Supply Chain: July 2015

Thursday, 30 July 2015

Transforming the Supply Chain with Agile

The globalization and digitalization has massive impact on supply chains. Agile methodology can help in the transformation efforts and provide solid, practical guidance.

The ADAPT-model of the Scrum methodology offer five common activities:

Awareness – that the current situation/ process is not delivering acceptable value
Desire – to adopt/ change
Ability – the necessary capabilities and skills to succeed
Promotion – sharing experience and making sure that others see successes
Transfer – managing the implications of using the new approach throughout the company

Awareness, Desire and Ability are overlapping, whereas Promotion and Transfer repeat and occur throughout the transition effort.

Mike Cohen, highly respected Agile Leader and bestselling author of “Succeeding with Agile” provides a very systematic and practical approach that can also be well leveraged for driving change and transformation programs in general. I have summarized from Mike and provided additional thoughts:

A transformation leader needs to engage in these activities on multiple levels:

Organizational
- A critical mass of people with similar awareness is required before the organization will collectively move forward
Individuals
- Organizations are made up of individuals. To change organizations, a transformation leader must change individuals.
- Important is that individual are in different stages of awareness, desire, ability, promoting change, transferring abilities/ learning to others. They progress differently and need different guidance & support
As a team
- Teams can be aids or hindrance to progress of individuals; enforce or undermine right attitudes & behavior
Per practice
- Functional units/ stages within the supply chain

Examining the ADAPT model in detail:

AWARENESS

Becoming aware that what worked in the past is no longer working can be extremely difficult. This is especially true for companies that are successful. There is almost always a lag between when the need to change first arise and when we become aware of it.

Impediments are:

A lack of exposure to the big picture
A refusal to see what’s right in front of us
People confuse movement with progress
People listen to their own propaganda

Good way to tools for developing awareness are:

Communicate that there is a problem. Generate discomfort.
Use metrics to reinforce core reasons to change.
Provide exposure to new people and experiences. Encourage people to learn from others in the market, conferences, competitors, etc.
Run a pilot to demonstrate success (and refine your approach)
Focus on the most important reasons to change

DESIRE

Without desire there will not be any meaningful action.

Tools for increasing desire:

Communicate that there is a better way
Create a sense of urgency
Build momentum
Agree on a trial, get teams to test drive
Align incentives/ remove disincentives
Address fear
Help people let go of the past and do not discredit it
Engage people in the effort.

ABILITY

Becoming agile and equally transformation efforts require learning new personal and technical skills, thinking, working as a team and at different pace.

Tools for developing ability:

Provide coaching and training (using various approaches & tools)
Hold individual accountable (must understand that they are expected to apply new skills)
Share information (collaborate across teams; learn from each other, use tools such as departmental intranet, Wikis, communities of practice and reading groups to disseminate information).
Set reasonable targets, progress incrementally
Just do it – Experiment, be patient and expect to make mistakes
Fail often, fail fast, fail cheaply

PROMOTION

Promotion must lay the foundation for the next pass through the ADAPT cycle. Spread successes to raise awareness and desire for the transformation. Goal is to get the people to commit to the transition, not just merely comply with it.

A good idea is to not put a name on your transition, as it is harder to resist a nameless effort.

Seek shamelessly attention. The more often people here about the effort – even better see or experience it – the better. Use graphical displays, organize events, etc.

TRANSFER

A transformation effort requires the support from the other parts of the organization. Without their cooperation, most efforts are likely to fail, even when successful within their own group! The law of organizational gravity pools many innovative groups or good improvement efforts back to the beginning. Key functions to gain cooperation are HR, Marketing and Finance.

Agile methodology is proven. It is structured to embrace change and thus often provides better, faster results. Leading companies driving transformation efforts – across Organization, value & supply chains – will increasingly use agile methodologies to succeed.

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Tuesday, 28 July 2015

7 best practices and solutions to optimize a companies supply chain

There are at least 7 Practices & Solution areas where companies can make improvements to their supply chains – optimize operations, innovate and gain a competitive advantage. The recent „Future Supply Chain 2016“ report from Capgemini and the Global Commerce Initiative offers interesting thoughts and ideas for any company. Here, key summary points with my additional views.

In-Store Logistics

Solutions involve improvements within the store and focus on adding value the consumer and reducing business costs.

Examples:

In-store visibility
- RFID technology can provide real-time insight into inventory, alert when supplies are running low or theft is detected.
Shelf-ready products to improve replenishment and enhance visibility
Products for the consumer in the store
Point of Sales data (POS) available to manufacturer, retailer and data warehousing;
Shopper Interaction
- Electronic labelling, mobile payments, mobile device marketing, in-shore kiosks and narrowcasting (to present information designed to stimulate purchases)

2. Collaborative Physical Logistics

Solutions involve sharing transport, warehousing and other infrastructure. Sharing and collaboration can take place between and across various nodes of competitive supply chains.

Shared transport
- Collaborative approach between manufacturers, retailers and third-party logistics providers. Sharing load planning, truck capacity, etc.
Shared physical infrastructures
- Shared warehouses and distribution centers, cross-docking
Shared information
- Combine deliveries from more than one source toward multile locations via warehouse or distribution centre.

3. Reverse Logistics

Logistics designed to reprocess assets, materials, packaging, products or other components that can be recycled, reused or remanufactured. Solutions include traditional backhauling, product recycling, packaging reuse. It is most advanced form it would turn into a zero waste / Circular Economy model, where all “wastage” would enter as a new nutrious stream into the economy.

4. Demand and Fluctuation Management

It requires new models to smooth the demand signals coming from customers. New vertical solutions include promotion/ introduction calendars, supply/ demand capacities to align introductions and promotions. It includes collaboration on execution, joint supply/ demand andticipation based on real-time visibility of physical flow of goods and consumer behaviour, joint real-time access to results of introductions and promotions.

5. Identification and Labelling

Provides all partners in the value chain with the ability to use the same standardized mechanism to uniquely identify parties/ location, items and events with clear rules.

6. Efficient Assets

Design and use of new buildings and equipment that enhances the productivity and reduces their environmental impact.

Examples:

Green buildings
Efficient use of key resources such as energy, water, materials and land.
Efficient trucks; best routing; training on fuel efficient driving

7. Joint Scorecard and Business Planning

Two broad categories are qualitative and quantitative tools.

Qualitative:

Capability metrics designed to measure extent trading partners (suppliers, service providers and retailers) collaborate

Quantitative:

Business metrics to measure the impact of such collaboration

These seven key areas can be measured and supported through KPIs. The following chart illustrates areas, KPIs and offers best practice examples:

It is wise for companies to examine and understand the overall environment a company is operating in. Some factors and influences can be modified/ changed, while others are mostly out of a company’s control (external forces). A company within its industry can impact/ influence the Information and Product flows as well as Consumer Behaviour.

The “game” in supply chain management has changed due to globalization and digitalization.

Today companies are competiting with each other across industries. At the same time we see that companies even collaborate with competitors to achieve common objectives.

Supply chains, formerly more or less stable and formalized, are increasingly agile and fluid. The four dimensional supply chain is born. What supply chain you have depends on the time and circumstances. The supply chain has become a living organism. It is difficult, but possible to tame it.