Supply Chain Management

It is no major news that organizations are consciously gearing up to capture a customer demand regardless of the source/channel of demand and then attempting to fulfill the same. Internet dot com sites, cell phones/ ipads or any other such mobile devices give the buyers the necessary platforms to capture and convey data from multiple points and attempting to move to a truly smart consumer-centric model.

While there is a lot of activity and discussions on the trends in the Next Generation Commerce solutions and how a multi-channel e-commerce (MCC) solution enables retail organizations to offer consistent services across virtually any customer touch point, the question that comes to mind is "Are Supply Chain Planning systems (both demand and fulfillment) in a state where they can predict and plan the increasingly volatile demand?"

While having the ability to capture a firm demand, irrespective of the channel undoubtedly is a great solution and is helping a lot of retailers in increasing their top lines, would it not be a better situation to be in, if one can anticipate buying patterns across channels & plan for this volatility in demand well in advance?

 
Retailers are currently riding high, reaping the benefits of using the MCC solutions and having the ability to meet or exceed sales targets. It would be a matter of time before, surpassing the newly set sales targets become the need of the hour. There are already discussions around MCC being a thought of the past and an emerging era of Agile Commerce. However both the situations, i.e. a matured MCC market and the Agile Commerce era seem to prompt for a better planning system; one that can predict the volatility of demand at multiple channels or sense and predict the demand at multiple customer touch points.

While the buying patterns in  B2B scenarios are relatively more stable,  buying patterns in B2C scenario's could have a lot of changes from one period to the next. To the best of my knowledge, forecasting solutions that are currently available in the market from well known ERP vendors or even the Best of Breed demand planning solutions are either based on Statistical, Regression based or consensus based models. However most of them do not carry the models for demand sensing and cannot predict how many customers would be visiting the kiosks, or how many would be visiting the websites and how many would be visiting the stores? More importantly, of all such visits at multiple channels, how many of such prospects would actually buy at each of these channels. 

 
The primary input for the current forecasting solutions for demand planning is past or historical sales accompanied with firm independent and dependent demand inputs. While these can continue to be the prime inputs, the forecasting algorithms can aid a lot more if they can be changed to include the buying patterns of customers to predict better.

 
Larger businesses like Unilever and P&G have identified this gap and have implemented additional demand sensing solutions like those from Terra technologies to improve their responsiveness to current sales and/or reduce their forecast accuracy error over and above their demand planning solutions. 

 
In this era, where the critical success factor of  businesses lies not only in its ability to forecast and plan, but also being able to respond quickly to changes, it would make a lot of sense even for the software product companies to have demand sensing go hand in hand with demand planning and thus evolve the Next Generation of Supply Chain Planning products.

 
It would be interesting to get more insights & opinions on this. Do share if you have come across situations where you have seen these requirements or know about best of breed vendors or packages that are offering solutions in this direction.

Posted by Srinivas Ambatipudi at 8:08 AM | Permalink | Comments (0) | TrackBacks (0)

During the last couple of weeks, I have been associated with the brainstorming around how best to manage Hazardous Waste or Material (HazMat) for a major US retailer. The client management team is focused on having a solution that covers HazMat of all kinds across the enterprise since that is the core KPI of the department. Most of our initial discussions have been around two threads:
1. Understanding our Point of View on Reverse Logistics (RL) since HazMat typically need to flow in the opposite direction of the regular product supply chain flow
2. Figuring out whether SAP EHS solution is the best bet versus IBM Sterling Commerce RL capability and IBM Maximo's work management capability.
Personally, I wasn't too keen on going for either of these approaches.

For me, the fundamental question was neither RL as a functional domain nor the three competing product offerings in question, but that of who are the people using HazMat and when/where do they use it. Broadly, this meant classifying HazMat occurrences into two buckets:
1. HazMat coming out of core supply chain operations at various stages triggered by product returns via multiple combinations like (a) returning entity - customer returns or vendor returns (b) disposition type - product returned via backhaul or handled via one of the authorized disposition mechanisms for that SKU (c) Damages during receipt in the inbound PO-processing cycle at the warehouses.
2. Hazardous consumables being used during Facilities Management (FM) activities. The work orders being executed as part of a typical FM task can involve something like a corrosive floor cleaner (acid) which would need to be tracked as part of consumables request pertaining to that specific work order.

If I place the user group or department up in the front, then what this means is that the customer service representative accepting a return or maintenance personnel cleaning that messy floor already has a system in which they do their day-to-day operations. This is where I would advice any HazMat information to be captured as this means lesser change management burden, reduced user angst, more accurate data being collected and consequently, improved tracking and audit of HazMat. Having a one-size-fits-all department-driven design launching a new system/application could well mean the opposite of all these.

The first phase is currently being planned for Retail items, which makes it more RL-oriented than consumables used during FM tasks. That means

• enhancing existing OMS and WMS functions to capture HazMat
• processing blind/non-blind orders better, with better linkages to original sales order
• having more relevant and detailed disposition codes
• implementing alert management functionality triggering management personnel about the presence of such products returned/damaged
• product vendors or 3rd party providers taking the material away from premises subscribing to these process flows and so on.

If the systems can be built to prompt the right levels of safety measures to be taken as the transaction happens, that would be of real discernible value to the frontline employee handling the HazMat. If the reporting engine can be enhanced to classify, slice/dice HazMat data in terms of SKUs, damages vs returns, return to vendor vs disposition managed by the retailer and so on, that would keep the compliance hawks happy as well.

Net-net, we need a thought process that weaves in HazMat as part of the regular supply chain (or maintenance) processes, helping the handlers use the same systems they were using and then building in supply chain analytics (near real-time and data warehouse driven) at the back-end around those transactions that had some presence of HazMat in them. Treating HazMat as a product attribute which triggers certain behavior would result in a much simpler supply chain with all the required capabilities than giving it a life all of its own.

Posted by Gopi Krishnan at 1:46 PM | Permalink | Comments (0) | TrackBacks (0)

I am just back from attending the IBM event - Software Days at Dubai.

Infosys was one of the GOLD sponsors of the Event. Primarily meant to show case the Smarter Planet initiative, the event had a reasonably good participation from customers and partner community. Apart from the 8-9 partner's stalls, IBM had put up separate stalls to show-case their capabilities in various verticals like Government sectors (I found the smart city story from Rio de Janeiro quiet interesting- too good to believe! This can potentially take E-governance to the next level), Retail sector (Sterling Commerce et al) and Natural resources.   

The forenoon session was dedicated to sessions by IBM leadership team in the region. The one which caught my attention the most was the session by Middle East & Africa General Manager Takreem El- Tohamy. Lots of insight into evolution of IBM into what is it today over 100 years. (I didn't know that IBM had such a significant role in Apollo 13 mission. The video on this was quiet informative.)

One of the main attractions for me in the event was the keynote address by former world chess champion, Gary Kasparov- my childhood hero. In my experience, best of the chess-players generally are not best of orators. Found Gary to be an exception. He spoke on the topic- 'How IT changed the way human think' based on his famous Man vs. Machine encounters with Deep Blue in the mid-90's. He played with his machine opponent, who could analyze 200 million positions in one sec, whereas, as human being, he can at best think of 3 positions in 1 sec! His opponent has, over past several years, deeply analyzed and internalized all of his past games, and is well prepared. Whereas he had never seen his opponents play in the past. Quiet an unfavorable situation to be in- even if you are world champion for 20 years! Still he managed to win. The reason, according to him, is that human can think of 'WHY', whereas machine can only talk about WHAT, WHEN & HOW. Machine cannot shift priorities in between the game based on WHY - the man can. That's where human has a huge advantage over machine. He went on to suggest that the best and ideal, unbeatable combination would be a Man + Machine. Human will do the strategic thinking part and machine will be there to prevent him from making any possible 'blunder' moves.

Post lunch session was divided into 5 parallel tracks- on collaboration, BPM/SOA, Application life cycle management, Business Analytics and one on Business Infrastructure and Services. Since I had a specific interest in asset management in utility space, I choose to attend the session on Infrastructure and services. I particularly liked the talk by Jim Fletcher; chief architect of Tivoli Solutions on Facility Management for Smart Building. He lined up quite a few statistics to support the need for energy management in Buildings (I am not sure to what extend the audience - mostly from oil-rich GCC countries could relate to need for energy conservation!). He explained how well the newly acquired TRIRIGA for space management fits into the Energy Management Solutions- supported by Maximo in the Operations Management.

Overall, a well-managed event show-casing IBM's commitment for the region. Would have been better, if there was more on-stage participation from partners and customers like what they managed in IBM PULSE event last year. Hope to see this happening in the years to come.

Posted by C. N. Sajit Kumar at 7:37 AM | Permalink | Comments (0) | TrackBacks (0)

The two acronyms above are anagrams of each other.

When expanded into Architecture Driven Development and Development Driven Architecture, these appear to be antonyms.

No, this is not a word play blog entry; it is about the challenges faced by organizations forced out of organic growth into embarking on large transformational programs. IT teams in such organizations face the  challenge of altering their approach to architecture and development.

In the early days, the developer(s) put together the software and underlying engines and had a free run when implementing the business vision.  Over years functionality was added until at some point the business started growing faster than the pace at which IT could keep up. Quite often the slowdown in IT's pace was then attributed to IT's bad habits, while conveniently ignoring that whatever IT did was what the business had asked for in the first place. IT had no way of knowing what business would want next so newer demands stumped IT even more and more. 

Fast forwarding to the current time, looking for a solution, IT and business decide that the best way to proceed is to undertake a large transformational program that would help reset the IT solution. A best of breed package is identified and team start implementing it. However since this requires ripping out current systems and replacing them with the more rigid external package, it requires considerable thought prior to any ripping. This requires IT teams to focus on the end to end architecture, the process flows and the long term vision rather than the immediate job on hand (i.e. ripping, i.e. coding). This implies architecture drives development by default. This is different from the time when the development team could just build to requirements without considering the overall architectural landscape. The architecture was what happened as a consequence of the development, and it evolved since the home grown organic system allowed the flexibility to evolve.

Have you seen similar challenges in your programs? So, how is this conflict resolved?

Posted by Chandradeep Bandyopadhyay at 6:14 AM | Permalink | Comments (0) | TrackBacks (0)

My previous posts have outlined how warehouses and warehousing principles have evolved beyond their traditionally defined boundaries. We saw how managers load revenue center expectations on a warehouse, and yet, there is so much commentary on how a warehouse must lower its costs. My next post clarified on how DC strategies have a play in regular brick-and-mortar stores, esp. retail grocers.

The pertinent question therefore is whether today's package WMS solutions have undergone a similar evolution in their approach and applicability. I am not referring to the functional bells-and-whistles added by product vendors to their WMS solutions. Enhancements are important but not everything. Our frequent discussions on warehousing strategies across a cross-section of our customers reveal numerous challenges, but lack of functionality to meet business operations is really not up there.

Well, if it is not functionality, what else is required from WMS solutions to enable wider adoption? How can they lower TCO for customers while simultaneously enabling them to remain in the leading edge of warehousing best practices?  In short, what do the changing warehousing dynamics mean to the warehouse management solutions of tomorrow? The answer, I believe, lies in the three dimensions below.

Easy Integration: Vendors are yet to fully appreciate that the client application landscape is multi-faceted. Package ERP solutions in one geography, custom ERP in another, workforce management solutions in a few, and transport management in others are common. One WMS solution does not fit all. (And if it does, it is often years before the number of WMS solutions is rationalized.) Package WMS solutions therefore cannot restrict their out-of-box interfaces to a handful of functions and expect the rest to be built as a separate custom activity. My recent interaction with a client revealed over 125 business applications with 10+ managing inventory and warehouse functions alone. Rationalization was 5-7 years away. Seamless integration at lowered TCO was the retailer's No. 1 priority, not the latest cutting-edge functionality.

WMS Modularity: Purists may be horrified, but when WMS solutions are adopted beyond traditional DCs in creative ways, the complete suite of receiving, putaway, planning, picking, packing and shipping is an overkill. Retail grocers fulfilling online orders from stores use WMS only for planning and picking. Large online retailers are known to use external applications for cartonization and shipment planning during wave runs. A robust WMS design must allow for this modularity and enable true plug-and-play.

Pricing Flexibility: This is one area where WMS vendors have not gotten their arms around completely. When customers do not need the full suite of modules, why don't / can't product vendors sell licenses by module? This is meaningful to customers, lowers TCO and enables greater buy-in. Sounds straightforward. To a lot of customers, this is a deal-clincher. But to a number of package vendors, this remains a deal-breaker.

Just one last point. Buy vs. Build is a constant consideration in every major WMS transformation. I truly believe that any WMS that incorporates these three elements will go a long way in tipping the scale towards a 'Buy'.

This concludes the three-part blog on some of the trends in warehousing and its implications on WMS solutions.

Posted by Arun Kumar at 8:23 PM | Permalink | Comments (0) | TrackBacks (0)

Asset Intensive Organizations, mainly in Energy (Power, Utilities, Oil and Gas) sector, are in process of consolidating their Asset Management software solutions to achieve more with less number of applications or instances. These organizations have traditionally been using multiple EAM packages or older versions due to various reasons - new acquisitions, technology limitations, applications capability, geographical spread, lack of synergy among business units etc.

In order to realize maximum benefits, these organizations are considering business process harmonization across their plants along with upgrades and modeling these processes into one common application built on latest technologies to reach to next level of maturity. Some of the benefits of this approach are - operational efficiency using business process improvement, reduced redundancy & inconsistency across applications, reduction in overall cost of operations.

While organizations try to reach next level of maturity, they must evaluate multiple factors which would help them in successfully consolidating their asset management landscape. Some of these important factors could be:

• Process Harmonization - Asset-intensive organizations deal with critical assets, where they even minor downtime are very expansive or a small accident can lead to environmental damage. Multiple plants or production units within these organizations typically have similar assets and asset-handling processes. However, the business units often use varying processes due to multi-country/region spread and multiple underlying IT applications. Process harmonization among these units can improve efficiency and reduce overall cost of operations. It enables each business unit to leverage the best practices followed by other plants and achieve greater enterprise collaboration.

• Data Migration - A sound data management and upgrade strategy is critical for successful consolidation. While transactional records have a limited life, a master record is relatively permanent and hence requires careful cleansing and migration. Since data needs to be collected from multiple applications or versions during migration, this exercise requires a methodical approach to preserve data integrity, such as:
 o Health Check -  A thorough assessment of existing data for data completeness, duplication, standards, naming conventions, etc.

 o Classification - The involvement of business users is necessary to define the new data structure. This includes levels of asset hierarchy, item-  specification templates, etc.
 o Transformation - Data must be cleansed and modified based on the previous assessment and classification recommendation.
 o Data Loading - Only validated and cleansed data must be loaded into the new system.
  Organizations need to be cautious while consolidating their data since inaccurate data can compromise the whole system and increase operational cost.

• Change Management - An effective change management strategy is a key determinant of a successful modernization implementation. Such a strategy focuses on the impact the implementation has on the end users of asset management systems. These users include field engineers, maintenance planners and schedulers who work on critical machines in often unfavorable situations. Pressed for time, the users may resist having to learn how the new system works and set tough user expectations. In such a scenario, it is important to develop a comprehensive change management strategy that involves the end users from the beginning. At the outset, implementation teams must identify key business users and engage the end users through them.

There are many more factors which you should be taken care of. The above mentioned are few of these most critical factors which can make a consolidation project fail, if not taken care of.

 

Posted by Praveen Kumar Agrawal at 12:31 PM | Permalink | Comments (0) | TrackBacks (0)

In March this year, an earth-quake followed with a Tsunami caused widespread disruptions in global and local supply chains. While companies, particularly in the Electronics and Automobile industry, rushed to put their operations back on-track; a small minority of their brethren were (and still are) also burning their midnight oil albeit making plans to exploit the opportunity presented to them.

 

The nuclear industry, for instance, faces a change in the demand pattern. The radiation leak at Fukushima gives a new hope to the French nuclear industry who have bet on the expensive, super-safe, third generation EPR reactors; in contrast to their Korean and American competitors who offer a cheaper albeit less safe alternative. With the tables seemingly turned (read more here), French nuclear giants such as Areva and EDF are cranking up their supply chains to tap the possibility of orders coming from China and India.

 

Likewise, in the cut-throat competitive world of automobiles & electronics, it is usually a zero-sum game. A company's loss is its competitor's gain (haven't we seen that in the case of Nokia & Apple in the Smartphone segment; or in Toyota's poor showing due to quality problems in 2010 bumping up its competitor's books). So, when Honda's plants in the US face production cuts because of shortage of critical Japanese components, the vacuum created in the US market is likely to be exploited by Ford and other competitors (reason I say Ford is because it seems aptly poised to regain the US market-share given its strong showing in Q1 this year).     

 

The moot point is that in either case, whether you are a victim of the earthquake/Tsunami/the resultant power shortage or are poised to benefit from the same, agile and responsive supply chains hold the key to your resurrection. At the onset of the year, I had written about Agility and that it is agile thinking that fires agile supply chains. No-where it is better exemplified than in the above instances. Will the likes of Areva, EDF and Ford be able to make the most of this situation; even if the window of opportunity is slim? Only time (and their responsive supply chains) would tell.     

Posted by Amit Tambi at 10:56 PM | Permalink | Comments (1) | TrackBacks (0)