As we transition into the final month of 2011, we are revisiting the Supply Chain Matters 2011 Annual Predictions for Global Supply Chains which were outlined a year ago.  Our annual process is to first re-visit past projections made for the current year, in this case 2011, and declare some projections for the upcoming 2012 year, which will come in a later series of postings before the end of the year. In this Part Three posting, we will revisit predictions five through seven. Our earlier scorecards can be accessed by clicking on the following links:

Part One- Predictions One and Two

Part Two-Predictions Three and Four

Prediction Five: The year will bring a new wave of turmoil, acquisition and market consolidation in certain supply chain and enterprise technology areas.

The year 2010 brought a wave of consolidation and acquisition in the supply chain technology area and we predicted that this trend would continue in 2011. Although there was some activity in 2011, it was not a new wave, as we predicted.

We anticipated consolidation acquisition and consolidation fueled by needs to tap growth potential in emerging markets, adjust strategic focus, fill-in solution areas or take advantage of opportunities.  In essence it was a somewhat quiet year with the exception of perhaps the procurement, sourcing and 3PL areas  Worth noting was:

Sourcing, Supply and Contract Management

Emptoris acquired both telecommunications expense management vendor Rivermine, and later, provider of supplier lifecycle management support vendor Xcitec.

B2B E-Commerce and Supplier Networks

GXS acquired supplier information and community management provider Rollstream

ERP

Oracle acquired information search and intelligence provider Endeca.

3PL

Transplace acquisitions of both Celtic International and SCO Logistics.

There were no major supply chain related acquisition plays concerning major players (IBM, Google, Microsoft, Oracle, SAP) in 2011, and no major acquisition announcements concerning SAP itself. It was perhaps a year of digesting previous acquisitions of 2010 and a keen concentration on mining business from existing applications.

Manufacturers and retailers continued to have heartburn regarding annual maintenance fee burdens  placed on them by the major ERP vendors but that did not impact the revenue streams of the major players in 2011. Make no mistake, the heartburn issue of high recurring maintenance fees for enterprise software will remain an issue among both IT and supply chain functional teams for some time to come, and will lead to different alternatives in the market.

One rather big surprise in the services area was the announced acquisition by PwC of supply chain benchmarking firm PRTM.  We note surprise since the announcement seemed to be rather low-key and even missed our keen eye. The long-terms implications of this acquisition on benchmarking services are somewhat unclear.

Prediction Six: Cloud computing options directed at supply chain business process enhancement will explode in popularity and adoption.

We believed that the adoption wave of cloud computing alternatives would likely accelerate in 2011 and the largest benefactors would be small and medium sized businesses. The momentum and reality of adoption continued in 2011, however is was not as originally hyped by vendors. Buying trends were motivated by larger companies that needed to either springboard overall IT adoption or required specific tactical fixes to supply chain problem areas such as procurement spend or broader supplier integration, visibility and collaboration.

Adoption favored larger vs. smaller or mid-range companies because on the whole, price points remain at higher enterprise software levels. Smaller organizations still remain interested because their larger key customers require more electronic integration. More importantly, in our view, the mid-market continues to experience confusion as to what processes lend themselves to cloud computing alternatives. As Jim Cantrell of Hubspan noted to us in a recent briefing: “not all clouds are created equal.” Having a comfort level with software vendors hosting supply chain mission critical applications on a multi-tenant cloud, and persistent concerns regarding data security remain barriers to further adoption.

A significant announcement in this area in 2011 was the market launch of Kenandy, a new vendor conceived from the stewardship of salesforce.com founder Marc Benioff, Perkins Caulfield & Byers partner and former Oracle executive, Ray Lane, and former Ask Computer founder Sandra Kurtzig.  Kanandy presents itself as a social based manufacturing management cloud-based application that embraces a new paradigm of networked manufacturers, suppliers and partners. Also announced was salesforce.com financial investment in privately held ERP provider Infor, with the specific purpose in jointly developing a global marketing and order management system that will reside on the Force.com platform. The goal here is to make cloud computing more attractive for smaller companies.

We also predicted mixed buying signals relative to options for deploying private vs. public clouds.  Private clouds, where sufficient controls and security measures are monitored, continued to be favored by larger companies.

Prediction Seven: Wider scale leverage and adoption of in-memory computing, coupled with broader application of information discovery platforms could be game changing influences on supply chain wide business analytics.

When we framed this prediction, there were two important technology developments that had the potential to have significant impact on predictive analytical capabilities in 2011.  The first was incorporation of integrated in-memory technology among software and hardware appliances. The second was the wider adoption of Google-like information discovery tools that can mine hidden data, especially unstructured data and information.  If technology providers were agile enough in 2011 to incorporate these technologies not as tool sets, but rather incorporated into turnkey supply chain planning and analysis application appliances, we could have seen some dramatic uptake in customer interest levels in the second half of the year.

More importantly, converging forces of a more rapid clock speed of business, along with senior management imperatives for quicker, more-timely decision making have been motivating companies to re-look at sequential supply chain planning and execution in favor of merged planning and execution, and augmenting planning with more predictive analytical tools to support predictive vs. more reactive decision-making.

The reality was that many vendors got ensnarled in hyped product development initiatives that were too broad and multi process focused.  The biggest player with the highest game-changing impact in this space was SAP and its HANA development efforts. SAP’s efforts in 2011 became too broad and ran into the reality of scope and impact to existing application landscapes. SAP’s supply chain related applications therefore received little benefit in 2011.  Information discovery vendor Endeca lost its dedicated focus to manufacturing and supply chain process needs earlier in the year, and was recently acquired by Oracle.

The closest vendors to supply chain predictive analytics are JDA Software, Agistix and Kinaxis, with the latter having more of a focus on response management and a new initiative of supply chain control tower applied to overall supply chain planning and key decision processes. Progress Software is another vendor attacking predictive analytics and supply chain control tower from the business process management platform perspective, with an initial offering in supply chain execution control.

The bottom-line is that while game-changing in potential, predictive analytics capabilities will need more market education and more concentrated supply chain focus. Stay tuned for our 2012 predictions for more in this area.

This concludes our Part Three scorecard update of our Supply Chain Matters 2011 Predictions for Global Supply Chains.  In our Part Four update, we will revisit or other predictions.

Bob Ferrari

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

From our lens, certain technology vendors and bloggers have been confusing manufacturers and supply chain teams by communicating alarming messages on the growth of so-termed, “big-data” supply chains.  Some messages relate to organizations drowning in data while others offer a panacea of remedies to get data under control.

Supply Chain Matters recommends that our readers take the opportunity to review a recently published McKinsey Quarterly article, Are you ready for the era of ‘big-data’?  This advisory article is insightful and well written and provides a proactive context as to how organizations can leverage the harvesting of data for competitive advantage. While McKinsey acknowledges that these are still early days for big data, the authors state that their research indicates that organizations that leverage data and business analytics to guide decision making can gain an edge in strategically engaging customers and suppliers. We would add that the recent major supply chain disruptions precipitated by the tragedies in northern Japan and now Thailand, have also provided real-time reminders on the importance of having the right information.

The article also makes a very important conclusion. Some industries will realize benefits sooner, namely because they have strong incentives to do so, along with their overall readiness to capitalize on data management strategies.

The report features five well posed questions that senior executives should be asking themselves.

One question reflects on breaking down the barriers of accessibility to industry and supply chain wide data when organizations feel threatened or gain strategic benefit from sharing their perceived proprietary or confidential data.  These barriers exist externally as well as internally. As an example, some big retailers continue to harvest financial gains from selling point-of-sales data. Industry data aggregators or intermediaries benefit by selling such data to industry suppliers.  The good news however as that supply chain organizations are finding innovative and collaborative means to gain broader access to data.  At a recent industry conference, we heard one presenter representing a consumer goods company state that a revolution is underway in opening up access to direct sales data, even among industry competitors.

Another insightful question posed was the following: “If you could test all of your decisions, how would that change the way you compete?”   The notion here is that access and leverage of key information and insights facilitates a fundamentally different type of decision- making process, one based on reducing the variability of outcomes by testing or predicting possible decision scenarios ahead of time. A supply chain specific example of this analytical or predictive decision making context has been the popular adoption of multi-echelon inventory optimization technology.  This software leverages key data related to supply chain footprint, products, inventory cost, transportation and cycle time to analyze various inventory tradeoffs and deployment strategies that can achieve a specific customer service level. Thus, a decision related to servicing a key customer, can be analyzed ahead of time for quantification of impacts in overall costs and service levels. Other and more recent examples are the Kinaxis and Progress Software announcements of the availability supply chain control tower applications that leverage either scenario management or business process management outcome features.

Other questions posed relate to how the business would change, if big data were channeled, how these methods would augment management decision-making, and the opportunities for certain companies to create entirely new information-driven business models .

A final McKinsey observation concerns a pending shortage of skilled resources, one that this author has communicated in prior talks on predictive analytics.  McKinsey research quantifies that in the U.S. alone, “demand for skilled analytical people can outstrip supply by 50 to 60 percent.”  McKinsey notes: ”By 2018, as many as 140,000 to 190,000 additional specialists many be required.”  This message is rather important to dwell upon.  Supply chain professionals at all levels need to proactively upgrade their skills to include these new areas of leveraging analytical data and predictive decision-making.  Companies need to provide more incentives and opportunities for training in these areas, and universities and training organizations need to broaden their curriculum to embrace advanced analytical and predictive decision-making methods.

A final note reflects on the current landscape of supply chain focused professional certification programs, such as those offered by APICS, CSCMP and ISM.  By our point-of-view, there needs to be more exam content devoted to candidate understanding of these evolving data-driven and predictive decision-making processes vs. those that sufficed in the prior times of sequential based planning such as MPS and MRP.

The times are changing along with the potential and  means for more predictive supply chain decision-making.  And so are the skills and readiness qualifications.

Bob Ferrari

© 2011, The Ferrari Consulting and Research Group LLC and Supply Chain Matters, All Rights Reserved

The following posting posting can also be viewed and commented upon on the Supply Chain Expert Community web site.

This is our fifth and final posting concerning the Kinaxis Kinexions 2011 conference held last week in Phoenix.  Readers can review previous commentaries by clicking on the following links:

Dispatch One

Dispatch Two

Dispatch Three

Dispatch Four

The persona of Kinaxis events frequently includes three consistent themes, Learn-Laugh-Share, and Kinexions 2011 did not disappoint in terms of an enjoyable experience.  We genuinely like to attend Kinaxis events. Attendees once again were treated to the humor of Bill Dubois and the Late, Late, Show format of speaker interaction. The presentations and conference content were all very informative and the customer appreciation event was a lot of fun. Congratulations to Kirsten Watson and to all of the Kinaxis conference planning team for conducting a great conference.

Besides the usual complement of enthusiastic customers, the headline for Kinexions 2011 was the announcement that the company’s core product will be renamed Kinaxis RapidResponse Control Tower. The implication of this announcement is that the existing RapidResponse functionality of supply chain planning and response management along with S&OP process support will be expanded into areas of sales force optimization, profitability analysis, workforce and sales force optimization.  The concept of supply chain control towers coupled to more predictive analytics is gaining lots of interest in complex, highly outsourced supply chains such as the high tech and consumer electronics industry, and no doubt, Kinaxis management wanted to steer the functionality of RapidResponse toward supporting these needs.  One of the thoughts we “tweeted” during the conference is our belief that customer needs and technology developments are aligning toward a new era of supply chain predictive analytics.

No doubt, Kinaxis wanted to gain an upper-hand in being identified with offering supply chain control tower process support, but more importantly, to be recognized as the single supply chain decision platform that can best assimilate all supply chain related decision-support information. Kinaxis is currently working with four other development customers on various aspects of deployment, and it will important to monitor how these deployments impact business results over time.

It will be interesting to also watch one other provider of control tower functionality that Supply Chain Matters has noted. Business process management (BPM) provider Progress Software has developed a control tower type application to support supply chain process execution and visibility.

An obvious open question remains as to whether prospects and customers will embrace a “cloud” deployment of this functionality, given the mission critical and security sensitive nature of global supply chain related information.  While not a lot of cloud deployment information was openly shared during the conference, we suspect that Kinaxis management will continue to provide flexibility in customer deployment options. Our hallway conversations with some select Kinaxis customers noted some concerns in gaining access to non-core supply chain information sources such as financial planning, product management and CRM.  The implication is that Kinaxis sales teams will have to target more education to the IT audiences of prospects.

Supply Chain Matters often looks forward to hearing the customer presentations delivered at Kinexions, as well as the hallway conversations.  The primary reason is that the Kinaxis customer base represents many tiers of global supply chains, from the most innovative OEM’s and product innovators such as Amgen, Cisco, and others, to large-scale contract manufacturers and mid-market companies.  What you often find is that the mid and lower tier supply chain players, that have to manage single digit gross margins are often the most innovative in finding methods to innovate planning, response and customer service process needs.  These players are often tasked by larger, more dominant supply chain partners to provide broader visibility and more responsive response to changing business needs, and as Jabil astutely pointed out, they must also be able to out maneuver large OEM’s in terms of periods of short supply or supply chain disruptive events.

Make no mistake, innovation occurs at all levels of global supply chains.

As we noted in our detailed commentary, the Kinaxis team also decided to invite a broader group of well recognized industry analysts, systems integrators and bloggers to this year’s conference in order to broaden the visibility of the company.  Kinaxis is a privately owned company and this overt step to broaden the company’s visibility in the market may be a prelude to other options down the road, perhaps taking the company public.

The influencer track provided a great opportunity for invited guests to gain a broader understanding of RapidResponse capabilities, including its current scalability among customer deployments.  Some scalability numbers shared were 20 million plus input records processed per second and 20,000 planned orders or 300,000 dependent demands processed per second in MRP calculations.  We have noted in past commentaries that this application is unique in that it spans well beyond just supply chain planning utilization support and includes aspects of supply-chain wide visibility, S&OP process support, and other uses.  It is not uncommon to hear that some RapidResponse customers have end-user counts in the hundreds and thousands. A persistent layer of broad-based supply chain planning information, business scenario related data modeling, and most importantly, the business rules surrounding the data are all housed within the RapidResponse engine. This lends itself to a viable interactive decision-support platform for planning and managing the supply chain. It is no surprise that many of Kinaxis’s newest customers have been attracted by support for their respective S&OP and other broad based decision oriented processes.

It was also rather important for Kinaxis management to clarify that RapidResponse does not exist without the existence of current backbone ERP or legacy systems.  Rather, it enhances the need for supply chain and business planning decision-making without having to rip-out existing ERP systems or endure disruptive upgrading of applications and ERP vendor technology stacks.

In summary, we believe that Kinaxis remains as a technology provider with lots of momentum in the market, with the potential to provide further innovation in predictive analytics and supply-chain decision support.  We believe that next year’s Kinexions may well provide more customer evidence of these evolving capabilities.

Bob Ferrari

Added Note: Kinaxis is one of other named sponsors of the Supply Chain Matters blog and the author provides services to this vendor.

The following posting can also be viewed and commented upon on the Supply Chain Expert Community web site.

This posting continues highlights of the Kinexions 2011 conference being held this week in Scottsdale Arizona.  Readers can also reference our prior Dispatch One , Dispatch Two and Dispatch Three commentaries.

One of the new twists to this year’s Kinexions conference was an invitation for a broader group of industry analysts / partners / bloggers to not only partake of the conference but also attend a separate afternoon briefing session hosted by Kinaxis senior management and select customers. Seldom have I found software vendors willing to allow this grouping open access, and we complement Kinaxis for this effort.  As COO John Sicard explained to me, the company has reached a point where it requires broader market awareness of its capabilities.

The influencer briefing kicked-off with CEO Doug Colbeth and COO John Sicard jointly providing a history of the company both in its fabric and its technology development. Emphasis was placed on the current demonstrated scalability of RapidResponse and an acknowledgement that the application works best when in coexistence of existing ERP or legacy systems among its customers. Nearly 60 percent of Kinaxis existing customer base operate with an SAP ERP backbone system.  Also explained was that when users interact with RapidResponse they declare their work area responsibility, which the application then utilizes to tailor respective planning views. The application not only manages and processes large amounts of data, but also the business rules that exist regarding that data.  In our view, that characterizes RapidResponse as akin to a business process management (BPM) type of application, which the application accomplishes in its S&OP functionality. We were also briefed on why the new announced re-naming to Kinaxis RapidResponse Supply Chain Control Tower was a natural extension of the company’s current growth plans.  Although there was a on-stage demo, not a lot of information was shared in this session regarding the detailed functionality that is being planned for this extension of RapidResponse capabilities.

The remainder of the influencer briefing session focused on interaction and presentations from invited customers. Elisabeth Kaszas, Director of Supply Chain for Amgen, provided an update on that company’s multi-year transformational efforts towards more responsive supply chain business processes. A benefit mentioned, that was rather difficult to do in the existing ERP backbone system,was the need to provide various product costing structures beyond just standard cost data.

Chalam Kalahasti, Director of Global Planning and Fulfillment for Cisco Systems, described the unique challenges for planning a highly outsourced, globally extended supply chain.  Cisco has a very active S&OP process tied to RapidResponse, and a plan-of-record is created weekly. What is also noteworthy is that Cisco’s direction in more response-oriented planning has been motivated by previous incidents of supply chain disruption, such as earthquakes in Taiwan and China and the tsunami in northern Japan.  Cisco’s supply chain planning process is predicated on the ability to assess a definitive impact from an unplanned event and to provide different options and scenarios for responding to the exception.

Paul Lindblom, a member of the senior IT staff at Qualcomm QCT, provided a detailed perspective of how RapidResponse integrates with various other Qualcomm systems, along with the unique needs for planning in a combination push-pull, semiconductor supply chain.  Semiconductor wafers are long lead-time items subject to fab capacity considerations, and in the case of Qualcomm, multiple fabs are utilized to supply product.  Conversely, wafer packaging and testing are driven by customer buying and lead-time requirement cycles. Semiconductor planning needs which requires the unique ability to be supported for by-product and co-product production are supported in RapidResponse.

Due to time constraints, our final session featured Kerry Zuber of Kinaxis who provided an overview of the latest 10.0 release of RapidResponse, which includes a significant investment in demand management and product forecasting functionality.

Our briefing turned out to be a jam-packed session with a literal fire-hose of information.  Luckily, the customer appreciation event held on a reservation in the hills outside of Phoenix allowed ample opportunity to unwind and have great conversations with fellow attendees.

In a final posting, Supply Chain Matters will provide some final summary comments and observations regarding the Kinexions 2011 conference.

Bob Ferrari

Added Note: Kinaxis is one of other named sponsors of the Supply Chain Matters blog and the author provides services to this vendor.

The following posting can also be viewed and commented on the Supply Chain Expert Community web site.

This posting continues highlights of the Kinexions 2011 conference being held this week in Scottsdale Arizona.  Readers can also reference our prior Dispatch One and Dispatch Two commentaries  which highlight day one activities.

Day two of Kinexions kicked off with an uncensored presentation from former Gartner Vice President and supply chain sage Kevin O’Marah, who now characterizes himself as an independent thinker.  Kevin reflected on the history of business automation and innovation, the important trends that productivity and talent have brought to businesses large and small and his belief that large ERP vendors are not delivering the innovation required to enable the next era of business and supply chain process capabilities. Kevin referenced multiple survey data that reinforces that demand volatility is driving executives and supply chains literally crazy, and that the community needs to get ahead of these new realities of business. Kevin described the new wave as being led by human intelligence but with technology leverage.  Kevin was also kind enough to acknowledge our working relationship in the earlier days of AMR Research and I sincerely thank Kevin for the mention.

Day two customer presentations featured Lalit Pandit, the CIO of D&M Holdings, and Joe McBeth, Vice President of Global Supply Chain at Jabil, and Erwin Hermans, Vice President of Supply Chain Solutions, Celestica.  One of the extraordinary aspects of attending a Kinexions conference is that the audience can get perspectives from the key players located throughout many tiers of today’s global supply chain. The D&M Holdings story is one of a mid-market company that needed to transform its supply chain utilizing a planning and response management application that users could quickly adopt and leverage.  It is also an example of how a cloud offering is an important option for mid-market companies.

While there were many nuggets of information shared by all of today’s presenters, my personal favorite was Jim McBeth, who vividly expressed what supply chain response management really means for companies, and especially contract manufacturers. Jim reflected on the recent March earthquake involving northern Japan, and more recently, the devastating floods impacting Thailand.  Each had supply chain disruption implications, and as Jim best described it, “the guy who was the best information, wins”. In 48 hours, Jabil was able to provide risk assessments and impact analysis for its OEM customers and key suppliers. Jim noted that most organizations, consultants and pundits speak to constantly keeping inventory down, when the reality may be keeping partners in balance and inventory right-sized to buffer identified areas of component risk. Jim also spoke to the reality of planning at the EMS level, the mid-tier of high tech value chains when the bigger fish OEM’s will get the prime priority for available inventory and capacity. The reality turns out to be the ability to plan with predictive data, to proactively collaborate with OEM’s along with the ability to predict what requirements will be before the bigger players do the same.

This afternoon’s closing event was an interactive influencer’s panel discussion moderated by Trevor Miles of Kinaxis, which I was honored to be invited to participate.  Fellow panelists were Andy Coldrick, one of the original thought leaders in S&OP, Russell Goodman, editor-in-chief, SupplyChainBrain, and Predrang (PJ) Jakovljevic of Technology Evaluation Center.  Our goal was to wrap-up the conference by summarizing what we heard from customers and influencers, how we viewed the current state of  supply chain business process and technology innovation, and the notion of what is the state of collaboration in supply chains. A eureka moment came from an interchange of what comes next for S&OP?  Andy provided the perspective that as the originators of S&OP discussed what would be the next iterations, they also could not agree to terminology.  Andy’s charge to the audience, it doesn’t matter how you term the next iteration, what matters more is the objective your organization is seeking. Wise words from an original thought leader.

Supply Chain Matters will feature two additional Kinexions commentaries, one reflecting on this year’s briefing of key market influencers, and our conference summary impressions.

Bob Ferrari

Added Note: Kinaxis is one of other named sponsors of the Supply Chain Matters blog and the author provides services to this vendor.