Can Small Business Do Big Data?

Examples abound of how large corporations have harnessed the power of big data analytics across various aspects of their supply chains, such as demand forecasting, planning, sourcing, production, and distribution, to save millions of dollars. It would be only natural to assume that these companies had the resources necessary to commit themselves to such an endeavor: ERP platforms, or other transactional systems that had amassed large amounts of historical data (volume), and other sources of unstructured data (web clicks, GPS or mobile data, etc); analytic tools, knowledge (both domain, and of methodologies, and techniques), and the people to apply that knowledge to those tools; and money – large amounts of money. 

A white paper by Inmon Consulting [i] suggests that for a large data warehouse (one of two major platform architectures that can be used to implement big data analytics; the other being Hadoop), say several terabytes (1 terabyte = 1024 gigabytes) being managed by solutions provided by IBM or Teradata (vendors), the cost of the infrastructure would be $500,000 to $1,000,000 per terabyte. That is serious money.

On the other hand, according to a Winter Corporation report [ii] on the cost of big data, Hadoop, which is a lower cost, open source alternative to a data warehouse, has a commonly quoted acquisition cost of $1,000 per terabyte. That is still serious money.

These are just the costs of acquisition. Factor in maintenance, upgrade, and other recurring costs; throw in the cost of investing in human capital that can actually maintain these monster data stores and do the analytics on them; and you have huge overheads that inflate the initial acquisition figures. This is daunting for any business – big or small.

However, this money is something that big businesses can afford to invest. What about small businesses? Are they going to be left out of the wave of big data analytics sweeping across the business landscape and find themselves at an inherent comparative disadvantage?

There are many resources out there for small businesses that do not have the kinds of fat purses their larger competitors have, to take advantage of analytic capabilities for their data. Google Analytics is just one such tool that helps business owners see who comes to their site, what pages, and what products they look at, and what the overall traffic pattern is like. Use Google Analytics with Google AdWords, add Facebook Insights into the mix, and you realize that there are tools out there that democratize the availability of big data analytics, and bring small businesses into the game.

Need something more advanced or tailored than that? How Small Businesses Can Mine Big Data, an excellent article by Christopher Null [iii] provides some pertinent examples of how small businesses can shop around for, and choose from amongst different, lower cost big data service providers. Another article, How Can Your Small Business Use Big Data?, by Tim Parker [iv] provides examples of services such as SumAll. SumAll acts like an aggregator and takes data from different online platforms, such as Facebook, Twitter, Tumblr, as well as Google Analytics, AdWords and AdSense and organizes it in “an easy-to-read snaphshot” – and its free. There are other suggestions for using your CRM data, or looking into government data. Square, [v] which is a cheap payment processing option for small businesses, provides an analytics dashboard for free. It can help small store owners answer questions like what is the busiest time of day, which products are doing well, when should they have the most staff, and so on.

Then there are the many creative ways in which small businesses are trying to meet resource requirements to be able to do big data analytics. Taken from a Harvard Business Review blog article, [vi] the following excerpt highlights that:

“True that in the past, companies seeking to tap into big data needed to purchase expensive hardware and software, hire consultants, and invest huge amounts of time in analytics. But trends such as cloud computing, open-source software, and software as a service have changed all that. New, inexpensive ways to learn from data are emerging all the time.

Take Kaggle, for instance. Founded in 2010 by Anthony Goldbloom and Jeremy Howard, the company seeks to make data science a sport, and an affordable one at that. Kaggle is equal parts funding platform (like Kickstarter and Indiegogo), crowdsourcing company, social network, wiki, and job board (like Monster or Dice). Best of all, it’s incredibly useful for small and midsized businesses lacking tech- and data-savvy employees.

Anyone can post a data project by selecting an industry, type (public or private), participatory level (team or individual), reward amount, and timetable. Kaggle lets you easily put data scientists to work for you, and renting is much less expensive than buying them.

Online automobile dealer Carvana, a start-up with about 50 employees, used Kaggle to offer prizes ranging from $1,000 to $5,000 to data modelers who could come up with ways for Carvana to figure out the likelihood that particular cars found at auctions would turn out to be lemons. For the cost of the prize money (a total of $10,000), Carvana got “a hundred smart people modeling our data,” says cofounder Ryan Keeton, and a model that the company was able to host easily and inexpensively.”

Summing it all up – there are many opportunities out there for the small business to leverage resources and look into the data that they have.  Looking at the picture below (a hardware vendor, somewhere in Pakistan) – can all of them really do that?

 

Image Source: http://asiagrace.com/pakistan/hardware-store.php 

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[i] http://www.dataupia.com/pdfs/industryanalysts/reg/Inmon_White_Paper.pdf

[ii] https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&cad=rja&ved=0CEAQFjAD&url=http%3A%2F%2Fwww.teradata.com%2Fwhite-papers%2FWinterCorp-Special-Report-Big-Data%2F%3Fpid%3D6478&ei=qGgOU_PULPS30AHQuYGoBg&usg=AFQjCNEZXhxz_s2dzS8BfTzNjmXjZt-6MQ&sig2=lyfqRjrUyeYSOO8HV9OUTg&bvm=bv.61965928,d.dmQ

[iii] http://www.pcworld.com/article/2047486/how-small-businesses-can-mine-big-data.html

[iv] http://blog.intuit.com/trends/how-can-your-small-business-use-big-data/

[v] https://squareup.com/

[vi] http://blogs.hbr.org/2013/12/even-small-companies-can-tap-big-data-if-they-know-where-to-look/

Disruptive technologies. Business killers or business generators.

Among the articles recommended for this week, we found some commonalities, the disruptive role of 3-D printing for (some years ago) unimaginable applications, and the disruption (caused by this and other technologies) on older business models.

For instance, 3-D printed planters present a huge advantage in time and cost for patients (customers) but many people involved in the "traditional" treatment and orthopedics elaboration have their jobs threatened. "the radical ways technological innovations are now entering the market, often appearing as better and cheaper alternatives to existing goods, right from the start.    The impact of such disruptors on incumbents and their industries can be devastating".

Another -by far- more complex case, has been represented by the music industry. The internet and the digital formats where the breeding ground for a surge on piracy, that ended up with new distribution channels and business models, on which many actors found new opportunities, but traditional Music labels and industry leaders disappeared or lost most of their "ancient" power.

(source: http://arobinaday.wordpress.com/2012/02/12/the-structure-of-the-music-industry/)

“Personal-fabrication technologies present an opportunity for our nation to continue to lead the rest of the world in manufacturing, but in a new way.” says Ayah Bdeir, founder of littleBits.

The surge in start-ups is facilitated by venture capital, less available to established companies. The first ones can take advantage of the latest innovations as soon as they appear. But existing companies have a hard time adapting.

It's easy to be a technology fan, to applaud innovation when we get the benefits as a final customer or participating in the new business model.

But, what if we have invested on an start-up attempting to mount the last an highest wave in technology, and suddenly our investment is threatened by a new technology that makes our recent investment obsolete?.

The obsolescence cycle of some technology-driven capital assets has recently ranged from too short to unpredictable short. I want to put 60K on a 3D printer for a business idea with a huge potential. The outcome requires some post-processing... If the next generation of printers eliminates that post-processing, any new competitor can just take my idea, make it better, sooner, cheaper for final customers... and take me out of the business before break-even....

References:
Make Your Own Products: 3D Printing Reaches Consumers
<http://techland.time.com/2013/01/15/make-yourself-into-an-action-figure-3d-printing-reaches-consumers/#ixzz2pYnGdUl9>

Big Bang Disruption: The "Internet Of Things" Takes Off, Gradually And Then Suddenly
<http://www.forbes.com/sites/bigbangdisruption/2013/12/16/big-bang-disruption-the-internet-of-things-takes-off-gradually-and-then-suddenly/>

The Kitchen-Table Industrialists
<http://www.nytimes.com/2011/05/15/magazine/the-kitchen-table-industrialists.html?pagewanted=all>

Three top 21st century technology revolutions anticipated within the supply chain field

The age of big, complex and global supply chains is drawing to an end. Three emerging and converging technology revolutions: 3D printing, intelligent robotics and open source electronics are driving significant industry changes, impacting enterprises as well as governments.

3D printing

The first and most important revolution is 3D printing, also known as additive manufacturing. 3D printing uses technology similar to laser and inkjet printing to deposit layers of material on top of each other to build solid objects, a layer at a time. The technology has matured rapidly over the last two decades to the point where it is cheap enough for some consumers to buy their own printers. It frees companies from the need to build standard­ized parts and pursue economies of scale. To make the same size part, the time and cost is the same for  one as for a thousand copies of one part. 3D printers also eliminate the need for the costly and time-consuming creation of molds, enabling the step directly from a design to a part.

High-resolution desktop 3D printers are priced at about US$3000 today. The decrease in cost and size of 3D printers, along with improved accuracy and strength make it viable for makers and manufacturers to have more efficient design, lighter products and shorter product design cycles.

Not all materials can be 3D printed, however, about 30 industrial plastics, resins, metals and bio-materials are now supported, with conductive, dielectric materials and green polymers expected to be printable in ten years.

Stockless inventory models will result in smarter supply chains and lower risk in manufacturing. 3D printing will enable product customization to personal and demographic needs as retail models emerge, which engage the consumer in the product design process. Supply chains will also become more location elastic, as a result, bringing manufacturing closer to consumer.Transportation of fewer finished goods will alter global trade flows and the logistics industry, fundamentally transforming the principles of global mass production.

3D printing technology is already widespread in prototyping and specialized production applications like aerospace and jewelry. As costs fall, it is expected to transition into broad manufac­turing. 3D printing costs are expected to fall by 79 percent over the next five years – and by 92 percent over the next decade, making it more cost-effective than all except the largest comparable production processes.

Intelligent robotics

The second expected technology revolution is within intelligent robotics. In the last decade, a new and more flexible generation of robots has been integrated into production lines and adapted to new products. These systems can intel­ligently pick up items and place them correctly, adapt to variable rates of production flow and pick out correct items using machine vision. However, flexible robotics systems are still costly, taking weeks or months to design and configure for each step in the process, and costing US$200,000 or more per manufacturing cell.

The newest generation of robots has emerged in the last few years, and can be deployed for as little as US$25,000 each. They are also even more sophisticated than previous robot generations. They understand concepts such as production lines and they can be assigned to tasks without programming and designed to work safely with people in a manufacturing environment.

For manufacturers, the availability of cheaper robotics systems eases the search for low-cost assembly labor. Robotics will not replace all skilled labor, however, it allows for simple assembly operations at very low cost. This frees companies from excessively long supply chains and makes it possible to assemble products from components without transporting them to third parties for integration purposes.

Industrial robot sales have started to rise in recent years as costs have decreased and their capabilities have matured. Between 2009 and 2011, an International Federation of Robotics study found that their use in the Electronics industry rose from 18 to 23 percent. Improvements in robotic capabili­ties over time will continue to increase their usefulness, including: adaptive and reconfigurable assembly, safety, dexterous manipulation, correct-by-design manufacturing, unstructured environments and nano-manufacturing.

Open source electronics

Over the last decade, consumers and enterprises have become more comfortable with open source software. The purpose of embedded chips is to simplify products. Now, it is cheaper and faster to put a fully-integrated computer on every manufactured device than it is to develop a specialized, embedded chip.

Consumers have embraced these system-on-a-chip platforms to create open source hardware designs that add intelligence to devices, many of which can be produced by using 3D printers. Companies and individuals are publishing open source hardware designs using standardized components and developing open source software platforms that replicate system functionality. Whereas just a few years ago, consumers were sharing just 20 to 50 new open source product designs every month, today, there are more than 30,000 new designs every month.

For companies, the rise of open source electronics presents a dual opportunity. Running on a flexible platform translates to faster design cycle time. It also means that the marginal cost of adding significant intelligence to products is now almost zero. Open source electronics will bring the power and flexibility of complex control systems to a wide range of device types.

Of these three anticipated trends, which do you think will be the most impactful over the next century and beyond, and why?

 

Sources

http://public.dhe.ibm.com/common/ssi/ecm/en/gbe03571usen/GBE03571USEN.PDF

https://www.dhlsupplychainmatters.dhl.com/innovation

http://www.atelier.net/en/trends/articles/3d-printing-set-optimize-e-commerce-delivery_424024

http://www.infosys.com/supply-chain/pages/index.aspx

 

M2M Technology Allows Remote Management in Supply Chain

The report Top Ten Supply Chain Technology Trends, produced by Intermec Technologies, offers us interesting insights and comprehensive case studies regarding to the latest technology developments and trends in supply chain. The top ten supply chain technology includes comprehensive connectivity, voice and GPS communication integrated into rugged Computers, speech recognition, digital imaging, portable printing, RFID, RTLS…etc. While they may sounds familiar or even ordinary to you, the applications of these technologies are in fact bringing substantial improvements to the current supply chain systems.  Some modifications on the common technologies with a creative mind have benefited the supply chain and its customers, as well as increased efficiency and achieved cost-savings in supply chain systems.

One of the new trends in supply chain is the concept of remote management, which means the manager is able to access to up-to-date information of its supply chain and monitor the performance from a far off place in the real-time situation. Machine-to-Machine (also abbreviated as M2M) is a popular and widely used technology in today’s supply chain. M2M allows remote machines and sensors collecting and sending data to a central point for analysis, either by humans or computers so that there is less human intervention and therefore less costly. The difference between traditional communication technology and M2M is that M2M uses existing networks, such as internet, sensors and personalize computers, which gives us more accurate and real-time data.  

You may wonder how M2M works. M2M is a mixture of three technologies – wireless sensors, internet, and personal computers. For example, an environmental engineer needs to monitor the quality of water to make sure the environmental engineers. He may find that Data from the treatment plant will give information about the water's condition as it enters the process. For instance, the engineer places sensors around/near place that are sensitive to contaminates in the raw waters. Those sensors can tell a lot of information to engineers, such as oil appearing in the water. The engineer is able to monitor and analyze the problem and respond to it immediately.

M2M significantly improves the accuracy of data collections and communications between machines.  One unique M2M adaptation in supply chain is that its ability to configure, monitor and troubleshoot bar code readers and printers, RFID equipment, ruggedized computers and other industrial data collection and communication equipment. M2M is able to achieve this by monitoring the configurations and software updates of the machines to ensure its technology consistency, accessibility and compatibility to a wide range of machine which M2M can easily “talk” to, and optimizing RFID readers for their immediate environment by changing power output and making other tuning adjustments. M2M is able to “talk” to a variety of devices and machines, allowing more effective and efficient communications between machines and providing advantages such as a real-time environment for the supply chain manager.

Enhancing technology communication benefits many parts in the supply chain system, such as logistics and warehouses.  For instance, the manager and the truck driver can exchange information regarding the status of the orders, road conditions and time management through M2M technology. With a higher visibility of information and timely supports from the manager, the truck driver is able to achieve quicker delivery and higher efficiency. The adaptation of M2M doubtlessly has made supply chain system more integrated and more flexible to respond to changes in reality, as well as able to meet the changing attitudes of the customers about their needs. A question that we can think about is how to incorporate customers into the M2M network where customer can also exchange information freely with the supply chain.  

Top Ten Supply Chain Technology trends http://www.mirnah.com/images/White_Papers/Trends_SupplyChain/Top10Tech_wp.pdf

http://www.lantronix.com/resources/net-tutor-ds.html

http://computer.howstuffworks.com/m2m-communication.htm

http://whatis.techtarget.com/definition/machine-to-machine-M2M

Adaptive Global Supply Chains in a Changing Climate

If you'll recall, during a discussion on using the cloud to "burn the bullwhip" altogether so to speak, I mentioned an NPR feature that covered two agricultural giants progressively incorporating cloud solutions to farming. If you weren't aware of it before, global agricultural supply chains are among the most complex in the world for obvious reasons: they are among the most globalized, exceedingly elastic to price fluctuations and commodities market movements, and extremely vulnerable to weather-related risks - in sum, it boils down to one of the most risk-exposed supply chains with the most to lose (i.e. food source shocks).

Using cloud-based analytics, both Monsanto and Deer & Co. (you know em' when you see em', monstrous green'n'yella' machines responsible for the bulk of modern agriculture's field work) are beginning to introduce Midwestern farmers to competing services, both of which use predictive analytics to optimize harvest yields and improve global supply chains. Monsanto's offerings are housed within a service called FieldScripts and Deere is offering both JDLink and Autotrac.

Up until today, I was only going to outline the innovations then bring up Monsanto's incredible $930 million dollar acquisition of climate analytics startup The Climate Corporation. But then the plot thickened this morning when the University of Notre Dame's Global Adaptation Index (ND-GAIN) announced that it had successfully orchestrated a partnership with two other organizations to bridging the divide between sustainability/climate adaptation advocates and large-scale corporations that require scalable strategies. ND-GAIN is a center for the collection and analysis of data related to climate change and its real-time impacts on vulnerable communities throughout the world in the fields of urbanization, coastal concerns, water, food/agriculture, and energy (Youtube feature). The other two organizations are Four Twenty Seven, a San Francisco-based environment consultancy, and Climate Earth, a private firm that specializes in offering sustainable supply chain and financial management strategies that are scalable for large companies. You can read up on the details here.

To pause for clarification, what do we mean by adaptation? Find out from the United Nations Framework on Climate Change's overview. In short, "adaptation" studies pertain to any strategies that prepare people groups, their government's, and corporations for the deleterious affects of climate change. It has become a buzz topic in the world of international development, foreign affairs, and environmental specialists in recent years as the number of global natural disasters increase, especially floods and droughts.

As with a former post of mine, this topic also happened to be a major topic of discussion at Davos 2014 as well. The culmination of leading researchers' work and the collaborations of global leaders at the Forum can be found in a fascinating report released this past January entitled, "Climate Adaptation: Seizing the Challenge." The most salient point for our purposes here is that the negative effects of climate change will present new challenges to 21st century supply chains. This very point is explored in the report mentioned above, but was also articulated succinctly by World Bank President Jim Yong Kim. Drawing this connection between climate change and economic risk, he passionately called on corporate leaders to drive the transitions to sustainability that our world needs, but by honing in on the things that matters most to them:

Be the first mover. Use smart due diligence. Rethink what fiduciary responsibility means in this changing world. It’s simple self-interest. Every company, investor, and bank that screens new and existing investments for climate risk is simply being pragmatic. (Kim from "Jim Yong Kim: Make 2014 the turning point")

There it is, "simple self interest," both a hallmark of traditional liberal economic theory as well as an important consideration for company's that wish to stay alive.

Perhaps your exposure to the discussion of climate change is narrowly divided along strict lines - industrialists and environmentalists. Thankfully, this kind of hysterical myopia is only a most notable trend in the US, while the majority of the rest of the world (particularly the Global South) has been taking this seriously for a decade or more. However, recent trends among large US-based companies suggests that Kim's self interested pragmatism approach is actually starting to play out in board rooms around the county. In a recent New York Times article entitled "Industry Awakens to the Threat of Climate Change," Coral Davenport profiles Nike and Coca-Cola, two Fortune 500s who have a large presence in areas of the world who are or will be greatly affected by climate change. Along with their peers, they both are feeling the heat (pun intended) and beginning to change their behaviors to respond to the risks by changing themselves. In the examples provided by Davenport, Coca-Cola began using water conservation technologies in response to droughts, and Nike began using synthetics to avoid the procurement-related issues with previously used materials.

But it should be said at this point that there are some sectors whose risks cannot be ameliorated by changing their procurement strategies or making operational improvements aimed at conservation. When it comes to global agricultural supply chains, the "procurement strategy" is far too entangled with variable largely out of our control, namely the part where you have to put a seed in the ground and nurture it to growth with good soil, water, and sunlight.

With that, we're brought right back to Monsanto, Deere, and ND-GAIN. Both Monsanto and Deere recognize the enormous potential of analytics to optimize their clients' productivity, and that the outcomes will be mutually beneficial. Furthermore, without saying much on the matter, it is clear they are attempting to provide solutions in sustainability that can assist the agricultural industry in responding to sudden changes in real-time. ND-GAIN and their partners are doing the same, hoping to provide a similar service to companies that don't have what Monsanto and Deere have, the only difference is their information is being offered open source.

In the first place, one of the more exciting elements of all this strikes a similar tone to my former post on the "circular economy." The Ellen MacArthur foundation has a daunting mission, and they begin with a fairly critical rebuke of our current model of production and consumption. But instead of taking some kind of moral high ground - pretending as if they too don't also participate in the activity that fuels it - they struck up partnerships with the likes of McKinsey & Co. and the World Economic Forum to deliver helpful solutions to the world's largest MNCs that are more than just wagging their shaming fingers and actually attempt to develop scalable alternatives. 

In the same way, ND-GAIN and its newest partners are investing their energies in cultivating the kinds of resources necessary for large firms to change. The partnership they announced today will spend the bulk of its time creating a large-scale "enterprise-quality application" called the Climate Change Risk Management Index: 

It will enable large corporations to quickly map and quantify global supply chain risks due to climate change, leverages climate indicators and country risk ratings developed by ND-GAIN, the world’s leading research index showing which countries are best prepared to deal with climate disruption and other global shifts. (ND-Gain News Release, 2/25)

At the same time, Monsanto and Deere are preparing their most important agricultural region - the currently fertile and always vital Midwest - through the use of a cloud enterprise system that incorporates analytics to improve the decisions of farmers and the ultimate outcomes. In both instances we see the importance of new technology to allow for SCM improvements, particularly this "final frontier" of cloud-based intergration or, better yet, cloud-based enterpise-quality applications for supply chains. A tertiary benefit is the ways the solutions can better unify the entire chain of actors in a supply chain, thereby reducing the bullwhip effect.

The need for 'Just in Case'

This weeks articles talk about the formation of new hubs to deal with Just in case distribution. As opposed to the Just in time methodology of inventory management which uses lean techniques to reduce storage costs, the Just in Case strategy deals with unforeseen circumstances that can lead to the disruption of supply chain logistics. Natural disasters like hurricanes and unforeseen events like labour strikes can cause massive loses to company that depend on the shipping industry for getting their products to them 'just in time'.

The West Coast Port shutdown of 2002 was one such incident. The 10 day shutdown caused massive loss to companies as their inventory could not reach them in time. This and other events such as hurricanes have prompted various companies to look for Just in Case distribution hubs as a counter measure.

Not all company’s however, were as badly affected by the West Coast port shutdown. In the article, 'Living in Dell Time’, we have seen how Dell turned around this unforeseen ‘catastrophe' into a competitive weapon. By moving quickly at the slightest hint of a shutdown, they managed to not only keep their inventory up and running but also capitalised on the logistical nightmare affecting its competitors. How it dealt with the entire event seems something out of spy movie. We can say that Dell’s on the feet thinking and its ‘unrelenting sense of urgency’ got it through the disaster. This was a learning lesson for many companies and Dell was praised for its efficiency.

The important question here is, can what Dell pulled off be done every time, or is there a need to look for a less risky alternative, which many of the companies are searching for in 'Just in Case’. There were a number of factors that helped Dell with what they achieved. The fact that they had an inkling of the probable shutdown 6 months in advance and the large number of resources at its disposal were a couple of major factors. Not all the company’s in the world have the kind of resources that Dell has. Even if they did, there are only so many Boeing 747’s that can be used instead of ships to carry inventory from across the world, which again, may not even be feasible for most of the smaller companies. Dell could do what it did, only because other organisations were ill prepared.

Many company’s believe that the same 'Just in Time’ that was a huge asset in reducing inventory costs is becoming more of a liability in the wake of such unforeseen disasters. They feel the need to move back to the traditional way of stockpiling inventory, at least in part. This is where Just in Case comes in. It is a contingency plan for when things go wrong. 

How company’s implement Just in Case in conjunction with Just in Time depends from company to company. One factor the company’s need to take into consideration is the loses incurred by storing additional inventory vs the loses incurred by inventory shortage in case of a natural disaster. They needs to find the optimal balance in using the two strategies for the maximum speed and efficiency while still being prepared to deal with an emergency.

The need for the Just in Case strategy is more prominent then ever.

Supply Chain Network – IT works!!!!

The mantra of a successful business lies in the 3Ps – Procurement, Production and Passing onto the products/services to customer. The 3Ps can be widely evaluated on parameters like time, money, manpower etc. As we see this looks very simple, but the question is – is it?

Supply networks describes the flow of material and information over a grid of inter-linked bodies. The flow can be unidirectional or multi-directional, depending on what information or material flows. The idea is to identify and define suppliers, plants, warehouses, flow of goods from origin to final customer, while optimizing the process all the through. A company must decide how it could tackle a particular market. The strategy needs to be chalked out. How close the suppliers, plants, distribution network be to the target market. Many a times, two geographically separated, different companies combine in order to produce goods and sell it to the near market, thus bringing the cost of operation significantly down. At times, a third party logistics is involved to curtail the cost of creating a private logistics set up. And again, some go for local manufacturers to produce goods for the bigger brands.

Though, it seems that the company should and must have all this components near to the target market/customer. In real world it is quite a bit difficult. Sometimes, the cost of creating a local production unit is way too high than actually transporting the finished products from a distant location. In some other cases, the finishing of the product itself requires the intermediate products to be transported back and forth between two different locations in order to produce the final product. There is a myriad of possible scenarios. With advances in the economic conditions and increase in the demand, there is huge influx in these logistics. A survey reveals, logistics industry supports the 90% of the total market business. Now, that indeed is a real big number. Controlling such huge quantities of products and correct delivery of all of them is very critical. But, handling all of them can be daunting task indeed.

The role of technology pitches in here! Information technology is panacea for the logistics industry. Consider, manually tracking each consignment right from pick up to dispatch to delivery.  There are millions of thousands of consignment moved across the globe every day. The results of an error can be really decisive. Information technology serves a large part of the total logistics industry, especially large scale logistics. Many techniques like Radio Frequency Identifier (RFID), Global Location Number, Transport Management System (TMS), and Bar Coding etc. are brought into use on a day to day basis for the right on-time and correct dispatch and delivery of the logistics. These new techniques bring the occurrence of errors significantly down and speed up the process of tracking the exact location of the consignment. Instead of keeping voluminous records of all the transactions, the data can be stored electronically. Some consignments even have their units electronically save information of the source and destination, thereby making the chance of wrong deliveries less even if a part or a unit of the original consignment is misplaced.  As the market grows further, the need of even better and advanced technology would increase. The role of IT managers no doubt, would increase and the future. New Ideas to further make the supply chain network more streamlined is very necessary.

No doubt, IT is the solutions to all the queries of Supply Chain Network.


Ref: Information on public domain web  

Supply chains in 21st century!

Supply chain management (SCM) is the management of the flow of goods. More specifically it is defined as the “design, planning, execution, control and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand and measuring performance globally.”

So, we can deduce that SCM draws heavily from the areas of operations management, logistics, procurement and information technology and it also strives for an integrated approach to maximize end results right? With the globalization and widespread use of information technology the SCM has become very complex and volatile in the 21 st Century. Earlier dependence on “warehouse management systems”, “product lifecycle management”, “or logistics management packages” no longer is enough to fully understand the complexities of the challenges of modern day SCM. Many huge companies are relying on material requirement planning (MRP) system in order to come up with suitable answers to the current demands.

Previous challenge with SCM was not having visibility into what is being moved and its status. But now, the modern tools have solved this problem. Now the problem is which specific items are being moved/made available for the manufacturing platform.

The 21st century challenges:

Ø  Customers demand shorter lead times, more variety and customization.

Ø  Due to advent of internet, transactional friction has reduced and hence competition can come from anywhere. Hence supply chain has become extended, vulnerable for disruption.

·         Old “push & promote” mode of operation has caused the following:

Poor inventory performance

                        Poor service levels

                        Higher expedite related expenses

The “push & promote” mode of operation has given rise to “position & pull” model called “demand driven MRP” (DDMRP). Similar model that is gaining increasing attention is “Vendor Managed Inventory” (VMI) which makes companies reduce / postpone inventory ownership but still have visibility into in-transit inventory.

It is Digitally-Driven Future.

Supply chain segmentation enabled approach is needed today instead of ‘ONE SIZE FITS ALL’ approach. RFID enabled retailers are needed to improve inventory accuracy. Now, RFID has moved to tagging up the source.

‘Cloud Information Technology’ is changing the way B2B interactions are carried out- Cloud based software is being adopted to the businesses.

I feel that more ways should be found to ‘free up cash’ in the supply chain. ‘Just in time’ inventory strategies should co-exist with global sourcing strategies with the cloud based supply chain platform. I urge the companies to buy the best IT platform to manage SCM.

Customer-centricity : Companies should align their supply chain strategies to broader business goals and build competencies around each stage of the product lifecycle to achieve greater customer centricity while also improving operational efficiency and driving growth in the market. Similar to supply-side mechanisms ( to reduce waste), focus should be laid on demand-side mechanisms (to reduce wasted opportunity) also.

There are various other challenges for executives in the field of supply chain such as:

Ø  Globalization and off-shoring…

Ø  Demand and supply volatility

Ø  Product portfolio explosion

Ø  Partner collaboration and visibility

Ø  Acceleration of market changes

Ø  Revenue and profit considerations

There are various other challenges for executives in the field of supply chain such as:

Ø  Globalization and off-shoring…

Ø  Demand and supply volatility

Ø  Product portfolio explosion

Ø  Partner collaboration and visibility

Ø  Acceleration of market changes

Ø  Revenue and profit considerations

As market challenges became ever more acute, sales and operations planning(S&OP) has become ever more critical. Yet, most organizations are stuck. Their technologies and processes are no longer working for them. Simply put, their needs have evolved past what their current approach to S&OP can deliver. And they are not quite sure what to do next. Technologies have improved and there is ample opportunity to fully leverage them to gain performance improvements, but it requires the organization to change their view on how to approach both the process challenge and the technology solution.

Given the increasing trend in outsourcing in all industries, there is great amount of interest in visibility. It is the ‘money men’ that have pushed us in the direction of outsourcing and off-shoring, largely to get expensive assets off the books and in pursuit of cheaper labor. No Operations person would have chosen to outsource because of the lack of direct control this implies. Activities that used to be under the direct control of operations have now shifted to a Procurement function.

I am not suggesting the ‘money men’ are wrong to focus on the company value. Far from it. The issue is that we have not replaced the direct oversight of an internal function with the required visibility to maintain the level of control necessary to manage an extended supply network.

Lora Cecere of Supply Chain Insights has weighed in on the supply network visibility discussion stating in a Forbes blog titled “Building The Extended Supply Chain: If Only It was Like Legos” that

The primary investments of today’s corporations are in Enterprise Resource Planning (ERP from major software providers like INFOR, SAP SAP and Oracle Oracle.) The average company has not one, but seven instances. (Imagine seven Lego blocks….) And, while the company would like to use these investments to connect to trading partners, the study substantiates that the only value that is being derived from these investments is visibility of internal manufacturing. As shown in figure 1, the gaps in logistics and supplier visibility are large.

So, what do you think can be done to connect these legos together?

The modern business model, and its impact on supply chain complexity

In the New York Times article "Putting Customers in Charge of Design" (http://www.nytimes.com/2010/05/16/business/16proto.html?_r=0), we see the emergence of a new, small, customized, higher priced and less supply-chain heavy business model.

This model relies on relatively well-to-do urban, trendy customers who are interested in personalized, small brand purchasing experiences. In the case of Blank Label, we see a clothes manufacturer that deals with their end, individual customers directly rather than selling to retail stores. As a result of short-cutting the supply chain, the manufacturer in this business model is able to make much more profit per item than the manufacturer who sells to retail locations. The downside, implicitly, is that scale is perhaps more difficult to achieve -- at least in the case of the start-up, Blank Label.

Although I am unaware of large-scale customized shopping/manufacturing business models, it is possible that the internet will enable the extension of this model to a wide audience. Blank Label's customer reach is built around the use of the web, and the customer's individual style choices are actualized through an savvy online clothing design interface. Potentially, this business model can accomodate as many transactions as the traditional retail-only business model. In the event of expansion, however, we would presume that the supply chain at Blank Label would grow more complex, with a more apparent bifurcation between the customer sales and service end, and the manufacturing end, of the business. The main advantage in Blank Label's case, however, is the lack of inventory: each clothing item is made on the spot, upon order.

Question: How can a large, product-sales based company maintain a minimal supply chain (with regards to supply chain components, complexity of relationships and price)?

Big Data and Me: The Unlikely Duo

I came across a blog this week that summarized some of the main points in Waller and Fawcett's on big data and supply chain systems. One of the blog's notes include Waller and Fawcett's notion that quantitative/technical skills are not the "end all be all" of data analytics in business applications (Ferguson 2013). An understanding of  the underlying business environment behind data is also a requisite skill for powerfully using data to better a business or supply chain. 

As Carnegie Mellon students, we've all come across classes/situations that address extremely quantitative or technical approaches to business problems. For the past two weeks, I have been learning about multi objective goal programming. In short, this type of mathematical modeling is used to achieve solutions to problems with competing/contradictory objectives. These types of problems do not always have a clear question that is asked nor will the best solution always stay the best solution. Priorities change, budgets change, and consumer demand changes, which all require agile, creative approaches to analyzing data. In a blog entitled, "Predictive analytics-art or science?," the author, Rachel Clinton, emphasizes the predictability component of big data and notes that "Some basic analysis can be done using this data by means of canned queries, pivot tables, summarized reports, and so on— but that’s basic ‘how much, how many, how often’ analysis – it’s not predictive analytics" (Clinton 2013). Spot on, Rachel.  As someone with very little technical background, I find myself able to contribute to complicated MOLP problems by knowing the setting in which the problem takes place, understanding how the variables interact with each other from a qualitative standpoint, and using business acumen to infer what the writer of the problem--in this case the author of the textbook--really wants. But without knowing the ins and outs of Excel, Oracle, or any other database/analysis platform, how can I conceivably contribute?

My Management science professor has often cited example where says that his success as a mathematical modeler has come from creating models that decision-makers can then use to feel like they have come up with the right answer. In fact, the whole point of the course is to become an effective "end user" modeler (Caulkins, Management Science I Syllabus). And nowadays, there are many type software out there that allows decision makers to solve network optimization, MOLP, and other types of problems without necessarily building the algorithms themselves. One of these is just the Solver add in to Excel that Public Policy majors have become familiar--some may say too familiar--with. Sometimes, the person on the end user is the last link to making the right decision in stream of complex business problems. 

I really loved Waller and Fawcett's article because it promotes that idea that varying skills sets are needed in a complex process like making a decision about a supply chain. Waller and Fawcett even notes that for some SCM applications, softer skills like budgeting and evaluating opportunity costs can be more useful than the more theoretical/technical/quantitative skills in the same discipline (Waller and Fawcett 2013). This brings to light an important question, however. How can people in such widely varying disciplines work together while maintaining effective and productive communication lines in a supply chain?

Sources:

Clinton, Rachel. Predictive analytics – art or science? Retrieved from http://www.sv-europe.com/predictive-analytics-art-or-science/.

Waller and Fawcett. Data Science, Predictive Analytics, and Big Data: A Revolution That Will Change Supply Chain Design and Management. Retrieved from file:///C:/Users/arie/Downloads/SSRN-id2279482.pdf.

Ferguson, Renee. "Are Predictive Analytics Tranforming Your Supply Chain?" Retrieved from http://sloanreview.mit.edu/article/are-predictive-analytics-transforming-your-supply-chain/.

Five Major Issues: Facing Supply Chain Executives

Executing supply chain excellence strategies can make favorable contributions to return on assets, margin, improved customer service and competitive advantage while generating more reliable metrics by which to measure success and foresee trouble spots.  Executives should be aware of the top challenges they will face as they make changes to their supply chain operations.

Continued complexity being added to supply chain operations. As more technologies, processes and “red tape” continue to be layered onto their operations, companies increase their costs of doing business and create confusion about what must be done to realize the corporate objectives and vision. Companies must be vigilant about finding and stamping out unnecessary complexity wherever it exists—for instance, identifying ways business or operating units can share common processes and technology platforms.

Overlooking the continued growth of e-commerce as a channel in the industrial sector. As sited by The Chief Supply Chain Officer Report in 2013, more than half (55 per cent) said the demands of e-commerce and mobile-enabled consumers are increasing the number of stock keeping units they have to support. Almost 55 per cent reported they are building new distribution centres, and 48 per cent are building direct-to-customer fulfillment capabilities. However, to avoid being the next Borders, small and midsize industrial manufacturers and distributors must take ecommerce seriously.  That means building multi-channel fulfillment networks that can simultaneously process orders from multiple ordering channels and fulfill them from the source that provides the highest level of customer satisfaction and the lowest fulfillment cost.

Inattention to potential risks.  An inability to define potential risks and develop mitigation strategies for those risks that have a high probability of taking place could jeopardize business continuity and profitability. With the globalization of manufacturing operations, having a global procurement network that can support and react to your supply chain needs is important. One of the very trends that has increased supply chain risk – globalization – also provides opportunities to manage that risk.

Safety and quality products. The pressure on manufacturers to produce high-quality products that are safe is an increasing challenge. The number of product recall cases is growing each day. It can damage a company’s reputation and is expensive to its bottom line. Following the horse meat scandal, safety and quality incidents are at the top of the risk index, with 37 per cent reporting that they are “very concerned” about this for 2013-14 and 35 per cent are “concerned”.

Unrealistic assumptions that supply chain management technologies will fix everything.  Access to the latest technology in various fields by having the right experts has proven to be a great support in new product development. However, for technology to work most effectively, a company must have an explicitly stated and shared corporate vision and mission—not just among external customers and service providers, but also internal constituents involved in the supply chain, including warehousing, transportation, and sales. 

In addition to the challenges discussed above, in 21th century supply chain management, an executive might also need to facilitate career progression, developing new production skills and demonstrating a return on investment is a further issue; continue to reduce costs while improving customer service and supporting expansion in new markets and product lines.  The bottom line is that while the executives have to deal with all these challenges, they should not ignore that it might also be possible for them to search some new opportunities at the same time, such as they might be able to use global souring to minimize risks and try to control supply chain disruption.

Here is a short video about a supply chain academy. Speakers focused on supply chain agility and the key importance of resource management, how to develop a strategic supply strategy to achieve sustainability of supply and the challenges of social and environmental compliance with the need to have a keen relevance in a volatile global commercial market place. 

https://www.youtube.com/watch?v=miWt_Nk2zEY

Reference:

1.http://www.supplychainedge.com/the-edge-blog/the-five-main-supply-chain-challenges-companies-face-today/

2.http://www.fmglobal.com/pdfs/chainsupply.pdf

3.http://www.bossard.com/en/how-we-add-value/key-challenges-in-supply-chain-management.aspx

4.http://www.supplymanagement.com/news/2013/the-five-major-issues-facing-supply-chain-leaders