Major industry executives make Supply Chain their business

Today’s manufacturing and consumer goods supply chains have become so complex, they incorporate almost every available facet of Information Communications Technologies (ICT). As these major industries retool for the future, they have identified common threads, including the elevation of decision-making to the highest levels of corporate accountability.

Today’s manufacturing and consumer goods supply chains have become so complex, they incorporate almost every available facet of Information Communications Technologies (ICT). As these major industries retool for the future, they have identified common threads, including the elevation of decision-making to the highest levels of corporate accountability.

This week, executives from Cisco, Samsung, BT, IBM, and Motorola, have joined colleagues from other technology disciplines and vertical industry in a two-day virtual summit. The Chief Supply Chain Officer Summit features dozens of sessions with C-Level executives in live panel discussions across a span of two days.

At present the actual office of CSCO may not occur formally, in that a vice president or director of technology may hold the responsibility. However, observers and practitioners of supply chain see the topic rising from operational to corporate domains, even boardrooms.

We recently spoke with several presenters to learn more about the summit’s agenda, and their opinions on the demand for supply chain visibility, and telecom’s vantage point on the whole kit and caboodle.

IBM Software Group’s Paul Hoy, Global Industrial Sector Executive, Business Analytics, said supply chain capabilities have become a realm of competitive differentiation.

The industrial sector practice at IBM deploys the Cognos software platform, which renders supply chain analytics and metrics, and tracks inventory for the end user point of view.

There are nuances or differentiators between major verticals, Hoy said, but they share a number of basic requirements, and now as much as ever require ongoing performance management. This new approach allows companies to become proactive and flexible, rather than reactive, he said.

In the old school, one could forecast demand through the supply chain and expect this will drive procurement and production. In the new school, where market conditions change rapidly and span the globe, it has become a customer-demand-driven supply chain, according to Hoy.

Research firm Aberdeen Group has observed this phenomenon as well and partnered with the CSCO Summit to introduce preliminary market indicators and to shape the conference’s agenda around topics that will drive additional market research for supply chain’s benefit.

Principal Supply Chain Management Analyst for Aberdeen, Nari Viswanathan, Vice President, said the higher the role of supply chain’s office in the corporate organization, the more likely the success of its initiatives.

Among practitioners of supply chain within the telecom industry, Viswanathan said, LG currently rates highest. LG, which receives an aggregate score across its other market sectors (e.g. TVs, consumer appliances) was number five in Aberdeen’s 2006 survey. Since then, LG has continued to improve its management techniques, climbing to third place in the 2009 survey results. Other global leaders in Aberdeen’s rankings include Nokia Siemens and Apple.

The difference, he said, was the creation of a CSCO at LG, which signals the company’s commitment to its supply chain transformation, making visibility and versatility paramount, demanding of the company a willingness to accelerate business processes, and ultimately to invest in changes to network structures and enterprise resources.

While it advocates this new position, thee conference agenda does not drill into technical details and tactics. At a higher level, it foster dialog between like-minded enterprises to share their vantage points, such as the widespread need to create interaction between a multitude of brands and ERPs, and reconcile their differences.

“You can ask any executive, what’s the first thing you want to know? and they will say ‘I want to know what the impact is to my business?'” John Sicard said, who is Executive Vice President Marketing, Development and Service Operations for the supply chain management software provider Kinaxis.

The common requirement immediately after that will become who can help me? Sicard said. “So this is a really salient question when you think about it… Hey, wait a minute. There are thousands of people out there in my supply chain, and I don’t know if the problem is in a master schedule in Ireland or a with buyer in Singapore. I need to know the name, rank, and serial number of the person who can help me solve this problem.”

Telecom industry suppliers and service providers are at the forefront of the transformation in more ways than one. In addition to provisioning the networks required of global supply chains, they also depend on their own supply chains to maximize return.

Telecom product life cycles illustrate a trend spreading across supply chains now, as they must adapt to shorter life cycles than previously determined. Telecom’s own needs are similar to the growing number of customers and partners responding to this acceleration, and tying disparate geographic suppliers together.

“The past breakthrough was: plan it better, become a better planner. The future breakthrough, I think, is going to be: respond to plan variants better,” Sicard said.

ModusLink’s Senior Vice President of Marketing, Lorcan Sheehan, believes the forum represents progress for business management, but reminded us that economic conditions — from micro to macro — remain fragile, and few would say that recovery is under way. Therefore, long-term planning for supply chains remains a challenge of scope and scale. Even currency fluctuations can significantly disrupt supply chain stability, which has already impacted components markets. The challenge is making it sustainable, he added.

Sheehan says this can become even more complex for network design and supply chain management when regional regulatory concerns impact procurement or payment assurance, such as is a growing concern for the pharmaceutical industry. If today’s regulatory demands serve as an indicator of future requirements, it only underscores the necessity of visibility, and accountability in the supply chain, according to Sheehan. Other industries likely to require more regulatory access protocols include consumer electronics, medical devices, the military, and food and drink.

Ironically, it is the efficiency and reach of networking protocols that now force the service of supply chain to understand how to manage the complexity of its capabilities.

According to Sheehan, services over telecom networks increasingly are oriented around the value chain and the supply chain. Often, this includes manufacturing plants in other countries, components, assemblers and distributors who may be in others.

Cisco, for instance, may have 6 different partners, each running different instances of ERP, supporting different brands, none of which talk to each other. Sicard, from Kinaxis, said that’s a complicated problem when understanding your current state and current risk and you’re one level removed.

“When you think about Cisco, they actually don’t make anything; they don’t manufacture anything. Cisco has 60,000 people in its supply chain and only 2000 of them work for Cisco. That’s a lot of people to orchestrate. Collaborating through this supply chain network becomes more urgent and more strategic,” Sicard said.

Sheehan posed a fairly simple question that crystallizes the beginning of supply chain transformation: how do I bring more knowledge up front?

Cisco’s vast and nimble supply chain, for instance, required the company to reconsider its supply chain networks to adapt its flow and ebb more faithfully in tandem with market conditions and demand.

IBM’s Hoy said he thinks Cisco is following the path that retailers have for decades and now acts more as a distributor. Looking forward, he anticipates this trend to continue growing.

“Human collaboration is coming back,” Sicard said. “Its funny we went from the early 90’s where the technology was about trying to get people out of the equation,” he said, acknowledging that the Internet continues to disrupt business models in ways he may not have anticipated. “20 years later the business problems are changing and the science required to solve those problems must change with it.”

The Internet is driving people back into the supply chain, he said. “People want to be part of it.”