Q: We have been talking about breaking down functional silos in the supply chain and achieving end-to-end integration for a long time. Kirk, what is different about the “control tower” approach and the “power of one” concept that you talk about at Kinaxis?
Munroe: In the past, technology was built to support the various functional silos and we looked for ways to integrate those silos to get an end-to-end view. But as businesses moved along, it became clear that it is virtually impossible to synchronize across all these different silos and still be responsive enough to the consumer. Trying to stitch all these together resulted in too much latency to support a nimble business. So the difference is having a technology that can do most of these functions in a single product.
Gaspari: I agree. At NCR we were really siloed and had people using one point system or another, or ERP, or Excel spreadsheets. But once we implemented Kinaxis and started rolling it out, we could literally connect the dots. We had to focus on change management to get people to give up the tools they had been using, but we did cross-functional training and we had the cross-functional leadership and support to get past these biases.
Bittinger: The “power of one” concept is not so much an organizational statement as it is the power of one business focus, the power of one supply network, the power of one deliverable. There will always be functional areas with specific mastery and skill development, but by using the control tower technology along with cultural and organizational strategies, you keep people focused on one outcome, one business, one system that you are delivering. Then you do mastery and skill development around that.
Cecere: It used to be that we had these big computers that did calculations, but the organizational memory still depended on people teaching people, so we basically had dumb supply chains. We might get the technology to respond quicker, but it was not able to sense or analyze or simulate. But now, with in-memory processing, we have the ability to look simultaneously at various events and put the organizational memory in the system’s memory, so we can get outputs with analytics and intelligence. It is a much better use of computing.
Bittinger: That’s so true. Earlier this week I was talking about process capability with one of my clients and one person said, “we don’t have that capability,” and someone else in the room said, “yes we do, come and see me.” So even within the same business, if you don’t know the right person or where the information is within the company or the right question to ask, you might be out of luck. If only Jim has the knowledge that Susan needs, you sort of have to rely on synchronicity and hope those two people will meet up in the right place at the right time. But when you are able to get that knowledge out of Jim and put it out there for everyone in the organization to use, it changes everything.
Cecere: And one of the things I really worry about is the turnover of supply chain planners, because we are losing a lot of people and a lot of legacy information, which means that the ability to get information out there for the entire organization to use and compare globally is more important than ever.
Bittinger: I think that has been biggest challenge for most companies going through a supply chain transformation. It goes back to the “power of one” concept. I have my approach and you have your approach and maybe your approach is better for you in this specific situation, but once you get everybody on the same page, you start to get the cumulative impact and benefits of that access to knowledge and information. It is difficult for people going through a transformation to see this. They think they have developed this really fantastic Excel spreadsheet that does exactly what they want it to do, and there may be a slight reduction when they go to a standard that everyone is on. But there will also be a whole new universe of capability that is very hard to see when you are in the middle of it, which is why people start pulling back.
Cecere: So many people rely on Excel spreadsheets, but this is a really bad habit because you need a common data model to be able to make trade-offs, and every organization needs to make trade-offs to be effective. The supply chain is about communications, and if you have the ability to look at trade-offs and to translate that into what it means to your job when you are making a decision to go one way or another, that is a lot of the secret.
Munroe: That’s a great point. The question for organizations is how to codify their strategy so that everyone can execute against it. Executives tend to think the people in the trenches are failing to execute as they should or that they don’t care, but the people in the trenches have no idea what the strategy is beyond a balanced scorecard they may see once a year. So the ability to codify strategy into one system is huge. People want to do the right thing but some workers are a long way from the customer and we have to help them understand how what they do on a daily basis impacts the customer.
Gaspari: And it is a cultural challenge. People grab onto those Excel spreadsheets. I heard someone say he would like to just remove Excel from all the planners’ PCs, because what we are really trying to get to is this single source of the truth that will enable us to do the things that we know need to get done and to integrate our network. I like to say, one NCR, one plan.
Bittinger: I think it is a case of “you don’t know what you don’t know.” That was certainly the way it was with me. I thought I had a pretty good feel for gaps in the supply chain and what capabilities were available, and then when I saw Kinaxis in operation for the first time, I realized how much I was limiting myself in terms of what I was asking for and the questions I was trying to answer – and I am a bit of an IT skeptic. Once you start working with Kinaxis, you realize you don’t have to edit yourself as much; you don’t have to constantly limit yourself in terms of what you can do for your customers and shareholders. You can go at a problem with a new set of eyes, and it’s like, wow, this is fun.
Munroe: You know, we hear about executives making decisions based on intuition and gut feeling, but no one wants to do that – they make decisions that way because they don’t have the information.
Bittinger: That’s why I think executives are the prime beneficiaries of control tower capability, because it gives them insights into the business. But it is not just a matter of giving executives better decision making capabilities, it is making your company a better data-driven, decision-making company. And that means the organization has to be able to go out and get the data and acquiring that ability affects a lot of work processes.
Cecere: If you look at the numbers, the average company has 150 systems in place, and yet only 8 percent think they have sufficient “what-if” planning capabilities and only 27 percent say they know their total costs. Everybody wants to make the best decisions internally – they don’t have the data to do it.
Gaspari: At NCR, we are really excited about the opportunity to partner with Kinaxis on mobile applications and what I call the executive work bench. I think it is my duty to provide our executives with information on their mobile device that has a simple look and feel, so they can get up in the morning and see the information they need with a click. They can look and say, “OK, we are 500 short on this item, so where is the problem?” Click again, and there it is. They don’t have to drill all the way down, but far enough to see what decisions need to be made. Maybe all they need to do is make a phone call, but they will be prepared to have a focused discussion on the problem and what needs to be done to resolve it. This has helped our executive team as well as our supply chain organization be more effective.
Bittinger: I absolutely agree. It is the supply chain leader’s responsibility to ensure that corporate leadership has the data in a visual management system that allows them to know whether or not action needs to be taken, and if action needs to be taken, where and how. To be able to provide that, supply chain leaders need to have a visual management control system for themselves. Having such a system in place it is extraordinarily empowering, not just for executives, but all the way down.
Cecere: Don’t you think it is interesting that most people in the supply chain started in engineering and learned about systems and process control systems, but until recently the didn’t really have systems that allowed them to manage the supply chain as a controlled system or to look at variances? The ability to get the data and to be able to look at set points and deviations, just like we used to run control rooms in the process control industry, is just great.
Bittinger: One example is Toyota’s production system, which is essentially revolutionizing manufacturing around the world, and these same principles absolutely work in the supply chain. The difference in the supply chain is the access to diverse data coming in from diverse sources, which presents a significantly higher challenge because you have to pull the data out of a thousand different pieces of equipment, each different in design and sitting in different locations. But once you put a control system and visual management in place, it can be done.
Gaspari: I think the power of the Kinaxis tool is that it gets the information in, literally, a matter of minutes, despite all the disparate systems we have across our network. My role is to orchestrate the supply chain so the procurement people and the manufacturing people and the supply chain people all are executing on the same plan. We still have some work to do on eliminating bad data and making sure we are connected properly, but getting that information so quickly and being able to use it to make decisions is very empowering.
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