Supply Chain Station reports on the Gartner Supply Chain Executive Conference 2015

The 25th Gartner Supply Chain Executive Conference just took place in Phoenix Arizona, at the Marriot Hotel conference center. This conference began life as the AMR Executive Conference but was rechristened following Garnter’s take-over of AMR back in the year 2009. Since then the Gartner conference has grown in format and content, adopting a very proactive marketing approach and it is one of the most eagerly awaited events on the annual supply chain calendar.

For newcomers to the Gartner conference, the format encompasses a number of keynote presentations, plus some Gartner Analytics, a series of case studies, and a number of supplier-sponsored presentations.

Opening Keynote presentation from Peter Sondegaard of Gartner

This year’s conference was introduced by Gartner’s Peter Sondegaard, who fronted a presentation of the importance of digitization in the supply chain. The theme of the presentation centered on the need to get everything digitized, and what this digitization will be in terms of how it affects supply chains in particular.  The importance of connecting both the real world and the digital world was underlined as the planet works its way towards someday realizing the so-called “Internet of Things.”

What is still unclear about this migration toward full digitization within supply chains is who is actually in charge of the process? Given its importance and the profound changes that it will engender, it’s something that needs to be considered. The massive amount of data that will be being process is immense, and it has benefits for many disciplines including supply chain itself and marketing. While it is undoubtedly IT who will be implementing the process, who will be in overall charge of steering it?

One of the things that could change is the way we collaborate within the supply chain. At the moment, it is not as easy as it should be. This is because there are many barriers to negotiate. They include the willingness to collaborate freely and openly, and the mechanisms, with so many businesses using an abundance of different hardware and software.  As more and more devices are brought into play with the progression towards the Internet of Things, the potential for free collaboration becomes immense. The barriers that were there will largely be reduced and real collaboration becomes a much more tangible goal.

Sondergaard’s presentation made mention of something he referred to a “B-modal” operations. This refers to the development of any new aspects and ideas, not just within the supply chain, but across business as a whole. Mode 1 is the development of a new concept in the traditional way. Mode 2 is its digital development and any disruptive elements. It’s a way of entrenching the digital process right from the very beginning and is clearly the way that most large companies are now approaching R&D.

The impact of the Internet of Things – John Kern – Cisco

The next presentation of interest was given by John Kern, the Vice President of Cisco supply chain. He opened by admitting that in the beginning he wasn’t sold on the Internet of Things, but that over the past few months, it, with its immense possibilities has won him over. He commented on how companies like Cisco have by now taken advantage of all of the methodologies that are available at present; things like lean philosophy, Six Sigma, and outsourcing. They’ve been taken just about as far as they can go, and they only new innovations are just small incremental modifications. But the Internet of Things opens up a whole new array of previously unthought-of possibilities.

Cisco gave two examples of how this new approach to advanced analytics has impacted on the quality of some of the products that they produce. The depth of the analytics they have used has given then information at a much deeper level than was possible before and using this information they have been able to improve product quality and its yield through manufacture.

They also cited a project whereby they have just opened up a new power plant in Malaysia. Every single machine that uses electricity has been fitted with a new special sensor that will collate details about exactly what electricity any particular machine uses, and how it uses it. Cisco believes that this new system of advanced analytics data collection will give then some totally fresh insights into the total power consumption of the new plant and how they might be able to reduce it.

This is interesting on a “1-off” project basis but applied globally is could have serious implications for power supply and consumption cross the planet, as well as global conservation issues.  It could have implications for businesses operating in regions where there is a differential in cost depending on what time of day or night the power is being drawn. From Cisco’s own point of view, they believe that they might be able to save as much as 20% to 30% on power costs in their many plants all over the world. Rolled out across industry in general, the impact could be huge.

The importance of an in-depth supply chain network – Frank Crespo – Caterpillar

The next presentation of note came from Frank Crespo, the heavy plant manufacturers, Caterpillar, along the lines of think “Network” rather than “Chain.”  He reported on the fact that Caterpillar has built what he described as an engineer valued chain which involved creating a supply chain network for every one of the 500,000 individual components that Caterpillar use. It was a mammoth undertaking, and one which treats each and every one of the 500,000 components as a critical bespoke item. It certainly made a lot of sense and could well be something that many more companies may emulate in the future.

Crespo also expounded how Caterpillar is already investing in the Internet of Things by installing performance sensors onto each individual machine that they manufacture and sell. It means that they are receiving advanced analytics from all of their new products in the field; data that will tell then everything they want to know about any machines performance deployed out in the field.

The level of hi-tech data that Caterpillar is using is awesome. Using GPS communication, tied in with topographical maps, they can even remotely set the height of the cutting blades on machines on the ground to ensure that they are cutting at the optimum height/depth.

The Caterpillar supply chain philosophy is also big on supplier innovation and collaboration. Their view is that it will be impossible to maximize the number of benefits, and develop new innovations without the full interactive cooperation of all member of the supply chain.

Caterpillar also takes visibility in their supply chain to the max. The level of detail that they can drill down into is impressive, allowing them to analyze events at multiple levels. For example with metrics such ship on time and deliver on time. Whereas most supply chains today report in real time, Caterpillar’s supply chain reports on:

  • The percentage of product that is delivered late
  • The percentage in on time
  • The percentage that was delivered on time but was late in getting to the factory
  • The percentage is delivered ahead of time.

Taking the analytics even further, their supply chain program allows them to click on a delinquent item to see 3 potential reasons for the delinquency.

In examining their metrics, Caterpillar employs what they refer to as a “radar” methodology. Things happening now shown at the center of the sweep. Then different tiers of suppliers and different time zones in the future are shown in concentric circles spreading outwards from the central nucleus. They maintain that this gives them perfect visibility of what is happening through the supply chain, and when the time parameters are altered, what will be happing in the future.

The Walgreens way – supply chain deployment and the use of disabled labor

The final presentation worth of note came from Rueben Slone of Walgreens. In this, he presented supply chains as providing 3 meaningful sets of results.

  • The availability of products
  • The product inventory profile
  • The cost of producing a given product

By taking all of these aspects into account, Slone stated that you will be able to drive economic profit.

Slone wound his presentation up by extolling the virtues of Walgreens program for the hiring of disabled workers. Their overall workforce contains up to 13% of disabled workers, and on one particular site the figure was as high as 60%.

Walgreens found that although they had to redesign some of the physical aspects of the work, this redesign made the work practice more acceptable across the board for all employees. Overall quality standard have not been dropped to accommodate disabled workers. If they cannot make the grade, they are let go, the same as any other worker. Quality remains king.

From a health and safety point of view, Walgreens have calculated that they have 30% fewer accidents and a similar reduction in the amount of absenteeism with their disabled workers compared to able-bodied workers.

Looking forward to Gartner Supply Chain Executive Conference 2015

There were many other excellent presentations and break-out sessions, but none more noteworthy than those summarized above.

The Gartner Supply Chain Executive Conference 2015 proved its worth on the global supply chain stage once again, and we now look forward with great anticipation to the next conference in 2016.

Have you been to Gartner’s Supply Chain Executive Conference? Let us know you thoughts on the feedback section below.


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