Comment: Industry 4.0 is disrupting the supply chain for good

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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6 Ways Quality Can Strengthen Supply Chain Profitability

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

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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Clarkson University Delivers 17th Global Supply Chain Management Executive Seminar to Corporate Professionals

Earlier this month, Clarkson University’s Global Supply Chain Management (GSCM) program presented its 17th annual Executive Seminar, delivering state-of-the-art education to corporate professionals.

“We are pleased that our executive seminar continues to attract supply chain professionals from several highly respected global companies,” said Professor Farzad Mahmoodi, the Joel Goldschein ’57 Endowed Chair in Global Supply Chain Management and director of the program. “It’s a strong endorsement of the quality of our faculty and the relevance of our curriculum.”

The annual, four-day, on-campus program attracted participants from Amazon, Toyota, Stanley Black & Decker, Xerox, Lockheed Martin, Verizon, Corning, Raymond Corporation, Entegris, Par Technology and Indium.
The participants came to Clarkson from 12 states: California, Colorado, Connecticut, Illinois, Indiana, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York and Ohio.
In addition to lectures by faculty experts, the seminar utilized a highly interactive format that employs team and hands-on activities, including simulations and negotiations exercises. Participants also benefited from networking opportunities with industry professionals and Clarkson faculty.

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Global Supply Chains Are About to Get Better, Thanks to Blockchain

When an E.coli outbreak at Chipotle Mexican Grill outlets left 55 customers ill, in 2015, the news stories, shutdowns, and investigations shattered the restaurant chain’s reputation. Sales plummeted, and Chipotle’s share price dropped 42%, to a three-year low, where it has languished ever since.

At the heart of the Denver-based company’s crisis was the ever-present problem faced by companies that depend on multiple suppliers to deliver parts and ingredients: a lack of transparency and accountability across complex supply chains. Unable to monitor its suppliers in real time, Chipotle could neither prevent the contamination nor contain it in a targeted way after it was discovered.

Now, a slew of startups and corporations are exploring a radical solution to this problem: using a blockchain to transfer title and record permissions and activity logs so as to track the flow of goods and services between businesses and across borders.

With blockchain technology, the core system that underpins bitcoin, computers of separately owned entities follow a cryptographic protocol to constantly validate updates to a commonly shared ledger. A fundamental advantage of this distributed system, where no single company has control, is that it resolves problems of disclosure and accountability between individuals and institutions whose interests aren’t necessarily aligned. Mutually important data can be updated in real time, removing the need for laborious, error-prone reconciliation with each other’s internal records. It gives each member of the network far greater and timelier visibility of the total activity.

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Commentary: Managing risk in the global supply chain

The World Economic Forum defines global risk as an uncertain event that, if it occurs, can cause significant negative impact for several countries or industries within the next 10 years.
Global supply chains create both opportunity and risk. Some of the macro issues we face both in day-to-day operations and future planning include cybersecurity, terrorism, climate change, economic instability, and political discord.
More specific to executives who manage global supply chains, risk is more apparent, and on a micro-basis potentially more consequential in the short term, in areas such as but not limited to reducing spend, leveraging sourcing options, creating sustainability, political and currency instability, government regulations in the U.S. and abroad, trade compliance management, free trade agreements, energy costs, and what the incoming Trump administration will mean for global trade.
Since the recession in 2008-2009, we have witnessed a serious uptick in companies worldwide reviewing their operational exposure and then creating risk strategies in managing these vulnerabilities. Risk exposure can negatively impact margin, profits, growth strategies, operational stability and personnel maintenance.
For companies operating in global supply chains the risks are vast, convoluted and often unanticipated. As a result, we tend to be unprepared for the impacts.

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The Value of a Supply Chain Executive Education

Executive-level supply chain positions have gained both prominence and importance for today’s global companies, and to support this trend, universities, colleges, professional organizations, and training firms have enhanced their supply chain and logistics programs to help executives stay current on supply chain trends.

It wasn’t that long ago that supply chain managers worked mainly behind the scenes, stealthily orchestrating the movement of products from the raw material stage to manufacturing/production and right on through to the final delivery of the finished goods.

Typically occupied by employees who had successfully “worked their way up” through the company, these executive-level supply chain positions have over the last few years gained both prominence and importance for today’s global companies.

To support this trend, universities and colleges have enhanced their supply chain and logistics degree programs; organizations like APICS and the Institute for Supply Management (ISM) have expanded their certification programs; and training firms offer myriad options to help executives stay current on supply chain trends.

These executive education offerings provide executives with the opportunity to hone their skills, upgrade their technology acumen and better understand the inner workings of the modern-day supply chain.

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Why are global supply chains becoming more fragile?

General Motors recently recalled nearly 4.3 million vehicles with defective software. The bankruptcy of Hanjin Shipping, one of the world’s largest ocean carriers, left half a million containers with $14 billion worth of goods stranded at sea.

Fiat Chrysler recalled 1.9 million vehicles worldwide for possible airbag and seat belt failures. Samsung had to recall a million of its newly launched Galaxy Note 7 smartphones after some devices burst into flames. And in Europe, Volkswagen was forced to shut down production of nearly 10,000 vehicles after a supplier refused to deliver key components.

These examples all point to two worrying questions: are global supply chains becoming more fragile and if so, why?

The above Volkswagen example is a good place to start to find answers and begin to address this issue begins it soon becomes apparent this fragility is itself, the first signs of a major shift for global supply chains.

Inherent imbalances – from single company to ecosystem

The automotive industry has come a long way since Henry Ford’s Motor Company mke everything that went into its product in-house. Today, 75 percent of automotive parts are not designed or built by car manufactures themselves but by their suppliers.

That means that manufacturing a car is no longer the job of a single enterprise. It’s the job of a complex ecosystem of supply chain partners. And VW is no exception. Indeed, any manufacturer of a complex product such as a car, hi-tech consumer electronics or even clothing relies upon its ecosystem of suppliers far more than the manufacturer may realize.

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

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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Globalization Creates New Avenues for Supply Chain Risk: riskmethods Shares its Predictions for 2016

As part of our ongoing series on what procurement technology providers see as the biggest challenge for procurement in 2016, we recently spoke to riskmethods to hear its thoughts on the topic. Heiko Schwarz, riskmethods founder and managing director, pointed to increased external risks, globalization and regulation compliance as the main issues procurement and supply chain managers will have to tackle in the new year.

These three major trends will expose organizations to risks in 2016, Heiko said. External risk will continue to be an issue. For example, extreme weather such as rain or snow storms will expose and disrupt supply chains even more than in the past, he said. Political risks have been a growing trend for years, but will continue in 2016 as well, he added.

Globalization is also pushing enterprises to search for new suppliers in countries or regions they probably have not worked in before. Procurement’s scope in the last year has dramatically changed, going from a “domestic-centric” view to a more global one, Heiko said. Specifically, he believes we will see movement away from China as the cost of operating there continues to rise. China is no longer a low-cost sourcing country, and this is putting pressure on companies to move to new areas, places such as the northern regions of Africa, he said. This globalization push will put increase supply chain complexities in 2016.

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