I like art, and love unusual sculpture. Some days when I need a pick-me-up, I watch the videos of Theo Jansen’s Strandbeests. These self-propelling plastic pipe structures use wind power to walk. I am amazed as one of these ungainly creatures catch the wind and walk easily across the sand. It is carefully designed alignment.

Over time, these modern sculptures have become more resilient. The artist, over two decades, refined the sculptures to withstand the rigors of the environment. In an interview this morning, on Sunday Morning, he discussed two factors that improve performance:

  • Flexibility at the joints
  • Design of the ends to catch and propel the sculpture in the wind.

As he shared his secrets, I smiled. I had started this blog post on Friday afternoon. It is a discussion of supply chain design and the sharing of research that supports that the best supply chains have flexibility in the joints and are well designed on the ends to propel commerce. Like the Strandbeest, using these two design elements, the supply chain is more resilient. It might even propel your organization to win the race for Supply Chain 2020. Take a minute and watch the video of the Strandbeest and contrast this effortless movement to what you see in your organization and see if you agree.

Flexibility at the Joints

Sometimes I find the writing of reports drudgery. Sometimes, it is fun. One that I enjoyed the most was the recent report Three Techniques to Improve Organizational Alignment. The study looked closely at the views of over 190 respondents from three functions within the organization: supply chain, finance and IT. In the survey, each of the organizations rate the need for agility high, and rate it low. As shown in figure 1, the gap is wide. The supply chain group rates it the lowest.

The supply chain needs to be designed to be agile. It does not just happen. There is no industry standard. In this research, we define an agile organization as one that is designed to withstand the levels of demand and supply volatility and deliver the same levels of cost, quality and customer service.

An agile organization, like the Strandbeest, has flexibility in the joints (at the connections between functions within the organization and in the interconnectivity between organizations in the creation of value networks).  A barrier to creating this level of flexibility is the tight integration of functions.  While the transactions need to be tightly integrated, the planning and analytics need to be based on “what-if” analysis and visualization. In our research, we find that only 11% of companies feel that these criteria are being met in their IT architectures today.

Figure 1.

To have this flexibility, the organization also needs to be aligned. In this study, we asked each organization to rate how well each organization was aligned. In figures 2-4, we share the ratings and perspectives of the individual functions. The self-assessed ratings are very different.

The only commonality in the three views is the gap between sales and the rest of the organization. Many companies have made the  mistake of rewarding sales for volume and the rest of the organization for profitability. This, by definition, creates misalignment.

In the figures below, we share the perceptions of each “teams’” view of alignment. Contrast how different these three views are.

Information Technology Group. As shown in figure 2, the Information Technology (IT) team views the organization as more aligned, with fewer gaps, than their finance and supply chain counterparts. They also have a false sense of how well they are aligned with the business teams. They believe that the team has achieved greater alignment than is seen by the other line-of-business counterparts.

Figure 2.

Finance Group. The Finance Group sees the largest gaps within operations. For this group, the gap between operations and finance,  and sales and finance, are both acute. They also feel that there is a gap between manufacturing and procurement, and sales and operations. While they see the gap between sales and IT, they see it as less important than the gap between other functions.

Figure 3.

Supply Chain Team. The perceptions of the supply chain show the greatest lack of organizational alignment. In the views of this team, there is a greater gap in organizational alignment than felt by the finance or the IT teams. This is particularly true in the teams’ view of alignment between the operations group and IT.  This group also feels a large gap in manufacturing and procurement alignment and the gap between sales and operations. They see that the operations and finance team are more closely aligned than the views of the finance team around this alignment.

Figure 4.

So, how do we Run the Race for Supply Chain 2020?

Just as the Strandbeest walks the beach, organizations need alignment to run the Race for Supply Chain 2020. To improve alignment, the research study supports three next steps:

1) Improve Sales and Operations Planning. In our research, we see that companies that have a mature view of S&OP and are modeling the network, and planning to maximize opportunity and mitigate risk, nearly double their perceptions of organizational alignment.

2) Clear Supply Chain Strategy. Agility does not just happen. It requires design. Postponement, demand and supply orchestration, and supplier network flexibility are all tactics that require careful design and deliberation. Today, 95% of organizations are not clear on supply chain strategy.  Like the Strandbeests, the supply chain needs to be carefully designed, and redesigned, to improve agility.

Some organizations see agility as shorter cycles. This is a mistake. Many times people can do the wrong things quickly and create a heap of problems. Take the example of a shoe manufacturer that I worked with for many years. The CEO believed that the best supply chain had short cycles. The team focused on improving cycles and were surprised to find that their costs were 38% higher and that their supply chain cash-to-cash cycle was 49% longer.

3) An Effective Supply Chain Center of Excellence. While the supply chain center of excellence is present in over 35% of organizations, only 53% of companies surveyed  feel that they have a successful supply chain center of excellence. The primary issues lie in the design of supply chain strategy and the facilitation of cross-functional horizontal processes. Most of these issues lie with the organization’s view of supply chain as a function versus the definition as an end-to-end process.

What do you think? Any ideas on how to improve organizational alignment and flexibility? We would love to hear your thoughts.

We will be sharing more on this research and other snippets from our 18 research studies at our upcoming Global Summit to be held at the Phoenician in Scottsdale, AZ on September 11th and 12th. For more on how to register check out our Supply Chain Insights Global Summit website .

Welcome in the Big Data Opportunity

by Lora Cecere on July 9, 2013 · 0 comments

Big Data Outlook

Big Data Initiative

The term big data is moving up the charts as a “hot topic.” This week, we published our second quantitative study on the evolution of big data concepts, it gave us the opportunity to talk to supply chain leaders on the evolution of technologies and the use of analytics in the Race for Supply Chain 2020.  We wanted to understand where companies are at in the adoption of big data concepts and we had a good time writing the report on the research.

The study was completed by over 120 respondents in the period of June-July, 2013 and the complete study can be accessed on the Supply Chain Insights website or through slideshare.

What Did We Learn?

We believe that the adoption of new concepts for big data is a step change for supply chain teams. It is not about force-fitting new forms of data into applications based on relational databases. Is cannot be treated as an evolution.

It requires change management. It is about small and iterative projects using new forms of analytics. The projects have to be based on a business problem and the focus needs to be on continuous learning. This is quite different from the traditional waterfall project approach of mapping “as is” and ”to be” states and managing a large project against a goal. Companies have to be open to the outcome and invest in innovation through analytics.

To drive success companies have to sidestep the hype. While the powerpoints on big data concepts abound, very few technology companies and consulting partners have built solutions to harness this opportunity, and even fewer supply chain leaders are ready to have the discussion. We find the work by Aster Data (now a division of Teradata) and the work by IBM and Enterra Solutions on cognitive learning engines to be promising. We are also encouraged by SAS’s work on unstructured text mining, Bazaarvoice on the translaltion of blog and sentiment data, and the work by APT on test-and-learn strategies is exciting. We are also encouraged by the work on cold chain and serialization by a number of consultants working on sensor data and counterfeiting.

The Findings

In the study, big data was defined as volume that is at least a petabyte, working with a variety of data that goes beyond traditional structured data, and building processes that are based on an increased velocity of data that is associated with real-time flows. In the results, we see several trends:

-The biggest opportunity is not with the volume or velocity of data. Instead, it is with the management of opportunity associated with new forms of data. In the study,  76% of companies see big data as an opportunity and 12% see it as a big data problem.

-Databases are growing, but they can be managed. 15% of companies have a database today that is at least at a petabyte. The largest databases are not Enterprise Resource Planning (ERP). Instead they are in the areas of product management or channel data.

-The work is starting: 28% of companies have a Big Data Initiative today with 37% planning to implement a big data team.

-Companies that have worked on a data-driven culture have a leg-up. Organizations that have active teams on Master Data Management are more likely to have a big data cross-functional team. 54% of companies with Big Data initiatives believe that big data techniques help with MDM.

In the words of a supply chain leader, the path forward requires a disruption. It is for this reason that we have asked experts from the Department of Defense to join us to discuss these findings on our webinar this Thursday at 1:00 PM EDT. We hope to see you there.

We will also be continuing the discussion at our Supply Chain Insights Global Summit in Scottsdale, AZ on September 11th and 12th. There will be several panel discussions on the future of analytics, the evolution of new technologies for healthcare, and the evolution of digital manufacturing with real-time data.  The event will sell out at 150 participants and the cutoff date for the discounted room block at the Phoenician is August 8th. So register soon to reserve your seat. (The event is now sold-out for technology providers.)