We pen this commentary at the beginning of day two of the Supply Chain World North America 2012 conference, sponsored by the Supply Chain Council.  The theme for this year’s gathering was Taking Supply Chains to the Next Level. As was the case last year, our speakers have been extraordinary and the messages have been fairly consistent. For the most part, speakers reinforced that current efforts toward transformation are focused more toward the ‘soft’ skills of managing required organizational and business change, and the recruiting of skilled supply chain professionals.

Donald Wirth, Vice President, Global Operations and Corporate Supply Chain delivered an insightful day one keynote, and providing some candid observations regarding supply chain transformation. One example was: “We spent way too much time on six-sigma efforts while never moving the needle on the competition.”  He then shared his council on leading transformation, which included:

• Leverage scale and skills of the entire organization.
• Focus on standardization and simplification.
• Align management practices, including shifting from functional execution to more collaborative based metrics.
• Continually build the culture and capabilities required to support the business.
• Link supply chain performance and plant excellence, which is a very important required learning and challenge for inexperienced supply chain professionals.

Wirth further shared his belief in visual management boards as a very powerful tool of communicating management commitments toward change.  His key takeaway for attendees was the statement that the business strategy is the supply chain strategy.

Lalit Wadhwa, Vice President of Global Supply Chain Operations for Avnet, Inc., a global high tech electronics distributor provided insights to continually changing high tech and consumer electronics supply chains and the critical importance of fostering multi-tier visibility to inventory, capacity and order activities. Avnet has the unique situation of having capabilities located at both the downstream design and upstream supply points of high tech supply chains.  Lalit also described for the audience Avnet’s current design principles and deployment of a supply chain control tower rollout.   Supply Chain Matters plans to follow-up with Avnet and provide further detail on this control tower deployment effort.

Other speakers stressed a variety of common themes that emphasized strategies for:

• Balancing globalization vs. regionalization
• Learning from other industries
• Importance of risk management
• Segmentation of supply chains
• Focus on required customer and business outcomes
• Understanding and paying attention to the power of analytics and business intelligence applied to areas such as cost to serve, anticipated product demand, or total landed cost analysis.
• Developing a flexible roadmap of transformation

Conversations at last night’s evening reception provided attendees the opportunity ample time to renew acquaintances and reinforce conversations related to supply chain transformation.

Stay connected for further commentary later this week.

Bob Ferrari

This is a brief reminder that there is but one week remaining to register for the upcoming Supply Chain world North America Conference, sponsored by the Supply Chain Council.  As in previous years, there is a great lineup of keynote speakers and concurrent sessions.

Supply Chain Matters via this author will be facilitating one of the conference’s premiere events, the  Pundits and Influencers panel discussion which will be held on the final day of the conference. The Supply Chain Council has provided a dedicated web page to introduce our panel. I was very fortunate in being able to assemble this panel, which will represent years of experience in observing and commenting on supply chain insights and future trends.  Knowing each of the panelists personally, I’m expecting a lively and information exchange.

After collaborating with each of the panelists, we have lined-up the following topics slated for panel discussion this year: (time permitting)

• How and why supply chains must be positioned to be driven by business strategy outcomes?
• Should organizations be revisiting the determination and assessment factors of supply chain risk?
• Will technology play a more instrumental role in transforming supply chains to required new levels of capability?
• Supply chain executives have been of the belief that continuous improvement programs that introduce gradual change are the means for implementing transformation. Will this approach suffice in this new era of constant business change and increased risk?
• What do you believe are the next logical steps for organizations in their S7OP journey?
• How do you observe current supply chain skill gaps being articulated and what do you view as the key management skills required to manage in the “new normal” of business?  Are universities and training organizations focusing on the right skill areas?

At this year’s conference, our panel will also be conducting a dedicated informal networking session with conference attendees, a day prior to our panel. This will be the opportunity to meet one on one with any panelist and provide other questions or exchange topics of interest.

Supply Chain Matters readers who plan on attending the conference are also welcomed to share topics that they would like the panel to address.  Send us an email: info <at> supply-chain-matters <dot> com.

Readers can easily register for the conference by double-clicking on the icon located in our Upcoming Conferences panel on the right-hand panel of this blog.

Bob Ferrari

The following also appears as a published guest commentary on the Supply Chain Expert Community web site.

Earlier this month, the Wall Street Journal’s Theory and Practice series published an article, The New GE Way: Go Deep, Not Wide.  (paid subscription required or free metered view) For many of us who are familiar with General Electric’s previous tenets of management education, this article notes that the company that once prided itself on a curriculum of grooming  broad industry and functional generalists has instead shifted its management training focus in favor of deeper expertise. The WSJ points out that like all companies, GE requires both horizontal and vertical traits in its leaders, but the balance has tipped toward deeper expertise. Instead of purposely relocating senior leaders often to expose them to more of the company’s diverse businesses, GE now assigns these future leaders with longer assignments to develop a deeper understanding of products and the specific customer needs within an industry segment.

The reasons for this shift are those that many in our community have likely observed.  The pace of global business requires a much more intimate knowledge of the aspects of customer needs, product development, supply chain tradeoffs and go-to-market strategies. In the article, Anders Wold, head of GE’s ultrasound business is quoted: “Customers tell us exactly what they want. If you are very generic, if you don’t have the domain understanding, you will develop products that will be average and not successful.” GE’s aviation business unit, one of the fastest growing businesses, is headed by David Joyce who has devoted his entire career to aviation engine platforms.  Previous leaders of this GE business unit came from outside of aviation.

In our view, this trend is also a reflection on accountability, staying in a leadership position for the time to make longer-term initiatives successful and avoiding the constant “parachuting” into and out of programs without a consistency in leadership and follow-through to initially targeted results. Broad initiatives directed at implementing a company-wide S&OP process, implementing advanced technology or shepherding a multi-year supply chain transformation effort can often lose momentum or perspective from frequent changes in leadership.

The point of this commentary is for our supply chain community to reflect on the functional and leadership skills that are required in this new era of dynamic business change, globally extended supply chains and risk exposures.  Supply Chain Matters offers a point-of-view that required skills should reflect broad functional supply chain skills and deep business and program management skills.

Regarding functional knowledge, not everyone can effectively contribute within this new and faster clock speed of business without broader supply chain functional knowledge. That is why current certification programs offered by either APICS or CSCMP test on broad based functional knowledge in areas such as customer relationship management, procurement, planning, transportation and logistics, among other areas.  The goal of certification is to reflect a fundamental baseline knowledge of the processes involved in the supply chain, and we would add, the newest price of admission into the function.  Beyond acquiring certification are years of actual experience working within and across many supply chain functional areas in implementing business and functional program needs.  Thus, broad supply chain horizontal skills and practical knowledge remain extremely pertinent to success.

Conversely, at the management level, we submit that deep understanding of the business, effective communication to senior management, coupled with demonstrated leadership at implementing needed strategic, tactical and operational change are clearly new stakes for global supply chain leadership.

It may be no secret that some current managers within individual functional domains have risen to leadership roles because of their deeper functional and tactical leadership skills vs. broader understanding of either supply chain multi-functional requirements or needs to directly integrate supply chain business process and information technology initiatives with required longer-term business outcomes.  This is often where initiatives for ‘taking cost out of the supply chain’ conflict with ‘providing enhanced services’ for innovative new products.

Tomorrow’s supply chains require leaders who can articulate how supply chain capabilities impact a required business outcome or desired metric of performance.  They are leaders who build their resume on facilitating timely strategic and tactical change vs. multiple assignments implementing short-term objectives.

What about your supply chain organization?

Are functional and management training or mentoring programs addressing the unique needs of broad supply chain functional and deeper business and management skill knowledge?

What are other thoughts to this important area of management skills development?

Bob Ferrari

We again remind our readers that on April 2nd thru the 4th, the Supply Chain Council (SCC) is conducting its annual Supply Chain North America 2012 Conference being held at the Hyatt Regency Hotel in downtown Miami Florida.

This year’s conference has as its overall theme: A Shift to Integrative Thinking, and will include sessions that address needs in the areas of customer delight, supply chain operational excellence, people and talent, and the need for resilience. Last year’s conference garnered highly positive feedback from attendees and this year’s event has similar potential.

The lineup of speakers includes timely keynotes from Donald Wirth, Vice President, Global Operations-Corporate Supply Chain at DuPont, and Steven A. Melnyk, Professor of Operations and Supply Chain Management at Michigan State University. Other conference speakers include senior supply chain managers representing Anheuser Busch Inbev, Avnet, Inc., Cienna Communications, Dell, Land O’Lakes, and SAP, among others. This conference is designed to be a more intimate session with lots of opportunities to network with both your fellow supply chain management professionals and the presenters’.

I’m delighted to announce that I will once again be moderating the Pundits and Influencers panel discussion which is scheduled on Wednesday, the final day of the conference.  This will be my second year of panel moderation for the annual conference.  The panel itself is designed to provide attendees the latest perspectives of upcoming business, process and technology trends impacting global supply chains.  We broadened the format last year to provide the audience with more diverse perspectives, hence the name changed from the traditional industry analyst panel to an influencer’s panel.  The change was well received by last year’s audience.

Panelists confirmed include:

Steven A. Melnyk, Professor of Operations and Supply Chain Management, Michigan State University

Roddy Martin, Senior Vice President, Global Supply Chain Practice, Competitive Capabilities International (Former Vice President at AMR Research/Gartner)

Matthew Davis, Research Director, Supply Chain, Gartner Inc.

Bob Parker, Group Vice President, IDC Manufacturing Insights and IDC Retail Insights

Yours truly as moderator and facilitator

My goal as moderator is to have the panel discuss and interact on current top-of-mind topics including what integrative supply chain capabilities equate to, the impact of a rather tumultuous 2011 and 2012 across global supply chains.

More detailed information regarding the conference, including detailed agenda and registration information, can be accessed by clicking on the conference graphic located on our Conferences panel on the right-hand side.

Please consider joining me at Supply Chain World North America this coming April.

Bob Ferrari, Founder and Executive Editor

We were catching-up on reading this week and reviewed an article published in CSCMP’s Supply Chain Quarterly printed magazine. (paid subscription or CSCMP professional membership required).  The article was titled, Tap into the power of analytics, and was jointly authored by Thomas H. Davenport, distinguished professor of IT and management at Babson College, and Jerry O’Dwyer, a principle and leader of analytics strategy for the strategy and operations practice at Deloitte Consulting LLP.

I remain a strong fan of professor Davenport’s research in the area of supply chain and business analytics.

The article itself explored new ways of applying supply chain analytics to business performance needs and where to find the best opportunities.  One of the most important insights brought out in this article reflected on the need for improving analytical “literacy” across supply chain teams.  We have heard and read of this same need coming-up more frequently among senior supply chain management teams and wanted to enhance this challenge through this commentary.

In their article, the authors make the observation that several companies have had to considerably upgrade their analytical capabilities of both their IT applications and in the skills of business planning teams.  A quote from one supply chain manager observes that people have to be twice as smart in order to make best leverage of today’s more sophisticated technologies in analytics. Further noted is that individuals need to be either retrained or perhaps moved to other opportunities.  Some companies are providing for in-house sponsored training while outside universities or training organizations are offering new opportunities for deeper analytical skills.

One other concept brought out by the authors to facilitate the understanding of supply chain analytical skills was simpler software applications with narrow functionality. The analogy brought forward is that of a “smartphone-like app” that would support a single decision, and further noted is that some software providers are now beginning to introduce such narrow applications. Examples mentioned are supplier evaluation, inventory performance analysis or transportation analytics.  The authors point out that the way to guarantee the use of analytics in supply chain management is to embed them into supply chain-oriented processes and systems.

Supply Chain Matters would not necessarily agree with the first approach, namely because it places analytics and business intelligence data back into functional stovepipes, rather than into a supply-chain wide information and intelligence repository.  These narrow scope analytics applications may also be the means of some software providers to hang on to customers while not necessarily supporting the broader and more extensive need.  The latter, in our view, reflects the emerging concepts of supply chain control tower like applications or platforms, which we addressed in prediction five of our Supply Chain Matters 2012 Predictions for Global Supply Chains.

Regardless of the systems and technology approach, the reality remains that both supply chain management and planning teams need to consider realistic methods for  deepening individual skills and literacy into leveraging advanced analytics within supply chain business decisions.

We encourage readers to share their own views regarding the growing need for supply chain analytical skills by either adding a Comment to this posting, or responding to our interactive poll question appearing in the right-hand panel. Depending on the volume of responses, we will share the results in an updated commentary.

Bob Ferrari

This commentary can also be viewed on the Supply Chain Expert Community web site, upon which the author is a featured guest blogger.

One of the cornerstones of the Supply Chain Matters blog is to track the history of specific supply chain related events involving industries and to help our readers connect the dots in term of strategy and results. In May 2009, we featured a commentary regarding Fiat Group and its unfolding strategy of opportunistic supply chain strategy, specifically its planned acquisition of Chrysler in the U.S..  At the time, this author was impressed with Fiat chairmen Sergio Marchionne and his strategy to make both companies global players in the industry.

As we approach the end of 2011, the story of Fiat and Chrysler is much more positive, with an even stronger potential.  We call readers attention to an article published in the December 19 edition of Time, Power Steering- How Chrysler’s Italian boss drives an American auto rival. (paid subscription required) Author Bill Saporito pens a very insightful look at Chrysler, where it was, and what it is becoming, and in particular, the noticeable leadership of its chairmen, Sergio Marchionne. Sergio has a knack for turning around dysfunctional automobile companies along with a keen understanding of operations and value-chain management.

The article points out that Fiat’s small-car prowess, engine technology and superior manufacturing capability was a perfect complement to Chrysler’s needs. Fiat which now owns 53.5 percent of Chrysler, has made its impact. Chrysler revenues were up 23 percent in Q3-2011 and could top $55 billion.  Operating profit could reach $5 billion vs. hemorrhaging $1 billion a month in 2009. In May, Chrysler transferred $5.9 billion to the U.S. treasury, paying off its bailout loan six years ahead of schedule.

The article goes on to expound on the unique leadership style of Mr. Marchionne, specifically his no-nonsense approach to management, his deep analytical abilities, and attention to the details of all aspects of the business, including manufacturing and value-chain.  He has thus far resized the company, flattened management layers, and overhauled the vehicle line-up in record time. Mr. Marchionne is a strong believer in elimination of management layers and practices promoting people buried in the ranks to higher levels of responsibility, giving such people all that they need to succeed and prove their potential. It is referred to as loose-tight management, a concept which many successful companies have practiced.  At the same time, he also holds people accountable for definitive results and is not shy about pulling the plug when results are not forthcoming. The author notes that: “Marchionne has the Steve Jobs gift of absolute focus.” He gets into the details. He also does not choose to have his office within Chrysler’s former executive penthouse, opting instead to locate his office in the engineering department, a visual reinforcement that it is no longer business as usual.

As was noted in 2009, Marchionne has a vision that the surviving global automotive OEM’s will need to have sufficient volumes of production to support each of the major world markets, at least one million for each major product platform in order to drive required global production cost efficiency and sustained profitability.  This translates to a combined goal for producing 6 million vehicles among the Fiat and Chrysler brands, with today’s volumes at 4.2 million vehicles. Fiat has become a global leader in efficient, high-volume, robotized production of small displacement engines and there are plans to have a similar focus for V6 engines.  Fiat also excels in small diesel powered engines, and its production facility in Poland recently exceeded a production target of 4 million 1.3 litre, 16 valve MultiJet technology engines. Technology and world class manufacturing knowledge transfer is underway among both companies with a cultural premise that production workers, not engineers, own the quality control process.  A global manufacturing boss has been appointed to oversee both Chrysler and Fiat, and the article points out that Mr. Marchionne has been known to show up from time-to-time at warranty analysis and quality performance meetings. Chrysler itself has not been known to invest in advanced supply chain software technology for planning and business intelligence but that may perhaps change.

The first totally new vehicle of the combined Fiat-Chrysler collaboration will debut in 2012 with a C-class Dodge branded vehicle. It will be based on the Fiat platform of the Alfa Romeo Giulietta, adapted for U.S. market requirements. There is a further plan to invest $23 billion to develop new vehicles for Chrysler through 2014, a rather aggressive plan by U.S. automotive industry standards, and all vehicle can be adapted by Fiat for other global sales needs.

The Time article concludes with a very characteristic Marchionne quote: “People need to trust you that you’re going to pull them out and that they will follow you when you pull them out.  If they don’t get that comfort, they’re going to drop you. This is true of organizations.  It’s true of countries.”

We would add that this quote represents a philosophy that is rather important for senior and team focused supply chain management in the coming year and beyond, namely the ability to lead, get into the details, provide people with the means and tools to accomplish their goals, and to foster consistent accountability.

In our 2009 commentary, we closed with the statement that whether the combined force of Fiat and Chrysler was totally successful, we have the opportunity to observe a visionary company with a leader that truly understands the importance of a leveraged global value-chain and integrated supply chain execution.  Two years later, this case study continues to play out with positive potentials.

Time will tell if this will become a definitive case study in vision and consistent execution in supply chain management but the scorecard thus far is rather positive.

Bob Ferrari

© 2011, The Ferrari Consulting and Research Group LLC and Supply Chain Matters.  All rights reserved.