Digital Transformation of Supply Chain Planning

Henry Canitz, Director of Product Marketing & Business Development, Logility

In almost every new supply chain focused industry periodical, you will find an article discussing transformation or digitization. Industry analysts, consultants, solution providers, executives and practitioners are all focused on how to transition from traditional to more “digital” planning capabilities. In fact, a Google search using the words, “Digital Transformation” yields 2,800,000+ results. As a supply chain practitioner it is critical to understand what digital supply chain planning looks like and how to ensure your supply chain is on the right transformational path.

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What is Digital Transformation?

Digital Transformation involves a focused effort of activity across multiple processes that accelerates performance and delivers new value-added capabilities. Digital Transformation in supply chain planning usually involves development of new tools, skills, and/or processes that target a step change in speed and/or agility.

Why is Digital Transformation Important?

Digital transformation is one of the top concerns and areas of focus for C-Level executives. There is a growing awareness within senior executives that transforming supply chain planning capabilities to take advantage of the emerging areas of “Big Data,” “Artificial Intelligence,” “Advanced Analytics,”  and “Cloud Computing” is a competitive imperative.

Most supply chain managers already know that there is a “War for Talent” being fought to find and retain qualified supply chain personal. Today there is only one qualified supply chain candidate for every seven planning openings and this ratio is projected to increase before it gets better. The best supply chain planning candidates want to work with advanced technology platforms that allow them to spend more time analyzing problems and developing value-added recommendations. Digital transformation of supply chain planning capabilities is critical to hiring and retaining the best talent.

Supply chain practitioners are being asked to accomplish more with less, to be involved in more business processes and deliver more value-added capabilities while lowering costs and ensuring high customer service. Materials and components are sourced from ever-more remote locations and finished products are being sold into expanding regions and channels. The amount of external data continues to grow at exponential rates. Planning cycles continue to shrink and customers expect shorter and shorter delivery cycles.  All these pressures demand a step change in performance building the need for Digital Transformation.

As a Supply Chain Practitioner, How Can I Facilitate a Digital Transformation?

The first step is to obtain C-Level sponsorship. Unlike most supply chain improvement efforts focused on managing and maintaining the current state and making incremental improvements, transformation involves multi-year, multi-functional, disruptive, and expensive efforts that can only be accomplished when embraced by top company executives. Often to gain executive approval requires a business case showing substantial hard and soft benefits.

Start with documenting the “As-Is” process capabilities and corresponding key performance metrics. This will lay the foundation for any future performance comparison and provide the starting point to develop benefits for transformation. Envision the “To-Be” process capabilities and desired performance metrics through benchmarking, group brain storming sessions, and alignment to business strategy and direction. Include envisioned capability cases to provide a vision of what the “To-Be” environment might look like. Develop a flexible roadmap with critical milestones required to transition from the “As-Is” state to the “To-Be” vision. The trick is to have enough detail in this transition plan to execute against while still maintaining flexibility to adjust to new priorities and emerging technologies.

The skills people need to operate in the envisioned “To-Be” environment will be drastically different requiring training and education. Some employees will find it impossible to make the transition requiring the hiring of new talent. A dedicated focus on change management and employee development is necessary for successful transformation.

Conclusion:

The move to digital business capabilities is affecting all areas of a company including the supply chain. Today, technologies such as RFID, GPS, and sensors have enabled organizations to transform their existing supply chain execution capabilities to be more flexible, open, agile, and collaborative. This same type of transformation from embracing digital capabilities is starting to take place in Supply Chain Planning.

To be truly competitive in an increasingly volatile world, forward-thinking companies will need to transform its supply chain planning capabilities by investing in digital supply chain planning capabilities to improve customer service, reduce costs, and enable company strategies. This new vision of a digitally transformed supply chain has caught the attention of executive management and supply chain practitioners must step up and meet this digital transformation challenge.

 

Additional Reading

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Diversifying and Optimizing amid the US-China Tariff War

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAE

The escalating tariff war between the United States and China has created uncertainty for U.S. supply chains that mainly source their raw materials and manufactured goods from the republic. To hedge against risks, U.S. companies are looking to new suppliers in other countries while Chinese manufacturers are seeking to add value to their products and retain their customers, Financial Times reports.
As a risk management measure, both U.S. and European companies have been shifting their sourcing to other Asian countries throughout the past decade.  To reduce their reliance on a single country and take advantage of cheaper wages, manufacturers have set up factories in and sent work to Bangladesh, Cambodia and Vietnam.
This trend is being accelerated by the tariff war. In preparation for potential tariffs, handbag designer Steve Madden announced it is shifting more of its production to Cambodia. Following suit, Flex, an electronics producer that supplies Bose and Google, is exploring options in Malaysia and Mexico, and Techtronic, which produces parts for Hoover, is sending business to Vietnam.
However, it may be hard for U.S. customers to find reliable, quality labor in developing markets. Unless companies have existing relationships with factories, suppliers and governments in developing markets, it is challenging to shift labor there because investment laws often are unclear. Similarly, labor and environmental standards often are lacking in these markets. Spencer Fung, chief executive of supply chain management company Li & Fung, says that it will take about two years for a company to stabilize production in a new country.
Plus, because complicated electronics supply chains are so entrenched in China, it’s unlikely that all business will shift away from the country as a result of these tariffs. “Everybody is looking for a way to hedge but it’s not that easy,” said Larry Sloven, executive at Capstone, which sells China-made LED lighting in the United States, in the article. “Think about all the components that go into making an electronic product — they all come from China.”
Chinese companies are not going to let their customers go that easily either. Instead, they are going to rethink their value propositions and business strategies. “This is a moment for the [Chinese] manufacturing industry to think about how to diversify risk, whether to upgrade products and add more value or expand production to other regions,” said Clara Chan, president of the Hong Kong Young Industrialists Council and chief executive of a metal production business in China, in the article. Fung adds that Chinese factories also will invest in automation to boost their competitiveness.
As U.S. companies transition to other manufacturing sources, the switch likely will be slow and possibly even temporary because of China’s market dominance and value offerings. This still leaves U.S. companies with the challenge of figuring out how to grapple with new tariffs while still securing the supply they need.
Managing the risks
As the market fluctuates in the midst of this tariff war, companies will have to utilize a variety of strategies to protect their supply and bottom lines. Risk remains an essential part of supply chain planning, and some companies might be leaning on it now more than ever. Consider the definition of risk response planning as it appears in the APICS Dictionary: “The process of developing a plan to avoid risks and to mitigate the effect of those that cannot be avoided.” Companies that anticipated higher tariffs as part of their risk response planning likely are dealing better than those that didn’t.
APICS offers the APICS Risk Management Education Certificate to help professionals understand how to manage these and other risks that will inevitably affect their companies. An individual who completes the program demonstrates a commitment to protecting his or her employer from supply chain risk and the ability to balance rewards and risks in the decision-making process. To learn more, visit the Education Certificates page.

About the author

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Abe Eshkenazi, CSCP, CPA, CAE
APICS Chief Executive Officer 
Abe Eshkenazi currently serves as the chief executive officer for APICS and APICS Supply Chain Council. Prior to joining APICS, Eshkenazi was the managing director for the Operations Consulting Group of American Express Tax and Business Services.

Five reasons why APICS CPIM is a must for every ERP user and consultant

Business people on a meeting at the office

For the most part of my career, I have been known to be an active member of the APICS community. This means that, quite frequently, I interact with SCM practitioners and ERP consultants from different industries and with different professional backgrounds. During discussions, I am often asked what ways are best to acquire more in-depth-knowledge of the SCM/ERP domains.

Drawing from my 9 years of extensive, hands-on experience in the fields of Supply Chain Management and SAP ECC ERP implementation/support within the Pharmaceutical and FMCG industries, and a unique techno-functional skill set in SCM enabling technologies and Domain Expertise in the SAP PP/PP-PI module, I have compiled some advice for others.

When reflecting on numerous SAP ERP implementation/improvement projects, I keep falling back on the certainty and solidarity of the APICS certification: Certified in Production and Inventory Management (CPIM) which I believe was one of the main factors that led to my implementation success. Here are five reasons why I believe the APICS CPIM is a must for every ERP user and consultant:

  1. It harnesses your talents: It is widely believed that a lack in SCM talent is the reason behind many ERP implementation failures or less than optimal ERP performances – both the user/consultant sides. And while there is no one-size-fits-all kind of advice, the APICS CPIM certification has so many benefits to both users/consultants that I almost always advise people to pursue APICS CPIM because it is more about getting the best ROI of an ERP implementation.
  2. It follows a process-orientated approach: ERP commercial packages are all built to computerise the classical value chain activities of a company. These value chain activities are resembled in the modular structure that all commercial ERP packages follow. For example, business processes relating to Supply Chain Planning including, Sales and Operations Planning, Demand Management, Production Planning/Scheduling would be found under the Production Planning “PP/PP-PI” module in SAP ECC ERP. Likewise, other business process compromising a company’s value chain would be found as “canned” business processes across different modules of an ERP solution. The CPIM follows a process orientated approach to Supply Chain planning in a fashion that’s is almost identical to what is found in a SCM/Manufacturing Modules of and ERP package. This strategic fit between how ERP systems are structured and the process-oriented structure of the CPIM courseware is what makes CPIM the most powerful framework for SCM/ERP professionals in both user/consultant roles.

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    Australasian Supply Chain Institute offers the CPIM Learning System for self study or together with Guided Learning sessions, available right across Australia

  3. It mirrors the same language as your ERP: The concepts and terminology of an SCM/Manufacturing module of an ERP system, such as MPS/MRP, BOM, phantom assemblies, time fences and forecast consumption techniques, just to name a few, that prove tricky for most users/consultants to grasp are explored in-depth in the CPIM courseware in an a clear and easy to follow approach with plenty of real life examples. This helps to better utilise system functionalities/features that are likely to be ignored due to the lack of underrating of such concepts.
  4. It builds confidence to apply a configuration effort: CPIM equips designees with knowledge that proves critical to guide system configuration efforts in the SCM area.
  5. It results in better, more streamlined implementations and a higher ROI for digital transformation efforts: Many companies the likes of BASF, DuPont and Intel have adopted APICS frameworks which helped them achieve organisational goals and increase the efficiency of their systems and people. It’s why over 110,000 other SCM practitioners around the world have attained the CPIM. Now it’s up to you. https://www.apics.org/apics-for-business/customer-stories

By Hatem Abu Nusair, M.Sc. Engineering, CPIM-F, CSCP-F, SAP Certified Application Associate, APICS Master Instructor

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Hatem is a Global Supply Chain Management & ERP Expert. He is currently the Production Planner at Tip Top, one of GWF’s divisions in Sydney, having moved from Jordan where he worked for a blue-chip international company that grew rapidly. Here, Hatem founded the Regional Middle East & North Africa (MENA) Supply Chain Department with the purpose of optimising Supply Chain performance across 13 subsidiaries through demand management and forecasting, capacity management, inventory control, and special projects, which entails: IT initiatives, ERP implementation, re-engineering of Supply Chain processes and other relevant matters.

Hatem is a qualified Industrial Engineer and a Master of Manufacturing Engineering candidate at UNSW. He is a Certified Fellow in Production and Inventory Management (CPIM-F) by APICS, a Certified Fellow Supply Chain Professional (CSCP-F) by APICS and a Certified Application Associate by SAP SE.

Hatem will be facilitator for Term 4 CPIM Part 2 Guided Learning for Australasian Supply Chain Institute where will be share his passion of streamlining supply chain processes, eliminating redundancies and utilising enabling technology to achieve operational goals with CPIM Part 2 students.

 

 

ASCI members enjoy lessons in surviving and thriving in Australia’s manufacturing industry

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Site Visit Report by Geoff Palm
When Sten Campbell, Director, designtech, and his wife bought the business 25 years ago they had no idea about making furniture. Thanks to the help from a mentor and competitor in Sydney, they began the journey to where they are today; one of the leading manufacturers of MTS and MTO furniture manufacturers in Australia.
They have both local and national customers and compete effectively with imported products. One of designtec’s advantage is in quality, with a 10 year guarantee on all their products. They have not had a single claim against their product since this warranty was put in place. Another advantage is their speed to market; being able to deliver orders within 2 weeks. In fact, they recently helped out a Fitout company that was in trouble due to a delayed overseas shipment and late completion penalties approaching.
designtec has invested in state of the art German machinery, which is in part, one of the reasons they are so competitive. We watched one machine in action that cut, trimmed and edged a tabletop in minutes. This used to take 2 tradespeople up to 3 hours each to complete in the past. It was fascinating watching the journey of the product from raw material to finished product; created by a combination of people and machine. Staff skill levels range from tradespeople to semi-skilled; with a strong focus on cross-training. This ensures that most people in the business can operate a range of equipment; allowing for flexibility when demand dictates.
Safety is another important factor in designtec’s success; with no LTIs in the last 5 years.
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Most of there employees are now long term; with some coming up to 20 years. This was not the case during the mining boom when Western Australia struggled to find qualified people and it was the same with designtec; growing at 30% a year. That all changed in 2008 with the GFC and then the end of the mining boom, which saw demand for their product diminish rapidly. It is to the owners credit that not only did they survive, met the challenge they faced and have prospered since the downturn.
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The visit was hosted by Sten and Hannah Witherick, General Manager, on the afternoon of July 24, ASCI and associates learned the commercial, technical, industry and logistics issues around the designtec business.
ASCI WA thanks designtec, Sten Campbell, Hannah Witherick and other staff for hosting this visit and openly sharing their stories with our members. We must also not forget the office dog, who shared her love with all in a quiet and dignified manner. – end

Does Your Company Have the ‘Right Stuff’ to Embrace Advanced Analytics?

By: Henry Canitz – Director Product Marketing & Business DevelopmentPicture1

John Glenn became the first American to orbit the Earth on Mercury-Atlas 6 on February 20, 1962, just a few days after I was born. I grew up watching the Apollo Space Program launches including the six launches that sent humans to the moon and back. Like many kids back then I dreamed of being a test pilot and an Astronaut. I partially achieved that dream by becoming an Aerospace Test Engineer and working at Edwards Air Force Base where many of the early test flights by Chuck Yeager, Scott Crossfield, and other’s took place. On February 6, 2018, 56 years after John Glenn’s historic launch, SpaceX launched their Falcon Heavy rocket with Elon Musk’s Tesla Roadster and a dummy named Starman on a journey into the solar system. The Falcon Heavy is a new class of rockets that may allow man to colonize Mars and beyond. Today, space launches are routine with launches happening on a monthly if not weekly basis. Exciting stuff for someone who dreamed of being an astronaut.

It is also an exciting time to be a Supply Chain Practitioner. Like space exploration, the supply chain has become significantly more complicated over the last 25 years. Technological advances have simplified and automated a lot of routine processes while opening up entirely new opportunities. These new frontiers require advanced capabilities to drive business value such as cost reduction and customer service improvements. Analytics, for example, today is a routine part of a supply chain professional’s job. We can now analyze the end-to-end supply chain and quickly determine the best path forward. While speaking with practitioners at industry events it is quite apparent, some supply chain teams have the ‘Right Stuff’ to fully embrace advanced analytics while others are just beginning their journey.

Moving up the analytics maturity curve takes a combination of the right talent, processes and enabling technology. Unfortunately, the people component is often not adequately addressed. As supply chain planning incorporates more data, supply chain roles need to be redefined to support analysis and decision making. Just as Chuck Yeager had to acquire new abilities and skills to break the sound barrier, companies have to define new skills and roles to meet their envisioned advanced analytic enabled processes.

Below are a few of the new analytic roles for leading supply chain teams today:

  • Business Analyst: understands business needs, assesses the business impact of changes, captures, analyses and documents requirements and communicates requirements to relevant stakeholders.
  • Supply Chain Analyst: responsible for improving the performance of an operation by figuring out what is needed and coordinating with other employees to implement and test new supply chain methods.
  • Artificial Intelligence Specialist: work on systems that not only gather information but formulate decisions and act on that information. Software that determines Sentiment from Social Data is one example of the work of Artificial Intelligence Specialists.
  • Data Scientists / Big Data Analyst: analyzes and interprets complex digital data, such as the usage statistics of a website, especially in order to assist a business in its decision-making.
  • Database Engineer: responsible for building and maintaining the software infrastructure that enables computation over large data sets.

As our enterprise systems continue to produce volumes of data, we need to make smart decisions faster to drive the business forward. Does your current team have the ‘Right Stuff’ to embrace advanced analytics? What new roles do you need in your supply chain team? How should your team be organized to efficiently run the business while also driving innovation? Are your current supply chain systems sufficient to leverage new data sources and enable advanced analytics? Can you automate routine activities? These are just a few of the questions you should ask as you embrace all that analytics has to offer to keep your supply chain team engaged in value-creating activities.

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About the Author:

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Henry Canitz is The Product Marketing & Business DevelopmentDirector at Logility. To read more of Henry’s insights visit www.logility.com/blog.