The Value Network, Optimization & Intelligent Visibility

The supply chain is more properly designated a value network through which many supply chains can be traced.  Material, money and data pulse among links in the value network, following the path of least resistance, accelerated by digital technologies, including additive manufacturing, more secure IoT infrastructure, RPA, and, potentially, blockchain. 

If each node in the value network makes decisions in isolation, the total value in one or more supply chain paths becomes less than it could be.  

In the best of all possible worlds, each node would eliminate activities that do not add value to its own transformation process such that it can reap the highest possible margin, subject to maximizing and maintaining the total value proposition for a value network or at least a supply chain within a value network.  This is the best way to ensure long-term profitability, assuming a minimum level of parity in bargaining position among trading partners and in advantage among competitors.

Delivering insights to managers that allow them to react in relevant-time without compromising the value of the network (or a relevant portion of a network, since value networks interconnect to form an extended value web) remains a challenge.

The good news is that many analytical techniques and the mechanisms for delivering them in timely, distributed ways are becoming ubiquitous.  For example, optimization techniques and scenarios can provide insights into profitable ranges for decisions, marginal benefits of incremental resources, and robustness of plans, given uncertain inputs.

When these techniques are combined with intelligent visibility that allows you detect and diagnose anomalies in your supply chain, then everyone can make coordinated decisions as they execute.  

I will leave you with these words of irony from Dale Carnegie, “You make more friends by becoming interested in other people than by trying to interest other people in yourself.”

Thanks again for stopping by and have a wonderful weekend!

Supply Chain Action Blog

The supply chain is more properly designated a value network through which many supply chains can be traced. Material, money and data pulse among links in the value network, following the path of least resistance.

If each node in the value network makes decisions in isolation, the potential grows for the total value in one or more supply chain paths to be less than it could be

In the best of all possible worlds, each node would eliminate activities that do not add value to its own transformation process such that it can reap the highest possible margin, subject to maximizing and maintaining the total value proposition for a value network or at least a supply chain within a value network.  This is the best way to ensure long-term profitability, assuming a minimum level of parity in bargaining position among trading partners and in advantage among…

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On Memorial Day Weekend

Let us remember and honor all who serve a higher good than their own comfort and fulfillment. This is Memorial Day weekend for us in the U.S., but may our memory serve us well when the calendar does not. Let us never forget when uncommon valor becomes a common virtue and those who shirk not their duty, nor shrink from their sacrifice leave their families bereaved. May God bless all who have bravely and knowingly walked into the “valley of the shadow of death” but have never returned, freeing others to pass by unharmed. May they rest forever in our hallowed memories of the price of peace with liberty.  May God bless the families who will always suffer without them. And, may God bless those who have returned but not without cost and their families who suffer with them.

The Value Network, Optimization & Intelligent Visibility

The supply chain is more properly designated a value network through which many supply chains can be traced. Material, money and data pulse among links in the value network, following the path of least resistance.

If each node in the value network makes decisions in isolation, the potential grows for the total value in one or more supply chain paths to be less than it could be

In the best of all possible worlds, each node would eliminate activities that do not add value to its own transformation process such that it can reap the highest possible margin, subject to maximizing and maintaining the total value proposition for a value network or at least a supply chain within a value network.  This is the best way to ensure long-term profitability, assuming a minimum level of parity in bargaining position among trading partners and in advantage among competitors.

Delivering insights to managers that allow them to react “in the moment” without compromising the value of the network (or a relevant portion of a network, since value networks interconnect to form an extended value web) remains a challenge.

The good news is that many analytical techniques and the mechanisms for delivering them in timely, distributed ways are becoming ubiquitous.  For example, optimization techniques and scenarios can provide insights into profitable ranges for decisions, marginal benefits of incremental resources, and robustness of plans, given uncertain inputs.

If these capabilities can be combined with intelligent visibility that allows you to see every area and metric of your end-to-end supply chain in context, then everyone can make coordinated decisions as they execute.  

I will leave you with these words of irony from Dale Carnegie, “You make more friends by becoming interested in other people than by trying to interest other people in yourself.”

Thanks again for stopping by and have a wonderful weekend!

Leadership: Motivation or Manipulation?

Motivation is the inspiration to do the right thing.  A leader imparts it.  The best colleagues, clients, and partners embrace it.

Do you know when you are being motivated and when you are being manipulated?  Do you motivate people or manipulate them?  Is there a distinction and if so, what is the difference?  Is there an appropriate time for each?

Tricking someone to do what you want them to do is manipulation.  Those who respond to it are either taken in by the superficial validation of own importance that is implied by the manipulator or driven by a fear of the consequences of questioning the manipulator.

OK.  So what?

Most of us are called upon to be both leaders and followers.  Part of wisdom is knowing when to do which and how.  As a leader, there will be situations when time does not permit a comprehensive explanation and as followers, there are times when we need to accept the decision and execute without an argument.

But, leaders owe it to their stakeholders to do the following:

  1. Live their values – The more you do this, the less time you will need to spend on points 2 and 3.
  2. Communicate them clearly – Keep them few and short.  They can be phrased as expectations.
  3. Give direction and expect initiative that is consistent with those values.

And when following, you owe it to your leader and organization to question when the direction you are given appears to seriously diverge from either the leader’s stated expectations or your own core values.  You need to be able to orbit your leader’s values and expectations and the direction that you are given while maintaining your own values.

So . . . Resolve to do the following:

Decide on your own core values and live them as consistently and transparently as you can.

As a follower, there will be times when you disagree with the leader and must dutifully carry out your responsibility (within obvious moral limits) as a member of the team, but you can do it with comprehension and not out of either fear or a need for validating your worth.

No leader or follower is ever perfectly consistent and always acts out of motivation or is never manipulated, but isn’t it a goal worthy of continuous pursuit?

Finally, I leave you with this thought for the weekend:  “You can’t lead others until you serve something greater than your own ambition.”

I would be delighted to know your thoughts on this subject.  Have a wonderful weekend!

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Footnote and Question:  There will be those, both leaders and followers, who serve nothing more than their own immediate self-gratification.  These folks may not embrace leadership from either position.  Do we need to resort to manipulation in order to move some of these people the the right direction for the organization?

A Few Random Thoughts

This week, I was privileged to attend the INFORMS Analytics Conference in Huntington Beach, California and the IEG S&OP Conference in San Francisco.  I heard some insightful points and thought I would list a couple here (with appropriate attribution) along with a few thoughts of my own.  I hope that at least one strikes a chord with you.

If you use a heuristic to solve a problem with 100% complete and clean data, using a data model that exactly represents reality at any given moment, you still have an inexact answer.  But since such data and data models are rare (or nonexistent), even a pure optimization is still inexact and, in effect, a heuristic solution requiring both art and science on the part of the analyst. (Colin Kessinger, End-to-End Analytics)

If the purpose of Sales and Operations Planning is to make the best integrated decisions for running your business, then you will have a firm, published schedule and people will schedule other meetings (even customer meetings) around it. (Bob Ratay, SAP),

Key capabilities in an S&OP decision-making process are business agility, versatility, and elasticity.  (Olaf Gelhausen, Infineon)

S&OP is about a range, not “one-number” – one plan with a range and distribution of probabilities, but not one number. (Olaf Gelhausen, Infineon)

The best business decisions, even very qualitative ones such as those in the fashion industry are built on a foundation of rigorous data analysis and decision modeling, providing the qualitative decision-maker the largest head-start possible by reducing the “solution space” and delivering insight into the most sensitive tradeoffs.

Working with people is the hardest part of any business challenge – by comparison, the mathematics are relatively easy.

In business planning, longer term investment decisions require detailed scenario analysis.  Near term execution decisions require existential insight into the cash flow changes and their causes.  One might call the latter, “analytical awareness”.

Once sources have been qualified, sourcing decisions among sources (both near and far, “in” and “out”) should be cost-optimized and dynamic (Olaf Gelhausen, Infineon).

Thanks for dropping by Supply Chain ActionPlease feel free leave your random thoughts as a comment below or send them to me, and I’ll try to include them in an upcoming post.

Until next week, always choose life, light and love and don’t forget to laugh along the way.

Have a wonderful weekend!

Merry Christmas!

Phillips Brooks

On this weekend before Christmas, I pause from my usual postings of practical points or insightful perspective on business to share with you with the words of Phillips Brooks, penned in 1868, which embody my favorite thoughts at this time of year.  Have a wonderful weekend, and I wish you the very best Christmas and holiday season ever.

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O little town of Bethlehem,
How still we see thee lie;
Above thy deep and dreamless sleep
The silent stars go by:
Yet in thy dark streets shineth
The everlasting Light;
The hopes and fears of all the years
Are met in thee tonight.

 For Christ is born of Mary;
And gathered all above,
While mortals sleep, the angels keep
Their watch of wondering love.
O morning stars, together
Proclaim the holy birth;
And praises sing to God the King,
And peace to men on earth.

How silently, how silently,
The wondrous gift is given!
So God imparts to human hearts
The blessings of His heaven.
No ear may hear His coming,
But in this world of sin,
Where meek souls will receive Him still,
The dear Christ enters in.

O holy Child of Bethlehem,
Descend to us, we pray;
Cast out our sin, and enter in,
Be born in us today.
We hear the Christmas angels
The great glad tidings tell;
O come to us, abide with us,
Our Lord Emmanuel.

When to Collaborate and with Whom?

I hear a lot about collaboration at conferences these days and there are books and articles to match.  The prevailing implication is that sharing information and collaboration, however defined, is categorically meritorious.  

 There is very little, if anything, however, written or said about when to collaborate and with whom. 

Before you commit your organization to sharing information with either suppliers or customers, you must answer at least two fundamental questions. 

First, how much value can be created through collaborative synergy between your organization and your trading partner? 

Second, of that value, how much do you need to capture? 

Answering these questions will likely require some rather rigorous analysis of the total costs of operating without collaboration as well as a detailed calculation of where the value or savings will come from and what you will need from your trading partner in order to realize your targeted share of that value. 

It is clear and has been demonstrated that when two organizations cooperate for a shared goal, then they achieve better results.  But, it’s important to analytically establish the parameters so that you can plan, negotiate and operate with full information.

Thanks for stopping by. 

As we move into another weekend, remember that “Logic will get you from A to B. Imagination will take you everywhere.” (Albert Einstein)

Have a wonderful weekend.

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