Tag Archives: Inventory

The Role of Business Intelligence in the Supply Chain

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Supply Chain BI Dashboard - Warehouse Order Performance

Supply Chain BI Dashboard – Warehouse Order Performance

Business intelligence enhances supply chain management by making real-time data analytics accessible. Self-service BI takes this a step further by allowing users to run their own queries and create their own reports, even if they don’t have a background in statistical analysis.

Here, we’ll discuss how BI can provide real-time insights into supply chain emerging risks, inefficiencies, and anomalies, allowing organizations to quickly isolate and resolve potential problems.

Supply Chain Disruptions

We saw unprecedented disruption to supply chains in 2020 that caused problems for companies and consumers. The Federal Reserve reports continued supply chain and logistics disruptions in 2021 are emerging at the same time demand is increasing.

For companies struggling to manage supply chains, it’s a significant issue. Supply chains represent as much as half of the value of a company’s products or services.

Failing to manage the supply chain efficiently, leads to ongoing problems, including:

  1. Less resilient to market changes
  2. Less efficient
  3. Decreased inventory
  4. Inability to meet demand
  5. Decreased financial performance

Managing the Supply Chain with Embedded BI

Embedded BI integrates business intelligence reporting tools into everyday apps. Embedded business intelligence tools provide ad hoc reporting, interactive dashboards, scheduling, and distribution tools within your custom apps.

When you embed business intelligence tools into your decision chain, it provides quick access to the insights team members need. Potential supply chain problems can be spotted in real-time for faster resolution.

Visualizing Demand and Inventory

Data visualization makes it easier to manage inventory by providing a visual reference for current inventory levels and pending orders. This makes it easier to forecast inventory needs and set reorder points.

Visualizing Distribution

You can also visualize the movement of goods and material through your supply chain into your inventory and out the door to customers. By monitoring order status, you can also see potential disruptions in your supply chain or your processes.

Read more at The Role of Business Intelligence in the Supply Chain.

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The changing role of the CFO in a post-Covid-19 world

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The changing role of the CFO in a post-Covid-19 world

The changing role of the CFO in a post-Covid-19 world

Pre-Covid-19, CFOs primarily focused on reporting historical financial performance. But today, with rising logistics costs, supply chain bottlenecks, escalating input costs, and the uncertainty of sales, developing a forward-looking perspective is a must, write Chee Wee Teo, Huan Gao and Adam Mokhtee from Alvarez & Marsal.

In the months and years ahead, the CFO role must significantly evolve to keep up with the ever-changing Covid-19 environment. To be successful in the role, CFOs need to apply predictive thinking, adopt a greater strategic view, and increase their focus on forward risk assessment and contingency planning.

Develop a forward-looking perspective

Traditionally, finance teams spent 80% of their time on reporting results and 20% of their time on forecasting. In a Covid and post-Covid world, that ratio needs to shift toward a forward-looking approach that will better prepare companies to respond to unexpected events.

With this new approach, the CFO’s conversations with the CEO and the board will center on what could happen in the future. For the CFO who is accustomed to relying on historical data, this may be an uncomfortable transition, but it’s vital for the changing role of the effective CFO.

Digitize the finance function

Although digitizing processes has always been necessary for efficiency, the digitization offorecasting has become especially crucial. Leveraging digitization for predictive analytics can help anticipate challenges ahead and allow companies to stress test their business plans.

In some companies, the CFO manages the finance team while the Chief Digital Officer leads the data analytics effort. We strongly encourage the finance function to collaborate with data analytics so that the CFO can develop a predictive, forward-looking view of where the business can go.

The following should be digitization focus areas:

Customer focus:

Build a profile of key customers, their cadence in ordering products, consumption pattern and liquidity situation.

Production and inventory management:

Establish a robust production system (that captures the right production costs) all the way through to an effective sales fulfillment (that delivers the right product to customers at the right time witminimal production waste and inventory leftover). These interdependent processes are typically filled with manual touchpoints and subject to human judgement. This can be significantly augmented with digital tools to drive optimization.

Read more at The changing role of the CFO in a post-Covid-19 world

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Inventory Management: We Can Do Better

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Inventory Management: We Can Do Better

Inventory Management: We Can Do Better

Each day through the COVID-19 pandemic, I tune into Anthony Cuomo’s (governor of New York) daily briefings. It is my break in the day. As a multi-tasker, when Governor Cuomo broadcasts, I use the time to work out on my rowing machine.

His opening line is, “Let’s start with facts. While we all have opinions, let’s start by reviewing the facts.” When he says this, I smile and row harder. I wish that all discussions could start with the facts.

Reflection

In my day-to-day work in supply chain management, I find more encounter more opinions than facts. …most discussions are fueled by over-zealous and self-serving marketing programs. Strong opinions and egos (mostly male) abound… For over two decades, I obediently tapped my foot to technology leaders’ glibly spouting opinions. I seek facts, but I find that they are few and far between.

The lack of fact-based discovery makes me itch…

A Story

Last week on my Network of Networks call, a proud technology salesperson, let’s call him Jim, announced, “I am speaking at Logimed next week on the impact of Just-in-Time (JIT) on the COVID-19 response. Downsizing inventories over the past decade crippled the response.” As I heard Jim speak, I twisted in my seat unsure what to say.

I struggle when I hear opinions that don’t align with facts. So, let’s start with the data. (Yes, am that geeky kind-of-gal that likes to ground discussions in data.) In Table 1, I share research collected for the Supply Chains to Admire analysis on the average days of inventory by industry across the period of 2004 to 2019 by increments to match economic shifts. The period of 2007-2008 was the downturn of the recession while the period of 2009-2013 marked the recovery. (The source of this data is a syndicated data provider of public reporting termed “Y-Charts.”)

So when we start with the facts, it is clear that every industry peer group increased the days of inventory. In addition, each peer group is markedly different. So, why have we not reduced inventory?

Now I will share my opinion.

  1. Complexity. Supply chain leaders in the beverage and household products industries struggled to manage complexity.
  2. Supply Chain Leadership. With average operating margins of 20-22%, medical device and pharmaceutical companies are supply chain laggards.
  3. Supply Management. Industries like automotive pushed cost and waste backward in the supply chain.
  4. Network Design. Only 9% of companies actively design the supply chain with a focus on buffer design.
  5. Factory Scheduling. With the evolution of the advanced planning market and the growth of the market share of ERP expansionist companies, solution capabilities in factory scheduling weakened.
  6. Executive Understanding. Many executives do not understand the form and function of inventory and the need for inventory buffers.
  7. Balance in S&OP. While 82% of companies have an S&OP process, less than 50% of company processes are balanced and only 1/3 of companies actively run “what-if” scenarios.

Read more at Inventory Management: We Can Do Better

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Resilience is the New Name of the Game in Supply Chain

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Resilience is the New Name of the Game in Supply Chain

Resilience is the New Name of the Game in Supply Chain

For the majority of Supply Chain’s history, this evolution has been driven by a knack for finding efficiency. Companies have leveraged digital tools, and evolving skills, to collect vast data about product or raw materials sourcing, transportation, logistics, and manufacturing. They’ve hired strategic Supply Chain professionals who can turn this data into actionable intelligence, and redesign the supplier, production, and transportation network to get products to market quicker and cheaper. They use advanced ERP software and S&OP strategy to match supply with demand, and turn over inventory faster and faster. “Just-in-time” production has become a hallmark of today’s Supply Chains.

Case in point: research firm Gartner includes the speed of inventory turns as a key metric in its annual Top 25 List recognizing companies for their excellence in Supply Chain.

Now, the top Supply Chain professionals are those who can find those efficiencies, while providing a strong customer experience that safeguards the company’s brand. It’s been a long evolution, and it’s made the field more ascendant within companies than it’s ever been, with a bigger seat at the C-suite table. Risk mitigation, innovation through supplier collaboration, and increased sustainability have also driven Supply Chain’s strategic value – but they’ve taken a back seat to efficiency.

Then came COVID-19.

As we’ve also written about recently, the COVID-19 pandemic has caused almost-unprecedented disruptions to a majority of companies’ Supply Chains – as many as 72%, according to a recent Supply Chain Canada survey.

We’re four months into the pandemic, and it appears that these disruptions have spurred another evolution:

More than ever, companies are focusing on Supply Chain resilience

All around the Supply Chain world, professionals are shifting their focus to make sure that they can withstand supplier disruptions, not only due to COVID-19, but to future emerging issues as well.

In our recent interview with Procurement Guru Jill Button about the particular Supply Chain challenges of the moment, she highlighted this shift, saying: “People are beginning to understand the risks and fragility of a Supply Chain and not having a sound Procurement practice. I think, as a field, we need to step up and embrace this moment.” In March, at the outset of the pandemic, industry thought leader Bob Ferrari wrote about how, in a world of supplier disruption, companies might shift from a just-in-time inventory model that maximizes efficiency, to one that prioritizes a diverse supplier base to maximize resilience.

Top consulting firms are taking notice too, in their own advice to corporate leaders: Bain, Deloitte, McKinsie, and Baker McKenzie, and others have released white papers in recent days on the importance of Supply Chain resiliency and risk mitigation in this new era.

Read more at Resilience is the New Name of the Game in Supply Chain

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Warehouse Drones: Real-Time Inventory Tracking by Air

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Using the Right Technology For Your Inventory Management

Using the Right Technology For Your Inventory Management

Warehouse Drones for Inventory Identification

Accurate and reliable data is essential to efficient and effective business operations.

Inventory management represents a significant portion of assets in a business.

Therefore, managers and other decision-makers need to accurately and timely know how much inventory there is and where it is located in order to make effective budgeting, operating, and financial decisions.

Companies that carry a significant amount of inventory are continually looking for innovative logistics solutions to improve the overall efficiency and effectiveness of their inventory checking process.

While some companies stop operations to carry out a full physical inventory check, others perform more targeted checks, with cycle counts in areas that deal with high-value or high-volume products.

Regardless of your approach, it often means that there is a team of individuals roaming the warehouse manually checking for inventory.

This can be time-consuming, expensive, disruptive, require equipment (people lifts), and exposes people to safety risks.

Most important of all, inventory accuracy is never guaranteed due to the verification process being manual, coupled with the time taken to execute.

Inventory Robotics: Automated Cycle Counting

Automatic identification and location of hard-to-reach inventory in warehouses

PINC’s UAS (Unmanned Aircraft System) is called PINC AIR, Aerial Inventory Robots™.

This warehouse drone solution allows companies to apply drone technology, coupled with advanced optical, RFID, and barcoding sensor capabilities, to significantly improve the operational effectiveness and efficiency of warehouse inventory cycle count.

The warehouse drone can be ordered by the operator to perform automatic inventory checks throughout the facility, accurately identifying inventory in put-away locations, at the frequency of your choosing.

Moving the process of information capture into the air provides on-demand checks of logistics inventories and avoids the time, expense, and risk of using a people lift to access difficult to reach locations within the warehouse.

Using extensive optical sensors, the inventory drone can navigate, identify inventory, determine inventory location, and fly safely in a warehouse environment.

The power in the drone inventory management solution lies within the sophisticated software capabilities that provide three-dimensional mapping, navigation, inventory identification, and location accuracy. Indoor flights do not require FAA approval.

Read more at Warehouse Drones: Real-Time Inventory Tracking by Air

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OM in the News: Amazon Marries Drones and Intermodal

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Amazon patent graphic for railroad sourcing

Amazon patent graphic for railroad sourcing

“Amazon wants its inventory everywhere”, writes Supply Chain Dive (Nov. 8, 2019). It is expanding its network of fulfillment locations with a focus on intermodal containers. Intermodal-based fulfillment, as Amazon’s patent application describes it, would allow the company to fulfill orders from rail, truck or ship. Here are the steps in the patent:

  • 1. Load intermodal container with inventory.
  • 2. A robotic system picks and loads items onto drone.
  • 3. Launch and retrieval system puts the drone in appropriate position for take-off.
  • 4. Drone departs container through opening in the roof.
  • 5. Drone travels to a customer’s home, delivers package.
  • 6. Drone meets back up with the container at a pre-calculated rendezvous point.
  • 7. Variety of sensors track container’s location.

But wait, drones need new batteries, their propellers might break, and without a human in the loop how does this operation keep running smoothly? Amazon thought of this. One of the details included in the patent application is a maintenance container where drones can have a robotic technician replace propellers or batteries. Amazon says containers could be loaded with inventory before the launch of a book or video game in anticipation of demand spikes, placing inventory in locations where it expects orders.

To compete with brick-and-mortar locations, Amazon wants to cut down on delivery time making it just as convenient to hit order on the marketplace as it is to drive down the road. But this requires a complex network of inventory in fulfillment and sortation centers across the country. It has already promised one-day delivery for a variety of SKUs. Amazon claims drones will enable 30-minute delivery. Making this happen will not just require drones, but a vast web of SKUs across the country.

Read more at OM in the News: Amazon Marries Drones and Intermodal

10 Ways Machine Learning Is Revolutionizing Supply Chain Management

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Machine learning makes it possible to discover patterns in supply chain data by relying on algorithms that quickly pinpoint the most influential factors to a supply networks’ success, while constantly learning in the process.

Discovering new patterns in supply chain data has the potential to revolutionize any business. Machine learning algorithms are finding these new patterns in supply chain data daily, without needing manual intervention or the definition of taxonomy to guide the analysis. The algorithms iteratively query data with many using constraint-based modeling to find the core set of factors with the greatest predictive accuracy. Key factors influencing inventory levels, supplier quality, demand forecasting, procure-to-pay, order-to-cash, production planning, transportation management and more are becoming known for the first time. New knowledge and insights from machine learning are revolutionizing supply chain management as a result.

The ten ways machine learning is revolutionizing supply chain management include:

  1. Machine learning algorithms and the apps running them are capable of analyzing large, diverse data sets fast, improving demand forecasting accuracy.
  2. Reducing freight costs, improving supplier delivery performance, and minimizing supplier risk are three of the many benefits machine learning is providing in collaborative supply chain networks.
  3. Machine Learning and its core constructs are ideally suited for providing insights into improving supply chain management performance not available from previous technologies.
  4. Machine learning excels at visual pattern recognition, opening up many potential applications in physical inspection and maintenance of physical assets across an entire supply chain network.
  5. Gaining greater contextual intelligence using machine learning combined with related technologies across supply chain operations translates into lower inventory and operations costs and quicker response times to customers.
  6. Forecasting demand for new products including the causal factors that most drive new sales is an area machine learning is being applied to today with strong results.
  7. Companies are extending the life of key supply chain assets including machinery, engines, transportation and warehouse equipment by finding new patterns in usage data collected via IoT sensors.
  8. Improving supplier quality management and compliance by finding patterns in suppliers’ quality levels and creating track-and-trace data hierarchies for each supplier, unassisted.
  9. Machine learning is improving production planning and factory scheduling accuracy by taking into account multiple constraints and optimizing for each.
  10. Combining machine learning with advanced analytics, IoT sensors, and real-time monitoring is providing end-to-end visibility across many supply chains for the first time.

Read more at 10 Ways Machine Learning Is Revolutionizing Supply Chain Management

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Transportation Predictions That Will Shake-Up the Supply Chain Industry In 2018

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In the book, The Living Supply Chain, the authors argue that “Speeding up the supply chain is at the root of everything that is good: improved revenue, reduced working capital, higher profitability, and less obsolete inventory.

Conversely, slowing down the supply chain is at the root of everything that is bad: working capital write-offs, reduced profitability, and slowing revenues.”

To “speed” up the supply chain is to invest in change and change will come with the digital transformation of the supply chain, which is the major focus for executives in 2018.

Much change in the supply chain industry will be due to innovative technologies for digital transformations, along with the recent tax reforms (see below), and the still-current driver shortage/capacity crunch.

The digital transformation of the supply chain will change everything – for the better.

These are the innovative technologies that I predict companies must use to undergo this transformation within their supply chains:

  1. Cloud-based technology
  2. Advanced Analytics
  3. Tracking and Tracing
  4. Supply Chain Visibility
  5. Blockchain
  6. Artificial Intelligence
  7. Predictive Analytics
  8. The Internet of Things

“In 2018, shippers must embrace change in order to succeed. Waiting and seeing what will happen is no longer an option,” adds Clark.

“Transportation management systems are poised as the fundamental tool for supply chain transformation, helping businesses to position themselves above the competition with sustainable profits and better service levels.”

Read more at Transportation Predictions That Will Shake-Up the Supply Chain Industry In 2018

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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.

Read more at Comment: The secret to making customers care about supply chain

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All in with online, can J.C. Penney get up to digital speed?

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I had a few occasions chatting with the IT people of the company in the past few years. They were reluctant to adapt to the on-line trend of the retail market. One year, they wanted to expand their on-line catalog business; the next year, they closed the on-line catalog business and moves the majority of their IT people overseas in the following years. This time, it appears that the new SVP, Mike Amend, hired from Home Depot, is ready to face the on-line retail business challenges.

This article highlights a lot of positive actions for the company to transition itself from a traditional retail business to an on-line one.

  1. Recognizing its market strength: Research from comScore tells Penney that its customers have household incomes of $60,000 to $90,000, and they tend to be hardworking, two-income families living both in rural and urban settings. They don’t have the discretionary income to commit to membership fees.
  2. Last month, Penney added the ability to ship from all its stores, which immediately made about $1 billion of store inventory available to online customers and cut the distance between customer and delivery.
  3. About 80 percent of a store’s existing inventory is eligible for free same-day pickup.
    Last week, it offered free shipping to stores with no minimum purchase. Large items like refrigerators and trampolines are excluded.
  4. JCPenney.com now stocks four times the assortment found in its largest store by partnering with other brands and manufacturers.
  5. More than 50 percent of its online assortment is drop-shipped by suppliers and doesn’t go through Penney’s distribution. Categories added range from bathroom and kitchen hardware to sporting goods, pets and toys
  6. JCPenney.com now has one Web experience regardless of the screen: phone, tablet or desktop.
  7. Its new mobile app and wallet include Penney’s new upgraded Rewards program. Customers can book salon appointments on it. The in-store mode has a price-check scanner.
  8. Penney set out to “democratize access to the data,” so that not only the technical staff could understand it, now dashboards and heat maps allow the artful side of the business — the merchants — to measure such things as sales to in-stock levels or pricing to customer behavior.

Read more at All in with online, can J.C. Penney get up to digital speed?

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