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June 17, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet All that (Supply Chain) Jazz: The LLamasoft User Conference bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet Expert Insight and Supply Chain by Design bullet June Videocasts and On Demand Videocast
first thought


Supply Chain Graphic of the Week
An Interesting View of the State of US Manufacturing

US Manufacturing Activity Sags Again
The Three Roles in Supply Chain Network Design
US Lags in Infrastructure Spend
FedEx Ground Pays Up to Contract Drivers


See how one Distributor Saved Over $15,000 the First Year


Week of May 30, 2016 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: E-Commerce Verses Conventional Order Fulfillment

Weekly On-Target Newsletter:
June14, 2016 Edition

Cartoon, DHL DC Robots, Swapping Tractors, Profit Max vs Cost Min and more

Supply Chain Software Trends and Opportunities Benchmark Report 2016

From the Search for Greater Agility to the Coming Era of Cloud Software, Where are Companies Headed?

Moving Past the '90s: Why ERP Just Doesn't Cut it When it Comes to Supply Network Visibility

by Jeremy Coote
Acsis Inc.

Using Profit Maximization to Minimize Cost

by Dr. Michael Watson


What were US logistics costs as a percent of GDP in 2014?

Answer Found at the
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All that (Supply Chain) Jazz: The LLamasoft User Conference

It's not easy to get away with using two metaphor's to describe the general supply chain environment, but I will say LLamasoft founder and CEO Don Hicks pulled it off.

I am literally just back from LLamasoft's 2016 user conference in New Orleans, the sixth such event that moved out of its Ann Arbor, MI home for the first time last year, when it was in Park City, UT.

Around for some 15 years, LLamasoft in recent times has rapidly emerged as the overwhelming leader in supply chain network optimization software, or what it prefers to call supply chain design. It argues, effectively, that (a) design has generally received insufficient attention in most companies; and (b) design has emerged as a true third competence in supply chain practice, in addition to planning and execution.


Will what has made LLamasoft so successful on the supply chain design side work equal well for traditional planning? That remains to be seen.


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I agree wholeheartedly with both propositions, though I add risk management as a fourth core competence. The message is working, with a substantial percentage of the Fortune 100 using LLamasoft's Supply Chain Guru tool, resulting in some 500 attendees at this year's event, with well-known companies from across the globe in attendance.

What LLamasoft has achieved organically, through a combination of really focusing on advancing its design software while competitors moved more slowly, plus a different-than-most focus on customer success, has recently been augmented by buying up most of what had remained as competition. First it acquired the LogicTools solutions from IBM in 2015, and then a more Euro-focused provider called Barloworld Software early this year. The latter deal was made possible by the investment of $50 million from an arm of Goldman Sachs that valued LLamasoft at some $250 million, no doubt making Hicks very happy indeed.

The Barloworld acquisition had other ramifications as well, which I will discuss in a moment.

Back to metaphors: a decision to engage former world chess champion Gary Kasparov as the first day keynote speaker led to comparisons of supply chain to a chess match, and a conference theme of "What's your move?"

Certainly others have compared supply chain to chess, but it's apt enough: strategy, execution, battling a competitor in a series of back and forth moves, etc. But even more apt may be a version of the game I was not familiar with, called chess boxing, popular in parts of Europe.

In this game, contestants battle on the chess board for a few minutes, then put on the gloves for a round of real boxing,then back to chess, etc. Maybe that's more what supply chain is like today, with traditional competition and unwritten but understood rules in a game that still must be played even as someone like Amazon comes along delivering body shots and maybe a knockout punch at the same time. Search chess boxing on YouTube to see this strange sport.

But, Hicks later said, maybe supply chain is a little like music too. You can try to have a highly structured, top down approach, like band or orchestra tightly controlled by conductor, under a strict set of predefined rules. But the results may be too predictable, and not flexible enough. On the other end, musicians each playing their own tune, uncoordinated (functional silos?) results in music (and supply chain performance) that is simply discordant.

But then there is jazz, in which musicians follow the same basic melody and tempo, but can improvise within that framework to delivered a better total result, as the small band Hicks brought on stage well demonstrated.

So should our supply chains be more like a jazz band or an orchestra? I am going to do some thinking about that.

There were two main company announcements at the conference. First was the coming release of what LLamasoft is calling Supply Chain Guru X (as in letter X not "ten"). I received a private demo yesterday, and loved exec VP Toby Brzoznowski's term "the developer's debt," referring to the price almost any software company pays as it expands its solution over time: more compromises as new capabilities are added, an inevitable sort of code bloat and more, limiting in the end the path forward.

LLamasoft has bitten the bullet and totally rewritten its flagship design software with a "clean slate" approach, and it is impressive. Highlights include a totally flexible data model, versus a more rigid structure previously, almost limitless ability to construct process steps across any supply chain function, and assign costs and other attributes to each process step. In addition to being valuable for traditional supply chain design work, this capability now enables LLamasoft to model "four wall" distribution center processes it really couldn't address before, getting much more granular on costs, capacities and constraints than just the sort of basic throughput numbers you could have assigned to a DC previously.

There is a very cool new dashboard capability in which users can with extreme flexibility combine supply chain maps, data views, and analytics/graphs into the precise views they want, and on the graphics side in some/many cases eliminating the need if desired to use a third party tool such as Tableau. Equally cool is a tool in which modelers can create and publish to the Cloud "what if" type capabilities for business users to explore different scenarios and see the result from changes in assumptions, hiding all the complexity of the models behind it. There's more, but you get the idea. Guru X will be available sometimes near year's end.

Just as consequential, LLamasoft is entering the traditional planning software fray in an increasingly big way. It was already headed that direction in 2015, building out a new set of tactical planning apps in addition to the existing strategic planning tools. But that direction was accelerated by the Barloworld acquisition, which in addition to bringing another network optimization tool also added demand and replenishment planning applications, with over 100 customers.

LLamasoft VP Jeff Meterksy showed a Gartner framework for supply chain planning software that had at least a couple of dozen distinct planning modules. LLamasoft had checks next to most of them, indicating either LLamasoft now had that capability or was developing it.

This is very consequential for the supply chain planning market, depending on LLamasoft's strategy and execution, but as I said after last year's conference, to a degree (slightly different now with the Barloworld solutions in the fold) LLamasoft will be coming at this from the top down (strategy and design) as the entry point, versus traditional planning vendors who comes more from the bottom up (demand and supply planning).

Will what has made LLamasoft so successful on the supply chain design side work equal well for traditional planning? That remains to be seen. The competition will be tougher, that's for sure, and will include ERP providers as well as best of breed, something the company really doesn't encounter on the network design side.

It may not be fair based on one 45-minute presentation, but I think to be successful breaking into this market in a big way Llamasoft will need to up its vision and messaging relative to planning, which was a bit incremental versus a more "new way" approach I believe will be needed to prosper in this very mature market.

I had hoped to review some of the several excellent breakout sessions I saw, such as ON Semiconductor's incredibly granular modeling of every production machine in every plant to greatly improve responsiveness to demand, drive the S&OP process, and improve factory utilization; how food giant Mondelez was able to build a global network design capability that is an interesting blend of centrally led practices with regional execution and led to big savings; IKEA's development of a total land cost model and tool that allows buyers to be much smarter about sourcing decisions; and Starbucks creation of a single, comprehensive logistics model (and internal design capability) to do short, medium and long-term design planning, savings many millions of transportation dollars already in the process.

I will hope to provide more details on these in the near future, maybe in video form.

Kasparov, who of course famously beat and then lost to an IBM computer in the late 1990s, was an excellent keynote speaker. Generally a conservative, he doesn't like Hillary, Bernie or Trump, and thinks the West is trading growth and innovation for financial security.

Good conference from Llamasoft. Spoke to many SCDigest readers there.

Any reaction to our summary of LLamasoft's user conference? Is jazz a good metaphor for how we might think about supply chains? Can LLamasoft be successful in the planning market? Let us know your thoughts at the Feedback section below.

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Thursday's Videocast:

Supply Chain Design as a Continuous Business Process - The Whirlpool Story

From Project to Process: Here's How to Get It Done

In this outstanding Videocast, we’ll explore the changes needed to make supply chain design a continuous process, emerging new best practices in supply chain design, and how consumer products leader Whirlpool has successfully embraced this 360-degree approach.

Featuring Dan Gilmore, Editor, SCDigest, and Toby Brzoznowski, Executive Vice President, LLamasoft and Brian Streu, Manager, Supply Chain Design, Whirlpool

Thursday, June 23, 2016

Tuesday's Videocast:

A Benchmark Study on Supplier Integration in an Outsourced World

Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.

A new benchmark study of practitioners reveals the priorities, expectations and challenges of achieving real-time visibility into goods as they move through third-party production cycles.

Featuring Dan Gilmore, Editor, SCDigest, and John Dipalo,Chief Strategy Officer, ACSIS, Peter Musser, IT Services Delivery Specialist, DUPONT and Bruce Stubbs, Director, Industry Marketing Honeywell Scanning & Mobility

Tuesday, June 21, 2016

On-Demand Videocast:

Now is Finally the Time for WMS in the Cloud

As Supply Chain Software Moves to the Cloud, Barriers to Warehouse Management Joining the Party have All Fallen Away

What has changed, and what WMS technology developments are fueling this transition. We'll cover all that and more in this detailed, fast-paced broadcast.

Featuring SCDigest editor Dan Gilmore and Dinesh Dongre, VP Product Strategy, Softeon

Available On Demand


Ok, our last set of some of the many emails we received on our coverage of Lessons from Finish Line's Distribution Disaster. Many great responses.

Feedback on Lessons from Finish Line's Distribution Disaster:


Nothing said yet in all the feedback about Change Management? Everyone has to be on board as to why the new systems are being implemented, and benefits it will provide.

Mock go lives? Also a best practice.

Finally, accountability. Everyone, not just project members and business leaders. Annual Performance reviews should have individual metrics and goals tied to metrics and goals of the project. A great way to get everyone on-board, or maybe looked at another way, "Get on the bus, or get out of the way!"

Very interested to see "the rest of the story".

Mark Shuda


I noted the consultant, you first referenced, called out the issue of "buy-in" from the company personnel who would be responsible to implement and operate the new facility and systems. To put it simply - BINGO!

As a retired supply chain executive and consultant, I can tell you our most significant challenge every single time we were standing up a new facility and system for a client was the full buy-in of the company personnel (from CEO to Order Picker in the warehouse) to the new program.

Supporting that buy-in had to be adequate funding, a detailed implementation plan with a reasonable schedule and accountability assigned plus the development of a comprehensive training plan for all (throughout the company) with close monitoring and mentoring before, during and after startup. These were essential elements of a successful project. If we could not get that understanding with a client, we walked away.

James Nelson


Wow, lots of painful and happy memories from earlier in my career when I did hundreds of these systems implementations.

Regarding the comment of Tompkin’s Kevin Hume on WMS/DOM implementation. The fact that Finish Line was implementing DOM suggests that they have multiple DC’s. DOM is a overlay concept to manage customer order distribution across multiple distribution points, and in my opinion should not be implemented until the DCs are running correctly. Plan and lay the groundwork for DOM as part of the WMS, but do the WMS first.

Sound like FL went "big bang" across the full business. I would have chosen 1-2 pilot locations to prove the WMS before going big. Pilots should have been first in a smaller DC which could easily be controlled and less impactful if there were failures, then a larger DC to prove scale – both would provide valuable learning experience and tools, and the opportunity to work out the kinks before bringing the business to its knees. Having a sound WMS running in one-two facilities will help "sell" the value of the system to others (convincing folks to change is always a bugger).

Steven R. Murray

Supply Chain Visions

comma I was lucky enough to not be part of FinishLine project (yes, I can say that again! I have not heard horror stories from those who were on the project, but none of them wanted to stay on it for long).

I have been on several projects that do it all wrong to start with.

At times, it is a company's own employees (on functional side) or sometimes it is IT team , and in many instances, it is the System Integrator or the Software Vendor at fault - and in the ones where distastes are biggest, it is a typically a joint effort.

Since I am typically on the Software Vendor side, here is what I have seen in close quarters:

1. Consulting Managers typically are afraid to give bad news to client.

2. They keep harping on their own team of consultants to get it right (no matter who may be wrong and how hard the consultants try, they can't get it right because of other variables on the project).

3. After a certain point (go live is pushed 4 times, and if the Software Vendor is not making any money - typically fixed fee projects in today's world) - every one starts cutting corners - take knowledgeable resources to profit making projects, put newbies in.

4. Vendors stop proposing changes to the project - which may bring right functionality, because they know that client is not ready to pay for it and if they propose it, it may have to do it for free.

Chirag Sanghavi



Q: What were US logistics costs as a percent of GDP in 2014?

A: 8.3%, according to the 201t State of Logistics report from CSCMP. The 2016 report, with numbers for 2015, will be released next week.

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