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Supply Chain Matters Attendance at Oracle Modern Supply Chain Experience Conference- Part Four

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This week, Supply Chain Matters has been attending the Oracle Modern Supply Chain Experience conference being held in San Jose California, drawing over 2800 attendees. Oracle_MSCE_Jan_16

In our Part One posting, we provided some highlights from the first’s day’s keynotes.

On our Part Two posting, we shared impressions of the Oracle S&OP Cloud application currently in-development.

Our Part Three posting provided highlights of the second day’s keynotes that were focused on future dimensions of transformation.

My goal in this update is to share my updated impressions related to current needs for supply chain related transformation.

As our Supply Chain Matters readers are probably aware, this industry analyst and Editor has be afforded the opportunity to attend many supply chain management focused conferences, either industry or technology focused. This week’s Oracle Modern Supply Chain Experience conference is no exception.

At many of such conferences, supply chain team leaders often describe various key learning derived from transformation or business change initiatives. Many exhibit very consistent and all-important themes such as insuring top-management sponsorship, a strong emphasis on change management or addressing process and data before layering advanced technology.

Of late, I have noticed a further learning, one that I can best describe as external or outside-in forces that compel the need for change at a far different pace of change.

Let me further explain.

A number of supply chain industry analysts often communicate the notions of supply chain transformation from people-process-technology dimensions at various levels of defined maturity. The so-termed phases of supply chain maturity charts are what I reference. Four or five phased, they all have common purpose. They often serve as a meaningful way for helping industry supply chain teams chart their transformation end-goal visions as well as benchmark a current state of organizational maturity. While such maturity charting can serve as a tool for change, it can sometimes transmit a message that continuous improvement is ok, or that taking pause at a given phase is acceptable. I worry aloud about such notions since some analysts, are not addressing the building external pressures within many industry settings that are now being communicated.

What’s different about today’s needs for transformation?

Read any business journal of late and the words economic and business uncertainty are stark and all too common. The global economy struggles to grow 3 percent annually, the U.S. and Europe a mere 2 percent. The Economist recently questioned whether global wide market presence and consequent global stretched supply chains may be faltering due to increased complexities and cost.

Individual businesses have shareholders demanding near-term returns and profitability for their investment and it seems that no business is immune from the force of activist investors. CEO’s have no choice but to prioritize efforts at growing top-line revenue growth, adopting new, more profitable digitally based business models while continuing to reduce business costs.  Growth is often translated to acquisition. Oracle senior executive Mark Hurd has been masterful in communicating such trends to CEO audiences.

Cost reduction motivates needs for restructuring or the flattening of organizational layers. If readers have had the opportunity to review our 2017 Predictions for Industry and Global Supply Chains, you are now aware that a whole new dimension of geopolitical uncertainty and business risk are prominent in the coming months.

What I hear of late is a new consistent theme of an external force for change. Our business has a new CEO with a mandate for transformation. Our business executed a merger and acquisition that introduced even more supply chain process and technology complexity. Regarding the latter, complexity is leading to more inefficiency and added costs. We are lacking the right data and information and our S&OP and operational decision-making processes are not keeping up with the current pace of business change.

The bottom-line is that the pace of transformation may no longer be as optional as it once was. Organizations may have little choice but to increase the pace of transformational change and supply chain leaders are expected to lead such efforts at a quicker cadence, albeit sometimes at an uncomfortable pace. That is why the notions of Cloud based applications and more leveraged use of digital advanced technologies such as analytics and IoT are gaining increased interest and senior management sponsorship. Consider that 2800 attendees are gathering at this supply chain management technology focused conference, often with needs to gain more learning and education as to new software and information management technologies.

We as analysts need to communicate supply chain transformative process maturity measures in dimensions of internal or external forces of change. The former having some timing discretion, the latter not so much. We need to remind teams that crisis is often the best motivator and mandate for an organization’s need for change. Industry supply chain teams face a building talent crisis yet beg for training resources. Our supply chain leaders of tomorrow are less tolerant for complexity and far more-savvy in the leveraged use of technology in their everyday lives and in conducting work. They embrace teamwork and team based problem solving. If your organization is laggard in talent development, your industry competitor will seize the opportunity with trained talent.

Finally, a message to technology providers. Some our communicating that now is the time for fostering innovation and new business models.  Some, such as Oracle, communicate the implications of millennial workers in their interaction with technology and decision-making. All of this is fine, but do not at all, dilute the reality that industry supply chains must continue efforts in reducing costs and complexity while increasing productivity.

External forces of change surround, and supply chain teams are now communicating those forces of external change.

Bob Ferrari

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

 

 


Supply Chain Matters Attendance at Oracle Modern Supply Chain Conference- Part Three

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Supply Chain Matters has been attending the Oracle Modern Supply Chain Experience conference being held in San Jose California and drawing over 2800 attendees.

In our Part One posting, we provided some highlights from the first’s day’s keynotes.

On our Part Two posting, we shared impressions of the Oracle S&OP Cloud application currently in-development.    Oracle MSCE Feb_17

Day two kicked-off with two mind-provoking keynotes that focused on futures of technology, organization and industry supply chains.

Yuri van Geest is described as a passionate professional, author, international keynote speaker and entrepreneur on exponential emerging technologies and the founder of Singularity University. Geest is co-author of the bestselling book, Exponential Organizations which describes fundamentally new ways startups and corporates are organized internally and externally to deal with disruption, exponential technologies and accelerated change. This is the first book by Singularity University Press globally.

As a result of accelerating technology change, a new breed of businesses is scaling ten times faster than established organizational structures. Yuri terms these as “Exponential Organizations.” His message was that the best vision of the future is happening in the peripherals of technology maturation. They include technologies such as artificial intelligence, robotics, additive manufacturing and 3D printing, sensors and drones. Each of these technologies are maturing rather dramatically in a cost vs. functionality dimension.

He predicted that evolving Blockchain technology provides both a trust protocol and the potential to automate transactional flow across the entire supply chain providing open and transparent transactional based visibility. Quantum computing technology can run 100 times faster than today’s standard computers. He declared that the half-time of IT competency has dropped to only two years. Think about that in the context that the average legacy ERP or specialized supply chain support application can be upwards of 10-15 years old.

According to von Geet, the notions of the Exponential Organization is one that exhibits eleven characteristics of shared values consisting of hard and soft skill competencies. He viewed exponential organizations as creating new jobs, but in totally different skill dimensions and leadership traits.

Our best description of this talk was that of mind-boggling and though provoking, requiring a lot of self-thought in terms of skills preparedness.

The second portion of today’s keynote tract was a supply chain thought leadership panel moderated by Roddy Martin, Oracle’s new Vice President, SCM Cloud Product Marketing. Three panelists included:

  • Karl Braitberg, Senior Vice President, Worldwide Systems Operations for Oracle
  • Stuart Whiting, Senior Vice president, Logistics and Network Design, Schneider Electic
  • John Gattorna, Supply Chain Thought Leader

Panelists described their impressions of current industry supply chains along with insights as to what is required for accelerating transformation to integrated people-process and technology capabilities.  Some insights shared included:

  • Customers as well as talent drive supply chains. Good leaders understand their markets and their customers.
  • Create and foster an end vision supported by common rewards and incentives.
  • Recruit people based on talent potential, those that exhibit passion
  • Failure is good- leverage as a learning
  • Be clear about your end goal but know that the path will often vary
  • The only way to resolve supply chain complexity is to deeply understand customer needs.
  • A metaphor that supply chains are to, many organizations, the central nervous system, with many dependent layers, and should be viewed and managed in this context.
  • Fast-track supply chain transformation, otherwise the forces of darkness will eventually get you.

In our next two commentaries, we will provide highlights from many of the great sessions that we managed to attend. This author will further share updated impressions of the changing nature of insights and lessons being learned that are now being described by supply chain team leaders, both in this and other recent conferences as-well.

Bob Ferrari

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

 


A Non-Traditional Supply Chain and Capacity Planning Automation Effort Underway at Ford Motor

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This author had the opportunity to attend the Kinaxis Kinexions customer conference last week. Among the customer presentations there was a rather insightful talk from a supply chain executive at Ford Motor Company. This presentation delivered by David Thomas, Director of Global Capacity Planning at Ford was titled, Creating Global Standards Across Regional Sites, provided important insights on building and adopting global-wide data and business process standards without the use of traditional waterfall based program and change management methodologies. This technology effort underway at Ford is so different and novel, and conference attendees were citing this presentation as noteworthy and insightful.  Thus are we sharing the highlights with our broader multi-industry cross-functional supply chain readership community.

Since the global financial crisis of 2008-2009, the Ford Motor Company has been focused on “One Ford”, a series of foundational initiatives directed at overhauling unaligned management and business processes. This umbrella initiative was designed to address Ford’s internal tendencies toward regionally-based independence in P&L, product development and product value-chain strategies. Rather than operating as a single global based company, the emphasis was more toward disparate, top-heavy independent operating divisions. As was the case with many other manufacturing companies, the “near-death” experiences of the financial crisis provided the wake-up call to the requirement that Ford had to change.

Indeed, Ford was able to quickly bounce back from the financial crisis but Thomas described hitting another wall by 2011. Unforeseen global capacity restrictions were hindering growth.  The major supply disruptions brought on by the devastating tsunami that impacted Northern Japan, and the major floods that effected Thailand’s automotive sector were another reminder that the company’s overall sales and operations planning was not globally aligned for capacity and resource based decision-making. That prompted the need for a global capacity planning initiative that would be able to coordinate global response to capacity and supply alignment needs based on singular planning data.

This global capacity planning team soon concluded that there were no existing global standards related to product and capacity data across Ford. Spreadsheets were the dominant planning mechanism, with differing dimensions of data and information that hindered any global perspectives to dimension problems or to assess resolution actions. Thomas described the prior dominant atmosphere as being described internally as “dumpster diving for data.” The team quickly came to the conclusion that a global-wide set of data standards supported by a single global planning system had to be initiated as quickly as possible. However, the initial goal was to provide consequential evidence that global-wide data standards would result in far more effective capacity and resource planning.

Rather than traditional system program management, the steering team elected to focus on a faster innovation cadence, that of two-month development processes. A total of 14 cycles of fast innovation focused at building management credibility on the business value of a globally aligned data supporting a common S&OP framework. Thomas described the selection of a pilot development window as a purposeful effort to uncover needs and provide more positive evidence to the business value for global data and information standards to improve decision-making. These efforts included painful methods directed at mapping data tables and building simplified Excel based extraction tools. Eventually, a cobbled together single view of global and capacity that included all regions, markets and major components was developed, enough to convince senior management of the value of a singular, authored, S&OP framework. Thomas described this pilot phase as advocating that a lot of little adjustments with improved visibility can save hundreds of millions of dollars.

This initial pilot effort provided the impetus to secure formal approval to move forward in the development of a global-based S&OP systems support initiative that remains underway across Ford. It is being designed to move away from a current monthly planning process to more agile, better-informed and more predictive planning.

For the subsequent phase of off-the-shelf application selection and implementation, the steering team again avoided a big-bang, multi-year waterfall planning effort that would involve as-is and to-be state analysis, and instead elected to go with a tops-down approach. Thomas indicated that the steering team avoided waterfall global workshops to depict future state needs because: “nobody would ever agree.” Thomas’s described a viewpoint that people are often conditioned by the tools they currently utilize to perform their jobs. Instead the effort was directed at the expectation that Ford will have a global S&OP system framework that would launch on-time without major business disruption.

The agile development approach carried over, and development teams now work to what was described as continuous two-week development milestones. Rather than assemble and allocate on a full-time basis a dedicated global team of Ford employees to manage overall implementation, a decision was made to utilize dedicated externally based experts, those that were not anchored in Ford’s past practices. The people who will ultimately utilized the global system work alongside the external team during the review phases. The current effort is described as including 9 dedicated resources from Kinaxis along with resources from Deloitte, Prana Consulting and Ford’s internal IT staff. Efforts are now underway to build full data transparency across all product demand and supply, along with provisions for regionally-based S&OP efforts that are collectively based on a more timely, global based planning data.

Thomas indicated that Ford is about 6-9 months away from global launch of its singular S&OP process framework. It was described as a big-change for thousands of people who do not really want their existing jobs to change but do want their jobs to be easier in the needs for gathering common, more insightful and meaningful supply-chain wide data that can provide for more informed decision-making relative to line-of-business and functional supply chain goals. Then again, a continuous development cycle is already providing the evidence of the benefits of a singular planning data model along with the value of managed scope efforts that stream continuous economic benefits for the business. Gone are the days of big-bang implementations that risk business disruption and significant added costs of change management and implementation.

Supply Chain Matters extends praise to Ford’s ongoing transformational planning efforts and we look forward to learning more about the post implementation results.

Bob Ferrari

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


Yet Another Airline System-wide Outage- Implications for Supply Chain Backbone Systems Technology Change

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Last week, thousands of airline passengers were delayed worldwide after a computer glitch temporarily halted departures at United Airlines, the latest in a series of outages to affect other airlines as well. Last week’s United system glitch was reportedly attributed to the airline’s weight reporting system which calculates and governs an aircraft’s total weight load for takeoff and other needs. According to both general and social media reports, passengers were forced to either wait onboard planes or inside terminals when respective United flights were delayed for several minutes or in some cases hours, disrupting travel plans and schedules.

Last week’s incident represented the third computer glitch to impact United’s operations in recent months.  In June, software needed to dispatch United’s flight plans faltered and in July, flights were disrupted after a computer problem blocked access to reservations records.

In September, a system-wide computer problem at British Airways caused significant delays.  In August, Delta Air Lines was forced to cancel or delay thousands of flights after a power outage impacted its operational computer systems. This blog subsequently praised Delta’s CEO for his public acknowledgement and apology for the systems outage and its impacts for customers. Also in August, a highly visible system outage also impacted Southwest Airlines after a prior system-wide outage in July, prompting the airline’s two major labor unions to demand the removal of that airline’s CEO.

These continuing series of systems related incidents that are impacting the airline industry and its customer service perceptions and ranking have pertinence to multi-industry supply chain and customer fulfillment systems that have not been updated for many, many years.

There are many parallels. let’s briefly explore them.

Older transactional systems implemented twenty, ten or in some cases even five years ago, were specified with different operational and information technology business needs and requirements. These older systems represented the architecture of either centralized computing and data retrieval, or client-server based systems architectures. They were the manifestation that all transactions and data related to customers and operational business processes would be managed and controlled via a central IT backbone system that included lots of redundancy and back-up provisions. During their prior phases, they indeed served that purpose. They were also rather expensive representing millions of dollars of direct investments related to hardware, software, database and network management needs not to mention likewise investments in initial and ongoing systems integration and consulting needs.

But as we know all to-well, today’s business world is one of continuous and constant change, some of which is rather significant.  There are mergers and acquisitions involving other airlines and their respective processes and systems.  New customer revenue service programs have been added that included paid upgrades to premium seating, payment of baggage handling fees and increased needs for regulatory passenger security reporting have all added to systems needs and requirements.  Investors, Wall Street and private equity firms continue to, on-average, have a short-term expectation window for profitability and stockholder value. There seems waning tolerance for any larger-scale, big-bang, multi-year business and systems transformation efforts without the profitability and cash-flow benefits to sustain such efforts.

Similarly, the ongoing needs of online customer empowerment and self-service require the ability of smartphone and other mobile-based applications to inquire, modify and update reservations, check on airline mileage balances or flight status. This is the building conflict of customer needs for total and complete mobile-based enablement with applications and supporting systems that were never initially designed to support such needs and requirements. They are systems designed prior to Cloud based computing, software-driven hardware and in-memory computing technology and analytics driven operational decision-making that have made their presence in today’s technology landscape.

Yet, even though line-of-business and IT teams have become more increasingly knowledgeable in the benefits of these newer technologies, the risk of potential business disruption related to systems changes continues to haunt these teams.

We recently highlighted efforts by American Airlines toward a major IT system conversion that consolidated all of its pilots and planes onto what is described as single flight operating system. Such an effort required an immense amount of operational and IT staff pre-planning and preparations, as much as a reported 1.3 million hours of IT staff time alone, since it involved a collection of what was described as more than 500 applications that manage everything from dispatching of crews to movement of aircraft.

At the same time, American is now evaluating whether to move major portions of its customer website, including aa.com and other direct web-based customer enablement support applications to a totally Cloud-based deployment model.

There are indeed many implications for systems technology change not only for the airline industry but multi-industry supply chain transactional systems as-well. The increasing needs and expense or supporting Omni-channel and online customer fulfillment needs is taxing existing other systems and applications, some to the break point. Such systems will require bolder vision yet multi-year manifestations of continuous improvements that generate the business expense savings that can fund and add credence to the value of moving forward in the journey.

Cloud computing and other new technologies will add to the economics of IT deployment and ongoing operational cost savings especially when applications and systems become optimized for their respective core missions, be that managing operations, supporting online customer enablement or more informed business results oriented decision-making.

We close this blog commentary with a food analogy.

Mixing large batches of cookie dough for too long creates tougher and less satisfying cookies. Smaller batches, with different variation recipes focused on taste, take less mixing time with a more delightful overall eating experience. Similarly, cooking large batches of various sized spaghetti in one pot yields a pot of unappetizing pasta that is a mass of uniformly cooked and a real mess.

Invest staff and resource time in comprehensive multi-year applications and systems planning focused on specific output needs and requirements. Open your thinking to the benefits of advanced technology but in the context of more managed scope efforts and streaming economic and cash flow benefits for the business.

Bob Ferrari

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


Tesla’s Revised Master Plan Provides More Product Engineering and Supply Chain Implications

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Last week, Tesla founder and CEO Elon Musk penned a blog posting that essentially updated the master plan for the company that called for a broader product development thrust into hybrid trucks and buses. This places a far broader emphasis on the firm’s supply chain ramp-up challenges, one with the implication that Tesla will, by our view, have to seriously consider adding to existing final assembly production capacity beyond its current Fremont California facility.Tesla ModelX_Live

The commentary itself not only provides an argument for why the electric car company must merge with SolarCity, but a further expansion of the master plan that includes:

  • Create stunning solar roofs with seamlessly integrated battery storage
  • Expand the electric vehicle product line to address all major segments
  • Develop a self-driving capability that is 10X safer than manual via massive fleet learning
  • Enable your car to make money for you when you aren’t using it

New product offerings were described as a new form of pick-up truck, and beyond the consumer vehicles market, an innovative heavy-duty trucks and high passenger density urban transport vehicle. Regarding the latter, Musk envisions a smaller footprint of urban busses with a transition from the role of individual bus driver to one of fleet manager. Both are noted as in the early stages of development at Tesla and should be available for unveiling next year, and will follow the availability of the more affordable Model 3 currently due in 2017.

Supply Chain Matters previously highlighted efforts of truck maker Nicola Motor Company in developing a Class 8, 2000 horsepower electric powered semi-tractor truck that will be named the Nicola One. This manufacturer has to-date booked 7000 reservations, each accompanied by a $1500 deposit, totaling more than $2.3 billion in cash to secure a reservation for this new vehicle, hence the sense of urgency for Tesla to enter such a market.

To state that the latest master plan is audacious or ambitious is an understatement. It places a far more concentrated focus on whether product development and the supply chain can rise to the challenge in such a short timeframe.

As noted, our last Supply Chain Matters commentary on Tesla concluded that the company remains challenged by supply chain ramp-up issues as it strives to meet aggressive short and long-term production and supply chain needs of existing announced vehicles. Musk has literally accelerated by two years, his goal to have the California final assembly facility output 500,000 vehicles per year. In his latest blog post, Musk once again re-iterated that this will be addressed as a function of engineering:

What really matters to accelerate a sustainable future is being able to scale up production volume as quickly as possible. That is why Tesla engineering has transitioned to focus heavily on designing the machine that makes the machine — turning the factory itself into a product.

The adding of commercial vehicles with more innovative hardware and software designs implies no choice but to accelerate capacity, strategic commodity and supply chain wide resources. Just today, The Wall Street Journal reports (Paid subscription required) that Tesla’s new $5 billion “gigafactory” near Sparks Nevada to produce the combined company’s battery component needs is currently one-sixth of its planned future footprint. Currently, 1000 construction workers are working two shifts per day, seven days per week to prepare for 2017 needs in the output of lithium-ion cells. Primary battery supplier Panasonic admits to the current challenges of finding qualified production workers, and with the addition of even more models of transport vehicles, the scale of the battery plant’s capability become crucial.  But so does final assembly and distribution as well, in an area that is noted for rather expensive real estate and distribution space.

Thus, any experienced or even entry level supply chain and manufacturing professionals that enjoy an environment of fast-paced innovation and creativity in business process and physical supply chain processes best route your resumes to Tesla. We anticipate a razor-like focus that harnesses the fusion of engineering, product development and supply chain management into a kaleidoscope of expansion that will test current norms and thinking.

Bob Ferrari


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