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Observations on the Rankings for Supply Chain Planning Technology

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Industry analyst firm Gartner published its Magic Quadrant Rankings for Supply Chain Planning System of Record applications in mid-January. In this Supply Chain Matters commentary we share some random observations regarding these latest rankings of supply chain planning technology vendors.

First, this particular Gartner Magic Quadrant report is later than usual; the last one was published in March of 2014. Rumor and speculation indicates that a reason for the delay was pushback from certain vendors.  While this author does not have first-hand knowledge, having worked at two top-tier industry analyst firms, I would not be at all surprised that the report could have been delayed for such reasons.  Supply chain planning vendors, especially the larger ones, have much at-stake in their ranking from Gartner.

Notable observations from our lens:

  • Niche players such as Blue Ridge and Tools Group moved to the Leaders quadrant to join incumbents Kinaxis, JDA Software and OM Partners. The crossing of two quadrants from the bottom left to the upper right quadrant in a single bound is a relatively rare occurrence in such rankings. As The Wall Street Journal was quick to observe, vendors currently ranked in the Leaders quadrant share the moniker of being best-of-breed technology focused. The only ERP focused supply chain planning provider is Oracle that straddles the line between Challengers and Leaders.

 

  • Upon reviewing many of the individual vendor capabilities rated as Visionaries, a consistent theme among customer references is Stage 3 or higher planning process maturity. Gartner defines such maturity as horizontally integrated demand and supply planning supporting linked optimization across the supply chain.   As one would expect, certain vendors achieve their Visionary ranking because of completeness of technology vision which is a further testament to best-of-breed vendors for the most part. Oracle is one exception.  From our lens, current efforts in releasing a full Cloud based planning capabilities for supporting discrete manufacturing planning needs demonstrates a lot in completeness of vision.

 

  • SAP APO slipped from the Challengers to the Niche Players quadrant. Commentary provided by Gartner indicates below-average level of capability as well as below average customer satisfaction inputs. Further noted is Gartner’s view that the level of R&D investment is now significantly less than the investment SAP is exhibiting in its Integrated Business Planning (IBP) application.  Ironically, SAP IBP does not yet meet the Gartner criteria for inclusion in its Magic Quadrant rankings because it is too new and according to Gartner is yet to have depth of functionality to be deployed as a planning system of record.

 

  • Infor also slipped, moving from the Challengers to lower in the Niche Players quadrant. That was a surprise. Gartner’s commentary reflects below average vision in comparison with other supply chain planning vendors and a more traditional view of planning vs. response planning. Below average customer satisfaction along with below average future buying intentions are further cited as cautions.

 

Notably dropped from the latest Gartner SCP SOR rankings were supply chain planning vendors AspenTech and E2open because of not meeting previous inclusion criteria. Additions in the latest rankings were Adexa, FuturMaster, GAINSystems, NeoGrid and Slimstock. Supply Chain Matters has previously highlighted NeoGrid as an up and coming industry specific supply chain provider.

Obviously, one analyst firm’s ranking of supply chain planning market offerings is different than others.  In the specific case of Gartner’s rankings, there will always be back and forth debates because of that analyst firm’s broad reach among IT organizations.

However, the current landscape of supply chain planning, sales and operations planning (SO&P) and B2B supply chain network planning technology is far more influenced by line-of-business and supply chain leadership input needs and requirements. Hence many other sources of information support the buying decision.

Bob Ferrari


IBM Closes its Most Important and Far Reaching Acquisition- The Weather Company

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If you have had the opportunity to view this author’s prior conference presentations on future technology trends in supply chain management you might have recalled my references to the technology-enabled data analytics services related to The Weather Company and its implications as to how industry supply chains can literally predict future product demand needs by region.

Last October, IBM announced its intention to acquire most of this data analytics provider.  While IBM would not disclose financial terms, The Wall Street Journal speculated the value was over $2 billion. Many in the tech world wondered what this was all about, and why did it fetch such value.

Last week, IBM announced that it has closed its acquisition of The Weather Company’s B2B mobile and Cloud-based properties including weather.com, Weather Underground, The Weather Company brand and WSI, the global B2B brand. According to IBM, the combination of these platforms will serve as a foundation to the evolving cognitive computing IBM Watson IoT Cloud which begins to reveal the why- becoming a far deeper business related data analytics company.

The Weather Company was spawned from what we all easily identify as The Weather Channel. Executives of this weather sciences broadcaster understood the future relationships of weather to consumer buying patterns.  For instance, in the summer months, beer consumption in Chicago incrementally increases after three consecutive days of below-average temperatures. In Atlanta, during the months of fall, beer sales rise after during periods of above-average temperatures and below-average rainfall. During the winter months in Boston, sales of healthy snacks increase after three consecutive days of below-average temperatures and above-average precipitation such as winter snow storms.

Having amassed enormous amounts of weather data from literally thousands of micro-climate geographic locations, weather scientists began to explore the direct correlation of weather to sales of consumer goods. Having found many direct correlations, The Weather Company was spawned as a big-data analytics provider that could aide various consumer goods producers to better predict or promote product sales by specific region. At the same time, industry customers subscribed to weather data to better manage their services and equipment. In a published 2013 article, The Wall Street Journal reported that the new analytics and data science company had the potential to be far more lucrative than the broadcasting arm.

IBM’s plans for The Weather Company now take on a more Internet of Things (IoT) strategy focus. According to its latest announcement, IBM plans to collect a larger variety and higher velocity of data sets from billions of IoT sensors around the world while providing real-time information and insights to tens of millions of users worldwide. As part of the acquisition, IBM inherits The Weather Company’s customers in the aviation, energy, and insurance industries, as well as others. IBM is dedicating more than 2500 developers to help clients and partners collect, analyze and act upon entirely new forms of IoT data resulting from the proliferation of automobile and airplane telematics, building and environmental sensors, wearable devices, medical implants, weather stations, smartphones, social media, manufacturing lines and supply chains, among others.

IBM indicates that its customers will now be able to link all of their business and sensor data from their connected devices with weather data using IBM Watson. Controlling what is described as 2.2 billion weather forecast locations and marrying other physical sensors originating from supply chain activities can literally open up far broader dimensions of predictive analytics and decision-making beyond consumer product demand. How products are planned, how transportation is routed and controlled and how risk is managed across the physical supply chain are all possibilities.

Industry supply chains should keep their eye on efforts in this area.  While IBM has exhibited a prior track record of rather elongated execution on the potential benefits of its acquisitions, Watson and its renewed focus on industrial IoT tied to predictive analytics is an area that will be, from our lens, crucial to long-term growth and future IBM revenue streams.

At the same time, the dimensions of data analytics that literally marry physical, environmental and digital applications information to decisions in product management, supply chain planning, manufacturing and service lifecycle management focused processes are capabilities with enormous benefits.

The open question moves from not in my career but rather to perhaps within the not too distant future.

Bob Ferrari

© 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

 


The Premier Supply Management Conference of the Year is Nearing and a Special Offer

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This Supply Chain Matters commentary is directed towards our various strategic sourcing, procurement and product supply management readers.   ISM 2015 Conference Logo

We wanted to make all of you aware that the Institute for Supply Management (ISM) will be conducting the Supply Management Conference of the Year, ISM2016, from May 15-18, 2016 in Indianapolis, Indiana at the Indiana Convention Center.Alan_Mulally_2

The themes chosen for this year’s ISM 2016 conference is: Proactive-Disruptive-Productive and includes a great line-up of speakers, sessions and networking opportunities.

Former President and CEO of Ford Motor Company, Alan Mulally, is a featured keynote speaker. Mr. Mulally will share his experiences as a dynamic change agent incorporating skills of positive attitude, team-building and business outcomes based decision-making. He will address the principles that took Ford’s supplier
relationship quality rankings from near-dead last to being close tothe top among automotive manufacturers.SusanCain

Former corporate lawyer and negotiations consultant Susan Cain, author of the best-selling book, Quiet: The Power of Introverts in a World That Can’t Stop Talking, will address why introverts are capable of great achievement.

Susan Schwab, former U.S. Trade Representative and current Professor of Public Policy at the University of Maryland will lead a discussion on the ISM Report on Business® and the future of the economy. Ms. Schwab was integral in the initial launch of the Trans Pacific Partnership (TPP) trade negotiations and she will further address how the TPP relates to the future of supply management.

New this year are Customizable Experiences learning tracks that include:

The Emerging Professional– tailored for attendees with 1-8 years of work experience seeking to accelerate certification, expand professional networking and work experience opportunities.

The Corporate Executive– tailored to corporate teams of five or more supply management professionals which will include hands-on team-building sessions, exposure to future up and coming talent, and exclusive access to keynote speakers in an Exec In forum.

ISM 2016 Educational learning tracks for this year are:

Do– Concrete examples of success stories from industry leaders.

Don’t– What the opposite of supply management best practices including mistakes to avoid.

Direct– Covering a broad spectrum of issues, strategies and processes impacting direct materials spend.

Indirect– Helping to identify key characteristics of several indirect spend categories, areas of value creation, savings and other relevant metrics.

People– Insights on the tools, resources, innovations and solutions needed to enhance talent management strategies and individual career management.

Tools– Addressing tools, templates and processes for risk management, innovation, sourcing and procurement practices.

Risk– Examination of risk assessment practices, operational blind spots and gaps, vulnerabilities that pose the greatest risk.

Rewards– Exploration of rewards that can be realized from diversity, sustainability, supplier innovation and business growth.

Senior purchasing and supply executives speaking within these learning tracks include corporate names such as Becton Dickinson, Chevron, CH Robinson, Dell, DuPont, Google, IBM, McDonalds, Miller Coors, PepsiCo, Siemens, Unilever, among others.

For more detailed information on ISM 2016 learning tracks and sessions, you can visit the dedicated conference website.

There is also an incentive for early registration that attendees can take advantage of.

If you register now, you can obtain a 40 percent discount and obtain a complimentary copy of Alan Mullally’s book on his experiences leading Ford. The discount offer expires after February 29.

You can either register directly at: www.ISM2016.org or double click on the ISM 2016 Conference icon. Please include the promotional code: ICON16! to take advantage of this limited offer.


A Tour of Healthcare Supply Chain Innovation in Action

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According to a 2015 survey of hospital executives commissioned by Cardinal Health, services reimbursement followed closely by the increasingly higher costs of supplies are two of the biggest challenges facing these executives. Financial issues, drug shortages and efficiency of the overall organization follow as major concerns.

One can notice a common theme among hospital executives that are often directly related to lack of supply chain efficiencies.

A 2015 white paper, 10 Barriers to Effective Inventory Management, points to the continued need for addressing barriers to effective supply chain and inventory management in hospital settings.  This is especially important in operating room or cardiac catheterization settings where medical devices are expensive and inventory management policies often stem from individual physician or surgeon relationships with individual device manufacturers. Cardinal’s white paper cites one report as indicating that supply chain inefficiency, waste and lack of visibility result in a $5 billion in inefficiencies each year in the implantable device market alone.

In operating room settings, surgeons, scrub technicians, resource nurses or operating room managers assume responsibility for maintaining relationships with manufacturers of implantable devices. They do so to insure access to the latest technology and patient safety innovations as well as surgeon preferences for certain devices. In emergency surgery situations, adequate inventory takes on an all-important life and death dimension, one that must be supported by accurate data related to demand incidence.

These complex relationships often extend to rendering orders and managing inventory. The result can often lead to lack of visibility of existing inventory in terms of expired, obsolete or recalled devices. There are also miscommunications and emotion among clinicians and hospital procurement professionals as to inventory exposure and cost. This is an area that has long been fertile for improvements in inventory management, particularly in advanced methods of item-level tracking.

As a major healthcare products distributor for hospitals and health care providers, Cardinal Health is working with hospitals in availability of more innovative inventory management practices in this area.

In November, this author had the opportunity to visit the Cardinal Health Healthcare Supply Chain Innovation Lab located in Concord Massachusetts.  This is essentially an R&D facility dedicated to reducing waste in the health care supply chain for implantable devices utilizing an Internet of Things (IoT) item-level technology approach. The lab serves as a hub to explore innovative technology approaches such as smart sensors and near-field communications (NFC) in addressing healthcare supply chain product demand and supply inefficiencies.

At the conclusion of the tour and a comprehensive briefing from Jean-Claude Saghbini, Cardinal Vice President and GM for Inventory Management Solutions, this author was impressed.

My impressions stemmed not only from the leveraging of advanced technology to challenging healthcare focused inventory management process needs, but in the notion that healthcare supply chains as a whole, and we as healthcare consumers, can greatly benefit from the application of such technology.

Cardinal’s approach to inventory management is described as product agnostic and can include devices not distributed by Cardinal.  The initial focus on medical, orthopedic and implantable device inventory is obvious, in that this inventory is expensive and as noted above, there has been a long history of process inefficiency. While surgeons strive to be up-to-date with the latest in medical technology, their concerns should not be inventory and supply chain management.  That is the purview of hospital administration.

We observed RFID enabled storage cabinets where inventory is RFID tagged by either suppliers or hospital teams. Storage cabinets constantly monitor item-level inventory including serialized devices.  An operating room nurse or physician removes an item from the cabinet and inventory status is immediately adjusted. Within the OR setting, a nurse scans a bar code affixed to the patient and the inventory transaction is  RFID Smart Cabinets for Hospitals automatically updated to include association with a patient.  If the item withdrawn is not accompanied by a patient scan, an inventory alert is generated.

Cabinets monitor and report inventory balances at prescribed intervals and can automatically generate replenishment orders when inventories drop to prescribed levels. If one particular hospital does not have a particular implantable device on-hand, a quick search of other networked cabinets quickly indicates which nearby or healthcare network hospitals have the specific device. The process works similarly for consignment inventory placed adjacent to operating rooms, helping hospital administration to control premium inventory costs.

Analytics associated with this automated process that are available to hospital administrators include open and completed inventory withdrawals, device consumption patterns to calculate replenishment thresholds, inventory nearing shelf-life expiration, inventory subject to product recall, or data needed to ascertain opportunities for specific device standardization.   RFID tag 250-87

Physicians and care givers can also take advantage of embedded analytics in searching for specific devices implanted in patients by serial number, or in queries related to historic procedures, or proper item stocking levels based on actual consumption data.

The value-proposition of Cardinal’s approach is that technology allows care givers more opportunities to better concentrate on patient care and patient outcomes, removing the administrative burden of inventory management. Hospital administrators and procurement team’s in-turn gain valuable efficiencies and inventory knowledge to help in improving overall efficiencies.

This author remains convinced that healthcare product suppliers, product distributors, hospitals and caregivers must continue to come together to collaboratively address the chronic inefficiencies of today’s healthcare supply chains. The visit to Cardinal’s Healthcare Supply Chain Innovation Lab and the exchange of ideas with staff convinces me that today’s advanced supply chain item-level and IoT focused technology can and will provide significant strides in overcoming such inefficiencies.

As our blog nameplate connotes, supply chains do matter in many industry settings and in healthcare supply chains, the opportunities for increased efficiencies and process innovation are vast.

Bob Ferrari


General Electric Declares a Pivotal Year and a Look into its Future

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General Electric recently announced its fourth quarter and full 2015 financial results and made it a point to call attention to its new GE Digital business unit. It did so because GE’s bold goal is to be a top 10 software company by 2020. In its press and media outreach, GE declared that GE Digital accomplished $5 billion in 2015 revenues with anticipation of far more growth in the coming years.

This relatively new GE Digital business segment was formally launched in November after a series of internal re-alignments. The unit brings together all of GE’s digitally focused and Industrial Internet capabilities under a single business focus. This includes GE’s Software Center, the company’s global IT and commercial software teams along with cyber security teams.

The underlying mission of this business is to make intelligent machines and connected industrial equipment as an emerging reality. GE is of the belief that the Industrial Internet could add $10 to $15 trillion to the global economy over the next 20 years. This includes aircraft engines that can self-diagnose operating performance, alert to pending operating maintenance needs and automatically order required repair components.  Railroad locomotives that can communicate onboard diagnostics, train operating conditions and train rail car composition. Data can be analyzed across fleets of similar equipment providing design engineers timely performance information while fleet owners have the ability to optimize operating assets.

GE executives are quick to differentiate Smart Machines and Industrial Internet from Internet of Things (IoT). The latter GE views as more consumer market focused. The Head of GE Digital, Bill Ruh, states in a recent blog post: “There’s a difference between running a smart thermostat in your house and controlling a power plant. We work in mission critical environments.”

Some in today’s broader tech world of IoT may take issue with GE’s succinct differentiation of consumer vs. industrial facing connected devices. Suffice to point out that the opportunities are indeed enormous for both dimensions. However, by our lens, it is rather important to differentiate the different scale, scope and function of needs for both, especially in the data security and scalability dimensions of industrial applications.

GE has indeed been a pathfinder in the notion of connected machines and is now beginning to harvest the financial and market benefits for being an early innovator.  From its longstanding industrial roots, the company can surely grasp the notions of what is required for mission critical operating environments.

Other industrial manufacturing and enterprise software providers will surely escalate their commitment to intelligent machines and by 2020, there may well be a different software provider landscape with competitive dynamics. What we term IoT today become more differentiated and more succinct in application. As with all prior tech revolution, there will be winners, laggards and market casualties.

The good news, however, is that bringing the physical and digital aspects of supply chain information and decision-making together are no longer a distant vision, but within the realm of a five-year goal.


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