“I am desolated to lose the pearls of wisdom that habitually fall from your cultivated lips,” returned Haddo.1908, W. Somerset Maugham, The Magician, ch. 3:
Rolling stones gather no moss, and road warriors/analysts that travel write fewer blog posts.  To all my readers, I apologize for a 28 day absence in posts.   In the past 30 days, I have spoken at 12 conferences, traveled 40,000 miles and become a grandma. <Yes, you read it right! I am now a grandma.>   All good, but a bit tiring.  I give thanks to be able to sit in my kitchen this Saturday morning and drink a cup of coffee in peace and quiet and write my blog post on Pearls of Wisdom.

What is a Pearl of Wisdom?

A pearl, throughout history, is treasured beyond value. Simple in composition, a pearl is just calcium carbonate.  It forms around a bit of grit or shell that is irritating an oyster.  The irritation gives rise to beauty.  The pearl takes on the color of the shell.  They form over many years often taking 5-7 years to form.
I like pearls. You will often see me wearing strands of pearls at many speaking engagements.  They form bonds.  The pearls transcend time.  This mother’s day, I wore two strands.  One was from my mother.  It was given to me on the day of my first marriage (if only I had listened to those pearls of wisdom) and one strand was a gift from my daughter.  It was her gift to me on Christmas from her first real paycheck.  My mother suffers from dementia.  In her mind, I am now “Rita”, but she still knowingly smiles when she sees me.  My daughter now holds her first son.  The strands around my neck are symbols of love that cross generations.

My Pearls from the Road:

A pearl of wisdom is a succinct and insightful saying.  It is wisdom that transcends time. It is called a “pearl” because it has the common characteristics of the gem:  valuable, colored by its surrounding, a gift that transcends time, it is often formed as a result of an irritant and takes shape slowly.
In my travels, I was the guest at many industry/ user conferences and stomped my way through many trade show aisles looking for cool technologies. Sadly I report that the evolutions in supply chain technology for the first quarter of 2011 were sadly disappointing for me.  While I normally write my annual “cool technologies” blog at this time of year, I am going to delay it.  There just was not enough out there for me to write  a post.  I am seeking more to write about.
However, what I see, and find exciting, is organizational change to embrace the technologies.  The pace of  technology has always been ahead of the organization.  The gap is closing.  In this blog, I share nine pearls of wisdom–short statements of wisdom reflecting this organizational change phenomena– that I collected from the many conferences that I attended this spring.  For each, I add my aggregate insights from listening to insightful practitioners speak.  They are gifts from the speakers.

1. Shift happens: This quote came from a S&OP presentation by Kimberly Clark  at the ESC11 conference in London.  It made me laugh. I found it refreshing.  The speaker’s point of view is that you can never totally prepare for all the events that will happen in the supply chain, and that it was incumbent on supply chain managers to prepare the supply chain to be flexible and resilient.  A good supply chain, in his opinion has “shock absorbers.”  He believes that a strong Sales and Operations (S&OP) process is key to resiliency.  His goal was to build a supply chain that can withstand a major impact and keep on ticking.  It hit home with me. Quite frankly, I am tired of all the posts on preparing for disasters in the supply chain.  Things are going to happen. There will be more earthquakes,recessions, ash storms, floods, tornadoes, and hurricanes.   The global nature of today’s supply chains with multiple inter-dependencies increases the need for strong horizontal processes like S&OP, revenue management, and supplier development.    While companies can plan for disasters, form disaster recovery teams and drill against simulated scenarios, when the rubber hits the road, in the words of the speaker, “shift happens.” What matters is building a supply chain that can get back on its feet fast and drive continuous improvement.
2. Where do I find T-Shaped Managers? This quote also came from the ESC11 conference.  The discussion was on the shift from vertical supply chain excellence to the building strong horizontal supply chain processes like Sales and Operations (S&OP) planning.  The speaker from Microsoft asked this question to the audience.  His point was that there are too few supply chain leaders that understand horizontal processes.  Most supply chain leaders have strong functional backgrounds and are the product of an HR development plan that reinforces vertical supply chain expertise–  deliver, make, or source– and lack the end-to-end supply chain knowledge to drive supply chain excellence through horizontal processes like Sales and Operations Planning (S&OP), supplier development, demand orchestration and revenue recognition.  The speaker’s point of view is that the processes are essential, but that there is a scarcity of leaders that understand them. His view was that there were too many “egg heads” or functional managers.  I agree.
3. The weakest link in the supply chain may be the CFO. Who says that we need a watchdog? At one of the conferences, there was a big push on understanding the “CFO’s perspective” on supply chain. The speech was a rather dry talk on the need for budget control for the supply chain and tight integration of supply chain planning with financials. As the presentation ended , the question from the audience was brilliant.  A member of the audience said, “After a speech like that, I believe that the Chief Financial Officer is the weakest link in the supply chain. “ I laughed.  I admired his guts.  The person asking the question was from a European organization that was strongly controlled by financial budget constraints.  He was frustrated with how poorly this was working.  As we chatted later over coffee, he shared his story of how he felt that the financial team lacked the understanding of the supply chain, but wanted to be watchdogs over the outcome.  He spoke openly how an uneducated team on supply chain was a poor watchdog.  This is consistent with many companies implementations of integrated Business Planning (IBP) that is now rampant in many organizations and consulting firms.  It takes partnering of educated parties.
4. Are we shaping or just shifting demand? I got asked this question during one of my speeches. I stopped. I was going to give a pat answer, and then I thought about it more.  Demand shaping happens when companies use techniques — price, promotion, new product launch, sales incentives or marketing–to increase market share, or share of wallet.  The use of these techniques increases demand elasticity.  All too many times, companies believe that they are shaping demand, but find that they are really just shifting demand (moving demand from one period to another). Moving demand from one period to another and selling at a lower margin without improving share creates waste in the supply chain.
5. Advanced Planning Solutions (APS) helped you manage constraints, Inventory Optimization is about Variability. This was a central point of Sean Willem’s, co-founder of Optiant (a company acquired by Logility in April 2010), presentation at the  Logility conference.  I had not thought of it this way, but he is right.  APS solutions were formulated to improve the visibility of manufacturing constraints and to eliminate them as a bottleneck.  The applications were not designed for variability.  Sean’s presentation was great.  Look for him as a speaker at conferences if you have not seen him speak.
6. Get to know the DNA of your item. Just as Deoxyribonucleic Acid (DNA) forms human cells with twisted strands of polymers forming a double helix, a speaker from Newell Rubbermaid at the Institute of Business Forecasting (IBF) stated that his key learning about supply chains is that each item has it’s own DNA. And he continued, that he believed that you only master the supply chain when you know each item’s DNA.   In his mind, the twisted pairs or long polymers in the DNA cell make-up are replaced by demand and supply strands (representing the rhythms and cycles of demand and supply) in the supply chain.  I like this metaphor.  On Friday, I was speaking to a supply chain leader about talent development.  I asked him about this metaphor.  He agreed that it was brilliant and added that his challenge is finding talent that will roll-up their sleeves to understand the DNA of each item.
7. It is Easier to Run Downhill than Uphill. This statement was made by a supply chain director, who was also a marathon runner, at a supply chain strategy day on S&OP.  His analogy is that each promotion or seasonal event is like preparing for a race, and that if you start from a point of strength with the right information and the right inventory that it is easier to run downhill (or decrease volume) than run uphill (or increase volume).  I liked the analogy.  In many ways a promotion or an event is like a sprint.  Planning how to run downhill is a useful way to plan.
8. Forecast with the goal in mind. I cannot go to a Terra Technology conference without thinking about this quote by Robert Byrne, CEO of Terra.  So many times, I work with clients that would be SO much better off if they stepped back and asked themselves the question of “what is the goal of this forecasting process?  And, how do I best forecast with this goal in mind?”  It was refreshing to see this level of thinking in the presentations at the Terra Technology conference.  I think that we have finally broken the bounds of traditional forecasting to include demand sensing in replenishment and transportation operations management.
9. Go slow to go fast: I love this quote. While I was at the Logility conference, I attended a presentation by American Italian Pasta Company. They had successfully implemented Logility Voyager Solutions over a 18 month period. The speaker shared that he had pressure, and resisted, to drive the implementation faster. He made a concious choice to “Go Slow to go Fast.” In other words, upfront investment in people and processes paid off. By slowing down the pace to be sure that the group had built core competency, he drove better results. He felt that this was essential to the projects success. In figure 1, he shared his journey with the attendees in the audience.   At first the statistical forecast accuracy output from the Logility system was far more accurate than what was used by the corporation.  Through the process of consensus forecasting and managerial overrides, the company was not using the statistical models even though they were more accurate.  Overtime, through sharing data and building trust, the company brought the two together.

Off to Collect more Pearls…

This week, I will be speaking at the Indiana Health Care Exchange on the findings from a research project on the life sciences value chain. I will also be spending time with a couple of clients in Indianapolic.    Then you will see me at the Manhattan User Conference in San Diego and facilitating a panel at the the Distribution Management Association Conference in Orlando.
Look for more pearls from the road in blogs next week.
Do you have a pearl of wisdom that you would like to share?  Does one of these speak to you?  Would love to see your thoughts!