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.

It is not uncommon to hear that a company’s management is worried about their forecasts.  “Our forecast numbers were not accurate,” is probably the most common statement made in management meetings. It even becomes the single reason for many business problems. It is needless to say that there will be some amount of risk when we try to predict the future. However, this risk can be reduced if proper tools and processes are used for forecasting.  Some of the key points to be kept in mind while designing the forecasting process are:

  1. Data - Wherever possible, historical data should be the key input to the forecasting process
  2. Collaborate - Different datasets provide different insights to forecasters. Various organizations have put in place different business processes for information sharing e.g. VMI, S&OP, CPFR
  3. Granularity - It is important to understand what kind of data is more important with respect to forecast accuracy. Is it the external data like competitor sales, POS data, sales team forecast or the internal data like stock-outs, shipments, orders, etc? Apart from this, it is also important to determine which time buckets are most suitable for forecasting. For example, whether to use monthly time buckets or weekly time buckets for planning.
  4. Analysis - Perform a detailed analysis of seasonality, trend and business cycles. Descriptive statistics can be used to analyse the boundaries. For example, the expected peak a product can reach, expected growth cycle time, etc. Based on this analysis, a model can be appropriately selected.
  5. Adjustments - In the field of demand forecasting, it is very important to understand that no single model will be suitable every time. Every forecasting cycle provides guidance on the directional changes affecting the market demand. Thus setting up a good feedback model is crucial.  Companies can think of comparing forecasts and actuals every quarter, and then tweaking the models based on the extent of deviations.

A good forecast can go a long way in helping companies operate efficiently and effectively. It is the most important lever for ensuring a win in the market. Demand Forecasting has been labelled by many as a dark-art and an inexact science, where importance of judgement cannot be overruled. However, the forecasting process helps companies ensure satisfactory levels of product availability in the market, thus laying the foundation stone for achieving good delivery service to the customers.

To read more blogs written by me, please visit : http://www.bcone.com/BristleconeSCMBlog/author/vijay/

Now the title of this blog is making quite a claim, but that is exactly how Gartner are billing this year’s Supply Chain Executive Conference in Phoenix.

 

The 1st day didn’t disappoint as over 1300 of the “world’s most important suply chain leaders” heard discussions from Colgate-Palmolive GlaxoSmithKline, Create & Barrel, Hewlett-Packard, IBM, Amgen, SanDisk, PwC and, of course numerous Gartner analysts.

 

The theme of the Gartner keynote by Debra Hofman and Noha Tohamy of Gartner was Leading the Decade.  They described how much things have changed over the past decade and how the span of control of supply chain executives has widened considerably. In fact Debra pointed out that “We have seen the rise of the Chief Supply Chain Officer who reports to the CEO 40% of the time. Supply chain executives are even being promoted to CEO”.

 

Noha pointed out that :

  •   “Sustainability is now a stated goal in the supply chain strategy of leading companies”
  • “Forecasts were what sales ‘thought they were going to sell’. We are now leveraging real time demand signals. “
  • “Deployments are moved from on premise to a steadily increasing cloud adoption (with a 40% increase last year).
  • 71% of companies now have a supply chain center of excellence.
  • There has been a 20% increase in enrolled in undergraduate SCM programs since 2011
  • These SCM graduates have had a 100% placement (verses 85%  of general business degrees)

 

However, Noha also discussed some challenges. The biggest one being that 65% of companies are still in stage 1 or 2 of the Demand Driven Value Network (DDVN) maturity level. I am sure we will be hearing how to fix this over the next 48 hours!

    

Debra and Noha also made some predictions about the next decade:

  • Supply chains will lead business innovations
  • The Gartner defined Nexus of forces  -  cloud, information, mobile and social – will enable this innovation.
  • The “internet of everything” will enable the interconnection of people, places, systems and things.
  • We will see the rise of the digital business - the creation of new business designs that blur the lines between the physical and digital worlds. 

 

All very interesting “food for thought”. We will be delving more into these topics over the next few days.

 

And the 1 thing that was not pointed out in this session. Over the past decade, with all the changes that have happened in supply chain management, one thing has remained constant.  According to Gartner numbers, "SAP has been the market share leader within the aggregated supply chain market for more than a decade".

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Tomorrow morning Hans Thalbauer, Senior Vice President of Solution Management will kick of the Logistics and SCM Event in Nice, France in front of over 1000 attendees.  This is the sister event to the SAPInsider event held in Las Vegas in March (see blog - What happens in (the SAPInsider Supply Chain Keynotes in) Vegas …… )

 

Over the next 3 days, over 60 speakers will present 75+ sessions that cover supply chain strategy across the breadth of a company’s supply chain needs.

 

There will be tracks on:

  • Supply Chain strategy and optimization
  • Trends in supply chain
  • Planning and forecasting
  • Logistics and supply chain execution
  • Product Lifecycle Management
  • Advanced Planning and optimization
  • Data Management and Reporting
  • Manufacturing
  • Procurement and Supplier Management   

       

The audience will be able to listen to, talk to and share best practices with experts from around the world from SAP as well as companies such as Beirsdorf, Bombardier, InBev, Linfox and Volvo.

 

For those attending the event, I encourage you to interact and network with the SAP experts and your peers. For those, not in the south of France, follow the discussion on #scm2014 and @scmatsap.

 

 

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For years, companies have tackled new customer or market challenges by accelerating and optimizing the supply side as best as possible to improve service levels and achieve higher customer satisfaction. This was usually done via a lean supply chain approach. But this approach has diminishing returns.

 

Why?

In volatile markets the power shifts dramatically towards the end-consumer, and ignoring that new reality will result in, not only, losing market share for existing brands on large scale, but also missing extensive growth opportunities for business.

 

In a recent blog, The Emergence of the Demand Network we discussed how new concepts like demand driven supply chains, demand-driven forecasting and demand sensing and shaping are taking traction,  and giving companies the tools  to enable an agile and more demand driven business model.

 

The ultimate goal is, to drive the right business activities across departments and organizations,   and to optimize the under-laying downstream business processes. As I talk to companies around the globe, l consistently here three questions outlining what is really possible beyond hype and myth:

  • How do I unleashing the potential of big data and leveraging information in real-time to manage demand?
  • How can I remove organizational silos to, share this information in a collaborative way?
  • How can I incorporate unstructured data such as social media, POS  and syndicated data into my business processes? (See blog Know what your consumers are thinking, before they do!)

 

Leveraging real-time demand to drive promotions

Most companies in consumer facing industries are heavily promotion-driven and face the high risks on having the dreaded “Out-Of-Stock” situations during promotion peaks. Even more surprising is that many companies face out-of-stock situations in the “post promotion” timeframe. This is even more disastrous because it can quickly erode revenue and market share and push the consumer towards competitor’s brands.

 

The key to avoiding this is real time visibility into demand fluctuations to drive analytical and predictive capabilities along with trade promotion optimization to minimize out-of-stock situations and drive higher revenues and market share.

There are many other areas from achieving higher forecast accuracy to introducing better product launches where a more market and demand centric model will pay out.

 

Leveraging syndicated data to drive marketing

It is often said that ‘marketing is an art rather than a science. However, with today’s technology and the great volumes of data available we are seeing signs that this is changing.

In a recent article we described how Beiersdorf, a leading global provider of skin care consumer products, are leveraging “big data” to gain deeper and faster insights into their market share development so they can stay ahead of their competitors.

Beiersdorf leverage Nielsen and IRI data to analyze market share for various product categories, both at regional/country level as well as global level. They keep track and analyze how a certain brand or category in a certain market/region has evolved over time. They do that on a global level and then they are able to drill down to individual markets.

 

With this approach, Beiersdorf will be able to automate the data harmonization process dramatically reducing the time lag between global and local market reporting. What used to be a very long and laborious process will be done automatically with more accurate and real time results allowing Beiersdorf to move beyond the logistics of gathering and cleansing data to analyzing the data, developing insights and making effective data driven decisions. Beiersdorf to gain new analytical viewpoints into product attributes such as gender, pack size, application form, benefits, …etc. enabling them to collect more market intelligence and detect key reasons for market share developments and new trends in real time.

 

So the old adage “the customer is king” is truer today, more than ever before. The key is to harness and leverage this power to sense and shape their thinking and try to stay one step ahead.

 

Click here to learn more about how a ‘truly’ demand driven approach can change your business.

 

See you, Volker Wilhelm

Follow us on twitter @scmatsap

We recently asked Mat Eames of Rocket Consulting to host an online Q&A to address the biggest questions surrounding SAP WM and EWM. Check out the transcript from this Q&A session and see whether your questions were answered.

 

Mat will be one of the featured speakers at SAPinsider’s SAP SCM 2014 conference in Nice, France May 14-16. For more info on the event, visit our website at Logistics & SCM, PLM, Manufacturing, and Procurement 2014 and follow us on Twitter @InsiderSCM


How do you see SAP-EWM evolve in next 10 years? Will it be used only for complex distribution centers or will it also be used in general less complex warehouses?

Mat Eames:  EWM is part of the strategic roadmap that SAP has set out for supply chain execution. This means that EWM will continue to develop and expand its footprint and functionality. EWM 9.1 is coming out of ramp up and 9.2 is about to start pre-release testing.

Functionality will only be one factor in the decision as to who implements it. Whilst it can be argued that less complex DCs don’t need all of the functionality EWM offers, you have to consider other factors in the decision. Are the requirements of your operation fixed for the next few years? Are there likely to be any factors (acquisitions or new customers) that mean you need to be able to change how you work quickly and effectively? Are you likely to need to integrate new technology into your landscape? How much does your existing WMS landscape cost to maintain and support today and tomorrow?

All these factors need to be reviewed by anyone considering changing their WMS.

 

Comment From Mariana: Is WM going to disappear?   

Mat Eames: No, it is in maintenance mode. This means SAP will continue to support it but they have no plans to develop new functionality. SAP WM still remains a very viable option for a lot of customers.

 

Comment From Jason: I know that 'Queue monitoring' between ECC & SCM is a big part of EWM. This is a little concerning. How much overhead does this typically generate for a client?

Mat Eames: Queued remote function calls (qRFCs) are used to communicate documents (deliveries, goods movements) and master data via the core interface (CIF) between ERP and EWM.

Queued data is an absolute must to be able to ensure goods movements are processed in the correct sequence.

Any overhead in terms of monitoring really depends on a number of factors. The ability of client support team to resolve the errors, how up to date the client’s SAP systems are in terms of support packs, etc. It can be time consuming in the final stages of the implementation project when the processes are configured and tested as per the requirements of the client. After the support phase the effort for monitoring the inbound/outbound queues is dramatically reduced due to the fine tuning that has been done in the earlier phases.

There are a number of automated jobs that can be set up to reprocess failed queues (due to locks or master data issues), this would then typically just leave genuine issues.

 

Comment From Jai: Why are many customers NOT using TRM? Is there any set back in using WM & TRM in place of EWM?

Mat Eames: TRM was developed to work alongside WM and adds many benefits to WM. Often it is enough for customers. The main setback is that as it is so tightly aligned to WM you have to adhere to the restrictions that go with WM. Whereas EWM was a complete rewrite from the ground up, it took some of the features from TRM and expanded them.

 

Comment From Sam Ranade: eWM cannot report batches in bins that are nearing expiration...is that true?

Mat Eames: No, there is full SLED reporting in the Warehouse Monitor under the stock and bin node.

 

Comment From Sam Ranade: What is the roadmap for Quality Management and eWM ? It looks like there is duplication of data in ECC Inspection Plans, Sampling Plans, etc. and eWM's QIE. There is no CIF capability either. For those who have implemented QM module and now want to implement eWM, it appears that there is some master data that needs to be maintained in eWM although it exists in ECC already.

Mat Eames: The roadmap is strong; a direct integration option to ERP QM has just been released in EWM 9.1. Prior to that, QM in EWM was really designed for customers who wanted a very limited inspection process to be managed and controlled in EWM. It was never designed to replace ERP QM functionality.

With earlier releases of EWM, it is possible to connect EWM to ERP QM (or any other external QM system) if you require a more complex or full-blown quality management process. The QIE can be connected to an external QM system, such as SAP ERP QM. This way you can cover detailed analytical inspections with characteristics. Within the activation of an inspection document in EWM, the QIE triggers the creation of an inspection lot in ERP QM. The inspection process is executed in the ERP QM system. ERP QM sends back the usage decision to the QIE after the inspection is done.

See SAP Note 1278425 – Connecting ERP QM to EWM for more information.

 

Comment From Dominik Tylczynski: How does EWM handle inventory differences in nested handling units? Is physical counting supported with RF transaction if nested HUs are used? That process is virtually not supported in ERP's WM/HUM.

Mat Eames: EWM can handle PI of nested HUs in the desktop transactions and via RF. You can count the top HU and the sub HUs. One restriction in RF is the sub HU can be no larger than 16 characters.

 

Comment From Mahesh Uppalapati: Some clients don’t have inbound and outbound delivery. They use PO to GR and GI, but they have cross-docking requirements. Will EWM support cross docking without inbound and outbound deliveries?

Mat Eames: The link documents between ERP and EWM are deliveries, and typically these are created in ERP and transferred via qRFC to EWM. However you can also use expected goods receipts which are based on purchase orders and production orders. In this case you create an inbound delivery directly in EWM.

 

Comment From Mahesh Uppalapati: Can we link EWM directly to PP just like WM-PP interface?

Comment From Guest: Can EWM be integrated with PP?

Mat Eames: Yes it can, there are several models that can be supported: Two EWM-managed storage locations in one warehouse; one EWM-managed storage location; MM-IM-managed storage location and two EWM-managed storage locations in two warehouses. The choice would come down to how you want to control the stock in and out of the PSA.

 

To view the rest of the transcript, click here.

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