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The Shaman’s Journal 2023
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The Shaman’s Journal 2023
Lora Cecere
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DEDICATION Winge tdoedmicaakteeathdiisffbeoreonkcteo. global supply chain leaders try-
Copyright © 2023 by Lora Cecere An ol lt rbi gehrtesprreosdeur vc ee dd . oTrhui ss ebdo oi nk aonr ya mn ya pn on retri ownhtaht es roeeovfe mr a y without the publisher’s express written permission, Published in the United States of America in 2023
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Foreword
Table of Contents Foreword............................................................................................ vi The Need for A Supply Chain Redefinition ............................... 3 No Time Like the Present................................................................... 7 When the Rubber Hits the Road...................................................... 15 Avoiding Dead-end Streets.............................................................. 21 What Is Digital Transformation? . ..................................................... 30 Dancing with Shiny Objects............................................................. 35 Why Organizational Alignment Is Essential ...................................... 41 S&OP Should Not Be a Hammer Searching For A Nail..................... 47 Lifting The Voice Of A Contrarian ..................................................... 53 Navigating The Ring Of Fire .............................................................. 61 Lessons in Leadership..................................................................67 Insights from The Supply Chains to Admire Analysis ....................... 71 What Worked................................................................................... 75 Normalcy? Not Yet. .......................................................................... 81 Driving Supply Chain Excellence . ..................................................... 87 Managing Metrics in Uncertain Times............................................. 93 Home Depot Disappoints. Why? .................................................... 101 Technology Evolution ................................................................. 105 The Saga of Supply Chain Innovation ............................................. 109 The Self-Driving Supply Chain Fallacy . ........................................... 119 Do Digital Your Way. Side Step the Supply Chain Conquistador . ... 129 Building Outside-in Processes. Insights From A Two-Year Journey .135 Tradelens Discontinues Operations. Why You Should Care. . ......... 141 How SAP Failed The Supply Chain Business Leader ....................... 147 The S&OP Technology Quandary................................................... 153 The Dance with AI.......................................................................... 159 Do You Need A Graph? . ................................................................. 165
Tb lhoeg Sphoasmt safnr ’osmJ oau rpnr ai ol ri st wa ec ol vme -pmi l oa nt i tohn poef rtiho ed .b e s t - r e a d Ti shree aS du pgpl ol yb aClhl ya ibny Sohvaemr a3 n0 , b0 l0o0g ,rne oa dwe irns . i Ht sutmh ibr lt ee de n, It ht hyaenakr, business leaders for their confidence in my work. Mf a cyef oocf udsi si rs ut po thi oenl p. Dout hr ei nr gs it mh i ps rpoevrei osdu,pIpal tyt ec mh api nt esdi nt ot hbeu i l d two guiding coalitions. The first was the network of net - works group to drive interoperability between networks, and the second was the definition of outside-in planning pevroocluetsisoens.oNf ceoitnhceerpitsseianstyh. eInsethaerewarsi. ting, you will see the a.k.a. “ The Supply Chain Shaman” Founder of Supply Chain Insights
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An Answer I Got Wrong . ................................................................ 171 By and Large, The Bullwhip Whipped Us....................................... 181 Risk Management ........................................................................ 191 Sourcing A Wider Periodic Table.................................................... 195 Barbarians at The Gate: A Risk for Supply Chain Business Users .. 199 Traditional Demand Management Practices Produce Empty Shelves 203 Risk Management: Think More Broadly Than Supply .................... 207 If You Think Visibility is Easy. Think Again. . .................................... 213 Building Your Career..................................................................221 Filling the Shoes of a New Supply Chain Leader ............................ 225 On Being An Influencer .................................................................. 229 My Answer for Jerome ................................................................... 233 Admitting Failure . .......................................................................... 237 Building Teams of Purple Unicorns................................................ 241 What I Would Tell My Sixty-Year-Old Self ....................................... 245 Definitions ..................................................................................... 249 About The Shaman’s Journal ................................................... 251 Supply Chain Insights LLC ........................................................ 252 About Lora Cecere ...................................................................... 252 Au Revoir........................................................................................253
Section 1 The Need for A Supply Chain Redefinition
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The Need for a Supply Chain Redefinition
Ii tny,t ht heefraec ei s oaf nuenepdr ef oc er daesnutpe dp ldy ecmh aainndr ae ns edt .sTu hp ep lcyhvaol lleant igl -e of uncertainty requires the redefinition of work. The pstaantudsemquicop. rovided the perfect context to question the
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No Time Like the Present
7 Time and data synchronization is essential in the defini - taiboonuot fms uypdpalyy. cMhya ibnoedxyc ye el laernncse .f oArs bt he de .c l o c k t i c k s , I t h i n k Tt ioodnasyl, i fI te, nI da me d baa4c k5 -odna yt hsep reoa akdi n, ga ltboeui rt . nAost CaOs VwI iDl dr ea sntdr i c - crazy as pre-pandemic. I am dragging. In my discussions on time in the supply chain, I struggle. I find companies having the wrong conversations. Even more so today than pre-pandemic. Tt hhei swi si nadnoowt hs eorf nai gdha tr kf oari rmp eo rt to tsetramr ei naat l t. hAes bI lsaqc uk i snkt yt of r o m ldoeol ak ya wt ti hl l ec fhl iagnhgt em, I obnri at oc er , mh oyps ienl fg f tohr atthteh lea tt we fol -i gh ho tu ar nf ldi gt hh te 2:00 AM arrival. The clock ticks, echoing time lost.
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Team turnover and the level of disruption drive reactive behavior, especially regarding the definition of time. Here I explain. Investments in Data-Driven Capabilities May Not Yield Better Decisions Omne mt hbi se rt,osupre, aI kh eoanr du sJ ienf fg Ma na a, al y ftoi crsmt eormMaIkTe bbl ea tctkejra cdke ct ei -a m sions in “beating the house.” I also heard Michael Lewis, ao ud tdhsoor f opf l Ma yoenr esyebl eacl lt ,i os pn ei ankBoans eubsai nl l g. Bdoattha at or ei mc opmr opveel l ti hn eg sinpseiagkhetsrstoeshpeolpusbienagttthheeuosdedosf. data and mathematical I love the stories but question the fit of the metaphor(s) for a supply chain conference. The reason? In both cases, there is a clear definition of “winning.” The rules of the game and associated outcomes are evident in both Black Jack and Baseball. This is not the case in the world of sup- ply chain management following 33 months of disruption. We are re-writing the rules. The outcomes are less predict- able or straightforward. Wo che ya na rseh itphpei rnugl ec rsanzoi nt ecsl es ai rs?aAb al ot itnhga, tshcehiasnsgueeds . aWn dh iilme p l i - cations of the Russian-Ukrainian war, energy shortages in China and Europe, food instability in Africa, and the glob - arol cwkasttehrecrsiuspisprlyevcehrabiner. ate as disruption after disruption Wa nhdi lien soing eh tms icgahnt haer gl pu ec otmh apt atnhiee sa vma ai lka eb ibl iet tyt eorf db ee ct ti es irodnast, a lceotmmpea ns hy a’ sr ea bmi lyi t cy otno caelri gn n. Tohne di as st au et os omf apkreo caeds es cl iastieonnc—y — a grow with disruption becoming a barrier to action.
Tg ehre i ltatragkeers t thoe dgeacpi sd ei noonr dg ai rneicztai ot ino.nTahl iasl ipgrnomc eesnst ,l at ht eenlcoyn - can range from days to weeks. Twhhei l reegaosoodn ?nBe wa ds nt reawv es ltsr aqvuei cl sk lsyl .oAwsl ya irne saunl to, ri gnaan mi z aatri-o n , ket downturn, process latency increases. The larger the omregtarnicizsa, mtioank,inthgedmecoirseiotnesnmsioonrewdiitfhficcuonltf. licting functional Ns uopt pe liyn cFhi ag iunr ep l1a .n1ntihneg gaanpds mf r ao nmu fraeccteunrti nr eg s, el oagr icsht i bc se, t awnede n sa anlde sl o. Tg ihset i gc as pa nb de tcwu es et onml oegr i ss et ircvs i ca en do rpgraonciuz raet imo ne ns ti ngcr roeuaps s- es process latency. These gaps are significant and growing as organizations become more reactive. Figure 1.1. Alignment in Organizations in the Summer of 2022
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11 There is a need to abandon functional mm ea tkrei ct sh ea nc dh aandgoep?t Aa l bi ganl af nu cnecdt i os cnoarl emc aertdr i. c Hs ot owf odcou ws e or enwr ae rl ida bs yi lsi tt ye mw ht oi l emaal ni gangien bg at lhaen ec en tsi hr ee eotr tgraandi ez -aot if of sn. ’ s A focus on functional metrics throws the supply The balance sheet shortfalls and the subsequent board- room discussions will redefine the rules for the supply chain. These discussions will also educate the executive team. (One of the most significant gaps in supply chain management is the executive understanding of supply chain management). Wo c he ai l ne torcaenasnp coor nt at tai ionne rp rvioc leusma er ef e7l 1l 8%%l oi wn eS re py teeamr -boevre ra-n d year, don’t get lulled to sleep. Inflation is 8.3%, the high - est in four decades. Fs poer ncdoimn gp arne mi e sa,i nt hseaibsosvuee 2i s0n1o9tlreevveel sn. uWe . hCiol en sduemmearn d i s choi sotloi nr yg ifsr os mt i l lt hn eo toav egrohoeda tperde ds ti cattoe roof ft hd ee ml aas nt d2 ,0mmaokni nt hg s , tcroandtiitni ou ne sa lt od ebme aunnde vpel annanni dn gu tnepcrhendi iqcut aebs l ue .s e l e s s . D e m a n d Why Does This Matter? To fhveafraiial ub ri lei ttyo cmh aanngaegse tmh ea rdgi isnc su sasni do ni navtetnhteo rbioeas ridn ltehvee fl .a c e Tr ehcee nr ut lreess ae raer cchh aonf g1i1n0g .bHues ri ne easrsel es oa md eer sh:i g h l i g h t s f r o m • Demand. The order is not a good proxy for demand. Wo uittshi dhee-iignhat enndeudsde icshr ua pn tni eolnd, at ht ae rteo itsr aannsel aetde tmo af or ckue st changes and align the organization quickly. • Metrics.
Let’s Re-Write the Rules Last week, Nike reported first quarter Q1 2023 results. We niut he st hi necar ne ansoeudn 4c e%myeenatr, -tohveesr t- oy ce ka rmwa hr ki leet gt ruoms sb ml e da r. gRienv - decreased by 44.3%. Ii tnyv. eWn ht oi lrei eNs oi nr tchr eAams eedr ibc ya n4 4m%a r dk ue te st ao l es us pwpel ryec dh oa ui nb vl eo- lda itgi l- - it, they did not offset sales declines in China. Nike’s supply chain capabilities –verified by being a Sup - py el ya rCsh–aai nr es bt oe tAt de rmt ihr ae nAtwh ae ri rd pWe ei nr nger ro uf opr. tTwh oe sceo rnesseuc lut st i v e hi negr aeladr nu ipncgosmc ianl lgs .i sNs iukees’ sf or er pf uo trut irnegmf oalnl ouwf asc tt hu er i na ng nr oe up no rc te-- msuepnptlybycoFsotrsdlaosfttwheee$k1.M shortfall due to the increase in Ownhei l ed anye tl aetaerr,nLi ne gv si rf ee lpl ot rot e$ d1 7n3e tmr iel vl ieonnu, eo rg 4r o3wc tehn tosf a6 . 7 % , sr iheasr ge r, ef rwo my e$a 1r -9o3v emr i- lyl ieoanr , boyr 44 37 %c e. nS tese, at hyee pa ra tat ge or n. I?nCv oe mn t -o - po fa nh ii eg sh dg or onw’ t thha, vceo ma rpeavneine us ea rper os bt rl ue mg g. l Ci nogmwi ni tgh omf f aar gpienrsi o d and inventory. Tu nh ce etri tma ii nn tgyi—s uancsoeot tl il ni ngge. cWo en of amc ey aa nnde wp owt eanvtei aol f rme caersksei ot n lie ahead. In the face of future demand and rising infla - tion, now is not the time for companies to hold excess inventory. (On a side note, in qualitative interviews, choa mp ppeann iwe sh es nh ai nr ev et hn at ot rt iheesi ra rwe ot rhset hc ui gsht oe smt .eAr ss et ur vf fiec de wl e va er el s- hstooucskepiisleisn.)efficient, and most companies have the wrong
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chain out of balance. • Planning. Traditional definitions of planning are also not sufficient. As shown in Figure 1, the plan - nzaintigongrwoueplls. are not serving any part of the organi- • Closed Loop. The goal to tie planning to execution remains, but the gaps in planning are a barrier. • Redefinition of Supply Chain Execution. The gd ri sotwr itbhuitni oannda al yt tai ci ss af onr orpe pa lo- rt itmu nei twy atroe ihmo up sr oe vaen odr d e r management. A real-time perpetual inventory signal offers great promise. The barrier is redefining sup - ply chain fulfillment processes to use real-time data effectively. • The Role of Enterprise Data. The promise of tight- ly integrated ERP to planning is failing in the face of variability. Companies relying on planning solutions from ERP expansionists—Infor, Oracle, SAP, etc.— si nt rtuhgegflaecteo oaf gt hr eeaitnetrednesgerveaerti ahbainl itthy.e i r p e e r g r o u p s • Digital Transformation. Digital programs are full of hype and over-promise. In the industry, there is not one consistent definition. Instead, there is amma nuul tf iapcltiuc irtiyn go fapurt oo mg raa tmi osn. Taor de at yh, ei nmv oe ss tt ms uecnctes sisnf u l . Continued investment in ERP programs as a plat - fuosremr sfaotrisdfiagcittiaolnt.ransformation has lower business
13 The current focus of supply chain cycle mc uarne a- tgoe- mr eec ne it p—t , oarndde ro-rt do e- cra- tsoh-, sphri op cmu er en -tt ao r- pe asyu, pppr loy- centric. The opportunity is to define and shorten the signals in the demand process: the time to under- sl at taenndc ym) a, cr ko ents us hmi fpt st i oa nn dt od or irvdeear d( de ec mi s iaonnd( lma taernkceyt ) , and the time for the response of demand to supply (process latency). In current processes, market la - taenndc yp rios c4e-s6s ml aotennt hc ys , ids e2m- 6a nwde el aktse.n c y i s 1 - 3 m o n t h s , The answer? Building outside-in processes based on demand and supply flows reduces latency, im - pT rhoevgeos oadc cnuerwa csyi, satnhda tr et omdoavye’ ss tbeuclhl wn ohliopg. i e s m a k e ti nh gi s. Ta opdoasys, inb oi l itteyc. hTnhoe l ob ga yd onre wc osnissutlht iant gi tgirsoeuvpo l v - ut i nmdee, rbs at as ne dd so hn ot wh et oc oi mm pp el el lmi negnrt etshuel tcso, nt hc ee pc thsa. nOgveesr will make it into the software and process defini - tiniognf.rHueitr,efoarreinsnoomvaetooprsp:ortunities, some low-hang- • Order Promising. I love the opportunity for NoSQL, nI mo -acgoi dn ee st ho ef t wp oasrsei,btiol i ti my opfr ohvaev ipnegrap er teuaal -ltiinmvee npteorr- y. petual inventory signal that is updated and accurate The Opportunity to Redefine Time Just as Fred Smith, Founder and CEO of FedEx, redefined time in a new model for overnight delivery, there is an opportunity to redefine time in the redefinition of supply cs ihdaei rn tphl raenen ci na sg ea sntdu de ixeesc ui nt i tohne. i Ir wd iagni tt acl ot mr apnas nf oi er ms taot icoonn - initiatives. Here is some detail: • Planning.
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every fifteen minutes. Think about the power for lt ar isct -rme si lpeodnes lei v. Te rhye agnoda li mi s pt or orvei dn ug cteh et hceu tsitmo me feorr- c e n - ce ua rs ltyo ma deorpot redr etre sctoi nmgmpirt omveens tt. hTi sh ea pgpo roodanc he w. s i s t h a t • Supply Chain Visibility. Imagine a decision support fvraarmi aebwi l iot rykatnhda tp coawnear naanl yi zne- md ee mm ao nr yd ma nodd es ul tpop hl ye l p cs po me epdaonfi ebsuds irni vees sb. iT- dhier egcotai ol ni sa tl od reec di sui oc en st haet tt hi me e t o make a cross-functional decision. While most companies speak of digital twin capa- bd iel ci ti isei os ,nt-hseuyp mp oi rs ts at hr cehliat regc et ur roeptpoorret du enfiitnyet owdo er kf i na en da embrace these opportunities. Wrap-up Of ocrteocbaes rt 2t w0 o2 2t oi st ht hr ee et hmi rotrye- tyhei ar dr smo of na tchh oa fl l de insgr iunpgt iroi dn e. Io f dairsersuupltti,oInasakft,er disruption for supply chain leaders. As “Why let a good crisis go to waste? Use this as the opportunity to redefine decision support to help the organization be more in sync with markets and make bet- ter and quicker decisions?” I firmly believe that the defi - nition of traditional supply chain planning and execution solutions needs to change. The opportunity is to redefine ttihmees:pfeoerdmoef,bituissinneostsr. eal-time decisions but decisions at Let’s get started. For me, there is no time like the present.
When the Rubber Hits the Road
Tr uhpet si ounp pwl ye rcehaa ilno nt ega, mw i’ sn dp iansgt trho iardt yp- tawc koemd of unltl hosf os fu dr -i s - pr er fi es rees n. Nc ea vmi goadt ei nl sg gt uh ied teutrhme oriel qi su iurne pd rbe ec he da ve inotre. dA: snao reeassuyl t , companies are writing new case studies through their action (or inaction). The overarching issue is business continuity. Vc uorl ar et inl itt yi s as nu de sdwi sirtuhpmt i aotne rairael fsahrofrrtoamg e os ,vlearb. oBra si sesdu oe ns , tehl ee c - tt ry i, cI af locr oe sc tass/t oaunt ae gqeusa, lwl eevaet lh oe fr de ivser nu tpst, i ao nn df owr at theer na ev xa ti l tahbri el ie- years.
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Table 1.1. Results in the Automotive Sector for the period of 2012-2021
Don’t Be Like Ford Ls ua ps tpwl i eere kc o, as tf tseirn bt ohoe kt ihni gr da nq uaadrdt ei tri,otnhael C$F1OB liendutnheex Cp oe mc t e- d pany’s focus on restructuring to “support efficient and reliable sourcing of components and internal development of key technologies and capabilities.” Following the an- ninoeulnecveemn eyneta,rFso. rd’s stock closed at the lowest valuation What is the issue? In this volatile world, efficient procure - ment led by a CFO is not the answer. The Company needs to focus on the design of flows, building outside-in pro - cr ee ds suecsi ,ncgr ec oa tmi npgl eaxni t eyf, faenc dt i vder isvui np gp lbi ei -rddi reevcetlioopnma l eonrtc ghreosu- p , tnreaet di o tno tbo ea mb aa nl aangceedd tsocgoertehcearr db .a Ms eadk oe n, s aonuar lcyet, i ca sn dt hda et l i v e r sbei lni tsi ee sa nd do nr eostpeoxni sdt aatt tFhoer ds p. Te ehde omf abnuusfi ancetsusr. iTn hg e- cseenctar pi ca - Ct eormmps a. Cn oy ni st i un sueadt i ot on sot fr at hn eg lti rnagdsi tui po pn lai le Fr so radn dc udl teumr ea nwdiilnl g lead to even more significant issues. Ft oomr do, thi vi set os er ci ct aolrl ya, nhda,swbiet ehnt ha ins ifnodc uu ss ,t rwyi ll la cgog na rt idn iune tthoe baeu a- laggard in the future. The low Return on Invested Capital (ROIC) and the growth below the industry average come fmr oe mn t tbheet wl a ec ek no nf ne we t wp roordk udcet sdi ge nv eal no pd mo regnat n, mi z aa tni uo nf aacl t au lri ignng- , apnl i de rps raonc du ri es ml eesns tc. oFlol ar bd oi sr akt ni voewt hn af no ri tsst rcoonmgp- aert mi t oi nr sg lsi kuep - Subaru and Toyota.
Who Is Navigating Well? Sr eos, ewahr caht ?c aFno uFro mr doannt dh so at hg eo r, swlee aursne df r oo umr oLui nr kceudr Irne nf ot l l o w - iunngdoe fr s3t2a 9n, d0 0c 0o mr epaadneyr sp et or fcoor mm pa lnect ee da ur reisnega tr hc he pp ar on jde ec mt tioc . Twhhei cgho tael ci hs nt oi qhueelsp ws uo pr kp layncdh wa i hn i cl eha dd oe rns otto. Iunn Fdiegrusrt ea n1d. 2 , wd i es tsrhi bouwt ot rhse. 3o 8v e%r aml l apnear gf oerdmwa enlcl eo ro fv me raynwu feal lc, twu rhei rl es 6a n2 d% struggled.
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(focusing on form and inventory function) with a more mature S&OP process performed better. Conclusion Ad iss rwuep bt iroanc,et hf oer ktnh ee ef-uj et ur kr er eo af cctoi on nt i ni su teod tai gnhdt eunn pf ul annc nt ieodn a l metrics. Unfortunately, this is not the answer. Uc hnaf ionr tausnaa tceolmy , pe lxeexc, unt oi vne- lui nnedaerr ss tyasnt edmi n gi s ol of wt h, ea snudpbpul ys i - nT ehsesalne as wd eerrsl iwe si l lwsittrhu gogultes itdoep- irne vme ondt ealdi nv eg rus sei ni mg pnaect tws .o r k di me spiagcnt aonndt hd ei gei txael ctuwt iivnet et ecahmn ool of gt hi ees f tooc us hs oown ftuhne cnt ieognaat il v e metrics, throwing the supply chain out of balance. Umnefnotrst ua ns ac toeml yp, tahneyr ea fwt eirl l cboemmp oa nr ey Fr oe radl i-zl ei kset ha en ni mo upnaccet -o f da ri sermu pi dt i-ownaayntdh rvoaur gi ahbti lhi ti sy.dBi sr ar uc ep tyi oo un rcsyecl fl e; .I t h i n k t h a t w e My advice? Align the organization against a shared vi- smi oonn tf ho lrystuophpel yl pc lheaaidneerxs cseel lee tnrcaed. eD- oe sf fi sg. n( Un seet wmoarrkkfel to wd ast a to decrease market and demand latency where possible.) Dtoeacrbeaalsaentcheeddsecopreencdaerndc. y on functional metrics and align
Figure 1.2. Performance of Manufacturers and Distributors During the Pandemic
18 Sf oou, ny do ut hma it gthhtr ea es kf ,awc thoyr ?s Wm ahtat te rderdi v: eosr gt ha en idziaf ft ei or ne na lc ea ?l i gWne- ment, descriptive analytics, and inventory management. Cb eo tmt epraonri ge as npi ez raftoi or mn ai lnagl ibgentmt e er ndtu. Tr ihnigs ti hs ee sppaencdi ae lml yi ct rhuaed when the critical customer service and transportation teams work better together. (During the pandemic, trans - pc uosrttoa mt i oenr sc eorsvt si csekaynr odcpkreitceed. ,Ci onmc rpe aa ns iine gs dt erni vsei onnbby eftuwnec e- n tional metrics struggled: they could not adapt quickly to the higher transportation costs.) Ei mx cpel el mu seangtei ni ng cAr edav saendc eddu Pr ilnagn nt hi negpsaonl du et imo ni cs. fCroommpEaRnPi e s technologists augmented the planning applications with dwei st hc rci op mt i vpea anni easl yatdi chse. r( iTnhgetroe twi gahst aS An eP gsattai nv ed ac rodr irzeal at itoi onn. ) Companies with more advanced modeling technologies and mature planners positively correlated at a 60% confi - dence level. Multi-tier inventory management by itself was not suffi - cient. Companies actively designing their supply chains
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Avoiding Dead-end Streets
21 Fp aolsl ti-sp caonndfeemr einc ceenseer ag syotno, raentdu rt nh itsoyeevaern, wt si, tIhhpi te nt ht -eutpr a i l tpol asnhnairnegi na ns idg hr et sc eonnt trhees evaarl uc he oo fn ot uh tes icduer-riennst uspt aptl ey oc hf a i n shua pn pd lsy wc hi tahi no tmh ea rnsa igne mp eerns to. nWaht iel ev eI natms ftei er el sd g, soho adk. iWn gh i l e sometimes, I feel like the old lady in the room (many of Is wa mo l lwe nr i ftei negt , tthhies bploi ssttefrrso mb e tawheoetne l mr oyotmo eisnbCl ehei cda, gaon. dI mh ayv e luggage overflows with dirty laundry. I have not been home since the end of August. This speaking tour ends the first week of October.
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my contacts are no longer active in the industry), the rpeocsei tpi tvieo, ns oo fI tghoe oc no ne tveennt tbhyo nu eg wh gsruapyphl ya icrhpaei nn el et raadt ee rs smi sy hairline. If un t tuhries ob fl oSgu, pI pwl ya nC th taoi ns hPal ar ne ni ni ns gi g. hLtest omn ems yt abr te lwi ei ftsh own htahte I think are “dead-end streets.” Let’s start with a definition.
23 We nitt hd ut he et omdaenayt hM, &r eAt i sr eh mi f tesnat n, adnsdh ij fotbs icnh as un pg epsl y, tchheawi notral dl - oi nf sstua pb pi l li yt yc thhaai nn lI ehaadveer sehv iepr hs ae se nmi on rme tyufronrot yv -eyreaanr dc at er ea emr. Ce coomn po amniieess ohfasvcea nl eo tt hbreoeung ha bMl e&tAo . aScmh iael vl eer scuopmp pl ya nc hi easi n o re u v t e p n e u rf e o s r ) m . larger companies (greater than $5B in annual Due to the need for urgency, I feel that we cannot waste our time or our limited funds on dead-end streets. Ex - ap ml a np nl eisn gi n, cr leuadl -et ipmr oe jpe lcat ns nl iikneg ,c Do ne tmr oalntdo-wDer ri vse, nl i gMh at st -eorui at l s Requirement Planning (DDMRP), forecast sharing, and spar loecse fsosreesc taos tui ns eg . r Ienasl t- et iamd e, l se itg’ sn ba lus i ladn od umt sai dr ke e- it nd pa lt aa nbnei tnt ge r tsotrmeeatk: e effective networks. Let’s examine each dead-end Control Tower. Most control tower implementations lack clear definition due to the lack of an answer to the ques - tion, “What is being controlled?” I find most are visibility pp rr oo vj eecdt sv wi s ii bt hi loi tuyt ttoh ep rroe cqeusi sr ecdo nc ltar roilt. yS oo ,ni fhyoowu taor et i ea titme m- p t - ing to implement a control tower project, be careful about the definitions. Lights-out Planning. The concept of Lights Out Planning assumes that planning can be automated to not depend on the planner. While I believe that the explosion of the number of planners and the lack of a clear definition of tahbel eptloa ni mn ipnlge mr oel en ti sa pprroobcleesms at ht iac t, wi s enaortedfeapr ef nr odme nbt eoinn g tphl ae nt nr ae irnse. )dCpol ma npnaenri. e( sT nh ee epdr ot ob lme me a issutrheepllaacnk aodf ht er ar ei nnecde , plan quality, and process latency and train their planners
“The end (as of a street) without an exit or a position, situation, or course of action that leads to nothing further.”
Miriam Webster
What are the Dead-end Streets? Amtotnhteh ps aonf ddei smr ui cp’ st i bo eng. iSnunpi np lgy, nc ho aoi nn el ei amdaegrisn me da nt haigr et yd- t w o twh er ao tuhgehr di mi s pr ua pc tt si o, en naef rt eg ry do ius traugpet si o, lna , bi on rc lsuhdoi rntga gi ne cs r, egaesoepdo - lt iht ii cs adl i ss hr ui fpt st ,i oa nn dp es ruipopdl ya /s l tohgei snt iecws cnoonrsmt raal i inst sn. oI t f oo vr ee cr.aIs t bT oe lpi epvi ne gt hmayt il ti swt oi l fl il sa ss ut ef os raar te leena es tr gt wy soh- toor-ttahgreese ayneda rtsh. e lcaocmk mo fordeiltiya bs luepppol ywsehr,otrht ae gdeesc, ltihnei nmg iagvraaitliaobni loi tfypoofpwu laat -e r, tCi Oo nV sI Dd ui me pt oa cf at smai rnee naontdowv earr. , Va ancdc itnhee el af fcekc toi fv es kn iel lsesdv laarbi eosr . by region of the world, so expect new variants. Mt a ai nntaygiisn ng eswu papnl dy cuhnapi rnesc iend tehnet ef adc. eI no tf ht eh ibs el ge ivnenl ionf gu, nt hc ee r - forecasted disruption period was seven to eight months. (mS oe da seol nf reodms ut hpep lrye cc ehsasi ino pn rooff e2s0s0i o7naasl sa ugsuei dd et hp eo smt . e) n t a l
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24 Again, asking sales to forecast sounds gmoaordk,ebt .uWt thhiel er es aa ll ei tsy i insptuhta ht es al pl es ss oh na rl ye kmnaorwk eat pdirei vc ee rosf, t h e sales forecasting tends to be biased based on sales and wouhtilpelasnavniinngg.the time and energy of thinking about lights- Real-time Planning. Yes, the supply chain is awash with rpel aanl -nt iimn ge. dTahtea .pUl asni nngi nrge aml -at si mt eer dd aa tt aa iussaens tohpeproerat ul -nt iimt yef o r cl ehaadn tni eml ea sn, dc os nu vpeprl syi ot on ur pa tdeast, ey ti eh led ps ,l awnani ti nt gi mf aecst, omr sa rl ikkeet pr ur ni cneisn, ga npdl aanvnai inl ag boi pl i tt iym. Ri zeaatl i-ot inmme oprl ae nf rnei nq gu ednotel ys. n o t m e a n Tophteimreiazsaotinonisesnimgipnlees. Minojercetsfrequent running of the noise into the complex, nmoena-nl isn oe fa ro ps ut i pmpi lzyi nc gh at hi ne ssyysstteemm. aS ni ndc ep rpol va indni ni ngg ai ss ybsot tehma oe nf gr ei nc eo sr dw, it lhl ea di ndc troe at sheedc forne fquusei onnc yi no fa nr uanl rnei na dg yp cl aonnnf ui ns ge d s ti t o a n te . when the organization faces disruption after disrup- Demand-Driven Material Requirements Planning (DDMRP) . Using better math to build an inventory plan fDoDr Mr aRwP ma sastue mr i aelss tihs aat gt oh oe do ri ddeear . iTs haegpo roodbpl ermo x iys ftohradt e - mand. Forecast Sharing. While running a supply chain based on tcho emdpoawn inesst rpeearmf o rcmu s at onmF eVrA’ safnoar leycsai ss tosno tuhned cs ugsot oo dm, ewr ’hs e n fyooruercsaesltf , ut hs ienyg f ti nh de Ft hVaAt ti en cahc nc ui qr ua ce i. eYsoaubwo ui l nl df i .nTde tsht at ht eo mn l y a few customer forecasts will be helpful. Sales Forecasting.
oprrgoacnesizsaetsioandadl tioncpernotcievsess.laInteandcdyitisiosune, ssa. les forecasting The Future SP ol a, ny no iun mg li og oh kt al iskke, ?wNhoa to wn ei l kl tnhoewf su, t bu ur et ho ef rSeu Ip sphl ya rCeh saoi nm e insights based on testing. Future applications are distributed and adaptive (re - duced latency to translate market data into actionable in- sights). In this transition, planners become orchestrators, and business leaders own planning outputs. The focus is on outcomes. The result is the redefinition of work: the net result is fewer planners with greater job satisfaction. Nt r ea xdte s- ot ef fps? bPel tawn en ei nngs toauxrocne o, mm ai ekse c, ha na nd gdee tl oi v ee nr abbalsee tdh oe n market signals and the design of supply chain flows to allow this shift to be successful. 1. Adaptive. The engines within planning shift to embrace machine learning and artificial intelligence, mt o ogvrianpgha- wb aasye fdr odma t ar be laastei os naanl dd oa nt at bo al osgei ca ar cl hmi toedc-t u r e s ei nl froerpmr es stehnetsaet iloe na sr n. Ai npg l ea nn gn ii nn eg sma an sdt ec ro nd tai tnauloa uy se lry lme aarpnpsi nbgy tmo imn iunlgt i pi nl es i og hu tt sp uf rtos m. F omr uelxt iapml epil ne ,piunt st hwi sh i l e mt h oe dFeol ri ne gc aosft LVKa Ql u de aAt da ,dme da c( hF iVnAe) l oe ua rt pn ui nt gs wi mhpi lreo dv ee d - creasing bias and bullwhip. The engine used eleven ivni spi ub ti sl i tt yo cmo anpf i gt ou rf ei vde boaustec do mo ne st .h(eRno el ee-dbsa os ef dd idf feemr eanntd team roles.) The engine learns based on the input and aligns the output while minimizing collinearity.
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Table 1.2. Testing of an Outside-in Machine Learning Model Based on Channel Data
Figure 1.3. Bi-Directional Orchestration
27 The definition of mar - kn ea tl s- dt roi vdeenc rdeeams ea nmda mr kae nt aa gnedmdeenmt auns de sl amt eanr kc ye. t Ts hi gi s- ftuonacdtieocnisailoitny.improves the time from market shifts Demand Visibility. The goal is the generation of rroollee--bbya-sreodleo.utputs for all roles in the value network Baseline Demand/Analysis of Market Potential. Reflection of market potential with continuous anal - ythseisiomf pdaecmt oanf ddesmhaapnidngsheifffteinctgi.veness while showing Unified Data Model Tied to a Balanced Score- card. The movement from the use of functional Planning Taxonomy Redesign. These shifts intro- duce nine new capabilities into planning taxono- mies, redefining planning. Advancements include tshy es teevmo ltuot ii onnf oor mf p al anndnai nl igg nmoaps tt ei mr di zaattai o: Bn ueinl dgiinnge sa based on market factors. Market-Driven Demand.
Distributed and Democratized Planning. To rhcrhoeusgt hr atthi oe ni mwpi tl he ma lei gnnt amt ieonnt ot of bt hi -ed ibraelcatni ocne adl s c o r e - cuar red1. .B3 i, -edni raebcl tei so nwahl aotr- ci fhoeps tt ri ma t ii zoant,i oa sn sf ho ro wc onmi nmFoidgi-t y bt ruayn sppl aonrst aitni opnr oocputri me mi zeant ito, nS &. O P e xe c u t i o n , a n d
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metrics to a balanced scorecard is the first step. The second is the alignment of disparate planning en- gines through a unified data model. Continuous Design of Supply Chain Flows . Contin- uous flow design enables decisions on nodes, form &p l af unns ,c tt ri oa nn sopf oi nr tvaet ni ot no rcyotnatrrgaecttss,, pa rnodc mu raenmuef anct tbuur iyn g sc tersasteesg ai ensd. Tphr oe vrieddeessiing pn upt rsotcoe tehdes mwui tlht i pS &l e OePn gpirnoe- s driving optimization. Procurement/Buyers Workbench. The design of a procurement workbench to consumer planned orders in the tactical horizon (outside of lead time) tdoe mi mapnlde mv aerni at bbiul iyt iynagnsdt rtahtee gbiue lsl wb ahsi epdi mo np ascutp. p l y a n d Bi-directional Orchestration. The orchestration of mofafsrktoetthsiegbnaallasnbcaesdedscoonremcaarrdk.et signals and trade- Redesign of Transportation Planning to Deliver a Feasible Plan. Today’s transportation planning processes focus on cost mitigation and do not re- flect the feasibility of the transportation plan while recognizing constraints. We depict the outside-in planning model in Figure 1.4.
Figure 1.4. An Outside-in Planning Model
Conclusion It will take time to redefine planning to help in these ti si ma ense oe fd hf eo irg ah tcehnaendg de ,i sarnudp tt ei os nt i, nbguits i rt ei sq uc li er ea dr . t Ihna tt ht eh enreew model in Figure 1.4, note the alignment to a balanced scorecard (a shift from functional metrics) and the plan - nteianmg ps.rocesses crossing both commercial and operations
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What Is Digital Transformation?
The concepts are new. Unlearning is the first step. The unlearning needs to precede the systems testing. To drive adoption, clearly define value. Sd ui gpi pt al yl tcr ha an isnf ol er ma daet ri os na rper oi ng rt ah me ms . iFdodr l emoafniymoprlgeamn ei znat ti inogn s , tThhee pr er oi sg raavme iol ef dd ipgri ot aml it sr ea nf os froirmmpartoi ov ne mi seunnt .t eHtehreer ei sdmh yy p e . challenge : Can you change course to drive more value in supply chain management?
Definition: Veiled: not openly or directly revealed or expressed.
Free Dictionary
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I first encountered the term “digital transformation” in 2011. The term is a spin-off of the “big data” work from ti nh de uospt er yn, -Ws oeu ur csee itnhneotvear tmi osndoi gf itthi zealtai os tndaencda ddei g. Ii tna tl ht rea n s - faonrdmdaitsitoinncitn.terchangeably even though they are separate Ibruoynei rc sa lhl ya, vseu lpi tpt ll ye cuhnadi en rssat ar en dbiing gdoa ft an op nr o- lbi nl eema rs twh ihnekrien tgh. e LT ehgeaecny gi innveess tt omiemn pt sr ouvs ee dr eelcai tsiioonnasl adraet a“ sbeats iet taencdh nf oorl goegti ei ts..” Tc ohme pI Ta ns it ea sn dt oa rsdpieznadt i omni lrl ei osnt rsi cotni oonl sd taopmp ri ot iagcaht ee sc ot hs at tmdorvi vee ldi tetnl et evda lvuaer.i aI rboi nl i ti cyaal lnyd, t rhiisskhtaopbpuesni sn ei ns st hc eo nf at icneuoi tf yu. n p r e c e - Ii clei kbeenr gt haifst esrt owr ay l tkoi npge tnhgruoiungs hs tbal ni nddi ni nggt owgi entthe er rc oo nn daint i o n s . Hs t oa wr i nsgo ?d oTwh en haut nt hg er ywpaet ne gr ’us i ends gset a, wn da notni nt gh et oi cj eu bmepr gbsu, t fearful of being eaten by a seal. So, they stand together and watch the first penguin jump, and if the first one does na toi to ng eht aepapt ee nn ,s t ehveeynwt hi l lo sulgohwtl hy ej upme npgtuhienms as er el vsetsa. rTvhi ni sg sai tnud- the only food source is in the water. Hj uomwp ?d oI dc oo nm’ tp ka nn oi ews . gOent ltyh 1e /i n3 sopf i rma at inounf aa cntdu rcionugr ca og me tpoa - nt hi ea sn f3e %e l tchoenys iadreeretqhueaml st oe lcvue rs riennntodviastrourpst. i o n s , a n d l e s s
The problem? Digital means different things to each team: no industry standard definition exists. The most success - ft uu lr ii nn gv easut tmo emnat t wi oint h. Ut hn ef ohr ti guhneast te lsya, ttihs if sa ci st i oo nn l iys 3m%a nouf ftahce- investments. Planning and visibility initiatives struggle for clarity on definition and the transition to rethink ar - chitectures based on newer forms of analytics. Figure 1.5. The Focus of Digital Transformation Programs
Cp uo tl teunrtei as l noef ende two tcehcahnngoel ot og yd. rAi vneefwo r pwraorj de cttoi smnaoxti ma idzieg itthael transformation. We need to imagine how we redefine ws uocrcke.sOs –nt ht heevjaoluurenoefyl, el ea ar nd ienrgs nn ee ee dd st ot oeemqburaal cteh ef adi lrui vr ee af os r Return on Investment (ROI). As shown in Figure 1.6, the current state shows that only thirty-five percent of supply chain leaders are familiar wl a ci tkh tthhee cnuel wt u raep tpor ot eascthaens /d t leeramr ns , taonddr 9i v7e%p roof cceos ms ipnannoi -e s vation. The gaps between IT and business leaders are a significant roadblock.
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Figure 1.6. Familiarity with New Analytic Approaches
Dancing with Shiny Objects
Final Thoughts Wt i oenas rbe ui nt cahna es en ds hl ei snsy coybc jl ee c. tCso. mI n pt ahni si ej so uwrannety ,plreoavdeenr ss oulsue- mD easnpyi ttee rt hmes pl ar oc kl i ifne gr awt i eolnl - og rf omuanndye dn eowb j ae nc tdi vperso. m i s i n g tTehc eh nc uo rl or eg ni et sa, pt hper ot oa lcehreasn uc es i fnogr rt ee lsat ti inogn aa nl dd al et aabr an si ne gs ai sn ldo w . tTroaddai tyi, ot nwaol mo uot doef l st harreee ncootme pq auna il etso fteoedl at yh ’ast cthhaelilre ne xg iesst .i n g tceucrhr en no tl oegnyv si rool nu tmi oennst , dbount owt i el lqtuhaelyt hj uemc ph ?a lWl e ni l gl tehs eoyf ttehset new approaches? Sadly, I don’t think so. I welcome your thoughts.
35 Iwnavtecsht emdebnut ss icnoems se l iena dwearvseisn. vI ne smt iyn l Yi f 2e tki,me eB,uIshi na ev ses , B i g Dn eatt ar ,eSs ou cl ti?a lYCe oa rm- omvee rr c- ye e, aa nr, dmDi lilgi oi tnasl Souf pd po ll yl aCr sh ai ni npsr. oTghrea m - monaftoicrsWpeenbd3i.n0g. with questionable value. Now, the chase is Mainly under the guidance of consultants, supply chain Bi mu ps iancet sosf l seua pd pe rl ys cdhuariinn gf rtahgei l pi t ayn. Td he emhi ci set xo pr iecrai le fnocceuds tohne efficient supply chains that could not sense market shifts rl eeasrunl t ae nd di nb du ii sl dr ubpettitoenr. aAf treerbduiisl dr uips ttihoen .oNp opwo r itsu nt hi teyt bi me feo rt oe us.
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36 lt ehaedr ee ri ss tsrpye tnhdei sneg ni ne wa bcuonndc ae np ct se ,i nf e hwy qp ue ecsytci loens . t Wh ehvi lael u e . Tmhoi rsegcaopnhs ae pr vpaetni vsediens pt hi teei rt hs pe et nr edni ndgo. fAcsosmh po wa nni ei ns bFei gi nugr e 1, less than 5% of manufacturing companies are innova- tors. (Twenty years ago, technology adoption was a bell curve with an equal number of late and early adopters. Now, business leaders are more conservative.) YL oe ut mmei gehxtpsl aa yi n, .e Ix ps el aei nt hteh pi sa, cLkoargai. nHgoowf tcraand itthi oi snba el ?t e c h - na cocl oe lgei reas t ien st op ennedwi npgr. oWg rhai ml e sc ob my cpoannsi eu sl t ha ne st si t taot edtroi vaedaonpdt new technologies, most have unfinished IT projects. As a rper soualct h, ceos mi npt oa nai ense awr ewbauv ne dolfi ns gp et rnaddi ni tgi ofno ar l t theec hn ne xo tl osghyi nayp - object. Digital is just becoming a way to finish the project of yesteryear. What Is A Digital Transformation Strategy? ITno d2 a0y1, 5o, nt eh ei nhtywp oe cc oy cml ep ao nf idei sg iht aa ls tar adni gs if toarlmt raat ni os nf obr emgaatni o. n sS tTrAa Rt eEg yw. hWehnaIt adsoke tshiits mq ue ae ns t?i oI nU iSnU aA Ls tLrYa tGeEg Ty sAe Bs sLi Ao nN. K (One of those looks of, “I wish you had not asked that ques- tion.”) Tmhaenrye filsavnoorsstaasndanaridcedcerfienaimtiosnh. oTph. e deployments have as I define digital transformation as the redefinition of the atoms and electrons of the supply chain to improve value. My list includes the redefinition of transportation plan - ning to use real-time data, demanufacturing to reclaim and reduce landfills, redefinition of work, the building of outside-in planning, the building of 3-D printing ca- pabilities, the use of NoSQL to connect real-time data to
ri nusl et as l laant di opnool if cvyatl ou ei mn eptrwo voer kcsu st ot oimmeprr-ocveen tt rr iacci kt ya, no rd tthr ea c e . I struggle to put traditional technologies like ERP, APS, ou rmdbersecl rl ai p, bt iuv te Iasneael yt thi icss. uC no md epr atnhiee sd ingei teadl tt or atne ss ftoarnmdaltei oa nr n wa ti rt hi cnk ye wj uamppp rfoora cchoenss et or viamt ipvreocvoemvaplaunei.eTsh. i s t ra n s i t i o n i s Success? Ii nr ognmi caanl luy,f awc ht ui lrei nogn–l yd i3g%i t aol ft wc oi nm, phaannidess- fi nr evee sptr ionc ei ms sperso, v - cmoennt rt so lhsayvset et hmes h, ri go hb eost ti cssu, cacneds sa ur at ot em. Aa tsi os nh –o twh ne si en iFnivgeusrte- 1.7, the success rate of supply chain planning and visibili- ty is significantly lower. Figure 1.7. Success Rate of Digital Transformation Programs
The reason? The most common issue is the lack of clear definitions to guide the scope. Too few companies cut tehxreocuugtahbtlhee. hype and cloudy words to make projects
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Lt oent ommeogui sv eS uy op up laynCehxaai nmsp. lI es. tLa ar st et dwteheek p, Ir es speonktea toi no nA wu -i t h a definition. An Autonomous Supply Chain is one where tehx ep lpari no ce eds tshoapt eI rbaet el i se vweidt ht oh ua tt wh uemwaenr ei nnt eo rt vreena tdi yo nf o. rI tt hh ee n autonomous supply chain because most companies are not clear on the definition of supply chain excellence. So, I asked, “Does a more agile supply chain improve resilience?” I then asked, “What is agility? How do you drive resilience? Which prompted an intense discussion. Let me explain. Design Flows. Most companies have 5-7 supply chain flows. Only 9% of companies actively design these. The responsive supply chain has a short cycle time. In con- trast, an efficient supply chain has the lowest cost, while ac un sat og iml eesruspepr vl yi cceh, agiinv ehna st hceo nd seims taenndt caonsdt , squupapl li yt yv, aa rnida b i l - ibt ey ml e av en la. g( eTdy paisc aa lnl ye, f2f i0c-i3e 0n %t s uo pf pa l cyocmh apiann. yH’ so wv oelvuemr, emc oa snt cuos mi n pg at nh iee ps rmi nacni pa gl ees tohfeesf uf i pc ipelny ccyh taoi ng ua si doenteh se t pa nr odcaersds .f)l o w It ni g ah dt di ni tt ieognr,atthi oennoe fwb pu rs oi ndeuscst pl ar uo cnec shs se us pwpiltyh cRh&a iDn treeaqmu isr e s ad ne -dms aunpupflai ec rt us .rTi nhge, ca inr dc urleacrl as mu papt il yo nc .hBayi ndienl ci vl ue dr iensg rceot un rs ni ss-, tdeenstpbi tael adnecme asnhde eatnrde ss uu lpt ps ,l yc ovma rpi aa bn ii lei ts ya. cI hc ioeuvled rgeos iol ine na cned on, but the biggest issue in the failure of supply chain planning and visibility projects is the grounding of defini - tions. Ta lhi gensme ceonnt do ni s swuheaits dcrriovsess- fvuanl uc tei.oTnhael ct oh li lradbios raawt i oa rneanneds s o f dthaetya ihnavthee. Company: too few companies use the data that
Mh ayn pd os -i nf rteoe f avui teowm? aCt oi omn pwa hn ei ens tahreeynaorte rue na dc lye at or ob nu i tl hd e d e - sign and execution of supply chain flows. Dancing With Shiny Objects Tc ho ao i nf e pwl acnonmi npga na ineds vdirsi ivbei lti ht ye pe rxopjeeccttes d. Mv ay l au de vi inc es ?u pGpe lty clear on definitions and desired outcomes. Avoid shiny objects.
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Why Organizational Alignment Is Essential
41 Hd aeyrse aI rsei tm, tyy pdianyg taowpaoys to mn ay bS he aa umt ai fnu lbMl oagyamn do rcnoimn gp. oMs eo na - podcast. The Shaman blog is now over eleven years old. It or eWmoermd Pbreers ms , ya nf idr sat bp loosgt tl oi koek i tmwe aas wy ee setke rt od af yi n. Ii swh .a (sSnuec wh a struggle!) Now, the writing follows the research. I mix
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the quantitative analysis with my observations and inter- views, and the posts roll from my fingers. I appreciate you as a reader and enjoy your comments. Oervsehrip2.8,000 readers read this blog, and I thank the read- A Closer Look at Organizational Alignment It nh ea rreescpeonnt ds eunr vt se yt oorna toer gt ha en ii rz as tui po np al yl ac hl i ag innmbeans te, dI oa snk e d ci no uF ni gt ue rr -eo1p. p8 o, 5s i0n%g asde jee ct ht ievier ss. uNpopt ley t chhaat i onf at sh ewroerskpi no ng dwe enltl s, 4o n2 l%y 3v1i e%w fiet eal st hr ea st i tl hi eeni rt , saunpdp4l y5 c%h as iene i ist aalsi gpnreoda.cMt i voes ,t bsue te their supply chain as fixed and insular. Figure 1.8. Use of Supply Chain Descriptors
On antee oi sf tt hh ee ag lai pg nbme tewn et egna ppsr ot hc au tr ei smgerno twai nn dg ma nadn iusf au cntfuorritnug- . Tmheins tgiaspt hoef 4h8i g%h ebset tswe ee ne ni nmsat nu ud fi ea sc taucrri onsgs atnhde pd reoc caudree. -T h e metrics defining success in manufacturing and procure - ment need to align. Figure 1.9. Organizational Alignment
Lt i ec te’ so tf aakne ot hr geaenxi az amt ipol ne owf osrukpi np gl i ewr i dt he vt he leo spump epnl ite- r- t bh ae spe rtaoc - help drive improvements– is as essential as an effective Sales and Operations Planning (S&OP) process. In this recent research, an effective supplier development pro- gram significantly improved resilience and agility in the roepsmeaerncthprreosgproanmd.ents reported an active supplier devel-
Sr ui lto, ss ud pr ipvleync bhya ifnu nl ecat di oenr as lt mr yettor ipc su ni sc thhtehne iorr wma. yS ttuhcrko ui ng ha a set of conflicting metrics and priorities daily. Operational ec rxec ae sl lienngcreetshurl ot swosnt ha eb saul apnpcl ey dc hs caoi nr eocuatr do fobf aglraonwc et h, d, me - a r - goinnI,ninvveesntetdorCyatpuirtanls),.customer service, and ROIC (Return
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Figure 1.10. Impact of Supplier Development Programs on Organizational Descriptors
A Need for A Supply Chain Reset MT hoesyt go rpoeur pa tseddoa ni l oy twr ei tahl ii nz et ht he ai rt rt hu et sy, an roet ol euatr onfi nbga ltahnact e . tAhl ei gi rn mv i ee nwtscor af cekx sc edl el esnt rcoeys ruebl -i ao bp itliimt yi, zcer epaetri fnogr ma da yn scfeu. n c - tional organization.
Reset: The act or instance of setting again. An act or instance of setting, adjusting, or fixing something in a new or different way.
Ot hneesiunptpwl yo cmh aa ni nu lfeaac dt uerri:nsgu oprpgl ya ncihzaaitni oonrsg raenpi zoartti oo nu st s i d e tdyi spti rciabl ul yt ihoanv, ea nt hdepf ruonccut ri oe nmseonft palsa nd ni riencgt, rt er apno sr pt so. rTt ah tei yo n , arerpe obrettttherroauligghnethdewshaemnemleaanduefra. cturing and procurement Rc leupdoer dt iins gt r ri be luatti ioonn sa hn idp st rtaon tshpeo rs tuapt pi ol yn cr ho al ei ns al enaddaerrei nl e- s s lriakteel yt ht eo mh aavneumf a ac nt uurf iancgt uorri gnagn. iNz oa tt ieo tnh aa st tmh ea truersep, obnudt et hn et s areas of transportation, distribution, and procurement are significantly lower. Sadly, the customer service–the os ar yg , asnoi zwa ht i ao tn, ’ Ls ol irfae ?b Il oboedl i–ervaet et sh et ht er al od wi t ieosnt a. Sl of u, ny oc tui omn iagl h t mE qeut ri pi cms eonf tl oEwf f ee sc tt imv eanneusfsa)c tt hu rr oi nwg tchoes ts ua np dp l Oy Ec hE a(iOn voeur ta lol f bi nagl af no cc eu .s Ae sc oo nmtphaenlyo wc aensnt omt apne ur ff oa rc mt u rwi negl l ci of smt ,atnr ua nf ascpt ou rr -- ti sa tsieoenkiisn tghteh leo lwo we set sttr pa nr os pc uorret amt ieonnt cc oo ss tt ,, pa nr odc cuur es tmo me netr service is an immature capability.
Merriam-Webster Tmhaen gc eo ai nl i tsi mt oeismopf rhoivgeh tdheemr ea snidl i eanncde soufpmp leyt rviac rsi apbe irlfiot yr.- F o r mp l yo-scte, nt ht ri si cr ec oq nu ci reepst st h. Te huen ml e aorsnt icnrgi t oi cfatlrealdeimt i oe nn at lf os ur po-r g a - np ai znadt ieomn isc t ph ha ta sr ea st ewd at sh eo mr gsaenl vi zeast i“ownoarl kailni ggnwmeel ln” t d—u hr ionpget-h e fully, a call to action for all.
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S&OP Should Not Be a Hammer Searching For A Nail
Pictures of smiling business leaders flood my mailbox. TUhnef ogrot uondant ee lwy,st hi set dh iastcwu ses ci oannsaftot ec unsd pcroinmf earrei lnycoens aogpai ni n- . ions, not facts. Ar ess ae acrocnht rt oa rsi taene vr ot hi cee ci on nt vheer isnadt iuosnt sr yt,oIwwaarnd t at omsohraer fea sc ot -m e based dialogue. My goal is to help. Idnr itvhei ss up cocset s, sI wb aasnet dt oo nf orceucse on nt rt ea sc et iacrsc thhoa ft 1w0o7r kb ua sni dn edsosn ’ t respondents.
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“If the only tool you have is a hammer, treating everything as if it were a nail is tempting .” Abraham Maslow, 1966
Supply Chain Center of Excellence Let’s start with a discussion on effective Supply Chain Center of Excellence. A Supply Chain Center of Excellence sounds like a good idea. Right? I used to think so as well. To fheexpc reol lbelnecme , icsotmh aptofue nwdceodmbpy atnhiee sl ahc akvoef aa cclleeaarr ddeeffiinniit i o n - tion of a business strategy. As a result, with the lack of clarity on supply chain excellence, the group flounders. In Figure 1.11, we share the gap analysis. Figure 1.11. Supply Chain Center of Excellence Gap Analysis
It nh eF ri ge us pr eo n1 d. 1e2n, tws eb as sheadr eo nt hae qr eu laant itvi tea mt i vaet us rui rt vy evya. lAu es coof r e of five was very effective, while a score of four was some - wt i ehsa, twehf fiel ec tai vsec. oAr es coof r2e wo fa 3s rreelpart ei vseelnyt iende af fveecrt ai vgee. c a p a b i l i - The average score was 3.11. No respondents rated their pf i rf tohc ec sosmaps l ee tf feedc ti inv et hi en ltahsits ddeecf ai ndiet i uo sni. nTghtihs i ss uqruvee syt ii os nt h. Te h e l s e t a u r c n k i . ng? The industry scores are not improving. We are Figure 1.12. S&OP Maturity
Td oi f fuenr ednetr sf at acnt odr st hoenrSoaolteiss sauned, Owpeearna at iloynz es de ftfheec tiimv epnaecstso f (S&OP). In the survey, companies rated their S&OP pro - cc ea spsa bo inl i at i es sc ai nl e foi vf e1a- 5r e, wa si:t ht hae sacboirl iet yo ft of i vs ee nrseep ar ensde nr et isnpgo n d tmo ednetmt oa nt hdeapnlda ns ,utphpel yc ovnonl aetci tl ii toyn, oorf gpalna inzna itni ogntaol eaxl iegcnu-t i o n , tf ehaesai bbliel i tpyl at no , baanl da nt chee doer mg aanni zdaat inodn ’ssuapbpi llyi t yt ot od emv ea lxoi mp ai z e opportunity and minimize risk.
49 Sd&o eOsPnios tndorti vaepoarngaacneiaz.aOt iuorn rael sael iagrncmh es hnot wo rs rtehpaltaSc&e Oa Pc l e a r supply chain strategy. However, the study does support Mc hya iwn omr rayl ai ds itehse. Iot vcearnuns oe tobf et haehSa&mOmP etro l sooolkvien ag l fl osru ap pnlayi l . ST&h eO Pc otnocaedpdt ri es sosvaelrl - suus pe dp l wy ci thhaoi un t ma da ldardeisessi ni sg at hme i gs taapksei. n execution.
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fcohramnnateilodnaftoar. demand processes based on Summary SS o&, Oi fPy, iomu aagrien ea twa hceornef et hr ee npcree sheena triinngg caopmr epsaennyt ar at itoens oo nn maturity and ask for feedback based on this research. Lr eeat ’ssomn ?a Tk oe ot hme uscuhp pi sl yd ec hp ae innd ae nf at cot n- bnaos et dg edt itsi nc ug scsai ou ng .hTt huep in industry groupthink.
50 Excellence score higher on driving effective- ness than a Supply Chain Center of Excel- lence? The Supply Chain Centers of Excellence swt ri tuhg ignl ec rteoa ds ienf gi nael iegxncme lel ennt ci es siuneos r. g( Aa nl iigzna mt i oennst gaps grew three-fold over the past decade.) This group struggles if companies cannot clearly define an operating strategy and a sup - pB luys ci nh ea si ns Ienxtceel ll li eg ne nc ec ed Ce fei nn ti tei ro on f. IEnx cc eo lnl et rnacset , haa s aorcgleaanri,znatoino-ncounsetrdoavtearsbieatltaegr.enda to help the • And why does a Digital Supply Chain Trans- formation Effort not score higher? The an- swer lies in the lack of clear definitions to drive oc hu at ci no mt r ea sn. sMf oor smt aa trieo ne ns gwa igt ehdo ui nt cdl iegai tr agl rsouupnpdl yi n g on “the what” and “so what” of the initiative. DMiagni tya la sr eu phpollyl ocwh awi no rt rdasntshf roorwmna tai or onuins da af asdt .a g e without clear meaning. What does it mean? I don’t know. There is no standard definition. • Or the use of Channel Forecast Data? I also think the industry is unclear on driving trans- that companies with a strong business intelligence cen- ter of excellence, a chief supply chain officer, and a clear supplier development program tend to perform better on S&OP. It also supports that companies with strong manu- facturing scheduling capabilities in process-based com- panies score better on S&OP. (There is no similar correla - tion for the other elements of planning.) As a result, I pose some questions for the reader: • Why does a Business Intelligence Center of
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