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First Thoughts
  By Dan Gilmore  
     
   
  May 15, 2014  
     
 

Trip Report: Gartner Supply Chain Conference 2014

 
 

 

As we roll into a Memorial Day holiday weekend here in the US, I am just back from sunny Phoenix and the Gartner Supply Chain Executive Conference, an event initially started by AMR Research years before Gartner acquired the company, and in the past few years Gartner has really put a lot of marketing muscle behind the event to take it to new levels of success.

I was only able to be there for basically a day and a half, but trust me that was plenty, as it seems like a firehouse hose of information coming at me over just that short period.

 

Gilmore Says:

Colgate's Topping worries a "perfect storm" of factors could lead to a dramatic shortage of supply chain talent in the next decade.


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The official theme was "Leading for the Next Decade," in the context of what supply chain will need to do to adapt and compete over the next 10 years. But more generally, the key themes of the presentations from both Gartner analysts and external speakers I think were as follows:

• The growth and importance of supply chain segmentation
• The rise of supply chain as a real driver of revenue growth
• The confluence of digital supply chains, the Internet of Things, sensors. etc., and how this will drive new offerings by many manufacturers that combine physical products with software and services.
• The rapid rise of advanced analytics
• The supply chain talent management imperative, and as a sub-theme to that, recognizing that millennials really are different

In addition, as never before (and maybe almost to the point of excess), Gartner really is pushing its various diagnostics and toolkits, which all sort of emanate from its now five-level demand-driven value network maturity model. Gartner appears to be successfully using these frameworks as a way to more directly engage its corporate clients, and if you do so, that naturally enhances your shot at a keynote event at the executive conference (see Schneider Electric, 3M).

Given the amount of material, I will summarize this year's keynote presentations this week, and then do the same for the breakout sessions next week. Even my keynote summaries in most cases will hardly do justice to the full presentation, but instead I hope to note especially interesting or insightful comments from each.

Gartner analysts Noha Tohamy and Debra Hofman opened things on Tuesday by first noting the dramatic changes we have seen in supply chain over just the past decade (and it is quite remarkable), naturally setting the stage for pondering what the key forces will be moving forward.

They noted that the number of supply chain undergraduates in US students has grown 20% since 2011 - I had no idea the increase was of that magnitude - yet virtually all of them are finding jobs when they are finished, such is the demand.

On the blurring of the physical and digital in supply chains, they noted that many companies are adding a software component to physical products to either enhance their value or sell additional devices. An easy example being GE's aircraft engines, to which now added dozens of connected sensors, that produce data that GE mines and sells to airlines to improve their maintenance operations.

Some 10 years ago, I remember the then CEO of automotive and electrical component giant Eaton saying the company would no longer sell any products that didn't have a chip in them. Kimberly Clark now markets a diaper with a sensor that detects moisture, sending a smart phone alert when a change is needed, in an interesting example of real-time demand sensing.

As this product transformation occurs, a key question, of course, becomes who owns the product development and delivery? Does supply chain just own the physical product, and IT or marketing the software and services side? Or will supply chain in many cases be given responsibility for the whole thing?

Regardless of how that plays out, product development and release will clearly be more complicated, and new skills and technologies will have to be added to create, launch, and maintain these new physical-digital hybrid solutions.

Tohamy offered an example of just how automated the coming new supply chain world could be, where a Taylor Swift tweet praising a new ice cream flavor leads to automated sensing of rising demand. Then, as production gets set to ramp up, sensors detect a quality problem on one manufacturing line, leading to machine to machine communications across the company's network, advanced analytics that determine the optimal mitigation plan, and automatic adjustment of orders to suppliers and the rerouting of deliveries. Then add in driverless trucks....

I think the example scenario actually should have been a little less automated, and thus seem more realistic of what we will see anytime soon. That modest vision perhaps might also have been a little less threatening for any middle managers in the audience wondering what they and their teams will be doing when this all automation comes to be. But directionally at least this does appear where we are headed.

Linda Topping, chief procurement officer at Colgate-Palmolive, spoke on what she and her company believe could be a true supply chain talent crisis arising before long.

She worries a "perfect storm" of factors could lead to a dramatic shortage of supply chain talent in the next decade. That includes 25% of baby boomers retiring in the next 10 years, millennials with very different views soon becoming the dominant proportion of the global and US workforce, 25% growth in supply chain positions to be filled in the next decade, etc.

Colgate recently realized it had to start work right now to build its next generation supply chain leadership team for 2020, and has been working hard to do just that. Those efforts include programs to ensure that top talent remains with the company and a focus on recruiting more woman and minorities to broaden the pool.

It also involves programs to adapt to what millennials value in a company, "since they aren't going to change, we have to," Topping said.

And just what are millennials looking for, besides the usual hopes for interesting work and growth opportunities? Topping cited socially responsible companies, flat organizations, access to senior leaders, opportunities to regularly express themselves, and opportunities to work from home as examples.

On Wednesday morning, noted business luminary Tom Peters, co-author two decades ago of the seminal book "In Search of Excellence," gave an interesting if somewhat rambling presentation on, I guess you would say, becoming excellent as a company and as a supply chain.

Almost defying a summary, the best I can do is offer some of the most interesting (though often not connected) observations: As supply chains become more integrated, they become more efficient, but that also usually raises a company's supply chain vulnerability scores by a few points - more companies need to recognize that; most companies should have a formal supply chain R&D/innovation budget; cross-functional communication is really more important to success than functional excellence, and there are easy ways to improve that, such just by regularly going to lunch with people from other areas and inviting them to your team meetings; ecommerce is like an election that never ends (that's especially good).

I met Annette Clayton a few years ago when she was previously at Dell. Now she is at Schneider Electric running its giant supply chain. She had an interesting keynote discussion with Gartner's Jane Barrett, but I am going to combine that summary with content from a related breakout presentation next week, focused in part on Schneider's supply chain segmentation efforts.

Chris Holmes from 3M spoke to how in just a few years the company has made major progress in getting control and driving improvements in its sprawling global supply chain, across many disparate businesses. 3M appears to have been able to centralize most supply chain functions even with that business diversity.

Holmes's presentation might be summed up as "Business and supply chain is a battle, and we intend to win," and in fact he used words very similar to that to end his presentation. Sure sounded like he meant it.

Again picking out some key points from an excellent presentation: every demographic group locally and around the globe is likely a customer segment; emerging economies go through stages of evolution in terms of focus as per capita GDP grows - infrastructure, manufacturing, safety, consumerism, healthcare, and 3PL proactively works to have key products for each stage; advanced manufacturing technology "is the center piece of the future of 3M"; don't be confused - lowest total delivered cost is in fact a customer-focused metric, and lowest price usually wins.

My head hurts. I will have some more thoughts on the conference overall as well as the breakout sessions next week.

Any reaction to Gilmore's conference summary, or the key themes he cited? Let us know your thoughts at the Feedback section below.

 


 
 
     

Recent Feedback

Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.


Srihari
Senior Consultant
Infosys
May, 22 2016

Surprised to see Home Depot fall off the list; thought they were winning with Sync?


Mike O'Brien
Senior editor
Access Intelligence
May, 26 2016

Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.


Julie Leonard
Marketing Director
Inovity
Jun, 27 2016

The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself?

Editor's Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 


Carsten Baumann
Strategic Alliance Manager
Schneider Electric
Aug, 19 2016

I agree totally with Mr. Schneider.

I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing":

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".






Jo Ann Tudtud-Navalta
Materials Management Manager
Chong Hua Hospital, Cebu City, Philippines
Aug, 21 2016

U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA".

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm


Sandy Montalbano
Consultant
Reshoring Initiative
Aug, 24 2016

 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!


Robert
Transportation Manager
N/A
Aug, 30 2016

SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day.

I've learned that one doesn't have to remind Germany about your EDI orders.


Ian Jansen
Mr
NHLS
Sep, 14 2016

Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 


Don Benson
Partner
Warehouse Coach
Sep, 15 2016

Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.


Jade
Admin
Fulfillment Logistics UK Ltd
Oct, 02 2016

Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.


Mike Dargis
President of asset-based carrier based in the Midwest
Zip Xpress Inc. (at ZipXpress.net)
Oct, 03 2016

Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com


Blaine
Inventory Specialist
Syncron
Nov, 16 2016

This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 


Bob McIntyre
National Account Executive
DBK Concepts LLC
Nov, 21 2016

I am referencing to the comment that leasing of warehousing equipment (beyond forklift trucks) is a vision for 2030.
Just recently in Europe, such a business model has started, see here: https://next-intralogistics.de/

I am following with a lot of interest, how the business develops.


Kai Furmans
Professor
KIT
May, 22 2017

If we limit the standard on judging or determining the best supply chain to just three calculations it does not tell the entire picture.  Financial performance metrics are valuable as they capture the economic consequences of business decisions.  But supply chain managers make decsions and use organizational resources that impact a company's financial well being.  Where is a firm's earnings over a period of time determined by sales less product costs and general/adminsitrative costs?  Where is the metric for determining the sources and uses of cash from three perspectives - operational, investment and financial?  Where are these supply chain metrics: on-time delivery, lead time, response time to customers, product returns, procurement costs, network distance, inventory carrying costs, forecasting accuracy, sourcing time, etc,.  Without knowing the results of all these supply chain calculations the there must be a question as to the accuracy of the 25 top supply chains.


Stuart Rosenberg
Supply Chain Consultant
First Choice Supply Chain
Jun, 05 2017

I feel this ranking misses the mark in SC. It does not seem to consider a key indicator in days inventory on hand, which is key to determining a SC company's ability to forecast, manage inventory costs and reduce aged stock. In additiion I realize it's difficult to understand what goes into the customer survey, but would I assume specific metrics are being asked. For examples customer's opinion on service level differentiation and the ability to deliver the right product on time, which should then be allocated a bigger weighting than 10%. It would also be interesting to take a view of the above list's SKU portfolio complexity, seasonality and launches/promotions. I would again assume some companies on the list above have a far more complex SC to manage and lead, ultimately requiring a lot more innovation within a SC to stay ahead of competitors, and ultimately satisfy their customers demands.  I understand above metrics are difficult to measure, as mentioned in the article, but they somehow need to be considered to give a true reflection. 


Dustin Calitz
Project Commercialization Manager
Mondelez
Jun, 06 2017

A Very Good Article...

While some feel that lean is a scam that pushes for more out of the personnel and out of the companies through reduction of waste and adding value for the customer, there are several things to remember:

1) Lean methodologies are designed and implemented to reduce time wasting, so this may seem that you are working harder as an employee.

2) Lean methdoligies only work when everyone from the janitor to the owner of the company get involved and back the program.

3) Lean methods are there to make you work smarter not harder, although it may feel you are working harder.

4) YES... Sometimes lean methodologies fail! This is due to project overun or taking on too large a problem and trying to fix it all in one go and not taking the smaller problems that are associated with the large problem and fixing them first. Sometimes fixing the small problems leads to resolution of the larger problem.


Michael Hurd
Lean Consultant
Unemployed
Jun, 10 2017

The Supply Chain technology is not considered a problem because traditionally supply chains are thought to be cost centres unlike sales functions. The tendency, in general, to limit expenses and cost cutting on upgrades for technology and for talent have been hindering progress for the businesses. Supply chains lack real time visbility and above all trust across the value chain (not that the participants are dishonest) rather it's about the cascading effects referred to as the bull-whip effect which causes higher magnitudes of disruptions. 

Supply chain real time information should top the list .

Another problem is that of multi homing as so much data is available across several feeds of IOT/Email/Internet /Mobility/ERP that organisations tend to have issues around finding a single platform to collate them for meaning analysis. 

Blockchain (if deployed appropriately) can be a great solution for solving the issues around the supply chain.


Akhil
Director Supply Chain
skuchain
Jul, 31 2017

Excellent article.  It very much points to the need for Shared Risk / Shared Reward as we teach at Vested.  Suppliers will respond when they are made part of the team, and they have a lot to bring to the game.  The service provider is the subject matter expert in the services provided, and in an excellent position to enhance the capabilities and services offered by the shipper.


Mike Ledyard
Vested Program Faculty
Vested Way / University ofTennessee
Aug, 04 2017

As the article points out it is not a lack of technology that is holding back performance but rather a failure to form the right sort of relationships.  As well as the length of such relatiohships, practitioners should consider employing arrangements that incentivise both parties to innovate and deliver levels of performance and profit that neither thought possible.  By far the best model I have come across to achieve this is the Vested Outsourcing model developed by researchers from the University of Tennessee.  See www.vestedway.com for information on the model and case studies that show how others have benefited from creating a Vested deal.


Andrew Downard
Managing Director
AD Supply Chain Group Pty Ltd
Aug, 05 2017

Very informational article. The major focus of logistics is on e-commerce. There is a need to optimize every component of logistics by following the latest trends and technologies. Thanks for uploading this article.


Najma
logistics
threelineshipping
Aug, 23 2017

I have recently co-authored a white paper with my colleague wherein we have looked at 2 fundamental guiding principles  -

1. Always have enough to Sell / Produce
2. Do not have excess to Sell / Produce

These 2 Golden Rules can be the foundation of keeping optimal inventory levels and for organizations to achieve the same. We have looked at a framework which tries to reduce the phase mismatch between Demand & Supply, and tries to bring the shape of the supply curve closer to shape of the demand curve.

We have classified symptoms and underlying root causes for the above "Phase mismatch" and "Curve Mismatch" between Demand and Supply, and then talked about addresssing those individual root causes to strive towards Leaner Inventory levels while maintaining or improving service levels.

So to answer your question, we feel the Companies which have addresed these causes have been able to keep DIO horizontal or even going down, while others have not been able to control rising DIO because of not addressing the root causes.


Sameer Shukkla
Consulting Partner
Wipro Inc.
Sep, 17 2017

You ask why turns are flat or declining despite lots of attention and technology. The answer is, I think, 2 fold: the supply chain environments VUCA (Volatliity, Uncertainty, Complexity, Ambiguity) is on a continuous upward curve and this means that forecast accuracy inevitably declines in parallel - and much of that inaccuracy is hidden by the statistics. For instance a company with, seemingy good, 80% mix accuracy will find that figure is skewed so high by the few high volume / low variability items. 80% of the items will be achieving considerably less than 60% error.

So most item level forecasts used for driving replenishment through an MPS (be it ERP or APS) are simply leading to unbalanced stocks, service threats and continuous expediting / fire-fighting. These schedule interrutions are "variability" that is disrupting flow and, thereby, increasing lead-times, using unplanned capacity and generating excessive (and still unbalanced) inventories.

The replacement in ex-stock supply chains is "enterprise(s)-wide" pull which also uses "push" for extreme/exceptional events. Its other key characteristics are that the supply chain is decoupled and is demand-driven. And now it can be implemented using SAP since they announced they they have co-developed an enhancement for IBP that supports this transformational way of working - up to 50% inventory reduction, requiring less capacity and shorter lead-times all while achieving planned service levels. See https://www.camelot-itlab.com/en/camelot-demand-driven-lean-planning-suite-for-sap/ and https://www.linkedin.com/pulse/supply-chain-flow-what-why-how-simon-eagle/



Simon Eagle
SCM Consultant
Camelot MC
Sep, 17 2017

IoT is without a doubt starting to become a major factor in the profitability of various companies. In the manufacturing sector, we will see it come into the front by the end of 2020 completely. Various sectors have already adapted IoT solutions like the security industry or companies offering BPO Services India. Contact centers not just in India and China but across the world have adapted technology following the principles of IoT. The manufacturing sector is soon going to follow.


John Smith
Research & Development
Octopus Tech Solutions
Sep, 18 2017

I  can speak with some context. While efficiency and tools can reduce inventory, we also see the number of SKUs and new products increasing, and also the number of sales/depot points. This means the inventory in such cases, can start with very high number and with more customization and choices available to the consumer, so there is no end to the long tail of products available within a category. It is unlikely that the slow/dead goods are written off so easily to be not included here.

A larger question, would it be purely an IO problem or also a Demand Planning (Forecast Error) problem? A higher cycle time of service but a better fill rate can improve inventory performance, by aggregation. But a bad forecast can do away all the good work you do in inventory planning.

Do you have numbers for decorative coatings in the list? I did not see something there only for decorative coatings.




Girish Maniyar
Chief Manager Development Initiatives
Asian Paints
Sep, 28 2017

My opinion is that peaks and valley are just nice graphics to explain.  Smooth responses save the day.   3PLs  just adjust to the climate and the areas of movement of Logistics.    One purpose of the 3PL movement was to adjust to an always changing market.   They will never be fixed and will flex as the logistics changes.   3PL companies have vast knowledge of their business.  Their success is their ability to move up and down as the market flows.  They bring a level playing field to the transportation world that in the past was rigid but looked good on spreadsheets.  Industry graphic personnel like to be able to answer all the changes because they can only see documents.  3PLs see the needs, the issues, the positive changes and the knowledge to know why and when to adjust.   They (3PLs) have smoothed the waves of the past and everybody likes to see the spikes so they know something is there to clearly report on. Smooth sailing is boring but sure gets you where you want to go. 


Reo B Hatfield
Chief Operating Executive
BestTransport
Oct, 20 2017

So the horrific and severe worldwide allocation of electronic components is not an issue?  Don't tell that to the automotive buyers.  It's HORRIBLE.  Lead times out to up to 76 weeks.  Why not write about that?  It's killing us, our customers and the big automakers.   


Catherine Dennis
Supply Chain Manager
Indak Mfg Corp
Oct, 26 2017

I suggest McKinsey to do a bit more research in Prof Gattorna’s dynamic alignment. This article only scratches the surface a tiny bit. Much more to be found reading about the alignment concept.


Huub
Logistics Manager
Shell
Nov, 11 2017

Primarily Vision is required followed by Assigned Focus on objectives.  Or maybe just love for USA.  The market will not find its way unless it's for organic vegetables and RRR.  Two to three years later will take two to three years longer to the end of the decade, and this is viable today.  God bless america from its present distraction.


Joseph George
Farmer
Field Vista
Dec, 07 2017

In My Opinion, the fact that capacity will tighten should be obvious to everyone engaged in the transportation. 
Capacity to move freight isn’t how many trucks or trailers are in the system or what a computer 
program says, it still is truck driver based and poorly-managed companies won’t be able to imporove
this fact.  Investing in people is still most important!

Get ready to pay higher prices for goods and services. I think we could lose 10% of Capacity in many areas. 


Gary Buchs
Owner Operator
Self, Landstar Business Capacity Owner
Dec, 17 2017

After all the ground we have lost in the productive sector and the additional burden that loss of our productive momentum has placed on our society, somebody tell me why so many people are against the actions necessary to restore our vital productive infrastructure! It is like the left enjoys shooting itself in the foot!


Dan
Pres.
Bioptechs
Dec, 20 2017

Great article and thank you for summerizing the predications. 

What does it mean to country like India where the labour is still cheap? Where the logistics cost is still on the higher side compared to some of the developed nations?


Jayaram
Business Development
Raghava Logistics
Mar, 04 2018

 I agree that robots can replace some amount of manual labor in logistics centers.  However as you mention, the labor pool is shrinking.  We need more training programs such as the one provided by the Greater West Town organization in Chicago.   Www.gwtp.org.  (It is a program that your readers should find interesting.)


Herb Shields
President
HCS Consulting
Mar, 06 2018

Thanks for this very informative article.


Billy
Associate
BJO
Mar, 13 2018

Gone are the days when consumers will wait for a retailer to have the product back in stock, those days are done. We live in the "I want it now" society and with Amazon in their pocket consumers can easily "now" it to themself the next day right from their phone.

The importance of product availability is under the microscope at all retailers as an empty shelf equals lost customers, a poor customer experience and entirely abandoned purchases.

We are on a mission at krunchbox to help suppliers fix their product availability and sell thru and improve their buyer relationships, hopefully before their retail partner fines start rolling in and or we see more retailers close.


Doug Murless
Country Manager
krunchbox (www.krunchbox.com)
Mar, 18 2018

You are correct There are government programs to encourage investment at small and mid-size manufacturers, but McKinsey says these programs generally have smaller budgets, less certainty of ongoing funding, and more constraints on their mandates than comparable programs in other countries. Policy makers should examine which existing initiatives are producing the most promising results, then scale up those efforts and commit to them for the long term.


NikhilSingh
Executive
Carmatec INC
Mar, 21 2018

I wrote a similar article on supplychaingamechanger.com about the same topic:  Gartner's 2018 Top 25 Supply Chain List!  Is it Still Relevant?  at https://supplychaingamechanger.com/gartners-2018-to…t-still-relevant/


Mike Mortson
CEO
Supply Chain Game Changer
Jun, 15 2018


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