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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.


Market Education Series- A Path Towards Internet of Things Enabled Service Management

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Supply Chain Matters kicks-off the first of a new market education series- A Path Towards Internet of Things Enabled Service Management, in collaboration with supply chain planning and service parts technology provider ToolsGroup.

This supply chain industry analyst is not alone in communicating the long-term implications and benefits of Internet of Things (IoT) technologies applied to multi-industry supply chain business processes.

When I speak to audiences on the future of industry supply chain capabilities, I often context that in over my 30 years of experiences and observations, what I always considered to be the “holy-grail” of our profession was the ability to connect the physical and digital components of various supply chain business processes. That vision is becoming much more of a reality as supply chain teams begin to leverage IoT data and information into planning and customer fulfillment decision-making. From my view, that reality is not the far away.  Planning 3 shutterstock 394279114 300x184 Market Education Series  A Path Towards Internet of Things Enabled Service Management

One of the most promising line-of-business areas that will benefit from IoT enabled technologies applied to supply chain will be equipment services management, especially service and spare parts management. Consider the possibilities when physical objects such as engines, motor vehicles, capital, and other forms of equipment, proactively communicate needs for required maintenance services, replenishment, or repair parts.

Consider the possibilities of far more knowledgeable insights into item-level service or spare parts product demand, more efficient and less costly multi-tier service echelon inventory management, and a more responsive services management process for your customers. 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.

Three to five years from today, equipment manufacturers will be communicating to investors about many of these new top-line revenue business growth areas where physical and digital interact in a more predictive service management business capability. Such capabilities insure maximum uptime for customers, supported with a super-efficient supply chain planning and resource management capability connects the physical with the digital.

This is all very possible. However, with any solid business model, there are requirements for foundational process and decision-making capabilities.  If your business or enterprise is considering such business models, now is the time to consider investments in fundamental decision-making support capabilities that can best take advantage of the implications of physical and digital coming together.

We submit one of the most fundamental investments to consider is that of a robust service parts planning and fulfillment process that leverages today’s more advanced capabilities of in-memory computing, machine learning and analytics to support automated decision-making and resource balancing. IoT married to machine learning and more predictive analytics pays near-term dividends for current service management processes as well as future, more robust business models.

In our four-part Supply Chain Matters market education series, A Path Towards Internet of Things Enabled Service Management, in collaboration with supply chain planning and service parts technology provider ToolsGroup, we will help readers to understand and be able to articulate the following:

  • The current state of service and spare parts planning processes and why tailored service parts planning capabilities so different than other forms of supply chain planning? Why is it increasingly becoming fundamental to any service management process and why are so many equipment manufacturers currently investing in this capability?
  • How does a robust service parts planning capability play a foundational role in an Internet of Things (IoT) enabled environment? How does such capabilities, augmented by new advanced technologies, enhancing the effectiveness of an overall IoT integrated process?
  • What are the overall benefits for customers and to the business, and what are some current-day examples? How is this best articulated to the C-Suite? Why equipment manufacturers and services providers are already on this path?

Join us over the coming weeks as we dive deeper into each of these topical areas reflecting on how to build the foundations for both a robust, more efficient, and less costly service parts planning capability as well as laying the critical foundation for new IoT enabled service management business models.

Bob Ferrari

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

 


JDA Software Announces Additional Executive Leadership Changes

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Just prior to conducting its annual FOCUS 2017 customer conference last week, JDA Software announced additional leadership changes. As we opined in January, Supply Chain Matters anticipates further business changes in the months to come.

In January, Supply Chain Matters called reader attention to then unexpected CEO management change that occurred at JDA. At the time, then Chairman and CEO Bal Dail stepped down and the company’s Board of Directors appointed former Tyco executive Girish Rishi as the new company’s CEO. Rishi assumed the role after serving as Executive Vice-President at Tyco International, responsible for that firm’s global retail and North America building automation businesses.  The move came after a $575 million re-capitalization of JDA led by private equity firm Blackstone Group in August of 2016, after an unsuccessful attempt by Honeywell to acquire this technology provider.

In January, we advised that it was unclear as to whether other strategy or leadership changes were in-store for JDA and we shared with readers that immediate or unplanned CEO succession announcements usually result in subsequent changes.

These latest executive changes include the promotion of Mark Morgan to the role of Executive Vice President and Chief Revenue Officer, responsible for the entire global sales organization. Morgan was previously responsible for North America operations, and came to JDA from the i2 Technologies acquisition.  This change came after existing sales executive Razat Gaurav, also an i2 alumni, departed JDA to pursue other opportunities.

A further change was the appointment of David Rye to the newly created role of Senior Vice President of Strategy and Corporate Development. Rye recently joined JDA in April from a private equity role and prior corporate development and strategy roles at Informatica Corporation and Hyperion Solutions. According to the announcement, Rye’s responsibilities will focus on: “shaping JDA’s corporate strategy around its portfolio, services, cloud and go-to-market approach.”  Rye’s background is noted as driving revenue growth strategies as well as acquisitions. He also provides five years’ experience in private equity investing. He has academic credentials at Stanford and Princeton Universities.

Supply Chain Matters has learned that there have been other management departures from the company in conjunction with these latest leadership realignment changes.

As readers can well surmise from the latest announcements, the priority of JDA remains in revenue expansion and perhaps other M&A activities.  Many times, when a software or technology company anoints a Chief Revenue Officer, it is a sure sign of singular accountability for revenue fulfillment goals. Similarly, singular leadership of corporate strategy and business development implies a laser focused priority.

By this supply chain technology analyst’s lens, JDA’s vertical industry focus remains pre-occupied with Retail industry and B2C technology needs, but that industry remains under extreme financial stress due to unprecedented business changes. There have been some inroads in other industry verticals but supply chain technology deals have become highly competitive sales cycles of-late. That may change with new JDA leadership, but we have witnessed the ebbs and flows many times prior.

The re-capitalization plan of last August can take the company so-far, and then there will likely have to be other forms of sustaining revenue, profitability, and business growth, particularly with Blackstone as an influential private-equity investor.

JDA customers are advised to keep a keen-eye on ongoing developments and request continual strategy and technology development updates.

Bob Ferrari

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

 


Q1 Economic Data Again Echoes Challenges in Integrated Business Planning

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For multi-industry sales and operations planning (S&OP) teams, keeping an eye on the global economy and on individual global regions has been an important consideration in efforts to meet business planning goals and achieve proper supply chain alignment. Yet, global and individual region economic and supply chain indices often reflect a differing collection of trending and forecasting.

Entering the year, there was little doubt that 2017 would provide a multitude of uncertainties related to both global economies and geo-political developments that could impact economies. In its World Economic Outlook published in October 2016, the International Monetary Fund (IMF) cited a subdued outlook for 2017 with political tensions and policy uncertainties prevalent. The October WTO forecast called for anticipated global growth rate of 3.4 percent in 2017.

Last week’s Spring meeting of world finance chiefs in Washington brought forward a more optimistic outlook. The IMF has raised its forecast for global growth to 3.5 percent, the first time this agency has elevated its original forecast in the past six years. The agency cited a stronger reported growth rate in China in Q1 along with improving economies in Europe and Japan. The IMF chief economist indicated to the Financial Times that the world economy was firing on all engines, albeit not very strongly. Another former IMF chief economist indicated to the FT that the low-growth legacies of the 2008 financial crisis have literally reached an end.

That data alone would obviously fuel optimistic perspectives for integrated business planning.

However, during the past few days, GDP growth and PMI indices point to varying sign points.The U.S. Commerce Department reported that the U.S. economy literally stumbled in Q1, as manifested by a 0.7 percent annual growth rate in the January through March period. That figure reflected the slowest pace of expansion in almost three years. According to various commentaries, American consumers sharply cut-back on spending despite consumer optimism being at an all-time high. A drawback in inventories had a significant negative effect on growth in the quarter. Yet, economists and the Commerce Department remain optimistic since other data points to increased business investment and stronger growth in the months to come. The new Trump Administration has put forth a U.S. GDP growth target of 3.5 to 4 percent for the year.

Meanwhile, a review of major global and regional PMI indices indicates that:

  • Global manufacturing and PMI activity reflected by the P. Morgan Global Manufacturing PMI index slipped to a three-month low for April. This recognized benchmark of global supply chain activity registered a value of 52.7 at the close of 2016. The April value was reported as 52.8.
  • The ISM Report on Business PMI (United States) decreased 2.4 percentage points in April, while the accompanying New Orders index decreased 7 percentage points in April.
  • Eurozone manufacturing expanded at the fastest pace in six years during April.
  • China’s General Manufacturing PMI reflected that the country’s manufacturers started Q2 with a further slowdown in production and new business growth momentum.

The above data points, by our lens, are a reinforcement of what integrated business planning processes must now deal with on a continuous basis. There are now multitudes of different data and information points that must be synthesized, weighted, and factored with more emphasis on the weighting of regional or country-specific product demand sensing. General forecasts based on historic data are no longer sufficient. Planning is now a continuous process with continual input at a much more granular level.

Some current examples of the implications can be observed in the consumer packaged goods and automotive industry sectors.

Market data from Nielson indicates that volume sales for packaged food products in the U.S. fell 2.4 percent in the first quarter of 2017. Noted in one of our prior blog postings, many branded CPG food producers continue to deal with challenges of low growth and permanent changes in consumer buying. For the automotive industry, a multi-year period of robust sales growth in North America is showing signs of more subdued growth. Producers such as Ford Motor, Fiat Chrysler and General Motors reported April monthly sales declines, including popular selling truck and SUV models. According to data from WardsAuto.com, U.S. auto dealers are now languished with a 72-day supply of unsold new vehicles. A report by The Wall Street Journal indicates that GM has nearly one million vehicles sitting on dealer lots. Additional manufacturing cutbacks are now being considered even though the late Spring and Summer are traditional periods of higher volume sales.

Our prediction for 2016, and again for 2017 is that resiliency, adaptability, and risk mitigation are very important competencies since the pace of business and of economic data are in constant flux. It is much more important for teams to be able to constantly sense market demand and look-ahead to what is occurring in specific regions.

The takeaway is that S&OP and respective supply chain planning teams are tasked to insure bimodal business plan performance which implies growing the top revenue line, insuring business margins are fulfilled, and that proper contingencies for the business and for the supply chain are always in-play, regardless of the constant ebbs and flows of the global economy.

Bob Ferrari

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


Market Education Series- The Future of Supply Chain Planning

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This Supply Chain Matters blog commentary is the first in a new market education series, The Future of Supply Chain Planning, developed in collaboration with our sponsor, KinaxisPlanning 1A shutterstock 562747135 250 Market Education Series  The Future of Supply Chain Planning

In this series, we are going to explore what are changing needs in supply chain planning and customer fulfillment, including business, process, technology, and other dimensions. Specifically, we will address what is commonly being referred to as concurrent supply chain planning, and why it is becoming a more important capability to support today’s multi-industry supply chain business environments that are increasingly becoming more dynamic, complex, and dependent on continuous changes in business and consequently supply chain resource requirements.

We begin our series with the posing of a generic baseline definition of what we describe as concurrent supply chain planning:

A continuous approach to planning directed at supporting both short and longer-term supply chain resource and customer fulfillment decision-making needs, that incorporates timely planning and supply chain execution information as the context of such decision-making.   It includes the ability to plan and execute continuously, monitor, and respond to ongoing business events, and the ability to incorporate the knowledge or context of multiple expert teams or stakeholder participants in the process, including the sales and operations planning (S&OP) process.

It is a transition from a linear, sequentially managed time-phased process of planning and decision-making to that of a concurrent process of capabilities anchored in more prescriptive and predictive data analysis, what-if scenario, or simulation-based planning techniques. It is a form of continuous planning and supply chain execution response capability anchored in today’s more advanced technology capabilities, broad-based analytics, and a singular data model approach that can support needs for broader social and collaborative-based interaction and decision-making.

 

Why Now? Why a Different Capability?

To answer this question, we need to look back a moment to the past 10-15 years of supply chain planning processes.

Planning methodologies prescribed by supply chain academic and professional organizations called for forms of sequential, time-phased operational decision-making processes that were predicated on pre-planned planning events and pre-scheduled decision-making milestones.  The primary reasons for adherence to a sequential process were the data and process constraints inherent in overall supply chain planning, principally large amounts of data extracted from multiple systems or spreadsheets. Processing and categorizing planning data literally took hours, days, and in earlier periods, weeks to accomplish.

As we all know, the process included the development of unconstrained and constrained product forecasts or demand plans, followed by matching demand to a supply plan to identify resource shortfalls.  For many manufacturers, the process often involved generating an MPS or MRP process within the resident ERP system that reflected supply chain planning recommendations, and this was the most complex step of all since data was translated to the individual item-level context. The reality of a separate advanced planning (APS) and ERP system added to the sequential process imperatives as well as inherent data accuracy and latency problems along the way.

The process was one of plan, then execute, often took weeks to cycle through with the value of the data and information losing important context during the full cycle. Once more, unplanned events or supply chain disruptions that occurred somewhere in the process would often prompt the need to re-initiate the cycle, which is often difficult to perform and caused a delay responding to the disruptions.

In many respects, S&OP processes evolved under similar pre-scheduled decision-making constructs to orchestrate either short-term operational or longer-term tactical and strategic decisions that involved executive-level participants.

As Kinaxis often points-out, gone are the days when planning happens in isolation, it now requires involvement from multiple internal and external teams and requires both planning and other important elements of information.

The clock speed of business has dramatically increased, and line-of-business and supply chain teams can no longer rely on a sequential, time-phased process of planning and decision-making.  Decisions are becoming continuous and must be predicated on a singular data model of streaming information related to product demand, supply, capacity, risk factors and other needs.

As we continue this market education series, we will explore in greater depth, the process, people, advanced technology, and other considerations that make concurrent supply chain planning more a more viable alternative in today’s industry supply chain environments.  Our series will include authored content from this author hosted on both the Supply Chain Matters and the Kinaxis 21st Century blogs along with interviews with others reflecting on today’s supply chain decision support expectations and they relate to the future of supply chain planning.

Stay tuned

Bob Ferrari


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