Category Archives: Performance Management

Comment: Industry 4.0 is disrupting the supply chain for good

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The impact of Industry 4.0 could easily be identified as a threat and a disruptor to the traditional supply chain. The truth is that, when deployed correctly, this dynamic combination is the antidote to supply chain disruption.

In 2016, global supply chains were impacted by a series of unfortunate natural disasters including earthquakes and typhoons that ravaged nations throughout Asia. In 2015, analysis by insurance firm Allianz Global Corporate and Specialty found that between 2010 and 2014, the top five causes of business interruption loss globally were fires and explosions, storms, machinery breakdowns, faulty equipment or materials, and workforce strikes.

Current events that are continually unfolding must also be considered, such as the economic nationalism propelled by the election of Donald Trump and the UK’s impending exit from the European Union. However, there are less dramatic situations that can cause supply chain disruption on a more frequent basis – small acts than have a large impact, such as human error causing delays on the production line. This creates an obvious knock-on effect that directly impacts the rest of the supply chain.

It is clear that the supply chain is vulnerable to disruption. The traditional supply chain ecosystem is built around a rigid process that does not provide supply chain organisations with the flexibility to adjust to disruptions that will impact the bottom line, or the opportunity to predict or prepare for those disruptions.

The traditional process is typically governed by inaccurate analysis of the market that dictates supply chain operations in order to meet the predicted sales. A digitised reinvention of the supply chain will replace this inaccurate, siloed process with a flexible and agile solution that utilises data to severely diminish the impact of disruption.

Industry of Things

The moniker Industry 4.0 represents the fourth industrial revolution which in turn refers to the rise of data exchange and automation in manufacturing technologies. ‘Internet of Things’ (IoT) is a similar term that supports the same notion of the world becoming more connected and is widely used to describe connected devices used in both industrial and domestic environments. In theory, connected devices, whether in a factory or in the home, bring all of these environments together to create one interconnected eco-system.

Disseminating the data

From the shop floor to the factory floor, each connected device provides important data that can be fed into the digitised supply chain. To be of true value, this data must be tracked and visualised. Visibility is a key area of focus in leveraging data in the evolution of Industry 4.0, and it’s equally as important in the supply chain. Once the data is feeding into the supply chain and clearly visualised, the organisation can begin to think about disruptions before they occur. This can be achieved by manipulating the data in three key areas; supply chain design, event simulation and decision support.

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The secret to making customers care about supply chain

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Imagine a world where customers care about how products are sourced, made, and delivered, understand what goes into pricing, and generally take great joy in the experience. A world where customers are fluent in the language of supply chain.

It’s not as farfetched as you may think.

Supply chains solve complex problems. And in the company of supply chain professionals, we use big words and complicated terms to talk about it. Words like multi-modal logistics and global transportation, mass-customisation and postponement, procurement and letters of credit, demand management, the cost of inventory and buffer stock, assurance of supply, warehousing, and the last mile.

We nitpick over the differences between distribution and fulfilment centres, debate the true definition of supply chain visibility and the role of control towers to support orchestration across a complex network of suppliers, trading partners, and carriers. And we’re still not sure if our industries are facing an apocalypse or simply working through the growing pains of transformation in the digital age.

It’s a mouthful. And as we dive into the technical details and jargon that comprise the modern language of supply chain, one can’t help but picture the average consumer’s eyes glazing over.

But that’s not necessarily the case. There’s mounting evidence people care more about supply chain than ever – they’re just not using our words for it.

Therein lies the secret.

The words used to describe supply chain were different at the recent Shoptalk Europe conference in Copenhagen, Denmark, a gathering of more than 2,500 retailers, start-ups, technologists, and investors all focused on the worlds of retail, fashion, and ecommerce. Though most attendees weren’t purely in the business of operations and supply chain, all were exploring how to reach, engage, and enlighten the customer wherever and whenever they might choose to shop.

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6 Ways Quality Can Strengthen Supply Chain Profitability

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To thrive in today’s competitive global business environment, manufacturers must have a top-to-bottom quality-oriented approach that infuses innovative thinking into every part of the supply chain in order to deliver world-class performance through products, processes and people.

Some promising news, according to a recently published report by Forbes Insights and ASQ, is that senior executives and quality professionals see a direct connection between the success of their continuous improvement initiatives and the success of their organizations as a whole.

The Forbes Insights/ASQ research surveyed 1,869 executives and quality professionals from around the world and focused on the links between quality efforts and corporate performance, as well as the evolving business value of quality and its relationship to the supply chain. Thirty-six percent of enterprises surveyed said that they regard themselves as an established quality organization, while 39% reported that they are still developing their quality programs and 25% said they are struggling to implement quality in their companies.

For those organizations that do have established quality programs, more than half say their initiatives already encompass a range of key corporate functions, including operations and supply chain management.

This focus on quality for the supply chain is especially crucial when one recognizes that supply chain management is often motivated to achieve the least cost when identifying and qualifying new suppliers. Supply chain leaders are often rewarded for these cost-savings. But then extra costs are incurred once the final product is manufactured and delivered and it is discovered that reworks are required due to the focus on price and not quality.

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Trax Expands Leadership Team With CRO Hire

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Trax Technologies, a global innovator specializing in harnessing logistics data and insights to improve supply chain performance, announced today the company has expanded its’ leadership team with the appointment of Christopher Rajiah as the Chief Revenue Officer. Rajiah is responsible for setting and executing the company’s go-to-market strategy in order to scale the organization and solidify its position as the market leader for freight audit & payment and supply chain data management.

The executive appointment follows the additions of Elizabeth Hart as CAO and Benjamin Morens as COO in 2016. The expansion of the leadership team comes as Trax Technologies experiences significant product adoption as it transforms the freight audit and payment process to improve supply chain performance. Trax provides freight audit and payment services as a cornerstone of its cloud-based logistics performance management solution combining leading controls, supply chain data management, financial classification, and business analytics to deliver accurate, meaningful and actionable intelligence to its global customers.

“Chris’s extensive experience in successfully driving and executing global sales initiatives and growing strategic partnerships will be incredibly valuable as we continue to innovate, develop new capabilities, and extend Trax’s industry leadership,” said Don Baptiste, Trax Technologies CEO. “I’m excited to have him on our team.”

Rajiah joins from Equinix, where he served as VP of Worldwide Channel Partners and Alliances. Prior to Equinix, Chris was SVP Sales & Marketing at ViaWest, as well as the Vice President of Worldwide Partner Sales at Rackspace Hosting. Chris also spent 9 years at Extreme Networks, where he started his career, and, eventually, led their North American channel and worldwide strategic alliance teams.

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2017 Parcel Express Roundtable: Paying for peak performance

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It can be hard to believe that very much happens in a year, but that theory is put to the test when it comes to the parcel express market.

In fact, over the past 12 months we’ve seen major changes in pricing from the parcel duopoly of FedEx and UPS; the accelerated emergence of regional parcel players; and don’t forget we’re all watching the increasing power and reach of e-commerce giant Amazon as it grows its own delivery capabilities globally.

These developments require parcel shippers to do whatever it takes to stay on top of their parcel game from both a financial and operational perspective. To help them along, Logistics Management has gathered Jerry Hempstead, president of Hempstead Consulting, a parcel advisory firm; David Ross, transportation and logistics director at investment firm Stifel; and Rob Martinez, president and CEO at Shipware, an audit and parcel consulting services company.

Over the next few pages, our experts offer their insight into what’s driving parcel market trends and offers some practical advice for how shippers need to re-adjust to ever-changing market conditions.

Logistics Management (LM): How would you describe today’s parcel marketplace?

Jerry Hempstead: All of the parcel carriers are doing well in volume and earnings—even the USPS is making money if you back out the Congressional mandates. And it’s clear that e-commerce is driving the volumes. To top it off, service levels this year are at record levels and are predictable and consistent.

My observation is that there’s no statistical difference between the service performance offered by FedEx and UPS across a year’s worth of activity, although FedEx offers a faster delivery on ground to about 25% more city pairs than UPS. This pressure on speeding up the promise and refining the networks to make the magic happen will only improve the consumer experience in parcel services.

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The Future Of Performance Management Is Not One-Size-Fits-All

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In 2013, CEB research found that 86% of organizations had recently made significant changes to their performance management system, or were planning to. In 2014, a Deloitte survey found that 58% percent of companies surveyed did not think performance management was an effective use of time, and many media outlets jumped on the opportunity to air their grievances.

Finally, the rising wave of discontent seemed to crash in 2015, as a slew of large organizations like GE, Accenture, Netflix, and Adobe all scrapped their age-old annual performance management processes in favor of more continuous feedback systems. And many others followed suit.

But, was it the right move for everyone?

Last summer, I wrote an article on this topic myself, urging business leaders to really consider the implications of following these organizations. The issue, in my opinion, is not that these organizations did something wrong. Rather, the risk is that many leaders misinterpreted these stories to mean that they should abandon performance management altogether.

One thing is clear: the future of performance management in the American workplace is still very much in question.

For more insight into this important topic, I recently sat down with a handful of thought leaders in the performance management space, including Rob Ollander-Krane, Senior Director of Organizational Performance Effectiveness at Gap, Inc., Nigel Adams, Global Chief Talent Officer at Razorfish Global, and Amy Herrbold, Senior Director of Organizational Development at Kellogg. Together, we discussed the future of performance management to understand, from their perspective, why changes to this process are long overdue.

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Accelerating Corporate Performance Management – Partnering Finance & Supply Chain

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Corporate Performance Management (CPM) activities time-consuming and labour-intensive, usually because they rely on spreadsheets, old data and outdated manual processes. With financial controls growing increasingly tighter, CPM must be performed effectively. Recently there has been talk of needing Finance and Supply Chain integration to achieve increased corporate performance with them now being key business partners.

The Corporate Performance Management Summit will take place on January 27 & 28, in Miami. Over the two days, the summit will gather over 120+ Finance & Supply Chain professionals to discuss the challenges related to internal performance management and external decision-making. There will be 25+ industry expert keynote speakers, interactive workshops with industry pioneers and over 8 hours of networking opportunities to take advantage of.

Ever considered how to execute performance management initiatives? How to manage external factors in performance management? Or even the role of the CFO in corporate strategy? The summit will explore hot topics such as these, as well as explicitly covering how CFOs can drive strategic performance through acquisitions and harness data to drive decision making. A key component to this summit will also be face-to-face communication and the opportunity to learn from your peers in a truly open environment. ‘The creation of a thought-sharing and interactive setting was always a key aspect for me when creating this summit,’ said Aaron Fraser, International Events Director. ‘I wanted to cultivate a forum for cross-pollination of ideas and advice for those involved in corporate performance management”.

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How visibility can drive supply chain performance

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How visibility can drive supply chain performance

At its heart, supply chain management requires a balancing of operational efficiency, customer satisfaction and quality. Managing the true cost to serve each and every order is the aspiration to allow better negotiation and value creation across the supply chain. Customer and consumer centricity helps anticipate product and service requirements. But supply chains are becoming more extended and complex with a consequent increase in risk and the need for resilience. There are multiple data sources making it difficult to manage and measure end-to-end processes and metrics. Aligning priorities through integrated planning remains pivotal but there is an explosion of data available that needs to be incorporated and the value extracted to understand how supply-demand issues impact profit and revenue targets.

Organisations are looking to enable better and more consistent decision-making across complex processes with diverse systems and data. Many are leveraging business intelligence (BI) platforms to give them the capability to make decisions across the organisation, including environments where mobility and access to decision-critical information on the go is crucial. Putting the information in the hands of the people on the front line – those managing supply chain processes – is key to enabling decision making at the point of decision. But this requires synchronising an enormous amount of data that comes from many systems and sources in a way that it can be easily consumed by people who need to act on the insights.

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Supply Chain Impact on Shareholder Value: A Performance Paradigm?

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If you ask a supply chain leader how they impact their company’s performance, the response is almost muscle memory, ‘reduce cost and inventory while improving service.’ If you ask the same leader how they impact shareholder value, there is often a long pause.

To shed some light on the subject, the APICS Supply Chain Council conducted a live poll during its jointly hosted Best of the Best S&OP Conference in June. Two poll questions were developed to examine attendee perception regarding shareholder value. Almost two-thirds of the respondents reported that they had some form of supply chain scorecard. Conversely, only three-percent reported that they linked supply chain performance to shareholder metrics.

This dialogue with supply chain leaders has sparked a number of research questions, especially in light of the fact that supply chain executives share a seat in the C-suite, including:

1. What are the key shareholder metrics that matter?

For a publicly traded company the ultimate measure is earnings per share or stock price. For privately held companies, the focus tends to be on the attributes that relate to earnings per share: growth, profit, and return.

2. What are the supply chain performance levers that intentionally add to shareholder value?

The Growth attribute is the conundrum that keeps supply chain leaders up at night. Traditionally, the assumption was that great service level, including both lead-time and reliability, didn’t lose sales and potentially helped grow share of customer’s ‘shelf space’ by having predictable availability.

3. How does that affect your supply chain strategy?

The correlation between supply chain excellence and earnings per share certainly is intuitive, but there is data to suggest that even the best supply chain companies still are not maximizing potential shareholder value.

Read more at Supply Chain Impact on Shareholder Value: A Performance Paradigm?

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External Insights Critical to Effective Supply Chain Performance

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Traditional forecasting models that leverage historical data to predict future performance are the tools used by most supply chain executives to plan critical functions, yet these predictions are frequently inaccurate. In fact, research from KPMG International, in cooperation with the Economist Intelligence Unit, shows that most quarterly forecasts are off by 13 percent—meaning that supply chain managers are basing their decisions for ordering materials and scheduling distribution on erroneous projections. The result can mean surpluses or shortages, potentially costing companies millions either way.

There is a better way to anticipate supply chain demands—one that can vastly improve projections, and decrease the discrepancies between forecasting and reality, therefore helping supply chain executives perform their jobs more effectively. Few companies take into account macroeconomic factors, global manufacturing activity, consumer behavior, online traffic, weather data, etc. when making business projections. Yet companies that do identify leading performance indicators using such external data earn more than a 5 percent higher return on equity than those that use only internal metrics. Leveraging external factors, in addition to internal performance measures, is proven to result in more accurate, effective forecasts. Not to mention that improving forecast accuracy can represent huge bottom-line benefits. For a billion dollar manufacturing company, for example, improving forecast accuracy and overall return on equity even 1 percent can equal a $3 million increase in net income.

Forecasting accuracy, improved through external factors, benefits multiple business functions—from financial operations (shareholder value) to human resources (adequate staffing) to marketing (product innovation)—but is especially impactful on the supply chain management function.

Improves Inventory Management

Improved forecast accuracy using external drivers equates to reduced inventory management costs, ultimately improving bottom-line profit. By accounting for external factors, companies can see a 10 to 15 percent improvement in forecast accuracy, significantly decreasing the cost of excess inventory. By ordering raw materials based on correct projections, supply chain managers no longer have to worry about discounts necessary to move excess inventory or the cost of warehousing excess materials because they are ordering accurately from the start.

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