interview touched upon the three new strategic pillars for APICS:
- Being more strategic in the understanding of how supply chain management impacts business outcomes and has become a competitive differentiator for various industry settings. Being more strategic further relates to helping individual members to acquire the required skill level competencies to provide such differentiation and leadership for their organizations. Acknowledgement of one of the most frequently expressed challenge among supply chain executives, that being supply chain talent management on a global basis was expressed as a part of this pillar. An area that APICS continues to focus on is providing analysis and articulation of well-defined supply chain management career paths that can be utilized for talent management initiatives. Career-path analysis includes collaboration with universities and other professional organizations related to supply chain management to insure that training programs are adequately addressing such needs.
- Being a more responsive professional organization to the needs of firms to recruit, retain and constantly re-skill supply chain professionals for today’s supply chain challenges. The CEO noted that the organization has taken great pains to insure that the content and supply chain body of knowledge is relevant to current and future skill needs. Stressed in the interview is that the organization takes special efforts to insure that certification testing is applications based vs. memorization. Programs directed at job task analysis are focused on what supply chain organizations desire and need. Such analysis is transferred to programs that can prepare supply chain and operations management professionals more successful in current and indeed, future roles, whether they are just starting out, in mid-career or later stages of development. APICS’s goal is to be relevant to members throughout all stages of their careers and as an organization, building a body of knowledge not only on current needs, but cutting-edge supply chain topics. The latter includes the rebranding of the organization’s research arm to the APICS Foundation, which according to Eshkenazi is focusing on more forward-looking topics related to supply chain needs of the future.
- The final pillar described was being a globally-driven organization, extending both educational and certification programs across broader geographic regions across the globe. Today’s supply chains extend to Asia, Latin America and other countries and the need for skilled supply chain talent is just as important. “APICS certifications need to be relevant across the globe” according to the CEO.
Our interview dived into many other efforts underway, enough to convince this author that APICS is indeed, a re-energized professional organization that is laser focused in operations and supply chain management education initiatives and continued programs that provide value to members.
A final note to our interview was that this CEO wanted to express the organization’s sincere appreciation to all of the existing APICS membership for their continued volunteerism and active interest in contributing to the organization’s mission and programs.
ToolsGroup Announces Application of Machine Learning Technology Applied to Product Demand Forecasting
In a previous Supply Chain Matters commentary s latest ranking of supply chain planning SOR providers that best-of-breed software providers continue to dominate in providing broad vision and product innovation.
Last week provided yet another example of that tenet.
Demand analytics and supply chain optimization provider ToolsGroup made a noteworthy announcement last week. This vendor has embedded machine learning into its SO99+ demand forecasting and management application to solve problems that supply chain planners more often than not, face every day. In difficult product demand forecasting scenarios, those that involve concentrated incidents of trade promotion, product seasonality, and new product introduction, or product cannibalization, impacts must be measured against baseline demand. Too often, planners overreact to fluctuation or sudden changes in demand. ToolsGroup application of machine learning analyzes many of the relevant variables and interactions and adjusts the baseline by identifying the effects of stimuli at a detailed channel level.
The vendor cites application of this technology at customer deployments at Danone and Lennox Industries, among other unnamed customers. While Supply Chain Matters has not as yet had the opportunity to view a demonstration of application of this machine learning technology, we look forward to doing so.
This is yet another example of how smaller, more nimble vendors can stay at the edge of innovation by moving quicker to respond to needs in the market.
April 7, 2014 Readers Note: The below posting has subsequently been edited from its previous appearance because of communication received from Gartner, Inc. Office of Ombudsman regarding Gartner Copyright and Quote Policy.
Last week Industry analyst firm Gartner released its 2014 Magic Quadrant for Supply Chain Planning System of Record technology. We compliment Gartner for somewhat more rigorous ranking criteria in the latest iteration.
From our Supply Chain Matters point-of-view, there is an important takeaway concerning this year’s rankings of vendors. Four of the total five vendors ranked in the upper right-hand quadrant, those that Gartner ranked as leading on completeness of vision and ability to execute, are all termed best-of-breed vendors in supply chain planning. If one adds the three other vendors ranked high in completeness of vision (lower right-hand quadrant), there are seven of eight best of breed vendors listed.
Common themes were broad vision, completeness of functionality in terms of supply chain process maturity and the quality of customer references and satisfaction rankings. Another important aspect to the rankings was customer’s use and dependence on a single planning platform. Much of this is reinforced in the individual listings of individual vendor strengths. These overall strong rankings of best-of-breed SCP vendors reinforce that product innovation, attention to customer process needs and overall solution value for the customer remains an advantage for this family of vendors.
For non-subscribers to Gartner’s supply planning research, a summary of this report can be viewed at this web link.
B2B cloud-based network provider E2open reached a significant milestone today with the announced availability of E2 Planning and Response version 11.2 which includes enhanced supply chain planning capabilities including “what-if” scenario and simulation planning, network planning visualization and analytics.
Readers will recall that in late July of last year, the supply chain planning technology market was stunned by the announcement that Icon-SCM, a German based private provider of supply chain rapid planning and simulation capabilities, and a preferred partner to SAP at the time, was acquired by E2open. At the time of this announcement, our Supply Chain Matters commentary opined that with the addition of Icon-SCM and its vision of network-wide rapid planning and simulation, the product roadmap for E2open would vastly accelerate in the areas of advanced supply chain planning. Today’s announcement represents a significant step in that direction.
It is further evidence that the technology community is hearing your desire to provide a B2B network that provides support capabilities well beyond supplier connectivity, visibility and basic collaboration. The ability for a cloud-based provider to incorporate responsive planning, what-if and simulation capabilities, coupled with collaborative execution brings customers far closer to the ability to enable supply chain control towers supported by deeper, predictive and more informed supply chain wide decision-making capabilities.
Readers familiar with Icon-SCM will probably recognize the augmented capabilities included in the latest E2open release. That includes in-memory creation and comparison of planning scenarios, the ability to perform multiple what-if simulations of various product demand and supply situations, a configurable planning cockpit with drill-down capabilities to analyze exceptions or alerts. The new release further provides a certified SAP adapter to provide proven connectivity with SAP data sources and hubs.
Our belief is that this latest release is one of others to follow that will add even more supply chain predictive planning and business intelligence support capabilities and it will be interesting to observe the market uptake as E2open begins to compete more directly with existing supply chain planning and execution providers. This will afford manufacturers and brand owners enhanced opportunities to align direct procurement, supplier based management, customer fulfillment and logistics capabilities on a single network, perhaps far sooner than any existing ERP provider.
Disclosure: E2open is a sponsor of the Supply Chain Matters blog.
On the eve of the beginning of the chronological New Year, it is our time to reflect, look back and scorecard our Supply Chain Matters 2013 Predictions for Global Supply Chains which we published nearly a year ago.
Readers are welcomed to review our predictions for 2014 which we outlined previously in a series of detailed commentaries. But now is the time to look back and reflect on what we previously predicted and what actually occurred in 2013.
In our previous Part One posting, we scored our first five predictions for this year. We now move toward the final five of our predictions and how they fared.
As has been our custom, our scoring process will be based on a four point scale. Four will be the highest score, an indicator that we totally nailed the prediction. One is the lowest score, an indicator of, what on earth were we thinking? Ratings in the 2-3 range reflect that we probably had the right intent but events turned out different.
2013 Prediction Six: Supply Chain Organizations Must Either Embrace and Augment Resiliency or Deal with the Consequences of Poor Business Outcomes.
This particular prediction was motivated by the constant volatility in product demand, supply, and other unplanned events impacting industry supply chains. Volatility exposes the vulnerabilities of existing planning, execution or S&OP processes. Throughout 2013, there were increased incidents of supply chain disruption including a major port strike, the threats of port strikes on involving the U.S. west and east coast ports, major factory and warehouse fires along with continued incidents of unprecedented natural disasters. Just this weekend, a fire destroyed the workshop of internal movement parts-making supplier to Swatch Group and other competitive watch suppliers. Swatch supplies roughly 60 percent of movements used in all Swiss watches. As we pen this update, it remains unclear as to the extent of the damage or parts disruption.
Throughout 2013, we observed more and more evidence of manufacturers investing in people, process and technology augmentation that would address resiliency and more predictive decision-making capabilities. This was further reflected in robust software sales from vendors and services providers that concentrated in enabling resiliency, risk-mitigation and more responsive supply chain decision-making capabilities.
We predicted that Supply Chain Control Tower (SCCT) initiatives, beyond those in high tech and consumer electronics supply chains, would come more to the forefront this year. That turned out to be not the case. There were various reasons including the need for further education, organizational readiness to take on such as an initiative and technology vendors themselves who moved away from articulation of SCCT concepts in their product marketing. This area was a missed prediction for us but we continue in our efforts to provide broader market education in this area.
2013 Prediction Seven: Chinese based Manufacturing and Service Firms will Markedly Increase Their Presence and Influence within Industry Supply Chains
The essence of this prediction stemmed from China’s leadership which was encouraging more companies to buy assets overseas and to make strategic investments across targeted industry supply chains. Having in excess of $3 trillion of foreign-exchange reserves helped in the bankrolling of such investments. While natural resource and energy continue to be the predominant strategy our belief was that other industry or geographic penetration strategies would play out in 2013, and that indeed turned out to be the case.
Chinese firms indeed turned their attention toward machinery interests across Europe, making select investments in distressed companies. Zoomlion Heavy Industry Science and Technology, a state owned construction equipment producer acquired German equipment maker M-Tec inDecember. Sany Heavy Industries has quietly acquired two German based firms, Putzmeister and Intermix and entered a joint venture with Austria based Palfinger. In the United States, Sany invested in a $60 million office building and adjoining warehouse outside Atlanta in an effort to develop a more significant presence in the U.S. construction equipment market. According to a Wall Street Journal report earlier in the year, Sany has been “scouting for acquisitions and joint ventures to gain a broader product line, more sales and rental outlets.”
Tianjin Pipe has invested in a $1.3 billion manufacturing plant in Texas to produce seamless-steel pipe for the oil and gas industry. That plant is expected to be completed in 2014. Hisense USA, the subsidiary of home-appliance and electronics producer Hisense Electric is branching out to become a stand-alone brand of flat panel TV’s and mobile handsets from a plant in Georgia. A growing number of China based textile producers including Keer Group and JN Fibers have been investing in new production facilities in the U.S. southeast to supply fabric yarn to Central America apparel producers. Energy costs in the U.S. have become far cheaper not to mention transportation cost advantages for shipping yarns and industrial fibers to Central America, an evolving low-cost manufacturing alternative for the Americas market. These strategic investments allow Chinese yarn and fabric producers a means to overcome existing U.S. tariff barriers for fabric composition.
The most visible and noteworthy investment was the acquisition by China’s largest meat producer, Shuanghui Group, of major pork producer Smithfield Foodsfor approximately $4.7 billion. The primary purpose of this acquisition was stated as fostering more export of Smithfield branded pork products towards China’s booming consumer market. The reality however is now the presence of a prominent Chinese based food producer within an important segment of the U.S. pork products supply chain. The deal also won approval from U.S. regulatory bodies. Since the Smithfield acquisition, there has been added speculation about added acquisitions in the dairy sector.
We believe we nailed this prediction and thus provided ourselves a generous rating.
2013 Prediction Eight: The Executive Level Voice and Shared Accountability of Supply Chain will Extend into Three Broader Areas
Rating: 2.0 (see below qualifier)
The basis of this prediction was our belief that evolving needs for product design, customer fulfillment and customer service now umbrella, voluntarily or involuntarily, more accountability for the supply chain leadership executive. Visible incidents of botched new product introductions because of initial quality issues or premature component failures across automotive, aerospace and consumer electronic brands during 2012 led us to this broader prediction. The new era of Service Lifecycle Management where OEM’s or capital equipment manufacturers offer customer pay by use or pay by hour leasing options was yet another motivator for broadening the accountability umbrella of the supply chain organization.
Throughout 2013 there were continued developments of premature quality and component failures among the above mentioned industry groups. While Ford Motor has introduced quite a number of new vehicle models, its quality indicators are slipping precipitously. Business media headlines were consumed with continuous reports of additional component failure incidents involving Boeing’s 787 Dreamliner aircraft. Other incidents that have escaped media visibility continue.
Candidly, our rating of this prediction has been a challenge since we have had difficulty in securing anecdotal or hard evidence of clear increased or broader functional accountabilities among industry supply chain teams. Our intent was to develop a detailed research study to explore this area in 2013 but a lack of time and a specific research sponsor thwarted our efforts. Therefore, we cannot in good conscience provide ourselves an overly positive rating even though our gut belief is that we were on the right track with this prediction. We therefore defer to our readers to add further commentary and perspectives as to whether broader and increased accountability indeed occurred during 2013. Look for flash poll early in the New Year to ascertain if a broader umbrella of accountability is underway.
2013 Prediction Nine: Higher and More Expensive Incidents of Counterfeit Products, Physical and IP Theft or Grey Market Activities Would Motivate Stepped-Up Mitigation Efforts.
The incidents and challenges surrounding the continued existence of counterfeit products, physical and intellectual property theft, and grey market activities unquestionably continued across multiple industry fronts throughout 2013. In 2012, U.S. Customs and Border Protection alone seized over $178 million in counterfeit goods coming into the United States. Among pharmaceutical and healthcare supply chains, the U.S. Food and Drug Administration (FDA) had to once again alert physicians and healthcare providers to yet another batch of the cancer fighting drug Avastin early in 2013. In March, U.S. Customs officials seized $3.6 million in counterfeit Viagra and Cialis in a warehouse in South Carolina. That same raid also uncovered a large quantity of counterfeit golf clubs within the same warehouse. Counterfeit drugs were not just in proprietary but generic versions of drugs as well. Generic manufacturer Teva Pharmaceutical had to step-up quality inspections of its off-patent heartburn drugs across Europe after healthcare providers and patients noticed miss-spellings in the drug labels. The World Health Organization (WHO) disclosed that there is still no accurate estimate of the global scale of counterfeit medicines. Reports by others groups suggest that the size of the global counterfeit drugs industry could run into hundreds of billions of dollars.
The United Nations Office on Drugs and Crime concluded in an April report that counterfeit goods, mainly originating from China, have become as profitable as illegal drug trafficking for Asia based criminal gangs. The UN agency concluded that counterfeit goods traced to China are the direct source of about two-thirds of the world’s counterfeit goods. Many watchdog agencies have concluded that counterfeiters have become far more sophisticated in their methods of production and distribution. China is also the primary area of the most concern regarding intellectual property (IP) protection, and has become a primary motivator for current decisions to near source design and manufacturing to other consuming regions such as the United States.
Despite all the above evidence and incidents, industry supply chains such as the pharmaceutical industry continue to battle a rising tide. While many firms have specific compliance leadership and staff resources, efforts generally were directed at certain controls within current budgetary parameters. They include early detection, audit and product packaging techniques to make it more difficult for counterfeiters to distribute fake goods. Calls from governmental agencies for stricter or mandated tracking, inspections and controls remain muted and subject to political lobbying. Private industry must step-up and come up with enhanced solutions.
Meanwhile, consumers, patients and services providers continue to remain the victims. While we correctly predicted the wide-scale scope of the ongoing problem, stepped-up mitigation efforts apparently lagged.
2013 Prediction Ten: Cloud Computing and Managed Services Options Continue to Gain More Traction Provided that Vendors Resolve Lingering Customer Concerns.
The year 2013 featured the ongoing shift of influence and the ultimate decision in technology buying moving away from IT and towards the business side, with the continued counsel of the CIO and IT teams. The fate of technology investments to enable expected and more timely business outcomes is quickly shifting into the hands of business and supply chain teams. At the same time, huge multi-year technology transformation initiatives were shunned in favor of targeted, tactical business process change initiatives of average 3-6 months duration that phase-in capabilities toward a desired multi-phased end-goal. This fostered a greater attraction toward cloud computing, managed services or best-of-breed selection options that
provided teams managed scope and much quicker time-to-benefit.
During the year, industry analyst and other published surveys pointed to less resistance for certain supply chain mission critical processes moving toward hybrid or public clouds, provided that vendors could ensure strict security standards, less onerous contract language and quicker implementation methodologies. However, the November-December incident involving the security breach of retailer Target’s point-of-sale systems will most likely significantly re-ignite security concerns again in 2014.
In 2013, many supply chain technology vendors continued their wholesale shifts at providing customers broad cloud-based options in planning, B2B collaboration and execution management. Thus far, customers seem to be comfortable with adopting such options, but again, in managed scope. Tight budgets for technology adoption also contributed to the attractiveness for cloud-based options since technology investments can be funded within business operating budgets.
This concludes our 2013 Predictions scorecard. We trust that you, our readers, secured benefit from these predictions as they transpired this year. While we did not hit a home run on every prediction, we were certainly in the game.
Readers are invited to add their observations in the Comments area regarding our predictions for this year and our self-rating.
Sincere thanks for your continued loyal readership throughout 2013 and we extend our wishes for a productive and rewarding 2014.
Bob Ferrari, Executive Editor and Managing Director
© 2013 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters Blog. All rights reserved.