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Supply Chain Management (SAP SCM)

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The area of Supply Chain and logistics is of increasing importance in today’s connected economy and statistics
underline the enormous growth potential as we are moving into a
global network economy and the new era

of collaborative supply chain management.

 

This has resulted in an increase in opportunities across the supply chain. A report from Fortune recently highlighted that the US logistics business alone is looking to fill 1.4 million jobs by 2018 including leadership positions.


Women in Supply Chain

 

Today, the world of supply chain is heavily male dominated.  According to a SCM World study, only   5% of top-level supply chain positions at Fortune 500 companies are filled by women, lagging behind figures in other senior executive roles, so here is a real opportunity.

 

There are some great examples of female leaders, such as Annette K. Clayton who currently serves as Chief Supply Chain Officer at Schneider Electric. Before that she held Executive roles for Global engineering operations, manufacturing, Supply Chain and logistics at Dell, GM and Saturn Corporation.

 

Another example is Marion von der Hand who started her career in purchasing. Since she was asked to assume the logistics responsibility on top she has had a very successful long-term career as Chief Logistics Officer with the German automotive supplier Leoni, a typical male-dominated industry.

 

This proves that women can greatly succeed in Supply Chain and serve as role model for others.

But the business space needs more highly qualified women.

According to surveys the motivation for women to work in logistics does not differ much from that of men. Both genders are looking for opportunities to grow in an environment that offers multifunctional job opportunities, may it be related to planning, purchasing, production, transportation, storage and distribution of products into the global market.


So which skills do women bring in?

 

Females who make their way in this male dominated area describe themselves as a very determined and with a clear perspective of the value they add and of what they want to achieve. 


According to studies, such as from the German Logistics Association (Bundesvereinigung Logistik e.V. BVL, 2012) their work style in managing logistical challenges is different than that of men. So is their problem solving approach. This is rated positively, also from a male perspective.


Moreover organizational talent, good networking skills and an understanding of interconnected  relations are usually rated highly amongst females. As are communicative skills comprising intercultural environments.


Also, the ability to create positive environments for discussions helps defuse critical situations with customers, suppliers and teams. Combined with the technical and economical expertise this can be a critical success factor to well-manage logistics processes and achieve corporate goals.

What is needed? 

 

  • Obviously the basic requirement is that more young women have the courage and decide to study industrial engineering or attend an MBA program with a focus on logistics
  • Dedicated programs both on university level as on business level  help raise the interest in logistics, one example is the ‘Women in logistics’ program of the Canadian Logistics Institute or ladies logistics lounges’ at industry events.
  • Universities with a dedicated logistics campus and specific chairs as well as targeted marketing campaigns will help raise the number of women   
  • University education combined with on the job training phases in supply chain and logistics departments of enterprises and, in different geographies, as offered e.g. by the Technical University of Dortmund, Germany, is regarded inspiring by the students as they provide daily business insights
  • Enterprises that set up initiatives to develop female talents systematically, including mixed leadership and mentoring and coaching programs with sustainable action plans. An example is the Supply Chain academy from Unilever.
  • Conditions should be framed to better address female requirements to manage career and family, e.g. flexible work models, job postings and web
    advertisements that speak to women  
  • Female role models both for business and for leadership positions 


    Conclusion

    There is a major opportunity for women today to choose Supply Chain and logistics for their career path and be successful. The time is better than ever before because of global market growth and the upcoming demographical changes in the global workforce.

    Supportive programs are certainly useful. But ultimately, more women should take the conscious decision for a Supply Chain and logistics career and go for it. They will be on the winning side.

    I’m looking forward to hear your comments, questions or suggestions. Thank you.

    SAP recently founded a global Supply Chain Women network that comprises around 50 female professionals across product management, development, services and customer support to drive exchange on supply chain topics. These women emphasize their focus on this
    career path. Moving forward the idea is to expand the network externally to SAP’s customer base.  

     

    Karin Fent
    Director of Global Customer Program
    Supply Chain, R&D, Engineering and Asset Management
    SAP



     



     

The demand side of supply chain networks is changing rapidly, requiring businesses to transform their distribution and logistics operations into demand networks that are all about the customer, the partners involved to fulfill demand, and the speed of that fulfillment. Read this article to learn how SAP’s Supply Chain Execution platform helps organizations meet this challenge by closely integrating the processes behind the planning, orchestration, and execution of the physical movement of goods.

 

If your work relies on logistics, you are likely aware of the ongoing changes in this sector. But a closer look at the challenges, such as increasing logistics costs and increasing customer expectations, that practitioners are facing in their distribution and logistics operations reveals that the entire discipline is evolving. The proverbial “box pushers” who store and move goods, react to hurdles, and make logistics processes run will need to grow into a different role responsible for value creation and the operation and orchestration of their networks. A recent study on the “smart distribution center” identifies demand volatility as the single most important factor in difficulties in distribution and fulfillment setup; more important than all other factors combined.1
 
What is causing this and how can companies best deal with these challenges? The demand side is changing rapidly: Today, the customer has more knowledge about products and services than ever before through social networks and easier access to product- or company-related information. Service levels of same-day delivery or even sooner are becoming established by online retailers, and those expectations not only impact B2C businesses, but spill over into the corporate world as well.

A Shift to Demand Networks

All of these changes increase the complexity of logistics. Constant change calls for much more flexibility in distribution networks. At the same time, companies are introducing speedy replenishment services as a strategic differentiator to set themselves apart from their competition. Examples of this can be seen across a variety of industries; not only in retail and consumer packaged goods, but in manufacturing industries, as well as among the service providers that run the logistics business for others. These major trends require businesses to adapt their supply chains and transform them into demand networks that are all about the customer, the partners involved to fulfill demand, and the speed of that fulfillment.

 

For logistics, this means that service levels and cost need to be balanced constantly by considering global trade, sustainability, and multi-mode transportation and distribution. Short-term planning has to match logistics demands and capacities, while the entire distribution network needs to be considered in the optimization of goods flowing in the network — all with full cost transparency. For a network to be able to respond to changes and provide the required flexibility, processes need to be closely integrated to enable the fast exchange of exceptions and provide insight into plans, operations, and inventory. Finally, this requires visibility into the logistics network and traceability of material flows.

Introducing the Supply Chain Execution Platform

To help organizations move to demand networks, SAP has introduced the Supply Chain Execution platform that covers the planning, orchestration, and execution of the physical movement of goods. This solution connects the different participants in the value chain of logistics: manufacturing companies that ship goods, freight forwarders and carriers that provide logistics services, and the ultimate recipients of the goods. The main building blocks of the Supply Chain Execution platform are the three solution areas: Transportation Management, Warehouse Management, and Track and Trace, all merged on one single platform. With this platform, it is possible to align logistics processes with business priorities from order-to-cash or procure-to-pay scenarios through tight integration. By including analytics in transactional processes, real-time operational insight enables the actual operator to make the right decisions.

SAP Transportation Management

SAP Transportation Management (SAP TM) was created as a holistic solution for shippers and freight forwarders of all sizes and with both simple and complex, high-volume operations supporting multi-mode domestic or international transportation processes. Recent solution innovations address the business processes of rail transportation for shippers as well as rail carriers. In addition, strategic freight management capabilities cover the complete tender-to-contract process for shippers and the quote-to-contract process for logistics service providers (see Figure 1). Thus the different participants of the value chain can operate on the same platform, seamlessly integrated with SAP Business Suite. To better collaborate with business partners, the SAP TM collaboration portal allows for the coordination of network activities with carriers.

 

Markus Fig 1.PNG

 

SAP Extended Warehouse Management

The distribution processes within SAP TM are tightly integrated with SAP Extended Warehouse Management (SAP EWM), which covers warehouse management for distribution centers and production warehouses. With recent innovations in SAP EWM, optimization capabilities find broader adoption in warehouse operations, as warehouse managers can use advanced workload calculation with predictive analytics for labor demand planning. A single point of entry for planning as well as shipment execution and monitoring is provided by the shipping cockpit that supports the operation itself and delivers embedded contextual analytics (see Figure 2).

markusfig2.PNG

 

Track and Trace

Tracking and tracing capabilities, the third component of the Supply Chain Execution platform, create visibility into logistics processes and provide end-to-end process monitoring for critical issue alerting. With SAP Event Management used for shipment tracking, it is possible to more quickly and more precisely know where goods are located. Companies are not only able to track the progress of orders and their fulfillment, but also trace back the distribution flow and the genealogy of the products handled.

An Ongoing Evolution

Planned innovations for logistics focus on optimizing integrated supply chain execution processes and connecting them to the Internet of Things. This will allow for the management of distribution hubs as well as deeper integration of the manufacturing material flow with production warehouses. Overall, the Supply Chain Execution platform strategy allows efficient and speedy fulfillment of customer demands. It breaks down the operational silos of separated responsibilities and allows greater focus on end-to-end business processes, creating the opportunity for logistics managers to become network orchestrators, creating value for the end customer.
 
For more information, please visit www.sap.com/scm or www.sapscm-webcasts.com.

 

This article was originally published in the October 2014 edition of SAP Insider.

 

It was written by Markus Rosemann (markus.rosemann@sap.com), who is SAP's Global Head of Logistics & Order Fulfillment. Markus has global responsibility for the SAP solution portfolio of Supply Chain Execution, covering SAP Transportation Management, SAP Extended Warehouse Management, and Track and Trace. 

In a recent SCM World Chief Supply Chain Officer Report, the top 4 disruptive technologies for supply chain where big data analytics, digital supply chain, the internet of things and cloud computing.

 

 

 

Another finding from the report was that more than 80% of respondents in CPG, hi-tech and chemicals firms, and over 70% in industrial, healthcare & pharmaceuticals, distribution and retail firms, are either very concerned or somewhat concerned about demand volatility.

In a new article by Martin Barkman titled, Integrated Business Planning for Demand Transparency, he discusses how in the face of all these challenges, cloud-based solutions for integrated business planning and supply chain monitoring enable companies to transform their supply chains by facilitating real-time decision making, providing visibility to drive predictive demand planning, and helping to orchestrate the right response.

It’s becoming increasingly challenging for retailers to satisfy the high demands of the omni-channel consumer in Africa.


As much as urbanisation is sweeping across the continent at a rate of 3.61%, which makes it the fastest growing region in the world, the supply chain is still an issue as suppliers have to deal with delivering goods and services using an underdeveloped infrastructure, amongst other issues.

 

With the rise of mobile, retailers need to look at more effective ways of implementing supply chains in a way that manages the expectations of consumers, thereby making shopping online as well as at a physical store as seamless as possible.


Some retailers are offering online consumers multiple options:

  1. to shop on the company’s website, and
  2. pay for the items at the stores as well as collect them there


This solves two problems:

  • Theft of banking details online
  • Theft of goods ordered while in transit to the customer


Another challenge faced in this area is Analytics.

Globally, 70% of respondents have stated that the analytics tools that they are currently using only provide insights about their prior performance. On top of this, 70% have expressed that existing supply chain analytics are really slow and take too long to provide answers. Making decisions rapidly and accurately using outdated, traditional systems is near impossible.


It really is time for Africa to rethink this.

  • Traditional supply chain tools are not on par with the new, digital world and cannot keep any business competitive.

 

Blogpic1.pngCRM and Content Management solutions are now being used to extract raw data from the digital sources to give insight on online customer interactions relating to research and purchases. This helps retailers create better and more personal end-to-end experiences, which will be sure to increase the omni-channel consumer’s satisfaction and loyalty.


Global retail leaders have taken this a step further with OmniCommerce, providing a seamless experience across all channels. The benefits of this system include consistent experiences, flexible delivery, inventory visibility and availability in the retail market.


With Africa being hailed as a continent rich with opportunity, retailers need to make more of an effort to marry physical and digital platforms. There is no avoiding the omni-channel environment and the need for an improved supply chain is great.

 

The bottom line is:

if a supply chain is not based on relevant data, it will not be competitive. Real time information fuels success and helps a business make better decisions.


SAP Supply Chain Control Tower provides real-time information across the supply chain to track events and react immediately to ensure your customer service is maintained.

http://www.sap.com/solution/lob/scm/software/supply-chain-analytics/index.html

SC Control Tower.JPG


Want to know more about Supply chain Innovation? Download and review the complimentary report from Bloomberg Businessweek:


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TACook.jpg

Join us at the upcoming International SAP Conference on Supply Chain 2014 – a business-focused event with best practices from leading companies for organizations using SAP on transforming your supply chain.

 

Taking place in Copenhagen this September (22-24), the conference is packed with customer case studies, latest news, HANA and cloud-based innovations for SAP SCM, networking opportunities, and solution workshops featuring best practices for supply chain management. Details of all these sessions can be found in our event brochure which can be download here – www.tacook.com/sapscm

 

Event Highlights Include:

 

•          Best practice case studies from leading companies including Ford, Schukat, BSH, DeLaval, Continental, Novartis, La Poste, Sappi, ETi, Linfox, Arla, Festo, Schaeffler, MAN Diesel, and many more

 

•          Keynote presentations featuring the latest trends, SAP roadmap, and innovations including new cloud solutions like Integrated Business Planning, based on the SAP HANA platform

 

•          Live demos and pre-conference workshops on the SAP portfolio of solutions for supply chain management

 

•          An informal evening event to network with peers and become part of a wider community of supply chain experts

  

Invest in yourself and business, and join us to better understand how to improve overall business operations, customer service, facilitate collaboration, and lower costs. Have a look at the companies who will be speaking at the event and secure your seat now at www.tacook.com/sapscm

 

 

Mark your calendar now:

 

 

International SAP Conference on Supply Chain 2014

 

Copenhagen, September 22–24, 2014, Denmark

 

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Garrett Miller

Everything-as-a-Service

Posted by Garrett Miller Jul 18, 2014

Recently I came across Microsoft’s offering of Machine Learning-as-a-service and I had to ask myself, “What will not become a service in the future?” Then again later today I read this quote from futurist Marcell Bullinga “The key to the future is not ownership, but access.” With the advent of the sharing economy or the bartering revolution, nearly everything is becoming a service: from flight time to drive time, from processes to platforms or from software to hardware.

 

It is the evolution of business models from physical goods to the outcome those physically goods would ordinarily be used to create—immensely beneficial to the customer and immensely challenging for businesses to think through how to adapt to this emerging economic shift.

 

But what is driving this push towards service? Arguably companies finally understanding that what customers want is the outcome and not the good itself—certainly exceptions exist and particularly when it comes to sentimental goods (probably not a good idea to find a wedding band-as-a-service, for example). Just as importantly though there is also the rapidly expanding pervasiveness of the internet that is functioning as an enabler by providing information on the usage and performance of all those things that are delivering the desired service.

 

Tracking this evolution of what Kevin Ashton termed “The Internet of Things” has been an interesting unfolding. The concept of machine-to-machine communications has existed in the manufacturing environment for decades—arguably where the Internet of Things was born. What is interesting is how consumer-facing technology is now driving technological advancement that feeds back into the industrial environment. I am not saying that you are going to see an injection molding machine wearing a FitBit any time soon, but you might find one equipped with a sensor developed for a smart phone—or even a smart phone itself.

 

Ironically, the Internet of Things is going to deliver the ability for individuals to potentially largely do away with things (or at leastthe ownership of them) in exchange for a consumption model that can be summed up as Everything-as-a-Service.

 

Whether or not this perhaps far-fetched reality of everything-as-a-service really comes to fruition, it is clear that the Internet of Things is and will continue to drive fundamental changes in the way businesses and individuals go about their daily lives.

Gabriella Gyoergy

SCM Webcast Series

Posted by Gabriella Gyoergy Jul 11, 2014

Create Your Real-Time Demand Network in Seven Steps – On-demand Webcast Series


Listen to this on-demand Webcast series to learn about SAP’s road map that helps you sense and respond to demand based on illuminating data that can transform insight into action.

 

The series starts with an introduction on how SAP helps you transform your supply chain into a real-time demand network. Then you’ll learn about the seven key steps to
create your own network.

Receive access to all eight Webcasts, as well as to complementary reports, case studies, product videos, etc.

Overview “Seven Steps for Supply Chain Transformation” Webcast Series

 

  • Introduction: Transforming Your Supply Chain into a Demand Network
  • Step 1: Balancing Demand Plans with Network Constraints Through Integrated Business Planning
  • Step 2: Adapting to Changing Customer Behavior and Market Variability in a Demand-Driven Supply Network
  • Step 3: Increasing Efficiency and Visibility with Warehouse Management on a Supply Chain Execution Platform
  • Step 4: Reducing Transportation Costs and Improving Customer Service on a Supply Chain Execution Platform
  • Step 5: Achieving End-to-End Supply Chain Orchestration Through an Innovative Business Network
  • Step 6: Building Supply Chain Monitoring for Improved Supply Chain Visibility

Registration link

Real-time location systems (RTLS) are essential for tracking the location and movement of items through the supply chain. But the data (and the resulting visibility into processes) that RTLS provides is even more critical for optimizing business costs, efficiency and performance.


The process of managing raw materials all the way to finished goods delivered to an end customer involves a huge number of steps. An inability to understand where materials are in the process and how they are handled can degrade the integrity of the entire supply chain, cause delays, logistics issues, drive up costs and erode customer service. When consumer products manufacturers started implementing RTLS a decade ago, the idea was simple: identify and timestamp where items existed in the supply chain process through technologies like passive RFID and GPS. Over time, more tracking tools were added such as optical, Wi-Fi, infrared and low energy beacons.

Having this “map” of where and when items existed in the supply chain was a major improvement. It opened up a whole new way to track and manage assets though data points. But with access to all this new data, consumer products manufacturers started to identify gaps in real-time visibility – what they really needed was the ability to better understand the impact that combined data points had on overarching business processes as change happened, not after it happened.

 

Today, an RTLS is just one important part of supply chain monitoring. It provides some of the foundational data required to understand movements of and interactions with assets over time. But overlaying business requirements creates visibility beyond place and time, and allows an organization to be responsive to changes happening at every point the supply chain.

The key to visibility is having a centralized view that provides access to RTLS data, but also logistics, POS, inventory, financial, and more. Only with access to all levels and types of data can manufacturers start to identify the relationship among data points and how change can lead to process improvements. Then, when an organization sets up its business parameters, the company can run analytics against a wide set of integrated big data points to determine if business objectives are being met. For consumer products manufacturers there are four areas where this has become critically important to success.

 

Maintain compliance with mandates


Track and trace requirements continue to be expanded. Consumer products manufacturers, primarily in food and pharmaceutical, are under increasing pressure to provide data that accounts for the location and interactions a product has along the entire supply chain. This is becoming more prevalent for electronics and automotive components as well as other industries.

Complete supply chain traceability must include visibility into product creation as well as movement of goods and assets, without regard to system or company boundaries. This is essential functionality in global life science supply chains. Database and technology solutions, including those powered by the SAP HANA platform, now enable manufacturers to monitor high volumes of data in real time for compliance recording. These data points may include orders, serialized items, alerts, expected and unexpected events, in-transit stock, and more – all used to enrich analytics and find exceptions to mitigate risk.

 

Improve accuracy and increase the speed

eCommerce players like Amazon have stepped up the game when it comes to availability and same-day delivery. For consumer products manufacturers and their retailer supply chain partners, competing with the likes of Amazon requires visibility into logistics, inventory, workforce management and information from other systems. Poor transparency into distribution is unacceptable today as it leads to costly corrections and excess inventory buffers. This is an issue
whether production processes are lengthy and complex, or have been outsourced. The biggest challenge comes when there are different logistics service
providers for delivery to different customers through different channels. When business-relevant data is scattered across systems and company boundaries, it hinders the ability to create decision quickly, slowing own the entire partner network.

 

Reduce waste

RTLS data combined with business process data can drive innovations beyond pure automation and compliance. It allows for more controlled monitoring of reimbursement and returns processes. By providing end-to-end business process visibility linked to the physical material flow, order-to-cash as well as procure-to-pay processes can be monitored beyond the limited view of one single participant of the value chain. It helps organizations monitor the condition of goods – for example, in the case of expensive, raw materials. In addition, companies prone to counterfeiting and gray market activities can provide authentication service or detailed pedigree information when needed. These authentication services allow process automation and alerting in the distribution network, which enables manufacturing companies to take accountability and adhere to liability obligations toward end-customers and consumers.

 


Increase customer service and protect brand reputation

The bottom line is that a high-level of transparency combined with big data allows for compliance, raises customer sentiment and service levels, mitigates supply chain risks, and helps protect the brand. In one example, a consumer products company was suffering from a lack of visibility into distribution – in too many cases, managers didn’t know when products would arrive at distribution centers or at retail customer locations. Trying to get insight was very time consuming because it required manually checking in with various other teams including third party contract manufacturers. The company was at an increased risk of not meeting delivery promises to customers and needed more insight.  The company was able to deploy RFID tags on shipments and roll logistics data into its SAP ERP system to create a central repository for information. It started by incorporating automated manifests into the company's SAP system via a flat file. It later moved to direct integration for even more visibility of individual items from point-of-manufacture to point-of-sale. Since the SAP ERP system serves as the system of record, informing these systems with RFID and other RTLS data can provide up-to-the minute updates for manufacturing, logistics and service operations.

 

 

 

Recently the new SAP supply chain strategy has gained interest, which enables businesses of all sizes, industries and regions to transform supply chains into demand networks. New business realities, such as demographical and geographical changes of buying power, individualization of products with innovative technologies and growing logistics complexity with same day delivery concepts, put companies under immense pressure to transform supply chain processes. A new strategy is to address these business realities and deliver cloud-based solutions in areas such as integrated business planning, supply network orchestration and logistics by leveraging the SAP HANA® platform as the platform for big data. As integration of systems continues and we learn how to tap into more data, consumer products companies will find more ways to leverage information and improve business processes.


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Article originally published in Supply Chain World – July 2014”. Copyright 2013, Phoenix Media, Reprinted with Permission

Over the past few years, due to high cost pressures to meet their ambitious margin goals, we have seen companies’ supply chains becoming stretched across the globe with dispersed production facilities, and increased outsourcing of many business functions. A recent SCM World study titled Every Day Low Price, Every Day High Risk - Protecting The Integrity of Food and Drug Supply Chains showed that more than 4 out of 10 respondents now purchase more than 50% of their materials/products from international suppliers.


This globalization has made supply chains more complex and challenging, and failures have gained unwanted publicity: 


These incidents had a drastic impact on the brand reputation of the companies involved. Similar issues, like counterfeiting and introduction of poor quality raw materials in the supply chain, don’t only worry the food industry, but many others as well, and thus more and more local supply chain-related regulations are put in place to counter that – affecting not only manufacturers, but partially also wholesalers, distributors and retail. To just list a few examples:


Beyond simply fulfilling legal requirements, companies are looking for better ways to minimize and wherever possible mitigate the risk involved in these situations. The ultimate goal is to prevent them, or at least manage the damage control to both customers and brand image. There is a strong and obvious need for software to support companies in these efforts. A comprehensive supply chain integrity offering that is tightly integrated with the relevant business backend systems, and is also able to take business partners’ data into account, can be a huge relief in that respect:

  • Product genealogy helps determining all affected lots in case of quality issues of batch-managed products.
  • Tracking of deliveries and shipments along the complete supply chain can localize the problem goods at, for example a hub, where they might be re-packed.
  • Product serialization and tracking through downstream distribution enables pin-pointed recalls.
  • The management and documentation through the help of efficient quality issue handling rounds off a complete track & trace process.


To learn more about SAP’s offering for supply chain integrity, click here.

You can also join us at the upcoming supply chain integrity Web cast on July 16th. Click here to register.

If you ask any supply chain consultant, what benefits an organization can expect if they were to implement point of sale systems, the first answer he/she would give you is better demand forecasts.  And without a shadow of doubt, he/she is right. This is because point of sale data will give you a picture of ‘True Demand.’  In the past few years, we have seen point of sale systems becoming very common in modern trade outlets, retail stores, restaurants, multiplexes, etc. Though the data these systems collect is generally used for purposes of demand management, it is also extremely valuable for supply chain planning in the entire network.

In a traditional setup of supply chains, demand information is passed from retailer to manufacturer to supplier in the form of orders. However due to large number of intermediate partners, this order information gets distorted as we move upstream. This is generally known as ‘bullwhip effect.’ One of the easiest ways to avoid this distortion on actual customers’ demand is to share the POS data with the suppliers. This will not only help the suppliers in meeting the demand properly but also in improved production planning through better sell-through visibility, better on-shelf availability, more accurate determination of re-order points and reduction of noise from demand trends and seasonality. For example, any supplier would assume that if its customer faces high level of order variability, its fill rates are bound to go down. However if POS data reveals that fill rate is steady, it implies the customer is stocking very high levels of inventory. Thus without POS data, the supplier never gets to know the complete sell –through picture and the customer may continue to carry higher than necessary inventory. Thus POS data will enable suppliers to calculate certain key metrics like ‘Sell through percentage’, ‘Ratio of Stock to Sales’ and ‘Days of Supply’. These can be highly powerful in decision making. Apart from this, in various industries, the large number of distributors and retailers makes it difficult to improve demand planning beyond a certain point. Thus the incremental value of improving supply planning can be more than improving forecast accuracy.  For example, companies with mature supply chains may not see much benefit from improving forecasting as compared to reducing lead times for their critical products.


Thus POS data can be leveraged not only to reflect true demand but also in making better supply side decisions.  A proactive organization can make use of POS data to overcome problems related to supply chain shortages. Thus an improved visibility in supply chain enabled by POS data can also improve supply chain flexibility of the entire network.

- Vijay Baweja, Senior Supply Chain Consultant, Bristlecone

To read more blogs from the author, check out Vijay Baweja | BristleconeSCMBlog

Over the years, with the advent of information technology and faster means of transportation, the supply chains have become longer and more complex. With increased length and complexity, the supply chains have become more vulnerable. According to the Supply Chain Resilience 2013 study conducted by the Business Continuity Institute (BCI), approximately 75 per cent of organisations experienced supply chain disruptions in 2012.

As part of supply chain planning using the traditional methods, we rely on knowing the likelihood of occurrence of potential events which may disrupt the supply chain. Therefore, currently our supply chains are responsive to events such as poor supplier performance, errors in forecast, machine breakdown, and so on. Our methods work well, using historical data points for these events, to quantify the frequency and magnitude of such risks.  But in case of events which have very high impact, but very low probability, such as the 2011 Fukushima earthquake, tsunamis, hurricanes, wars, etc., it is virtually impossible to have historical data and therefore it is impossible to handle such disruptions using traditional methods.

The increasing risk and rapid propagation of disruptions across the supply chain has put companies in challenging situations. In order to maintain supply chain continuity, it is important for organisations to keep a check on the following:

  • Increase visibility of the supply chain – Maintain supplier relationship with not just direct suppliers, but also include second and third tier suppliers
  • Identify the potential points of disruptions, both internal and external, and invest in managing such resources in advance
  • Carry out disruption studies at the points of high risk, to gauge the time to recover
  • Have a Plan B – Have alternate sources of supply available and in case of disruption, try to manage with the available resources

It is often feared that increasing resilience of the supply chain will add to the cost and reduce possible rewards from the supply chain. But building resilience in the supply chain is not just a good practice, but also an important preparedness measure. Prevention is better than cure. Having supply chain resilience helps organisations to bounce back from potential disruptions and also helps in gaining a competitive advantage.

- Neeraj Saini, Senior Supply Chain Consultant, Bristlecone

There was a time when manufacturing organizations used to manufacture all the goods in-house. But gradually organizations realized the advantages of outsourcing the components to external suppliers. Outsourcing of component manufacturing brings with it cost and quality advantages, but on the flipside it reduces the organization’s control over the manufacturing process and reduces visibility in the supply chain. Suppliers are spread all over the globe in different industrial clusters. The distance of suppliers from the organization’s manufacturing location leads to increased lead time and reduces the organization’s control over its suppliers’ processes. The success of Toyota production system has proved that organizations need to work in very close co-ordination with their suppliers and have a definite advantage if the suppliers are located closer to them. The dilemma is that it is not always easy to find a competent supplier (in terms of quality or cost) close by your location. There is always a trade off which organizations have to make between lead time and co-ordination on one side and the cost/quality on the other.  The decision of outsourcing component manufacturing to different suppliers has never been easy for manufacturing organizations.

There are components for which there are very limited good quality suppliers. In such scenarios, the organizations have limited choice but to outsource to the available suppliers only. Microprocessor is one such example, where organizations have only a couple of suppliers to outsource to. The decision in those scenarios is very simple. The challenge comes when there are multiple suppliers, both nearby and at far-off distances, to which organizations can outsource to.

Based on my experience in consulting multiple manufacturing organizations, I can suggest a guiding framework that can help organizations take correct outsourcing decisions.

Outsourcing Framework.png

The suppliers can be categorized into four groups (as shown in the Fig 1) based on their capability/cost advantage and lead time/distance from organizations. Organizations can strategically decide which components to outsource to which group of suppliers.

  • The simplest suggestion is that organizations should not outsource components to suppliers which are located far off and don’t offer any capability or cost advantage.
  • The suppliers (mostly ancillary units) which don’t provide high capability or cost advantage, but their closeness to the organizations provides an advantage in terms of lower lead times and better co-ordination, should be used to out-source non-critical and low value components.
  • There are suppliers which provide high capability or cost advantages and have very low lead times too. These are the suppliers to which we should outsource the highly critical or high/very high value components. But unfortunately such suppliers are limited in number.
  • The last categories of suppliers are those which, though provide high advantage in terms of capability and cost, are located far off. Such suppliers should be used for outsourcing of either critical or very high value components, so that the disadvantage of high lead time is offset with the cost or competency advantage

 

- Naman Sinha, Senior Consultant, Bristlecone

My top 3 from the article “10 Supply Chain Trends for the Next 10 Years” published last year on SupplyChain247 by Sumatra Sengupta. Why these 3, one may ask? Simple reason. Because these 3 will impact us and most likely be the areas where we, in turn, can make the most impact. So here goes:

 

  1. Service Chains will become more important than product chains.
    Service Chains in some sense is just an extension of the product chain, the latter responsible for the flow (forward and reverse) of products and the former for flow of services (mostly forward). The primary difference being that the product flow stops at the point of sale and the service flow can extend beyond. Product Chains can usually be well supported using your traditional enterprise applications like ERP, MRP, MES and Planning while Service Chains will require some of the newer applications like Supplier and Customer Relations Management, Event Management, Planning for Spares/ Repair Services etc.  Most of these applications work on a reactive mode taking inputs or interrupts from the user and to some extent on a predictive mode with the help of planning and heuristics. But the real future lies in making them work on a fully predictive –auto pilot model i.e. building planning capabilities inside the applications, making sense of social media trends and big data, integrating with RFID, NFC and the Industrial Internet.
  2. Companies will need to fully report corporate externalities.
    Financials Audits alone will be a thing of the past. Enterprises are coming under increased pressure to report on Foreign Trade and Sustainability data like Country of Origin/Assembly, Carbon Foot Print, Fair Trade Practices etc. Not only will these be made regulatory by law but mandatory by the marketplace, as Geo Economic considerations are becoming increasingly relevant in customers buying patterns. Along these lines, software to manage Global Trade, Sustainability and even Batch Traceability will become mainstream after having spent nearly a decade as a ‘novelty’ item.
  3. Technology to support SCM will primarily be “on tap”.
    I will take this one step further: “All software will be on tap”. It has to be that way. Internet speeds, cloud computing, SaaS, Internet of Things etc. lead to one conclusion.  Your hardware will not be on premise – will be hosted on cloud; your users will not be on premise ( at least not all of them) and will work via mobile devices; your data will be all over the place. So why will your software alone be on premise? It most certainly will NOT!!It will be pulled down from the cloud only when needed and charged on a subscription model; will be platform/device independent like a Force.Com app working with ECC Data on an iOS device. This would mean that some areas where traditional services are offered, like hardware/software maintenance, patches, and version updates etc. will make way for newer offerings like hosting services, Mobile Device Management etc.

 

- Sujan Muraleeswaran, Senior Manager, Bristlecone

Thanks to rapid leaps in technology, the world is becoming a smaller place. What does this mean for organizations? They need to each find their own space and make it theirs as exclusively as possible. A differential gain can prove to be a significant advantage. However, the level of insight needed to accomplish this is far behind the speed at which business dynamics change and impact each organization’s own ecosphere. The most obvious place to start would be the supply chain, since it offers the widest scope for competitive advantage.

Companies have been looking at case studies and past trends for far too long. The modern markets do not allow for much extrapolation or inference from the past. It is essential now that we look to predict what comes next and consider every constraint possible in doing so. Extenuating circumstances need to be modelled in, synergies and hindrances must be factored in.

Key questions need to be tackled and analysis must be done as close to the outcome as possible – at the most granular level possible. The analysis must not only be accurate but also fast.

Supply Chain Analytics (SCA) is increasing in importance for this very reason. It provides clear, actionable insights that help accelerate the decision making process. SCA not only leverages the investments already made to provide detailed information, but also helps maximize these very investments by improving the returns.

SCA provides visibility to all parts of the company – sales, marketing, operations, support and finance and helps them identify and resolve key issues.

SCA, in a nutshell, helps organizations deal with the following critical elements of business:

  • Reduce cost and improve profitability: Successful SCA results in revenue growth and improved cash flow
  • Reduce risk and increase flexibility: Global supply chain integration
  • Improve the ability to respond to market dynamics while maintaining control over the supply chain: Improve demand and inventory management with desired levels of customer service

SCA outcomes include advanced dashboards, detailed reports, multidimensional forecasting, cost sensitivity analysis, routing optimizers, channel data streamlining and production strategies. The organization that manages to optimally combine these capabilities to extract maximum value will move significantly forward in the race to be a domain leader.

Perhaps an important reason why SCA initiatives may not have fetched desired results in some companies is the reliance on internal expertise, which may be lacking. By working with outside SCA experts, companies can reduce the risk of failure and tap into the experience and expertise of these consultants.

Although it may seem a daunting task, planning growth around SCA can reap dividends. By first identifying the foremost critical functions and then using SCA to drill down into specific issues in these functions, organizations can start the growth process by acting upon these results. Once the benefit has been realized and appreciated, the next level of advanced analytics can be brought in to further drive value and considerably strengthen the company’s foothold in the market.

- Rahul Gollamudi, Senior Consultant, Bristlecone

If you walked around the city of Leipzig, Germany last week you would have seen Uber cars, bicycle riders in business attire, BMW i3 test riders in town. This is the 2014 annual summit of the International Transport Forum in action.This event brought together policy makers, scientists, as well as practitioners to provide a platform for a think tank for the global transportation community.

 

More than 1.100 participants came together over 3 days to meet and discuss questions of Transport in a Changing World. And the factors of change with an impact on transport are plenty:

  • Climate change calls for actions to reduce emissions
  • Information and communication technologies modify the way users make their mobility choices
  • Growing trade flows necessitate a reorganization of global transports.

 

At this summit, I had the opportunity to participate in a panel discussion on Constructing Supply Chains of the Future: How Shifts in Global Economic Balance Affect Transport. The topic of the discussion expanded across many dimensions:

  • Analyzing the shift of economic mass to emerging economies and supply chain designs becoming increasingly volatile
  • The shift in the global economic center of gravity to emerging regions may see reduced growth on traditional trade routes, such as the North Atlantic.
  • New business models are emerging with shift to customer-driven supply chains. Reconfiguring supply chains around customers has led to an emergence of small distribution centers located closer to customers.

 

The participants of the panel were of high caliber – with representatives from the United Arab Emirates, Indonesia, and Germany, some of the leading country in the Logistics performance index of the World Bank. Participants from the corporate businesses included:

  • Nestlé – Representing the manufacturing value chain
  • DHL Freight  - With a freight forwarder and carrier perspective
  • SAP – Representing IT solutions and infrastructure

 

What all participants were in agreement with was that we are seeing massive changes in Supply Chains driven by new business realities and several global questions were discussed:  

  • There is a clear shift in the balance of the markets and at the same time, the logistics complexity is increasing. As Jeroen Eijsink, CEO of DHL Freight Germany stated,  "Global logistics is not about ports and airplanes anymore. While in the past, the question was how to get products out of the emerging markets, we now see a lot of private consumption there".
  • Speed and agility is now expected to enable same-day delivery service levels, in an environment of growing urbanization and congestion.
  • We still have to reduce the inefficiencies of empty trailers and containers.

 

What can help solve the issues?

It was agreed by all that this can only be achieved through a systematic approach to ensure transparency, visibility and reliability. Governments, regulators and corporations need to collaborate and cooperate, and IT can orchestrate that process. This was showcased in the example of the Smart Port Logistics project at the Hamburg Port Authority, where the scheduling of hinterland transports via truck is synchronized with loading and unloading container vessels and steering traffic flows into the city of Hamburg can be controlled, e.g. by early advice to stop at a parking lot 100 km before Hamburg.

 

The conclusion was that the expectations are high for an integrated solution. Supply Chains of the future need:

  • Standardization of processes
  • Collaboration and cooperation are inevitable
  • Decision support based on big data is the resource of the future

 

 

In other words  it is critical to first understand the business challenges before you can take the appropriate action. And information is key to evolve supply chains into demand networks for speed and customer centricity.

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