HANA

Reflections

by Lora Cecere on September 19, 2012 · 0 comments

It is midnight in Melbourne, and I cannot sleep. I hate jet lag.

Tomorrow, at 10:30 AM, I will buckle my seat belt for a 22 hour journey back to the United States. I need to sleep, but sadly I cannot. I love Australia, but I hate the trip. So, tonight I went for a midnight walk, and have called room service for some coffee.  I think that I will pass the time before I put my exhausted body in a seat to fly home by sharing some reflections on my experience here.

I have spent the last three days with 200 SAP users at an Eventful Group Conference. The event team put me to work. I led four discussion groups, gave a keynote, presented on master data management and then taught a workshop  on supply chain excellence. I enjoyed  it. The folks in Melbourne were gracious and no-nonsense. They were hungry for information. Many had traveled many miles to come to the event. (e.g., I was surprised to have a wonderful woman from Chile in my class yesterday from Komatsu. I find teams in South America are thirsty for information on supply chain excellence.)

Similar, Yet Different

As I walked Collins Street at midnight, my mind was churning on how the folks at the event were different, but similar to the recent events that I have done in the states. How were they different? Their organizations were smaller, their understanding of supply chain was more basic, and their focus was more pragmatic than most groups that I speak to.  I enjoyed the no-nonsense approach.  How were they similar? The group struggled with how to use the software that they have bought, they are frustrated that they cannot access the data that they need, and they are not clear on the definition of supply chain excellence. I believe that companies all over the world have implemented supply chain projects without a holistic view of value.  As a result, they have not maximized the potential of their investments.

I love designing quantitative research studies. In the design, I always ask a question on business pain of the company; but recently, I have started asking a question about the pain of the individual in the company. The questions sound similar, but the outcome is very different. It is my belief that the pain of the individual in supply chain is rising and that we are not addressing it well. I am now analyzing my third survey where I have asked this question, and I am getting similar responses as  shown in figure 1.

Figure 1: Top Three elements of Supply Chain Management Pain

So, as I worked with the groups at the conference this week, I shared this slide and asked them for feedback. “Was this their business pain?” It resonated.  It was.

So, at the event, I listened with a new ear to understand  “why they could not get to data” and “what is the gap of knowledge and understanding of supply chain by the executive team?”

And, before my good friends at SAP call me to talk about why I have it all wrong, let me share that I think that this has nothing to do with SAP or the use of Business Warehouse Accelerator, or the evolution of HANA, or the good work that they have done with Business Objects. I believe that this problem is universal across industries, continents, and software solutions for supply chain management. Here are my insights:

We Got Here on the Wrong Road.  Supply chain management is now thirty years old. In the evolution, most companies implemented projects. They were sold technology. The average company now has over 150 distinct software systems. Consultants swarmed on implementations without any practical knowledge of supply chain touting best practices. We do not have Best Practices. We have EVOLVING PRACTICES.

Supply chain teams not knowing any different believed them. And, in their defense, the consultants do have insight on how to implement the technology.  What was not clear then, but is exceedingly clear now, is that the technology is only the enabler.  It is about much more than bolting in the technology.  Instead, it is about the effective USAGE of the software.

What was not clear then, and is still not clear for most, is how the multiple sets of technologies needed to be designed to drive value-based outcomes. As a result, project after project was implemented without a clear understanding of the definition of supply chain excellence. Metric systems were designed without ensuring the availability of inputs. Companies have not learned that when it comes to supply chain excellence, that you do not start with process. Instead, you need to start with business strategy, define value-based outcomes through a supply chain strategy, use this to build supporting cross-functional metrics to view the business holistically, and then define the supporting processes. The problem is not with the BI tools, it is with what we are asking them to do.

Enlightened Leadership is a Hard Nut to Crack. The lack of leadership and understanding by the executive team on supply chain excellence is tougher. These projects are typically led by an enlightened mid-level manager.  And, there is a belief that the project will be more successful with the support of the executive leadership team. This is true if the executive team is knowledgeable and understands supply chain excellence. The unfortunate reality is that most are not. It is a rare team that I encounter that has this support.

This problem is usually made worse by software sales teams and consulting groups. The providers of software have limited the potential of the market by selling software versus enabling a better way to run a business.  It is like a car manufacturer selling cars when there is no place for people to learn how to drive or read a map. While the software sales people have made it a bad situation, the consultants have made it much worse. It saddens me to see that most consulting partners think that they know what supply chain excellence is, but they do not. They do not see the problem. They have been rewarded for many years for a project-based approach, and most lack grounding in supply chain excellence. I have a very short list of folks that I think do it well. This will be an upcoming blog post. Let’s just leave it here as I am still working on this one.

We Focused on the Wrong Goal.  Companies have focused on project implementation not on software usage to solve a business problem. Software sales cycles were long and companies pushed to get software implemented fast. Most companies do not use the software that they have installed. They cannot get to the right data. In the webinar that I will present on Wednesday, I see an inverse relationship between short implementations and business value.  Over the last 9 years, I have worked with over 400 companies selecting and implementing software. This experience has given me a great reference point to now look at the impact of these projects against the corporate financials.  The companies that have achieved the most on the Supply Chain Effective Frontier implemented slowly with strong leadership against the goal.

Conquering the Supply Chain Effective Frontier

I am passionate about supply chain.  I believe that effective supply chain processes improve economies, minimize environmental impact and improve the satisfaction of employees in companies.  I am bothered that we have made these mistakes.  As a result, I have written a research report and built a webinar series around it.  Please join us for these insights on Supply Chain Excellence on Monday.  The sign-up for the webinar is  http://t.co/2PD0xBPT. (We are doing a review of process industries in our September webinar and discrete/high-tech in our October webinar.) I am very excited about the methodology that we have built. I spent six months developing and testing it. I share insights on the work that we are doing in the report Conquering the  Supply Chain Effective Frontier . It is the essence of the book Bricks Matter which is now publishing in early December .

Conclusion

As I walked the streets of Melbourne in my sleepless state what troubles me most is that many companies are looking to speed up their current SAP processes through the use of in-memory processing with HANA analytics.  Let me state for the record that I am a big fan of HANA and love some of the new SAP analytics capabilities. My caution to business users is be careful. I worry that we are going to speed up the wrong things versus taking a step back and rethinking business value.  I want to see companies do value stream mapping and focus on a clear definition of supply chain excellence and then re-implement to make the right business decisions faster.

Thoughts? I would love to hear from you.  And, I am hoping that you can join us for our webinar on Monday.

 

Another Concorde?

by Lora Cecere on September 2, 2012 · 2 comments

In high school, my favorite teacher was Wanda Hughes. She taught history. Her class was both loved and feared. This was one class where there was no messing around. It was strictly business.  She made us read the Wall Street Journal and New York Times daily. We debated the potential outcome of headlines: the Vietnam War, the rise of the Beatles, and the fall of the Nixon administration. We learned that current events quickly become history. In the process, I learned that there were patterns: people make the same mistakes over and over again. It is hard to learn from history.

A Look Back

Let’s fast forward. When I was 28, I worked for General Foods (now a division of Kraft). I was a divisional engineer responsible for the purchase of $42 million of equipment for a national launch. It was a big responsibility for a young kid.

The equipment vendor was in Denmark; and I flew cross-Atlantic flights frequently to check on progress. In those days, the corporate policy was to book cross-Atlantic travel as a first class ticket. (Ah yes, sadly these days are gone forever.) So, as a young kid, I had the enviable choice to either fly SAS First Class directly to Copenhagen or book to Paris on the Concorde and take a commuter to Denmark.  The total time difference was two hours. The cost for the Concorde aircraft was slightly higher than a first class seat on SAS.  For me, the choice was easy. The Concorde was not as pleasant of a ride. The seats were smaller and the food was not as good.

Today, there are no Concorde flights. It was canceled in 2003. After 27 years of flight, it died a slow death.  The price/value equation for the average traveler to fly the Concorde was just not there.

Learning from History

Every year, computer speeds get faster and memory costs are cheaper.  Currently, I am working with several supply chain technology vendors that are attempting to place these new forms of analytics underneath traditional supply chain planning platforms. My caution is that this is analogous to the Concorde.  My question is, “Should we invest to make current supply chain planning systems faster or take advantage of new technologies to redefine them?”

I was speaking to a leader at a supply chain planning company last week, and his words hang in my mind as I write this:

“Lora, you are pulling us along. It is hard for us to do things differently. Our business users ask us for refinements not a re-write of supply chain planning. The momentum in the company is not to do things differently. There is no incentive to adopt new enabling technologies.”

In my opinion, there is just not enough value in speeding up traditional supply chain planning footprints to make it worth our time.  I want technology vendors to start over and “Paint Outside the Lines” and recreate supply chain planning. I want them to deliver more value for the supply chain leader. However, I am convinced that it will only happen if it is pushed by the supply chain leader. If supply chain leaders do not push, I fear that we will have the 1995 version of supply chain planning in-memory.  In my opinion, this would be another Concorde. Here is my logic:

The Definition of Supply Chain Planning is Inadequate. Supply chain planning applications rate lower in user satisfaction than supply chain execution (warehouse and transportation management) software systems.  In Figure 1, based on a recent supply chain survey of 60 supply chain leaders, you can see the current satisfaction levels of supply chain software.

Figure 1: User Satisfaction with Current Supply Chain Software

The traditional definitions of planning were based on computer capabilities from the 1990s. They were the best that we could do then; but they are inadequate today. There has not been a substantial redefinition of planning platforms since 1995.

Time to Paint Outside the Traditional Lines. I would love to see us put these new forms of analytics to use in building the End-to-End value network.  I would like for us to redefine versus making the old, inadequate definitions faster. I am passionate about using new technologies to redefine business outcomes.

The possibilities to improve supply chain planning are numerous–deeper optimization, in-memory processing, mobility, pattern recognition, rules-based ontologies, simulation, text mining and visualization– and offer great promise. However, the adoption of these new technologies to supply chain planning platforms has been slow. I find that most line-of-business users do not even know of some of these possibilities.

Figure 2:  Potential Supply Chain Planning Platform Using New Technologies

These new advances in business analytics can allow the Line of Business User to sense channel demand from the customer back, to test and learn in real-time, and map multiple ifs to multiple thens to orchestrate demand and supply. We are moving into the world of Big Data Supply Chains and Outside-in Processes. Here are some examples:

Digital Manufacturing. The use of mobility in manufacturing is defining digital manufacturing.  In digital manufacturing, sensing real-time equipment status and scheduling based on actual conditions, allows companies to move from a near real-time to a real-time response for manufacturing planning.  No longer does maintenance need to be based on mean-time failure. Instead it can be based on actual operating conditions of real equipment outputs–pumps, conveyor motors and filler heads–to improve the certainty of manufacturing output.

Orchestrating Demand and Supply.  We know that a customer is not a customer and an order is not an order, but there is no way to orchestrate this; and once determined, in today’s systems there is no way to manage a rule-set to ensure that the highest priority customers get the highest priority for inventory. Or for companies to manage operations to ensure that the lowest cost operations are used to fill the customer order. These new forms of analytics enable new sets of trade-offs horizontally. I would love to see supply chain planning vendors embed the combination of Enterra Solutions and Signal Demand to orchestrate demand and supply.

Channel Sensing and the Redefinition of Order Management.  Similarly, I would love to see the roll-up of demand vendors– a demand signal repository vendor like Relational Solutions, Retail Solutions, Vision Chain with a demand sensing vendor like Terra Technology to translate demand from the channel to the enterprise and drive priorities in order fulfillment.

Network Design and Supply Chain Visualization. It is good to see the Llamasoft solution for network design being applied more widely.  This more advanced capability for optimization and simulation can be used for operational and tactical decision-making.  Today’s solutions lack sufficient visibility for teams to quickly make cross-functional decisions.

Can We Avoid another Concorde?

Mrs. Hughes died in July 2010 after 42 years of teaching. The Concorde is now legacy. It is my hope that I can apply what I have learned to help supply chain leaders redefine supply chain systems.  I am excited about the potential.

What do you think? Do you agree? Do you think that we can now declare traditional supply chain systems legacy and start again?

Or, do you disagree? Do you think that there is enough value to putting new in-memory forms of business intelligence under the traditional platforms and running them faster?

I look forward to an engaging debate.