Developing supply chain excellence

John G. Jazwiec joined RedPrairie in January 2002 as Company Leader. Jazwiec has extensive executive management experience and an outstanding track record of success in leading software and technology companies to high levels of growth, market leadership and customer satisfaction. During his tenure at RedPrairie, the company has more than tripled in size and has enjoyed record financial results.

Chris Heim's visionary leadership and focused strategy have led HighJump Software to gain strong momentum within the supply chain execution industry since his 1997 appointment as President. In 2004, Heim led HighJump Software to its acquisition by 3M, a move that brought the company into an exciting new era of financial viability and accelerated product development.

Lora Cecere, Research Director at AMR Research, has a wealth of experience in the software industry and provides vendor research and analysis in supply chain planning, execution and event management to AMR Research clients. She also has experience in distribution, engineering project management, new product launch and manufacturing operations for companies including Procter and Gamble and Kraft.

In today’s competitive landscape, collecting information is not enough; the best companies are putting that information to use across their organization in innovative ways. How are companies using information technology to the benefit of the supply chain?

JG. It is a common pitfall for companies to collect vast amounts of information and then suffer from information overload. However, forward thinking companies are strategically using business intelligence tools to determine the information and metrics critical to their supply chain success, and to then monitor those processes across the end-to-end (E2E) supply chain. Visibility and event management tools allow for real-time performance monitoring across the supply chain network. Companies may also set up alerts to signal exceptions within their integrated supply chain execution systems. For many companies, RFID tag information will also increasingly be used to track large, expensive corporate assets, to capture data at the pallet and case level, and to signal replenishment at the store shelf.

RedPrairie's supply chain business intelligence tool, Decision Data on Demand (3D), visually integrates real-time analytics, predictive event management, and traditional reporting into a framework that can be personalized to an individual user's requirements. Ease of use and the ability to integrate with other systems should be primary considerations when evaluating BI applications. Finally, service-oriented architecture (SOA) enables companies to leverage a flexible technology platform for ease of integration and long-term adaptability.

LC. We are seeing a change in how companies are using technology to improve the supply chain. There is a movement from transactional processing to marketing opportunities with relationships and creating more effective upstream and downstream networks. In the case of the supply chain, what this means is not just looking at enterprise systems or demand or supply matching, but looking at the importance of customers and how the supply chain enables this opportunity.

CH. Today’s companies are using information technology to achieve a wide range of benefits, from reducing labor costs to consistently meeting customer expectations. Visibility of critical operational data throughout the supply chain is integral to making this happen. A full suite of truly integrated applications on one platform supports the unencumbered flow of supply chain information throughout a worldwide network of suppliers, manufacturers, distributors and transportation companies. Real-time information sharing also supports lean execution as operations can be driven by demand signals and not guesswork. In addition, product traceability, critical for many regulated industries, is easily accomplished through linked systems.

‘Agility’ is a key business buzzword at present. In what ways can the implementation of an effective supply chain execution solution enable companies to achieve greater agility?

LC. Agility means having access to timely information, and we see the leading companies as having a very active supply and demand visibility system, much like those we see in constantly changing systems such as the weather or online information about train or rail capabilities. For example, when I was starting up I always had to watch the news to find out what the weather would be; now I can go online and access it anytime. We see the same thing happening in the supply chain – demand becomes not just a monthly forecast but daily and hourly information, and it references the importance of the customer and the importance of orders to that relationship.

JG. Consumers demand customization, choices, and on-time, accurate orders – today. The right solutions mix can provide the agility and flexibility needed to compete in today's fast-paced, consumer-driven environment. When store operations are linked to manufacturing, labor and distribution, consumer purchases can act as the trigger for inventory replenishment back through the chain to the supplier. This creates a more efficient, agile, consumer-driven system in comparison to the traditional ‘push’ model.

RedPrairie has created a standard graphical user interface with thin client screens to provide customers improved efficiency and agility in training, information sharing and monitoring across processes throughout the E2E network. Companies should also consider applications that are built upon a flexible SOA that enable configurable workflows and ease of integration.

Every customer has specific nuances on how material flows through their supply chain network, so it is critical to have a supply chain solution that is quick and flexible enough to respond to the dynamics of consumer-driven demand. An effective supply chain solution with highly configurable workflows allows companies to be agile and to make process changes as quickly as they present themselves. An end-to-end supply chain solution can more quickly react to supply chain constraints and/or hiccups in the material flows of goods because it integrates processes from the point of manufacturing to the point of consumer delivery.

CH. Agility means being able to respond quickly and without a lot of cost when new business demands arise. Over the years, seeing hundreds of implementations, we have seen that no two supply chains are alike. Because of this, organizations can achieve their true potential only when they have the tools to adapt operations easily, quickly and cost-effectively to their unique business processes and to respond to new requirements and opportunities.

Adaptable supply chain solutions make this possible with an architecture that flexes with each customer’s changing needs, thereby creating a culture of change. This self-sufficiency enables rapid growth and the ability to implement cutting-edge processes and business models that the customer might not even have considered with other systems.

Customers, not suppliers, are increasingly driving the processes that support the design, planning, manufacturing and delivery of products. Does this mean we are shifting away from the traditional idea of a supply chain to more of a demand-driven network? What implications does this have for those looking to develop an effective execution strategy?

CH. Today’s supply chains require linkages between many related nodes, including manufacturing, suppliers, warehousing, transportation, etc. Because of this, a demand-driven network must be a supply chain-wide effort to be successful. Once distribution systems are integrated with the manufacturing and supplier communities, demand signals can be communicated in real time to manufacturers and suppliers, who can replenish based on these true demand signals. Supply managers no longer need to predict future demand. Instead, manufacturers and suppliers can gain visibility to actual consumption signals and trigger their supply responses in coordination with end-customer demand.

We have been helping customers establish operations that respond to demand signals from their own customers by implementing solutions that enable real-time information related to customer demand patterns to flow back into distribution, production, and to the suppliers. Additionally, these platforms provide remote inventory management tools to support inventory at the customer location, using methodologies such as vendor-managed inventory (VMI) and scan-based trading.

JG. Consumers are absolutely driving the supply chain processes, which is causing a shift away from manufacturing-centric inventory models toward a focus on demand-driven models. This phenomenon is exactly why RedPrairie has embraced an E2E vision for the consumer-driven supply chain. E2E is a new way to think about how you can begin to service your customer’s customer and synchronize with your supplier’s supplier, and it is RedPrairie’s answer to the consumer-driven supply chain challenges our customers face. Every industry is being challenged with increasingly complex multi-channel demands, especially from the end consumer of their products. The future of effective supply chain management is in the hands of the companies that recognize the need to respond to create perfect, customized, and timely orders driven by the consumer. Rather than focus on simply optimizing processes within the warehouse and the narrow scope of the producer-driven fulfillment model, RedPrairie’s services and solutions will address the end-to-end network holistically, to provide a degree of integration, optimization, value, and return to our customers never reachable in the past.

LC. In terms of developing an effective execution strategy, first it is important to sit back and be clear on the goals. There are many different projects that a company can do, but first they need to decide how much they should bite off and how the projects tie together against the master plan in terms of improving competitiveness. There is no one cookie-cutter approach that helps all companies. So, be very clear on the goal and look at the supply chain as an enabler of system strategy. If the company’s business strategy is to be the lowest cost, then really focus the project on cost efficiency. If the company’s strategy is building powerful brands then look at how the supply chain enables that. Also, look at the supply chain not just in terms of execution of orders but really executing market opportunities.

Finally, are there any supply chain management trends or developments you are currently getting excited about? How will these influence business operations over the coming 12-18 months?

LC. We are moving away from the systems that are designed to match product demand with availability to systems that look at downstream relationships and market opportunities and look at the creation of visibility. As we do this, we are seeing the development of composite applications that combine the tools and technologies of customer relationship management with higher relationship management and supply chain management. The building of networks allows the workflows to go from downstream channels up to higher relationships. This enables a more agile response and to be able to not only design the supply chain but to facilitate the execution.

JG. We continuously look for ways to help customers become the most dominant forces in their category. I mentioned configurable workflows and the way they allow our customers to react to change. We are also actively engaged in integrating all aspects of the supply chain from supplier to consumer. RedPrairie is developing new applications that optimize inventory rationalization across a network of facilities, order sourcing, and the allocation of future demand against future receipts. Revolutionary thinking has been the cornerstone of RedPrairie’s success and it has helped us become the world’s fastest growing supply chain company. We have always foreseen technology needs in the market and have risen to meet them well before they become customer concerns.

CH. Collaboration is becoming increasingly important in supply chain management. Companies are focusing more and more on intelligent linking of supply chain operations, hooking up management of the warehouse with that of the yard, the manufacturing facility, as well as the transportation and labor surrounding these activities. The companies that will see the most success don’t try to boil the ocean with huge applications designed to do everything. Instead, they are using flexible, tailored applications to link pieces of the supply chain where it makes sense for a particular vertical or customer.

Lifecycle issues

Lifecycle issues are increasingly critical in managing the supply chain, whether forecasting demand for new products or managing inventory as a product ramps down toward end-of-life. But why is it critical that supply chain solutions take account of lifecycle issues? “One reason lifecycle issues must be taken into account with a supply chain management solution is to properly profile items within the facility,” says RedPrairie’s John G. Jazwiec. “Proper placement of fast/slow moving goods has a direct impact on worker productivity and facility throughput. Another reason is to properly position inventory across your supply chain network, by looking at item forecast/demand and determining how much inventory is needed at a specific facility.”

Growing pains

The supply chain execution market is expected to reach $6.6 billion by 2010. AMR’s Lora Cecere provides an insight into the factors that are driving this growth.

“There are really three things,” she says. “The first is a move away from an enterprise focus to looking at extended relationships. The average company not only has 20 manufacturing sites, but they typically have 38 contract manufacturing relationships and each of these has suppliers that interact with them and require logistics. The movement from enterprise to channel relationship has seen a lot of change.

“Second, as we become global we have to rethink our processes so that we can plan globally and execute locally because we need to be effective in all regions of the world. We need agility along with nimble and flexible systems to allow us to do that.

“Finally, the speed of information as they connect these processes is more critical – we can no longer wait for information when we have the speed and opportunity now.”