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August 17, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet LLamasoft Aims for the Top of the Supply Chain Hill bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Supply Chain by Design bullet On Demand Videocasts



first thought


Supply Chain Graphic of the Week
Another Scary Picture of Rising Transportation Cost


Supplier Parts Deliveries in the Slow Lane

China Investing Big Time in Foreign Ports
US Retail Sales Looking Rosy
East and Gulf Coast Ports Agree on New Contract, which Bars Automation

Learn how a Digital Global Supply Chain can Reduce Risk and Establish a Solid Foundation for the Future


July 16, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!

Feature Story: Amazon Files Patent for Augmented Reality Putaway, Critics Again Erroneously Worry about Big Brother


Weekly On-Target Newsletter:
August 15, 2018 Edition

Cartoon, Parts Shortages, Reducing Transport Costs, Barcode v RFID, More


Using Multi-echelon Inventory Optimization to Achieve Measurable Operational Improvements

Why Business Leaders should think of AI as an Umbrella Term
by Dr. Michael Watson

Getting to S&OP Success
by Henry Canitz
Product Marketing & Business Development Director

BOPIS to the Rescue - Inventory Integrity
by Richard Wilhjelm
Vice President, Sales and Business Development
Compliance Networks



Why should you know the UniCo Manufacturing company?

Answer Found at the
Bottom of the Page

LLamasoft Aims for the Top of the Supply Chain Hill

If you are a large company, you probably know LLamasoft from its supply chain design solutions. LLamasoft dominates the market for such software.

It has its sights set on a lot more. That was the obvious takeaway from my recent trip up to Ann Arbor, MI and a briefing from key members of the Amazon team, including new CEO and friend Razat Gaurav, plus co-founder Toby Brzoznowksi, long-time public face of the company and former University of Michigan baseball player, where he was on the same team with several future major leaguers, including hall-of-famer Barry Larkin.

But let's take a step back. The company was founded in 2003 by Brzoznowski and now current chairman Don Hicks as a supply chain simulation company.


The LLamasoft position is that digitization starts by creating a digital twin of your supply chain, from which you can now get mathematical, optimized answers.


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It than added capabilities that since the concept developed in the mid-1970s are generally referred to as supply chain network design or network optimization.

Through a series of savvy moves and a dollop of good luck, LLamasoft has come to own that market. The smart choices included aggressively promoting the idea that it wasn't just about network design, which implies large scale analysis and sometimes daunting efforts to re-configure the supply chain network.

Instead, LLamasoft said, it's just "supply chain design," a new competency in the SCM discipline, involving a lot more focused analysis and improvements (what SKUs should be made in what plants/lines, what is the right port strategy, etc.). These decisions can drive real value, are a lot easier to implement than a full network redo, and solve every day problems.

LLamasoft also smartly focused on its product development with its core Supply Chain Guru product more so than competitors such as Insight and Caps Logistics, which were as much consulting as software. Not that LLamasoft doesn't offer consulting - the company's early focus on delivering success to customers was another key factor in its fast rise to dominance on the market.

It had a real competitor for a while in Dr. David Simchi-Levi's LogicTools, but - fortunately it turned out for LLamasoft - LogicTools was sold to ILOG which was then sold to IBM, where LogicTools got lost in the shuffle. IBM later decided to shed the LogicTools business - and sold it to LLamasoft.

That took care of one competitor. Then LLamasoft acquired part of Barloworld, which had a decent position for network design in Europe, giving LLamasoft an enhanced international presence. That means LLamasoft is about the only one left standing, "running away with this thing" as one competitor told me a few years ago.

If you go to its SummerCon user conference, the badges are like a who's who of the Fortune 500. It now has just under 800 global customers.

But LLamasoft is hardly standing pat, as I have noted before. It is actually somewhat difficult to separate supply chain design from supply chain strategy. So in the growing number of companies that are embracing supply chain design as a core competence, setting up teams and centers of excellence, LLamasoft is there as the key tool to optimize supply chain strategies. As a result, design - powered by optimization and analytics - and strategy become nearly one.

And even before Gaurav came on board, LLamasoft was moving to take advantage of that position in its customers. First, it developed off of the Supply Chain Guru platform a small suite of solutions that moved it into more tactical and even operational planning. That includes solutions for multi-echelon inventory optimization, transportation optimization and more recently Demand Guru - a demand planning tool positioned for use in long range forecasting but which can easily be used for traditional demand planning and S&OP support.

Starting last year and now formalized, LLamasoft is directly going after the supply chain planning market, but not as it originally envisioned when it acquired Barloworld. LLamasoft is not interested in building a new traditional planning suite, but rather seeks to enable better planning through an "app" development platform (App Studio) that provides customers a suite of tools and solvers to develop their own solutions for problems traditional planning systems aren't addressing, as evidenced by the side spreadsheet work the majority of companies still use.

LLamasoft customers had already been doing this for years on their own - the LLamasoft app platform formalizes that, making it far easier to develop apps versus starting from scratch with generic analytic environments and tools. Customers are using this platform to develop solutions ranging from a sophisticated supply-demand balancing tool at a major technology company that informs its S&OP process to dynamic daily truck routing at a major mass merchant to a form of available-to-promise capabilities at an industrial company.

The basic idea: keep your planning systems - just plug in these better answers into the existing process. But this is clearly a bit of a Trojan horse strategy here - after you build a number of these apps, with workflow tools, what is your strategic planning system really?

It should be noted that a fundamental change here is that it is only recently that a company could model its complete supply chain. I think it is usually more accurate to say there are a series of linked models rather than one galactic one, but the effect is the same in the end.

In an environment where there is much pressure to digitize the business and the supply chain, I find digitization is generally defined as a combination of technologies: 3D printing, analytics, sensors, etc.

There is also the notion of creating "digital twins" of products that electronically mirror a physical product's attributes and lifecycle. The LLamasoft position is that digitization starts by creating a digital twin of your supply chain, from which you can now get mathematical, optimized answers to a never-ending series of questions, opportunity analyses, and "what if" scenarios. To repeat from above, if LLamasoft customers increasingly think in this way, it puts the company in an incredibly strong position at those firms.

I want to mention a couple of other things: first, LLamasoft's Data Guru is a sophisticated tool for solving the long-time challenging for modeling efforts of getting good data into the system and maintaining that over time. It is very impressive, and saves much time and effort.

Second, LLamasoft is also releasing a data visualization tool - connected usually to data sources through Dara Guru - that provides a BI-type capability as a stand-alone solution, giving customers descriptive and diagnostic level analytics, versus the predictive and prescriptive levels you could say Supply Chain Guru has been delivering.

Now, a new strategy is on the way to an even stronger position. Brewing a bit before Gaurav's arrival but now accelerated, LLamasoft has developed a 5-level maturity model for supply chain design, ranging at the low end with one-off efforts to dedicated teams with repeatable processes and data maintenance. It's called the Design Competency Development (DECODE) methodology.

Users complete a survey instrument and follow up (at little or no charge) with LLamasoft consultants to nail down their current maturity - and to chart a path to greater maturity, getting at least to level 3, where the ROI from projects really take off.

By developing repeatable processes, formalizing data feeds for regular updates to support the model (e.g., supply chain costs), having the right team mix, etc., you can simply execute far more analyses over a given period, and give answers back to questions with far greater speed, in a virtuous cycle.

And guess what? The higher the level of maturity, the more a customer spends annually with LLamasoft, which moved to a subscription-only model a few years ago, as customers access additional applications, solvers, etc., each of which rings the register. The revenue bump is substantial - I know the numbers, but they were provided on a confidential basis.

LLamasoft continues to grow rapidly, expecting revenue a bit above $80 million in 2018 and north of $100 million in 2019. It has a very smart and difficult to challenge strategy, an aggressive new CEO, not much real competition in its core solution, and a very cool urban space in Ann Arbor that is almost maxed out. (I took the Ohio State sticker off my windshield for the trip.)

It will be a challenge to bring the along the consulting community it needs to fully execute the strategy; the app approach to planning is not a sure bet; and the visualization solution is in its very early stages. It's also not quite clear how far down into organizations outside the global 2000 the company can penetrate.

But the main approach of expanding use of its tools with existing customers and moving from that strategic place in the supply chain to solve other problems and opportunities further down looks formidable indeed.

Any reaction Gilmore's take on LLamasoft? What do you think of the company's strategy? Let us know your thoughts at the Feedback button below.



On Demand Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Now Available On Demand

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand


We are way behind on Feedback. Catching up on some email here.

Feedback on a New Way to Think about Gartner and the Top Supply Chains:


Excellent article, thank you for your analysis. Whenever I see a comparison or rankings of this nature it makes me think, who's raising the question (who cares) and why?


Beyond obvious bragging rights does an analysis of this nature equate to a higher stock price? Do underwriters give more favorable rates or increase the scope of coverage? Does the CEO use the analysis as a way to communicate to shareholders that the organization is achieving a greater return on invested capital? Or for a Risk Manager does it mean that the higher ranking organizations will be able to better manage (or exploit) "black swan" events?


If we move away from the operational performance metrics, does a higher ranking equate to greater difficulty for disrupters or new entrants to enter the market? Does the ranking equate to greater financial leverage over suppliers or the customer (a greater willingness to pay)? Does the ranking reflect overall speed of execution in the market, i.e. not just inventory turns but an ability to exploit an opportunity?

Dan, I think your article brought to light the elephant in the room and a question many think but don't ask. As a former Gartner Research Director I am very aware of "the process" and the purpose for these studies. Gartner's value is it's directional research. They are also in the marketing business and must create hype, community and competition. Studies (and conferences, research notes, special research projects) do exactly that! This is about the benefit to Gartner and their ability to drive business.

Of course, they are not alone and I don't mean to infer that they act alone. Bottom line: until the "who asking the question" and "why" are the motivated to address such a question, then studies of this nature are limited to entertainment value.

Gary S. Lynch
CEO and Founder
The Risk Project, LLC

Feedback on Home Depot and the Arc of Supply Chains:




Excellent story. For supply chain to be a competitive advantage, dynamic operating model approach is a must. You got to pro-actively understand (I mean, really understand...) your customers and shape the operations/supplychain to provide a personalised, meaningful and profitable customer experience... Little bit of tinkering here and there just doesn't cut it.


You can sweat your assets only so much. If the alignment is fundamentally flawed, you will only create stress... And on a different angle, endless personalisation won't get you far.


Vikram K Singla

Feedback on Gartner Conference:




Picking up on your report on what Anthony Bourke was saying and your comment reminded me of a 30 minute meeting I started holding with my logistics team every Friday just before lunch. I asked each one to select something that had gone right that week and to flag up one that had gone wrong. I then asked them to report on one concern about what might go wrong the following week.


It certainly concentrated minds and after a relatively short while brought through a great deal more collaboration and made a major contribution to improved customer service and cost control.

David MacLeod
Learn Logistics Limited


An excellent round up of the proceedings. I particularly liked the way you covered Fareed Zakaria's observations on the threats of increasing digitization. It was great reading through your summary. Thanks indeed.





Q: Why should you know the UniCo Manufacturing company?

A: It was the fictional firm at which Alex Rogo, star of Dr. Eli Goldratt's seminal novel The Goal, was plant manager.

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