I read with great interest a recently published report from Lora Cecere (Building Market-driven Value Networks, Supply Chain Insights LLC, 7/10/2012) that outlines where she believes the market is going. I agree with her. While many of the examples she uses come from outside high-tech/electronics, it doesn’t take rocket science to translate the examples into other industries, such as the Cargill Meats example:
Cargill Beef is a market-driven leader. The Company uses price optimization tools to evaluate the market potential for beef. Before the company decides what to package for the market, they first evaluate the market potential for each cut of beef and then optimize how they harvest their inbound herds to maximize the opportunity and minimize the risk. There are 197 ways to cut up beef cattle. Since each breed of cow has a different potential or finite mix of products—steaks, ground beef, roast, etc.—Cargill uses the technology in Sales and Operations Planning to drive rancher insights to define which breeds are best for customer demand. This process of being adaptable to trade-offs from market-to-market based on the use of optimization technologies is termed demand.
This is a great example of Alignment across the supply chain. As always I am not thrilled by the term “optimization technologies”, and I am sure we could convince Lora that demand prioritization and smart heuristics could provide answers that are close enough. More important is the description of how the end-to-end supply network is aligned around market drivers. If you think of the lead time from calf to cow, changing a farmer’s breed mix has a significant lead time, and market needs will change in this time. There is also a great definition of Agility , include a maturity definition (which by the way I believe is a key outcome of deploying RapidResponse, the others being Visibility and Alignment). From the report:
I also like Lora’s use of the term Sensing in the report to denote a higher order Visibility. My take is that Visibility is knowing not only where stuff is, but also the business outcomes that result. I agree that lots of people are looking for the physical visibility as a starting point. Hence the difficulty of coming up with the right term because I wanted to capture the “know-where-my-stuff-is” visibility, but not lose the “what-does-it-mean” visibility. Sensing is “what-does-it-mean” visibility, but Sensing is an action, not an outcome. Any suggestions? Our battle cry at Kinaxis is ‘Know Sooner, Act Faster’. Sensing is related to the “Know Sooner” part of the strap line. Agility is related to the “Act Faster” part of the strap line. And of course, Alignment is what you need to enable both. So I think we are on the right track. Excellent report Lora.