This is the final of our Supply Chain Matters blog dispatches coming from the Kinaxis Kinexions conference held these past two days in Phoenix.  Previous commentaries included Dispatches One, Two, Three, Four. And Five.

The conference planning team wanted to establish an overall theme of learn, laugh, and share.  They did not disappoint. From my lens, many of the attendees enjoyed the opportunity to partake of this conference and it seemed to this observer that many attendees were pleased they came.  A large shout-out goes to Kirsten Watson, Carol Watson, Lori Smith and the entire team at Kinaxis for coordinating an enjoyable conference.

Reviewing my notes and conversations, I noted that many of the customer presentations emphasized:

• Continued expansion in internationally sourced demand or supply sourcing
• A far more accelerated pace of business requiring quicker planning and decision-making cycles.  The uncertainty of markets coupled with the complexity of global supply chains often requires teams to be able to evaluate different business scenarios.
• An increased need for supply chain segmentation based on desired business outcomes.
• Supply chain risk remains an important need.
• Sales and operations planning processes involving dynamic and often changing business and supply chain dynamics does require technology augmentation.

I also come away with the following summary impressions from the conference.

In the positive category:

One consistent impression from this and previous year’s presentations and conversations is that Rapid Response customers are generally pleased with their overall relationship and support received from Kinaxis.  Many became engaged with this vendor either because no effective planning automation tool existed, frustration with the capabilities of their existing planning systems, and specifically the inability to keep-up with the current speed of required business decisions. That trend shows signs of increased momentum.

The Kinaxis RapidResponse core industry verticals of high tech, aerospace and pharmaceutical are each individually moving at an incredibly rapid rate of external and internal business change and many of the customer presenters consistently reinforced these themes. RapidResponse is in my view, well positioned to be in the ‘sweet spot’ of supply chain capability needs in this ‘new normal’.

The true story of Kinaxis comes from its collection of satisfied customers who continue to work in a two-way collaborative relationship.  Customers seem generally pleased with their vendor relationships. The energy and enthusiasm of the overall Kinaxis team is discernable, and I state that in honest objectivity. I’m pleased to have Kinaxis as one of other extended Supply sponsors of this blog, and to be deemed one of other contributors to the Supply Chain Expert Community.

Kinaxis is one of very few vendors in the supply chain arena that can demonstrate a culture of combining good natured humor with the stress of business. The Late, Late Supply Chain Show format was well received by attendees.  Another tip-of-the-hat goes to Bill Dubois for serving as show host and effectively combining business and humor segments.

In the needs work category

Kinaxis, like any other technology vendor, listens and respond to ongoing needs of customers, especially large globally based customers. I did discern some needs in overcoming the objections of internal IT in having yet another analytical system, perceived not to be in support of common systems architecture, information integration security and reporting standards.  This problem is not solely a Kinaxis one, but rather a challenge for any mission critical supply chain technology vendor evaluated as an alternative to the ERP supply chain planning option. The Kinaxis technology stack is sound. However, supply chain functional teams want the ability to reassure their respective IT teams on adherence to technology standards, whether such systems are either inside or outside the firewall.

Bottom-line, Kinexions was a great conference.

Bob Ferrari

This is the fifth of our postings coming from the Kinaxis Kinexions conference being held these next two days in Phoenix.  Previous commentaries included Dispatch One, Two, Three, and Four.

The morning of Day Two included a series of presentations representing other core industry verticals for Kinaxis, namely pharmaceutical and aerospace. I especially enjoyed a presentation delivered by Rayne Waller, Vice President, Supply Chain, and Elisabeth Kaszas, Director, Supply Chain, both of bio-pharmaceutical manufacturer Amgen.  Rayne began is presentation with an observation that I believe, that many other pharma-related supply chain teams should embrace, namely that the supply chain planning and synchronization challenges within the industry are similar to those that are being addressed in other industries such as high technology and consumer products.  There are certainly the unique challenges involved in scheduling complex biology-related batch manufacturing, shelf life and expiry date.  But the challenges for demand and supply synchronization, along with sales and operations planning alignment are similar.  Both presenters did a superb job of identifying internal and external business drivers that drive required supply chain planning capabilities within a dynamically changing business environment. They also addressed the successful adoption of an information integration strategy that allows information to flow from a backbone ERP system to and from the Kinaxis RapidResponse application.  The Amgen implementation is about to reach its first year anniversary, and the Amgen supply chain teams are benefitting from reduction in planning cycle times, increased capabilities in scenario planning, expiry and shelf life planning considerations and more efficient inventory management.

The other interesting dynamic was the interplay of the vice president, driving strategy and change management, with the director who manages day-to-day supply chain planning iterations.  We all got a first-hand, unscripted look at how that interchange occurs in terms of setting strategic expectations, setting the next milestone, and communicating supply chain’s impact to the business.  In the case of Amgen, the supply chain team is setting an impressive example on addressing and implementing pragmatic change.

To no surprise, the first question in the Q&A session of the Amgen presentation sought more details on the integration to the backbone SAP ERP system, and how the Amgen supply chain team addressed its information integration strategy. Many of the customer presentations over these past two days have provided rather positive experiences on Rapid Response’s capabilities in information integration, especially in SAP and Oracle ERP backbone environments.  In my view, this robust integration capability is a clear strength, and one that the Kinaxis teams should not be bashful in expressing to prospects.

Other morning sessions included a presentation by Kinaxis’s most widely deployed customer, Jabil, and a presentation from newest go-live customer, Raytheon Missile Systems.

This afternoon, the conference begins to wind down with a continuation of customer training workshops and a final product roadmap presentation.

Our final Supply Chain Matters dispatch will provide summary impressions from this year’s conference.

Bob Ferrari

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

At the recent Emptoris Empower conference, I had the opportunity to view an interesting presentation delivered by Kevin Keegan, Director at PRTM Management Consultants. The presentation really caught my interest because it included a recent PRTM survey of what’s on the mind of the Chief Operating Officer (COO) in positioning global supply chain process capabilities for the next two years.

The survey itself, titled Global Supply Chain Trends, Are Our Supply Chains Able to Support the Recovery, was rather timely and involved the views of 300 COO’s across multiple industry settings.  It took place in late spring and early summer of 2010, which would have placed the context of the COO agenda more toward moving beyond the effects of the global economic recession of 2008-2009.  The full report can be downloaded at this link.

The survey’s principal focus was to ascertain what supply chain capabilities will be capitalized upon in the coming months.  The summary conclusions were not at all surprising and fairly consistent to what I’ve been feeling and sensing:

• Volatility and uncertainty have permanently increased in many industry settings, and the COO seeks a more market dynamic, demand sensing, cost-optimized supply chain configuration
• Top-line revenue growth requires a global customer and supplier presence
• The existing supply chain organization is not truly integrated or empowered
• Managing supply chain risk involves the complete end-to-end supply chain

The most important conclusions drawn from the survey results point to three key enabling strategies that COO’s want by 2012:

Today              2012

Joint planning with key customers                   35%                  53%

Improved sensing of demand                         22%                  47%

VMI services provided by suppliers               25%                    44%

VMI services provided to customers                13%                    29%

Yet, in the category of exhibiting real-time planning and execution capabilities, the responses were flat at 44%, and data capture at point-of-sale showed some slight improvement, 25% today vs. 33% by 2012. The PRTM conclusion was that the emphasis in the slash and burn cost strategy seems to have subsided, and that is certainly the good news. Another key PRTM conclusion is that the supply chain process perspective now shifts toward improving customer access, increasing upstream and downstream flexibility and improving the overall accuracy of supply chain planning.

My reaction to this latest PRTM study is that we, as a community, are not educating the COO as to the most important capabilities needed to enable this agenda, namely more business intelligence and what-if analysis capabilities.  It just does not seem to show-up in this and other survey data I’ve been seeing.

There are also some other messages here about the continued importance of management education, and positioning an integrated sales and operations planning (S&OP) process as a key mechanism for facilitating improved access to both customer and supplier needs.  Managing senior management education includes an agenda of why previous investments in transaction centered supply chain planning automation fall short in added capabilities for supplier and customer engagement, synchronization and business intelligence.  It is not a question of why didn’t we get this from our ERP vendor, but rather how we get the process enabled with different, forward-looking analysis capabilities.  I’ll cite one powerful analogy I often heard from Jake Barr of Procter and Gamble.  If you are driving down the road, and storm clouds are threatening, do you drive by looking in the rear-view window to ascertain what landmarks just passed, or look through the windshield to ascertain what direction you are headed.  Today we can add yet another addition to that analogy.  With the advent of GPS in our cars, we let the system suggest the best routes for reaching our destination, given certain weather and traffic conditions.

The question however remains- are you educating your COO on what is really required to insure improved customer and supplier access as well as improved supply chain accuracy. Educating on the differences between transactional oriented vs. business intelligence, S&OP enabling and what-if analysis capabilities is the proper context to enable the 2012 agenda.

Bob Ferrari

I was recently asked to respond to April’s Manufacturing Business Challenge featured by Industry Week.

The problem concerns a hypothetical landscape and building maintenance vehicles manufacturer and are unlike those being asked by many small and medium manufacturers and distributors today.  Like it or not, the business environments in many industry settings have dramatically changed, especially if your business includes continuous product cycles and a volatile supply base.  Many supply chain organizations today find themselves asking a lot of ‘what-if’ types of questions.  An understanding of the difference in approaching ‘what-is’ vs. ‘what-if’ information analysis is the key to understanding what needs to change.  Knowing that you will have a problem, as well as what will cause the problem — before it occurs — is the first step to correcting any problem.  This capability is today’s fundamental building block for supply chain business intelligence.

I trust you will enjoy and benefit from this challenge scenario and my response.

Bob Ferrari

Let us dwell a few moments on real-life forecast error and another case of Apple related euphoria gone wild.

Over the weekend, Apple, Inc. new iPad tablet had its official public product launch where consumers were able to actually buy and take possession of their first iPad.  Initial reports in the blogosphere and business media indicated longer-than-expected lines.  A Wall Street Journal article (paid subscription may be required) noted that a Piper Jaffrey analyst actually doubled his initial forecast of first day sales estimates to a range of 600,000 to 700,000 units including pre-orders.  That same analyst also raised his full year 2010 unit forecast to 5.5 million, from a previous 2.8 million units.

Research firm iSuppli went even further predicting that 7.1 million iPads would be sold on a worldwide basis in 2010.  Forrester Research, on the other hand, remained conservative and predicted 3 million units.

This huge disparity stems from a number of different perceptions regarding consumers’ ultimate desires to have an iPad.  The article rightfully notes that unlike the iPhone or the latest wiz bang personal computer, an iPad seems to be a device that consumers may want but not necessarily need in their day-to-day or hour-to-hour needs for a technology fix.  This is also the first generation model of iPad, and experienced Apple consumers know that more functionality laden and perhaps cheaper priced models could be in the cards when later models are introduced to the market.  Interesting enough, a recent teardown analysis conducted by Chipworks headlines a commentary noting that the current iPad‘s technology represents a big iPod Touch, which doesn’t exactly scream ‘buy me’ for the current price.

Supply Chain Matters being what we are will focus our commentary on the rather large forecast discrepancies.  Consider the current situation that external analysts who supposedly know this market have a variance that now include a low of 3 million units to a high of as much as 7 million units.  Perhaps Apple euphoria is a selective disease practiced by some. The brute reality of this crazy situation is that Apple has now publically reported that, in reality, it sold an actual 300,000 units in the first weekend, just about a half of the day-old Piper estimate.

Apple’s supply chain planners, having great success in planning the launch of other Apple products,  purposely allowed three or so months to actually ramp-up production numbers to support product launch of the iPad.  No doubt, these teams will know better than to plan the remainder of 2010 sales outputs based on such wide external forecast bandwidths.  It is however interesting to note how Apple euphoria gone wild can play out among analysts.

Bob Ferrari