Supply Chain Shaman

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etc. abbreviation for et cetera

et·cet·er·a (tst-)
 A number of unspecified persons or things.

I am beat.  This morning I am sitting in a Heathrow hotel listening to the steady rhythm of planes taking off.  It is a consistent drumbeat calming my nerves. I know that tomorrow I will be cramped in an economy seat anxiously watching the screen. It will show a plane inching across the Atlantic. My body will hate me and my legs will ache.  (Ever wonder why it takes SO long to move over Greenland?)  So today I am trying to rest up and be positive about the journey home.

My body is suffering from all this travel.  I have not done well with the jet lag.  I have an earache, and my stomach is fighting a bug caught somewhere along the 10,000 miles. (Thank heavens for all of those horribly named over-the-counter drugs.)  I want to whine; but I am trying to fight it.  Instead, today, I am going to escape. I am going to spend the day reflecting, writing and thinking. Room service will be my best friend.

My book is done.  The pink binder that I have lugged around for six months is now on my shelf and I am waiting for the edits.  I am told that it will publish in the fall.  So, I am now busily writing reports. It is time to tackle new things. I am hoping to have three to four reports published next week. I remain committed to open research. I no longer want to be chained behind the firewall.

I have deliberately named this blog ETC. It focuses on a number of unspecified persons or things from my travel.  I have consciously chosen an acronym for the title.  (One of the issues with supply chain leaders is that executives cannot talk about supply chain excellence without stringing together six acronyms.) Just to be clear: I hate acronyms. The use of three and four, and now five levels of acronyms is a barrier to supply chain excellence.  Companies get so busy naming and communicating on acronyms that they forget that for manufacturers and distributors that supply chain is business.  Now that I have your attention, here are my reflections:

Pride and Prejudice.  Sense and Sensibility.  I like the antithesis and alliteration in these two titles of Jane Austen’s famous novels. (I am a fan of Jane’s writing.)  As I travel the country and the world attending conferences and watching the transformation of supply chain management, I often feel that I am in the middle of one of her plots.  There is also antithesis and alliteration in what I am seeing.  The characters are as interesting and the stories are as tangled.  At conferences, I see a lot of pride, but less sensibility. In short, there are too many conferences trying to sell yesterday’s ideas to too few buyers. (In the spirit of Jane Austen, should we call this evolution Hope and Helplessness?) The models of who sells what to whom are more confusing. There are more questions than answers.  Here is how I see the world:

  • Consultants selling software. Last week WIPRO announced the purchase of ProMax.  I know of two pending acquisitions of North American software companies by Indian service providers.  Over the last year, Accenture has purchased CAS and IBM has had a steady drumbeat of acquisitions (Coremetrics, Demandtec, Emptoris, ILOG, LogicTools, Sterling Commerce, and Unica).  As the go-go days of ERP implementations wind down, consultants no longer have a clear road to pull up their bus of young over-priced consultants.  The vision of what is next is murky.  In the absence of compelling new software to implement, the consulting partners are moving into selling software.  They are building solution architectures; however, the transition to selling software is not going to be easy.
  • Software companies selling consulting. While software companies have always offered implementation consulting, I am now seeing companies like SAP hiring business process consultants for topics like Sales and Operations Planning (S&OP).  This journey is fraught with issues.  As they progress, they will struggle with channel conflict, relevance, and strategic alignment. I see this as short-lived.
  • Software aggregators trying to roll new ideas. Infor, JDA and Red Prairie have become software aggregators trying to repurpose client-server software solutions to tap into new business potential.  The messages are different, but each is attempting to do this through cloud-based services, the redefinition of middleware, and the emergence of new data sources.  Each of these companies are trying to juggle many eggs in their baskets as they try to re-face their companies.  Their road forward is one of evolution.  They are conservative companies tightly managing cash flow and watching the market.
  • Mathematicians trying to build and sell software.  The market is a tough one for the emergence of new best-of-breed solutions.  Those that have been the most successful are companies with strong mathematics backgrounds trying to build software.  They are flush with new ideas, but struggle with the delivery of enterprise architectures.
  • Business intelligence companies are stuck in the middle.  The companies that understand the current shift in applications the most, but don’t know what to do about it, are the business intelligence software companies.  Companies like IBM, SAS, and Teradata understand that 90% of the world’s data has happened in the last two years and that 80% of it is unstructured, and that companies don’t know what to do about it.  They know that the new forms of pattern recognition and data visualization can revolutionize software.  Confusion reigns. Each of them comes from a strong business intelligence legacy and they are hesitant to move into packaged software.  Tension is mounting.  To solve the emerging business problems of manufacturers and distributors, they will be pulled and tugged into the party.  The question is will they dance?  The markets of finance and insurance are lucrative and manufacturers are cheap.  Many of the answers for the next generation of solutions lie within these companies, but manufacturers will be slow to move monies from the traditional implementations of ERP into these new forms of analytics. SAP and Oracle will push that they can answer the needs to use unstructured data, but the solutions will fall short.  They are each too caught up in the transactional world.
  • Analyst companies selling consulting. On this one, I admit bias. I think that analyst companies need to be focused on research. However, research is costly, and the margins are better in consulting. As a result, more and more analyst companies are defaulting to selling consulting. I feel that there needs to be more research in the analyst models, and that analysts should leave consulting to those that do it well, but for now they add to the confusion.

The Best Discussions at my Conferences are Happening on a Couch. I am having my best conversations over lunch or on a couch at break.  The questions are the same:

  • Why are the sales teams of enterprise applications so whiny and insecure?  Increasingly, I am being asked questions on “why supply chain management sales teams” are not easier to do business with.  Within sales groups there has been a lot of turnover; and the lot –by and large–is not happy.  The movement from license sales to cloud-based services is a different selling model that is not as lucrative.  The sales forces are struggling to make the transition.  It is a barrier.  It is time for them to stop the whining and embrace the future.
  • How do I buy demand planning?  The role of demand planning is changing as companies move from inside-out to outside-in processes.  It is a large gap for most that I talk to.  I am surprised that more companies have not thought more about the redefinition of the data models and the need to re-implement the systems installed with YEAR 2000 programs.  Most of these systems were hastily implemented by consultants that had little understanding of demand planning, and the ball has moved downfield.  Demand planning needs to be designed with the goal in mind.  With the evolution of market-driven supply chains, the goal of demand planning has changed, requiring a re-implementation of demand planning.
  • What should be the role of the user in defining future direction?  As I wrote in a past article, we are in the middle of a doom loop.  As Henry Ford wrote, “If I had asked people what they wanted, they would have told me a faster horse.”  Enterprise software vendors are asking users what they want in the next generation of solutions, and they are getting feature function requirements.  However, these feature and function requirements will not help companies move forward: to use channel data, to sense demand changes or to translate demand more accurately to the trading network.
  • The Journey to Outside-in is Tougher than People Thought.  I am convinced that the movement to market-driven (or demand-driven based on organizational maturity) is a revolution, not an evolution. Supply chain initiatives are confused. They are sandwiched between digital consumer and digital manufacturing projects. The discussions are silo’d.  Organizations are working in islands (sales groups using customer data, supply chain teams building horizontal processes, and procurement teams building networks).  The term “supply chain” is politically charged.  Consultants do not understand how to sense and shape demand and the impact on the redefinition of architectures. They are financially incented to sell the Y2K architectures that do not answer the current market needs.  There is so much to write on this one, but I will spare you here. It is in the 98,000 words and 300 pages of the book Bricks Matter that publishes in the fall of 2012.

Etc.: My Predictions

So, what should companies do?  How do they move forward?  In 2012, supply chain management is ending its third decade of evolution.  As we face the fourth, what will the future look like?  In figure 1, I share how the supply chain pioneers see the future in aggregate.  This is from Chapter 6 from the book Bricks Matter.

1) Moving forward will be a Revolution not an Evolution.  One by one, companies will realize that yesterday’s technology architectures were built on shipment and order data; and that the supply chain applications, as we know them, need to change.  They are limited only to the use of transactional data. As a result, the new forms of data that allow companies to sense, listen, and learn have no logical connection to these traditional systems.  These new data forms will drive new processes making many of the applications for ERP and APS obsolete. It will be a revolution not an evolution.  The question is who will step up to make it happen?

2) Clock speed is Changing.  Mobility makes real-time Possible. It is time to get the Supply Chain ready to move at a different speed.  Supply chain applications were built on near real-time data.  The use of mobility allows processes to be real time.  This is a step change.  As a result, we do not have best practices. Instead, we need to challenge all that we have learned.  We need to adjust and challenge the past and accept that we now have evolving practices that need to be shaped, defined and tested.

3) Leadership will have to come from within the Organization not from Consultants.  Sandwiched between digital marketing and digital manufacturing a new form of supply chain management will bloom. It will drive the redefinition of processes outside-in and provide horizontal connectors from the customers’ customer to the suppliers’ supplier.  In this journey, companies will find that the investments in Customer Relationship Management (CRM) and Supplier Relationship Management (SRM) are obsolete, but that the investments in horizontal processes for revenue management (to improve demand shaping), Sales and Operations Planning (S&OP) and supplier development will increase in importance.  Due to the gap in supply chain understanding by consultants, organizations will need to “man-up” to make this a reality. (Sadly, there are still too few women in these roles.)

4) Collaboration will take on a new Meaning.  While we have talked about customer collaboration, in reality, what has happened in the first three decades is the pushing of costs backwards in the supply chain to companies that cannot afford them.  It has largely been a story of “lipstick on a pig.”  It is time to own-up and look ourselves in the mirror.  As companies work on corporate social responsibility, there will be a new incentive to tackle the waste in the supply chain that lies between trading partners.  In addition, the tightening of the commodity markets and the rising prices and constraints in the supply of materials will redefine supply.  In this journey, the term relationship will take on a new meaning and collaboration will mean more than data sharing and lowering costs.

5) Compliance will Increase.  Forcing Value-based Outcomes.  I hate legislation; however, I feel that the transformation of the supply chain to value-based outcomes will only come through legislation.  And, it is coming. I believe that it will happen in all industries, but at different rates.  Food and Beverage will see it in the next two years.  I only know of one company that is ready.  Healthcare is four-to-five years off, and I feel that no one is ready.  Value-based supply chain legislation will change the incentive structure between buyer and seller and redefine the outcome.  In healthcare, companies will have to standardize.  No two hospitals are alike.  No two rebates are alike.  The focus today is on efficient sickness not effective wellness.  While food and beverage will be a painful evolution, healthcare redefinition will be a revolution.

So, as the Shaman dons her best chains and packs her bags for tomorrow, what are your thoughts?  How do you see the future?  How do you see the path forward for the applications that we are building and the needs of the supply chain buyer?  Where do you think that we will find the leadership?
Also, I gave four presentations this week. You can find them on SlideShare on  I believe in open research.  Use them to explain the changes, just give us credit.
Also, if you have time on Monday, join me for my webinar with Steelwedge.  I am very excited about the work that we have done at Supply Chain Insights on Agility and S&OP.  Register for the webinar at and look for our reports next week.
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