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The first article written by our new author Vivek Sood on this blog immediately exposes some interesting tidbits. First, together with earlier articles Vivek has written (before he joined SCM2.org) he shows a clear focus towards the business side of the supply chain, where my own focus is on the software that manages those supply chains. Between the two of us there will already be a more diverse set of topics to be published here. As a result it is my hope that this in turn will draw a more diverse crowd of regular readers and spark discussions with more diverse opinions. One very clear thing jumped up at me when reading his article: where the prediction on the software side is that they are becoming more holistic, the prediction for the business side is the opposite; the trend is to focus more on the core competencies and contract or outsource the rest. If both predictions are true the only possible conclusion is that collaboration between SCM software will not just become important, it will become imperative. Parties outside of your own enterprise will now hold even more of the information you need to make optimal decisions, and you need an easy yet secure way of getting that information on a continuous basis. An interesting series of articles that discusses this very difference can be found at the Technology Evaluation Centers blog. It is a 3 part article written by P.J. Jakovljevic in this case specifically about the Retail industry (here are the links to part 1, part 2, part 3). The title is “Act Vertical vs. Go Extinct Retailers” but the important distinction as it applies to the opposite trends signaled above are what he descibes as “Act Vertical” versus “Be Vertical”. The field of international goods transportation has witnessed several great advances over the last 100 years. Of these, perhaps, none had more far reaching impact than the advent of containerisation. Before 1965, all packaged goods were packed into boxes of different sizes and shapes to be loaded on ships. General cargo ships themselves were small in size – no bigger than 20,000 tonnes or so – and stayed anywhere between 1 week and 4 weeks in any single port. About 70% of ship’s time was spent in non-value producing activities such as planning and loading boxes and crates of diverse sizes and shapes into the ships holds. Containerisation changed all that. Ships are now built to carry standard containers of 20’ (or 40’). Containers are packed and unpacked in container yards far from ports – reducing the need for holding the ships in port, and costly warehousing space close to port. Size of container ships has increased greatly – the latest ones will carry nearly 10,000 TEUs (twenty equivalent units) or about 100,000 tonnes. These ships utilise more than 80% of their time on value-producing activities. No wonder the cost of shipping one meter cube of packaged cargo has gone down by nearly 75% to 85% in real terms over the last 40 years. This has made it possible to reconfigure the global supply chain in such a way that most activities are now carried out in the best place to do so. Manufacturing boom in China, super large container shipping companies, hub and spoke model of shipping, emergence of 6-10 global container terminals, are all partially a result of containerisation. So what precisely is the magic in using standard shipping containers instead of boxes and crates? The answer is simple – modularisation. We believe that a similar move towards modularisation of global supply chains is emerging and it will have a far reaching impact on the organisations, nations and businesses. Before looking at its impact, let us examine what modularisation means in a wider context of global supply chains. As a prequel to my upcoming post about the future of Sales and Operations Planning (S&OP) I thought it would be good to at least once discuss S&OP as it stands today. Rather than re-invent the wheel on this much discussed domain I’ll refer to one of the acclaimed experts on S&OP, Tom Wallace. Sales and Operations Planning has become somewhat of a confusing term. The domain has existed and evolved for decades. In the process it has changed considerably and of late has been hyped a lot. Nowadays when people talk about S&OP nobody really knows what form of it one means. In my opinion Tom Wallace explains it best in his book Sales & Operations Planning - The How-To Handbook, 3rd edition. For anyone who has to embark on an S&OP project, but has no hands-on experience doing so, this book is a recommendation as a starting point. There is an interesting interview with him on the 21st Century Supply Chain blog. In my upcoming blog post I will follow the same direction Tom Wallace takes in his books and this interview. |
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