The Two Best Supply Chain Metrics…Influence and Power!

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Since I’ve joined Kinaxis, I’ve become so intrigued by the parallels I see between Apple and Kinaxis customers. When I was at Apple, the joy that customers showed when using our products was so inspiring. They were always quick to say how cool something was.  Strangely enough, despite being in the enterprise software business, I’ve witnessed similar reactions from Kinaxis customers. In my 11 months here, customers are ecstatic when they talk about having RapidResponse. While I see the strategic benefits of using RapidResponse, it’s certainly not a consumer must-have gadget, like an iPad.  Yet, watch some of the Kinaxis videos, and see the passionate ways clients are using to explain what RapidResponse means to them.

          During my time here, I’ve been pretty curious about this enthusiasm and have been investigating the why, and now, after our recent Kinexions conference it has become clearer to me. Here’s what I learned when I asked a handful of clients “What do you love about Kinaxis?” The two most common replies were:

  1. “Once RapidResponse went in, it spread like wild-fire.”
  2. “I wish I would have done this years ago.”

So, let’s analyze each statement: “Once RapidResponse went in, it spread like wild-fire”, to me, means Influence. Consider first what RapidResponse is: An end-to-end analytics solution, with incredible speed. Speed from in-memory and ONE code.  Now, I’ve been around the supply chain block these past 25 years, and the only “ONE” code I’ve seen is Excel (and we know, using excel has its drawbacks – see past blogs Hey Software Bullies Stop Picking On Excel and  Yet Another Excel Blooper When Will We Learn). Everything else is functional modules that take time to stitch together.  Oh by the way, the complexity of supply chain nodes (from the companies I led) has increased from ~ 5-10 to ~ 20-25.  So, imagine gathering relevant data from EVERY node of your supply chain, into ONE code, and having incredible speed to perform analysis and collaboration.  To know what’s happening at every node, and respond before others are aware, brings a huge level of influence in the supply chain network.  People see it, and want it… badly! And, I can see why it spread like wild-fire. “I wish I would have done this years ago”, to me, means Power In this statement, customers are referring to using RapidResponse today.  And because of that, they are able to know sooner and act faster. For many companies, this has resulted in inventory and costs savings, margin and profit growth and utilization improvements.  The simulation capability has enabled them to use the supply chain operations to create a supply chain strategy and then align the supply chain strategy with the business strategy. So, when their competitors are fire-fighting disruptions (i.e. giving away profit to make revenues), they are simulating trade-offs in advance of competition, customer demand, industry and business plan changes and supply disruptions. The final result is a level of power in their company that they wish they had years ago. This influence and power remind me of a great quote I once heard… Information isn’t power…Informative decisions is power! When Kinaxis clients are using words like ‘every node in the network’ and ‘total cost’, they are speaking about how they use the information to improve end-to-end decisions.  Functional wins are replaced with value driven wins.  This is what Gartner calls Stage 4 – Value Driven Supply Chain. Gartner’s Christian Titze attended Kinexions and wrote the following article entitled, ‘Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record’. In it, he says that: "Some are now decommissioning their other SCP solutions and even moving material requirements planning (MRP) out of their ERP systems. This indicates Stage 3+ IT maturity for planning, whereby a planning SOR is in place and ERP systems are seen solely as transactional SORs. ” - Titze, C., Payne, T.; Kinexions 2013 Shows the Value of Adaptable Planning Systems of Record; Gartner, Inc.; 31 October 2013 . A value driven, or market driven, or even a demand driven supply chain is Stage 4 in the supply chain journey.  However, many companies are stuck in Stage 3.  Why?  I think it’s because they grew up functionally, are organized functionally, and make functional decisions.  It’s easy to spot.  I like asking the first question… “tell me about your supply chain strategy”. The typical response is, “we are working to reduce our costs”, “we have a goal of 98.5% on time delivery”, or “we want to improve our inventory turns by 20%”.  Great operational goals, but not a supply chain strategy.  Lora Cecere from Supply Chain Insight’s has stated, “…over 85% of companies are not clear on supply chain strategy,” in her blog Three Lies and a Truth. The answer starts with the business strategy – what is the company’s goal, what is being offered, when and where?  Then, how does the supply chain iterate and evaluate the cost benefit tradeoffs over time? Most supply chains do the cost benefit tradeoff at the end of the quarter, or after the disruption has occurred.  Masked with the benefit of “made the revenue plan” is the failure of lost profitability.   It’s even worse when supply chain leaders reward the fire-fighters, enabling an organization that sees expediting more positive than preparation. Call it Stage 4, call it value driven, call it supply chain strategy, the core is to know and respond across the complete supply chain network, and simulate the tradeoffs that enable the business plan.  You can see what the most important step in getting to stage 4 according to the Kinaxis clients… GET THE END-TO-END DATA! Using that data with incredible speed, affords you a level of influence and power across your company and supply chain network, and enables a value driven strategy.  

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