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Things that make you go hmm… – What is i2 upto?

SupplyChainDigest reports on what i2 plans as its “Next Generation” solution in the supply chain space.
Whatever i2 is pushing is based on its Agile Business Process Platform (ABPP) – so it helps to ask what exactly is the ABPP? ABPP is explained on i2’s website as:

The i2 Agile Business Process Platform is a finely tuned, synergistic development suite designed to support new-generation supply chain management solutions.

Alright, what does that distil down to?

This new-generation platform functions much like a “factory”, in which standardized application components such as data models, business rules, user interfaces (UI), and business workflows can quickly be assembled and then adapted to meet company-specific business and market needs. The platform can bring greater speed, agility, quality, and cost-efficiency to any supply chain.

I have a lot of experience, way back in 1998-2000, working with Labview from National Instruments which is a prototype systems software development tool that I used in the R&D labs. And the above description by i2 sounds a lot like a Labview type of environment within which a business can structure its supply chain planning, design and development processes. More details about the ABPP:

The platform makes up a comprehensive environment for supply chain management application development, including:
Core platform services. Including distributed process modeling, execution and monitoring, business rules definition, and web and rich-content UI generation.
Data services. With extensive supply chain data models and processes for validation, synchronization, staging, and aggregation.
Integration services. From bulk data transport and mapping to web services support for messaging and generic EAI.
Application development. With a proven studio environment for the integrated development, modeling, testing, deployment, and maintenance of new solutions.

Now, that is something to look forward to and I suppose it was bound to happen sooner or later. However, I would like to see how successful i2’s efforts are going to be in bringing a client’s organization up to speed on using even half of the functionalities described above. Will it turn out that i2 itself would have to invest a significant portion of resources to develop templates that will be adapted by the end-user. Or will there be special programmers such as ABAP programmers who do such customization. Time wil tell.
Back to the SupplyChainDigest article:

John Cummings of i2’s chief marketing officer says, “Historically, not enough of customer spending on SCM solutions went to true process innovation. Next generation supply chain is also about trying to change that.”

So here we have the notion that process innovation is going to be spurred within a firm by bringing in a tool from i2. Really? I don’t think so. What could happen is that in firm’s that have truly grasped and implemented process innovation is going to find i2’s tools more than helpful in building up a significant competitive advantage. But the source of that competitive advantage resides in the process innovation that prexisted the arrival of a tool but the extent of success derived would be greatly assisted by a tool such as that envisioned by i2.

John Cummings continues, “If you look at the Plan-Do-Check Act model, we’ve always been able to deliver the “Plan-Do” part, but not necessarily been able to close the loop on that and get to “Check-Act”.

All he is saying is confirming the view expressed above. The success of the PDCA model, a continuous process improvement methodology, is that it is a competency that pre-exists any tool that is brought in from the outside. In fact, I’d think that it is not dependent on any tool. But the next sentiment gets my undivided attention:

Now we like to do what I call “managing while tuning” the supply chain, tuning all the parameters in the planning cycle to make sure you’re getting the right answers.

I’d hazard a guess that John Cummings has a systems background of some sort, either in education or in some previous work experience capacity. “Managing while tuning” is so fine an art which is unfortunately not taught in any school except in control theory and perhaps then only for control systems and not for general systems that abstract control models – such as the activities of the firm. However, in the world at large, we usually “Manage while tinkering” which is just about the opposite of “Manage while tuning” which implies a strong grasp on the fundamentals of how to structure and execute the firm’s activities. But I’m impressed at the sweep of what i2’s tinkering with here.
More from John Cummings:

What struggled a little bit with what to name it, but it

Logistics Cost Survey – 2006

SC Digest released its Logistics Cost Survey for 2006 in March of the year. I’m catching up on it here.

Drucker on Real Transformation

Bill Waddell at Lean Affiliates writes about Principles for Real Manufacturing Transformation:

Sixteen years ago, Peter Drucker’s article, “The Emerging Theory of Manufacturing”, appeared in the Harvard Business Review. That is probably about the right incubation period for the rest of us to catch up to his thinking. Drucker points to four principles that defines what’s needed for real transformation, and establishes the critical role of the chief executive. These principles are:

  1. Integrate the factory into the total value stream
  2. Instill a statistical quality focus across the entire company
  3. Implement a completely new accounting model
  4. Treat the entire business as a system

Remember that Drucker is writing this at about the time that Six Sigma had just appeared on the scene but his recommendation seems to be spot on. Bill goes on to elucidate the differences between looking lean and being lean and how the above principles, proposed by Drucker in his “The Emerging Theory of Manufacturing” are essential to a lean transformation.
1. Integrate the factor into the total value stream: A quote from Taiichi Ohno of Toyota captures the central thought here –

All we are doing is looking at the time line, from the moment the customer gives us an order to the point where we collect the cash. And we are reducing the time line by reducing the non-value adding wastes.

. Bill calls this idea – “from call to cash”, meaning that every activity that occurs in the intervening period and process space is evaluated on the basis of its integrity with respect to the value to customer that each activity confers. Such totality begs for C-level executive involvement, not in sense of micro management but in the authority conferred to such a process overhaul.
2. Instill a statistical quality focus across the entire company: Ever since the surpassing of Newtonian physics, scientists have been engaged in the description of the natural world through statistical techniques. However, the education system relies primarily on the promulgation of facts implying the completeness of the description which actually only statistically implied. Its nice to see that businesses that imbibe this statistical approach to their activities are achieving coherence with the kind of descriptive and prescriptive pattern inference also called science. Though, I think that the day is so far off into the future when accountants shall describe a firms financial activities in statistical terms – what a sea change that would be? The other key takeaway is the relentless focus on quality that such statistical processes describe.
3. Implement a completely new accounting model: Accounting is quite integral to how management decisions are made and how they’re represented to the world at large. However, if even half as much continual transformation and improvement were carried out in the accounting departments as are carried out in the manufacturing department, the manufacturing department might be four times better than it is today. Yes, the ratios of supposed benefit are imaginary. However, that management often makes decisions based on accounting gimmickry is and should be the object of scorn because accounting doesn’t report information in a way that lends itself to decision making. While accounting should be about informing business decisions, I suspect accounting is really about accounting. And that’s Drucker’s view as well though I suppose I am twice as cynical as he is prescient.
4. Treat the Entire Business as a System:The central point here is that the manufacturer within his ecosystem provides a solution over and above providing a product/widget/service. Therefore, a manufacturer is as much part of the solution as he is part of the problem that crops up because of a particular deficiency in the solution that he provides. The expectation of a customer is not how finely finished a product might be (if that were the sole contribution of the manufacturer) but that it meets or exceeds his expectations of product peformance and value.

In the end, abstractions such as performance and value are what the manufacturer or business is aiming at fulfilling. The problem with abstraction is that people abstract without particular attention to reason or logic. One part of the business should be about addressing those abstractions in a value laden way but another part of the business should be about clarifying the abstractions, informing and educating the customer as well.

Supply Chain Execution Applications Lead SCM Market Growth

Supply Chain Execution Applications Lead SCM Market Growth, says Arc Advisory Group.
What are the key takeaways?

1. Supply Chain Execution (SCE) solutions that include Collaborative Production Management, Warehouse and Transportation Management is a key growth area.
2. Supply Chain Synchronization – The role of a manufacturing plant is becoming the focal point in a supply chain network and is often the determining factor of its overall performance. While costs remain an important issue of performance in the customer-centric and demand-driven environments, other factors such as time-to-volume, determining the correct product mix, and having the flexibility, adaptability, and responsiveness to exploit market opportunities are increasingly becoming important to success. Supply chain synchronization depends on supply chain solutions that provide accurate real-time information from operations to enable improved decision-making at all levels of the company and for trading partners in the supply chain.

2006 Supply Chain Pros

The cool dudes and dudettes!
Supply & Demand Chain Executive honors today’s supply chain leaders in many categories.

Creating sustainable competitive advantage in your supply chain

If I were to saunter down to a manufacturing/operations floor and impress upon the line managers that what they should really be doing in their operations is creating competitive advantage, chances are I’d be shown the door toute suite. Perhaps, I should be. A wise consultant does not get his head chopped off by spouting well worn academic/business terminology even if it is essential to business survival.
T’is something that I have learnt from working with managers – a commandment to savor – Thou shall not confuse the managers you seek to change.
What is the Competitive Advantage Model of Michael Porter?

Competitive strategy is about taking offensive or defensive action to create a defendable position in an industry in order to cope successfully with competitive forces and generate a superior return on investment (ROI).

And more or less:

The basis of above-average performance within an industry is sustainable competitive advantage of which there are two essential types:
1. Cost leadership (low cost)
2. Differentiation
No matter the scope of the above two types, the resultant competitive strategy is:
3. Focus

If one were to adpat such a model into one’s framework of developing a supply chain, it is quite obvious that both cost leadership and differentiation can be adapted.
Here’s a view of how a firm can create sustainable competitive advantage by Innovation labs.

The only way a competitive advantage of any kind can be made to sustain is through innovation.
This might logically lead you to ask how we define innovation. In our view, innovation is improvement in the value that a company offers to its customers, or reduction in the cost of delivering value to customers.

They go on to differentiate continuous innovation which is characterized as small and incremental and discontinuous innovation which is characterized by breakthroughs and disruptions. But is there any reason to think that even innovation can be sustainable ad infinitum – I think not. How about the process of continuous and discontinuous innovation? Perhaps, they can be sustained a little longer than the actual service/product created.
Going back to the outline from Porter’s model:
More than cost leadership, which may be a function of continuous improvement and strategic decision making to outsource or offshore low-value added activities, differentiation – real differentiation, seems to be the more significant lever of creating true sustained competitive advantage. How? – I’ll try to elucidate that in the next few posts.

Leverage Supply Chain as Competitive Advantage – the how to?

The article deals with a new book put out by two partners at PRTM – Shoshanah Cohen and Joseph Roussel called Supply Chain Management: The 5 Disciplines for Top Performance.

Too many senior officers don’t view their supply chain as a strategic business asset,” commented Cohen, co-author and partner at PRTM. “But when aligned with the overall business strategy, supply chain management provides major opportunities to impact both the top- and bottom-lines.”

The above is probably because there is a disconnect between business strategy (which thanks to Porter’s work) and supply chain strategy which has always been seen as an operational thingy that happens regardless. The companies that have successfully competed using their supply chains (eg: Dell, Walmart) as a competitive advantage view things slightly differently.
According to the authors,

The five core disciplines for top supply chain performance are:
1. View your supply chain as a strategic asset
2. Develop an end-to-end process architecture
3. Design your organization for performance
4. Build the right collaborative model
5. Use metrics to drive business success

Again, here the operational thingy of a supply chain seems to figure prominently and perhaps for the right reason – because a top performing supply chain is primarily about execution and getting things done. However, what about the very structure of the supply chain, which components should be finely tuned and focussed on relentlessly etc etc? You can only get things done within the framework that is imposed on from above by a company culture, philosopy or business strategy. As more and more companies turn onto the quest of using their supply chains as a strategic asset, I’d hope to see the supply chain strategy rise up to the level of being a business strategy.
And that should be a whole lot of fun!

About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

@ SCM Clustrmap

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