Ideas for improving your analytics and supply chain skills

Most people see trucks, ships, railroads, and rusty old chains, when they hear the term supply chain.  There is some truth to that as much of supply chain management is about getting the right stuff to the right place at the right time (which involves a lot of trucks, ships, and railroads not to mention planes, trains, automobiles, and the occasional bicycle or pack mule).  But supply chain management has advanced in last decade and practicioners and leaders have the capability to utilize data more than ever before to set strategic direction, design the supply chain network, and guide tactical decisions.  Whether we refer to this as "Big Data" or just plain old managerial analytics, the tools and datasets are becoming ever more accessible to organizations large and small but I fear that most supply chain organizations and individuals are far behind the curve in the skillsets they need be successful in leveraging this opportunity.  I had the pleasure of participating in several educational experiences in 2014 that provided me with some new tools and insight to the required skills for supply chain managers of the future.

I started the year with my first MOOC (Massively Open Online Course) from MITx, The Analytics Edge.  I blogged about this course in April while I was still taking the course and didn't realize that some of the skills I learned during this class would benefit me later in the year.  This course was a great introduction to fundamental data concepts, quite a few of which I used later in the year on other projects.  The first 8 weeks of the class required the use of R, a very popular open source statistical computing tool.  The course did a great job of introducing the capabilities of the tool and walking a novice through the basic functions required to start using the application to build linear regression models and making predictions based on data. The last two weeks of the course focused on optimization.  The optimization exercises were done in Excel using the built-in solver, but the basic principles learned are applicable to advanced optimization.  Later in the year I worked with two advanced optimization applications to solve mixed integer problems and found that the MITx introduction was a fantastic place to have started.  The Analytics Edge is running again in March 2015 so you have an opportunity to participate in this class (for free!)

I closed the year with a course from MITx/edX that was very interesting and directly related to my career, CTL.SC1x Supply Chain and Logistics Fundamentals:

This was the first available supply chain MOOC and it was a smashing success, reaching over 25,000 registered students.  Dr. Chris Caplice, Executive Director of the MIT Center for Transportation and Logistics led this course and it was a great opportunity to learn from a leader in this field.  In addition to his role at MIT Chris serves as the Chief Scientist for Chainalytics so he brings a wealth of practical as well as academic knowledge to the class.  This is essentially the same course as the graduate level 13-week, on-campus course at MIT so it was quite challenging for many of the students (there is an assumption that anyone accepted to MIT as a graduate student has some good math chops already and it was a fast paced course covering a great deal of material in a short period of time).  Still, 2,000+ students from around the world were on track to complete the course with a passing grade which equates to over 20 years of on-campus classes at MIT.  Clearly there is a great desire for rigorous supply chain education and Dr. Caplice and his team are early entrants into what will likely become a more crowded field.

Like most MOOC participants I also registered for my share of courses that I didn't complete - mostly because of lack of time.  These included Discrete and Linear Optimization, and Linear and Integer Programming.  When I have time I may come back to the archived course materials (one of the advantages of MOOCs).

I'm currently working through the Johns Hopkins Data Science specialization on Coursera, a 9-course series that covers a wide range of topics in the area of data science.  I'll be blogging about this as the year progresses.

I'd love to hear from you about what skills and knowledge supply chain managers need and how we can gain the knowledge needed to lead our supply chain organizations in the coming years.  Let me know your thoughts in the comments below or directly via email.

Thank you MMAM! (Math, Metrics, Analytics & Money) Part 1 (Math & Metrics)

The past few weeks have been very busy for me between teaching several Supply Chain/CSCP classes, taking a class myself, speaking to three classes at UIC, co-chairing the CSCMP Chicago Roundtable Spring Seminar, and attending the SCOPE Conference (and yes, work!)  A few concepts jumped out at me at these events and I want to share them.  I believe these are particularly important for emerging supply chain leaders.

The first concept is Math.  Supply Chain Managers (and Leaders) need to be comfortable with not just arithmetic but also more advanced mathematical functions.  Below is the Logistic function which is interpreted as the probability of the dependent variable being a 'success':

Supply Chain practicioners are often making decisions that don't involve binary outcomes (0/1, yes/no) but rather involve probabilities (possibly/possibly not).  We need to be comfortable with measures of risk and probability even if the calculations are done in 'black boxes' within Advanced Planning & Optimization engines or special software packages (and many would argue that we need to be even more so when 'black boxes' are involved!)  As a Supply Chain practicioner you need to be comfortable dealing with more than just 'business math'.

I've been working to become more adept in my own analysis and I am taking an EDx MOOC (Massively Open Online Course) through MITx entitled The Analytics Edge:

This course is an introduction to Analytics and machine learning techniques.  At work I frequently deal with large datasets (but not Big Data) and lead a small team that does some very good analysis - this often involves discussing different approaches to analysis or techniques to arrive at business results that can drive better decisions in the future.  However, it's been a long, long time since I've had to exercise my 'math' muscle.  I'm not saying that anything is coming back to me from freshman year Honors Calculus course at Northwestern but I am having to do some math that involves 'thinking' and it's been a lot of fun to learn some new Analytics tools.

Metrics is the second concept that jumped out at me numerous times over the past week.  At the CSCMP Spring Seminar Lora Cecere, the Founder and CEO of Supply Chain Insights presented her ideas on "Metrics That Matter".  Lora has a fantastic background in Manufacturing, Software, Supply Chain research and has held leadership roles at several large CPG companies; that has given her a unique perspective on supply chain and financial Metrics and how they are linked.  What I like most about Lora is that there are no sacred cows - she calls it like she sees it (or rather, what the data tells her) and her opinion is that most supply chains are failing at their mission.  Presentation at CSCMP Chicago Roundtable event on April 8, 2014 from Lora Cecere Supply Chain Insights:

Unfortunately many organizations presently have Metrics that incent behavior that we don't want.  As Lora mentions in her presentation, "A Supply Chain with Complex Processes with Increasing Complexity", it is increasingly complex to establish Metrics (natch!) that incent supply-chain appropriate behaviors.  Leaders within the organization must de-optimize operations within their silos and start partnering with other functional areas in the organization to optimize the overall system.  Without Metrics that drive that cross-functional behavior the organization will have suboptimal results.

Six days later at the SCOPE Conference attendees heard Daniel Myers, Executive VP of Global Integrated Supply Chain at Mondelez International speak about the transformation of the Supply Chain team at his organization.  Metrics that cascade through each level of the business from leadership through individual contributors are a key measurement of their success (or rather will be as they are still on the journey).

More to come on Analytics and Money in my next post!  Please share your comments regarding Math & Metrics below.

Inventory, Beer and Tests

Last week I spent a morning playing The Beer Game with a group of senior Supply Chain and Continuous Improvement leaders.  Before we started the game our host, an SVP of Supply Chain, related that he once played this same game with the CEO of an organization and the CEO became very frustrated at playing a 'game they couldn't win'.

Supply Chain and Continuous Improvement practicioners know it's not about 'Winning' but rather about the march of continuous improvement towards True North.

Well, our group of experienced leaders did not do so well.  Although we weren't supposed to collaborate it was difficult not to overhear what orders the distributor sitting next to you was going to place.  In spite of the factory trying to maintain some semblance of level production, inventories downstream (bull)whipped in all directions, stockouts occurred, and a certain amount of chaos ensued.  Your basic supply chain challenges.  The supply chain participants were surprised to learn at the end of the game that the customer simply ordered one amount for the first several periods and then doubled their demand for the following periods. 

Fortunately we were moving producing and distributing red 'chits' and not real inventories subject to expiration or trying to service customers that could turn to our competition.  Although this game seems simplistic it is a great way to drive home the value of Supply Chain collaboration. 

A few weeks earlier I attended a plant tour of Revolution Brewing Company sponsored by the APICS Chicago Chapter.  (Yes, I know it's a difficult job touring breweries but someone has to do it).  Chris Bird, the Director of Operations at Revolution told us that it's not unusual for them to have trucks waiting while cases of beer come off their packaging line and go straight onto a pallet and into the truck.  It's not their packaging line that is the constraint - they only run it 3 days a week; it's the size of their fermentation tanks that are the system constraint.  All of the beer they brew is routed through this set of tanks and they are rather traditional in the aging periods used for their beers (or rather they don't 'rush' it out the door).  They didn't seem particularly compelled to expand capacity (and it's interesting to note that since this tour another local craft brewery, Half Acre, announced an expansion of the capacity).  

Late this week I sat for the APICS CSCP exam again (I already have my CSCP certification but APICS instructors are encouraged to retake these exams).  In a recent SCM World report the CSCP and CPIM certifications were  recognized by business leaders as the leading Supply Chain certifications in the world (beating the next competitor by a substantial margin) and after taking the exam it is clear why. Supply chain challenges run the gamut - one Supply Chain may be challenged with inventory chaos while another may be facing demand that can't be met.  The understanding of the concepts tested on the CSCP exam give a Supply Chain practicioner a wide variety of tools to face these challenges.  

The Collab

It seems that whenever my teenager turns on the radio the song isn't one from a single artist, rather it's usually a pairing like Katy Perry and Snoop Dogg (pictured above) or Rihanna and Eminem.  I don't recall this level of collaboration among musicians when I was a teen - it seemed like the musicians I heard on the radio were working away in their studios by themselves and the extent of collaboration would be to invite a less established act to open for them on tour (which didn't seem very collaborative based on my limited sample of popular concerts).

My week was bookended by two drastically different takes on collaboration.  Early in the week I finished reading a book by Paul Midler,  'Poorly Made in China', the story of a supplier-customer relationship that started well enough but then goes awry in just about every way possible.  Rather than collaboration he describes furtive attempts on the part of suppliers to cut costs in all areas regardless of the impact on the customer's expectations for the final product.  This insightful account is sometimes funny but when you think that the 'quality fade' he describes isn't limited to supply chains delivering haircare products but may extend to food and pharma supply chains, it makes one pause (I blogged earlier this year about the New York City crane collapse that was caused by an inferior crane component made by a China-based manufacturer).

I spent time later in the week at the Conference Board SRM Conference and had the privilege of hearing thought leaders in the area of Supplier Relationship Management share their ideas.  Jonathan Hughes and Jessica Wadd of Vantage Partners did a great job of presenting their knowledge and experience in this area as well as facilitating breakout discussion groups.  I also served on a panel with John Caltagirone and Kirk Weidner, moderated by Rick Blasgen of CSCMP, presenting the supplier point of view.  We all agreed that a collaborative approach with strategic suppliers will benefit the supply chain's competitiveness.  Although collaboration was the word of the day no one said it was easy - most attendees shared challenges in their organizations related to Change Management, control of IP, lack of Executive Sponsorship, and poorly implemented enterprise systems (who doesn't have these issues?) but all have made serious commitments to furthering relationships with their suppliers to drive innovation.

I'm glad that collaboration is occurring in both music and industry - the world surely is a richer place because of it.  Let me know your thoughts on how collaboration is impacting your organization or industry in the comments below.  Thanks!

Caught in a Silo?

(thanks to Ragulin Vitaliy for the image)

Unless you're very lucky and happen to be with an organization that has both a Chief Supply Chain Officer and an intense focus on Supply Chain Management as a discipline across the entire value chain, you very likely have silos at your organization (in fact, even if you are blessed to be at such an organization you may still have silos).  These silos impact Supply Chain Managers in many ways - the challenge of gathering data existing within multiple functional areas, the inability to gain the sponsorship from executives necessary for Supply Chain improvements that cross multiple business units, and the authority to enact changes necessary for Supply Chain improvements, to name just a few.    

At the Aberdeen Supply Chain Management Summit this past week attendees heard several compelling stories of Supply Chain Managers had tremendous positive impacts on their organizations:

Brad Mueller, Vice President of Supply Chain at Briggs Healthcare, spoke about the transformation he led at Briggs where he turned a Supply Chain in disarray into a high performing one.  That he did it with limited resources and investment is even more remarkable.  

Masao Nishi, Vice President of Supply Chain Management at SYSCO, presented on the Inbound Transportation initiative at SYSCO, a multi-year effort that received strong executive support and yielded a substantial return.  His leadership was so intuitive that he didn't even present a business case for the Inbound program - they just gave him the authority he needed to make the change (which is paying off nicely for SYSCO).  

Jill Marcotte, CSCO of Dealer Tire, presented  a compelling story of Supply Chain Transformation and explained why Supply Chain should have a seat in the C-suite (when I asked her about the power of having a seat at the table she responded that it's important for Supply Chain to have that level of authority but it's just as important for Supply Chain to be part of the strategy discussion so they can prepare for and influence the future of the organization).  And thanks for educating the audience about the complexity of the Tire Supply Chain - I'll never look at tires the same way again!

Typically, a supply chain is performing at it's best not when each silo is optimized but when the total sum of all the silos is optimized - that's why it's so important to break down these silos,  At least one silo will need to be suboptimized for the entire supply chain to be optimal.  

It is unlikely you will unilaterally be able to make meaningful changes to the leadership structure of your organization but there are still ways to make progress, and it's imperative that our organizations make continual progress in improving their supply chain.  

How have you achieved success at breaking down the silos at your organization?  Has it led to significant benefits?  Please post in the comments below to continue the conversation.  

Risky Business

(Thanks to Paul Matsushima Photography)

A Cyclocross race this past season gave me a great opportunity to think about risk management.  Cyclocross racing is an interesting discipline because it involves components of traditional bike racing (going fast on flat straightaways) with the technical aspects of mountain biking (running up very steep hills, hopping over logs and riding through sand pits).  One can prepare technically for each of these obstacles but race conditions and the weather (sun, rain, snow) can affect a racer's ability to tackle them to a great degree.  The picture above shows one of the risks when, during the heat of a race, you extend yourself a little too far - hopping over a log at race speed just a little bit too low can cause you to hit your back tire and topple heels over head.

Of course this is just like business - we can prepare (perhaps extensively) but business is full of risks, many of which are not foreseeable.

At the Loyola University Supply Chain Management Breakfast Panel this past week (titled "The Cooling in China"), hosted by Professor Maciek Nowak, there was much talk about globalization but the real subtext was all about Risk Management - how will the uncertainty in supply, cost, lead time, and quality impact our organizations in the coming months and year.  Several of the keynote speakers conveyed stories about late deliveries and poor quality associated with extended supply chains.  Even though they are all employed by mature organizations that have a great deal of experience with sourcing material and products in Asia they all had painful lessons from the recent past that had a negative impact on customers.

An article in today's NY times about a poor quality part made in China illustrates some of the risks of globalization if your organization doesn't effectively manage it correctly.  The crane company appears to be clearly negligent here but this points out that everything is not always what it seems and that supply chain managers that fail to carefully vet their suppliers put their organization (and themselves) at great risk.

Back to that Cyclocross race - although I appear perilously perched on my front wheel I did safely land and stayed in the race.  Some of the time a calculated risk pays off.

I'm teaching the "Globalization" section of APICS/CSCP at DePaul University in a few weeks and would love to be able to share with the class your personal experiences with extended supply chains.  If you have a story to share please post in the comments section below.

Big data!

(Thanks to The Planet for the picture of the working side of their data center)

Supply Chain Managers are awash in more data than ever before.  Each system implementation or process change is likely to create more granular information than previously thought possible.  This explosion of data comes as we may still be managing through legacy system issues remaining from acquisitions, 'not quite perfect' system implementations, poor master data management, or several other data challenges (do you have hardware that wasn't scaled to handle the amount of data you're now creating?  You're not alone)  - welcome to the Age of Big Data.

At the eyefortransport 14th Annual Logistics CIO & Supply Chain Technology Forum this afternoon I heard six Supply Chain thought leaders participate in a panel discussion on "Visibility, Technology and Methodology for achieving End to End Visibility".  Jeff Jones, VP of IS at UPS conveyed that UPS has petabytes of data (I think it was petabytes, it might have been exabytes or zettabytes, I know it was a very large number).  Try to imagine the amount of data UPS creates every day - every container they move, every order they pick, every parcel they sort, ship and deliver.  There are datapoints collected from their own systems, their transportation partners (subcontracted ocean, air, rail and truck freight), GPS tracking information on their rolling assets, structured data and unstructured data (images of bills of lading in addition to electronic file transmissions), they must literally be drowning in data.

Well, maybe not drowning in it.  Jeff also said that UPS is investing just under a billion dollars (billion with a B) in IT this year and much of it is focused on supply chain visibility - using all of that data to drive supply chain improvements.

Are you thinking that UPS is in a different league?  Your organization doesn't have a billion (with a B) dollars to invest in IT this year?  Well, neither does mine but that can't stop us from making progress.  I draw your attention to the City of Chicago's data portal which has a wealth of datasets easily accessible for ad hoc reporting via browser as well as API.  The City of Chicago isn't bursting with cash to spend on frivolous IT projects and it's just about the last place I'd expect to see implementation of systems that drive data visibility but they've done it.

What are your organization's plans for harnessing big data?  What types of data challenges do you commonly run into as a Supply Chain Manager?