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Be sure to read our previous post beginning here on some basics of “blockchain” technology.  Today, we’ll tell you about an even newer evolution in the rapidly evolving blockchain saga.

Our title headline today is how a fellow named Joe Lubin, founder of a company called ConsenSys that develops applications for the burgeoning “Blockchain” technology, describes Ethereum.  Chances are if you’ve heard of Ethereum at all, it’s because the new platform was the victim of a $60 million hack a while back.

What you may not know is that companies including IBM, Microsoft, BP, JP Morgan and a lot of others recently attended a forum sponsored by an industry group called the Enterprise Ethereum Alliance.  Ethereum technology, while still young, comes with enormous promise, despite last year’s hack setback.  Advocates believe Ethereum “could be a universally accessible machine for running businesses,” according to a Matthew Leising of Bloomberg Businessweek.

Cornell University professor Emin Gun Sirer says “Ethereum gives you a new way for the computer to interact with the real world and how money moves.”  In effect, it’s a complete business-to-business transaction engine and database.  It’s based on the “Blockchain” concept of digital money.  The idea behind Blockchain is to create a verifiable virtual currency that can be distributed as easily as an email.  It’s an online ledger on computers distributed around the world.

We’ll spare you the details, but the idea is that every “bitcoin” distributed is tracked and verified, in a system that basically runs itself.  Its main purpose is to move currency from point A to point B.

What Ethereum adds to the Blockchain is the ability to store fully functioning programs called “smart contracts.”  So beyond moving money, users can potentially control contracts or projects, thus allowing a person to complete a job for a customer and trigger payment on completion – all without added human intervention, in a secure framework.

That’s the concept, at any rate.  As Leising notes, “Once you can create contracts – which in essence are just operating procedures – you can use them to manage almost any kind of enterprise or organization.”

A variant on the technology would see companies participate in an Ethereum platform on a closed invitation basis, given that a public platform tends to increase security risks, whereas a semi-private network among aligned business partners might provide an effective alternative with the same end result.

A variety of companies are exploring their options today.  John Hancock is experimenting with compliance tracking and anti-money-laundering regulations in its wealth management unit.  Airbus is exploring ways to move its entire supply chain to a Blockchain.

If all this sounds a lot like the future of enterprise business models, one shouldn’t be surprised.  There are security and logistical wrinkles to be worked out, to be sure, but the idea of a self-regulating supply chain of integrated enterprise systems that embrace project management, verifiable currency transfers and contract fulfillment has a lot of companies paying attention to the Blockchain ledger technology.

Right now, Ethereum is helping to lead the way.  It’s a name worth remembering.

 

 

As we began in our prior post to look at a new technology called “blockchain,” we posed the question: What if you could document and preserve all the data associated with a product’s life cycle from the origin of the raw materials to the final sale of the finished good as it travels along the supply chain, with 100% certainty?

In today’s concluding post, we start with a supply chain counterpoint: Even if you could, is it worth it?

An analyst at Aberdeen Group, Bryan Hall, is quoted in a recent article in the Mar/Apr 2017 issue of APICS Magazine pointing out that supply chains are full of unexpected events and disruptions, ranging from damaged goods to carrier capacity issues, not to mention customs delays, clogged ports, theft and other issues.  The key to adjusting and correcting often lies in what Hall calls the “occasional heroics” that keep plans on track – and none of these actions are possible without visibility.

According to Aberdeen, fewer than 60% of companies had online visibility into in-transit shipment status.  The percentages were even lower for visibility into data to make decisions, or to view supplier quality and manufacturing processes – in other words, traceability.

Other studies have generally confirmed that most companies lack full visibility into their supply chains, and most experience supply chain disruptions periodically.  Often, the source is not even analyzed, and all come at a cost.

And as Business Insider reports, according to APICS, the growth of IoT (Internet of Things – i.e., internet connected devices and machines) will generate yet more massive amounts of data.  Writes Crandall, “Blockchains have the potential to provide security and accountability that traditional databases don’t.”

As examples he cites IBM using a blockchain in the diamond industry… PwC using blockchain to deliver on-stop solution for financial service firms… Wal-Mart testing blockchain’s abilities to track the flow of certain food items to quickly identify items that may be tainted and subject to recall.  The downstream implications of that one – the ability to possibly prevent foodborne illnesses which cause 3,000 people per year and hospitalize more than 100,000 – quickly become clear.

TechCrunch contributor Ben Dickson has written of how blockchains will “enable companies to register information about a product transfer and the product’s price, location, quality and any other information that is relevant to managing it.”

And by its very nature, a public blockchain will ensure that all users have equal and common visibility into everyone’s supply chain.  The decentralized and open nature of blockchains inherently restricts withholding or manipulating information to gain advantage, while built-in encryption will help to ensure data integrity.

In the end, blockchains in the supply chain will eventually assure better regulation compliance, product integrity, customer satisfaction and confidence in product knowledge and movement for the entire family of producers, distributors and consumers.  According to APICS, The World Economic Forum has said that 10 percent of all global domestic product will be stored in a blockchain by 2025.

While still in its infancy, this new technology will present supply chain professionals with both opportunities and challenges.  But as noted business guru Peter Drucker observed long ago, the best executives focus on opportunities, not problems.

 

In our next post, we’ll take one final look (for now) at the newest wrinkle in blockchain, called Ethereum.  A lot of very big companies are getting on board with it as you’ll see.  We’ll tell you more in our very next post.  Stay tuned…

 

What if you could document and preserve all the data associated with a product’s life cycle from the origin of the raw materials to the final sale of the finished good as it travels along the supply chain, with 100% certainty?

That could be a reality in the not too distant future, thanks to a fast-growing technology we’ve written about several times here before, called “blockchain.”  We thought today we’d take you through a few of the basics of this important new technology, which you’ll be hearing more about in the future.

Some of our source material here comes from APICS and APICS Magazine (Mar/Arp 2017 issue, and others), and other publications.  APICS is an organization devoted to improving the skills of supply chain professionals everywhere through teaching and training in principles of supply chain excellence.  We are a long-time supporter of the organization and its efforts, and recommend their programs often to our clients.  As disclaimer, we are in no way affiliated with APICS other than as longstanding members, benefiting over the years from their training programs, most notably the CPIM (Certified in Production and Inventory Management) certification program.  PSSI also holds multiple “Company of the Year” award designations from our local chapter.  Learn more about the local chapter here.

Blockchain is basically a ledger system built on a peer-to-peer network (think: database) used to record and track transactions on computers.  The first blockchain was developed by Satoshi Nakamoto in 2008 and was implemented in 2009 as a ledger for a new kind of currency called “bitcoin.”

One of block chain’s appealing characteristics is that it does not require a “central authority” or a trusted third party, such as a bank.  Instead, a blockchain relies on three components: a transaction, a record of that transaction, and a system that verifies and stores the record.  Once stored, it is said to be difficult (though as the remedy to a recent Ethereum blockchain hack has demonstrated, not necessarily impossible) to delete.

According to an APICS Magazine article by Dr. Richard Crandall of Appalachian State University (referencing an article in The Economist in 2015), blockchain has “… a mixture of mechanical subtlety and computational brute force built into its ‘consensus mechanism,’ the process by which the parties involved agree on how to update the blockchain to reflect the transfer of [records or] bitcoins from one person to another.”

When someone wants to add to a blockchain, the other participants run an algorithm to evaluate and verify the proposed transaction.  If approved (a process too complex to describe here), the new transaction is added to the blockchain.  Or, in the case of the bitcoin currency, a new coin is added.

Marc Andreessen, a highly successful venture capitalist and inventor of the first popular web browser, Mosaic, describes the importance: “The practical consequence is that for the first time… one internet user can transfer a unique piece of digital property to another [that] is guaranteed safe and secure, everyone knows that the transfer has taken place, and nobody can challenge the legitimacy of the transfer.  The consequences of this breakthrough are hard to overstate.”

Ultimately, say blockchain advocates, if chains can be used to transfer and track bitcoins, companies can use blockchains as public ledgers to track product attributes including ingredients and history of production.

And that will usher in the next generation of supply chain innovation.  We’ll take a look at some of the implication of blockchains on supply chains in our concluding post next.  Stay tuned…

 

Over a decade ago, the late Peter Drucker (for my money, the wisest business professor and most clear-headed business writer ever) wrote in the Harvard Business Review that the best executives follow 8 similar practices:

  • They think about what needs to be done
  • Consider what is best for the enterprise
  • Develop action plans
  • Take responsibility for business decisions
  • Encourage communication
  • Focus on opportunities instead of problems
  • Run productive meetings
  • And embody a team mentality

Recently, HBR added a ninth trait, noting in a survey of 35,000 employees that people are happiest at their jobs when they are led by executives who have deep knowledge of the core operations of the business.  In the U.S., supervisor competency had a stronger influence on employee job satisfaction than salary.

In today’s increasingly complex, digital work environment, it becomes increasingly critical to understand the core technical concepts underlying the tools and solutions we bring to our jobs every day, while ensuring that executives are balancing that with the necessary core business vision.  We often emphasize to clients that while we may be a group of tech-focused individuals, we are first and foremost “all about the business.”

It’s harder than ever to successfully straddle the biz-tech line today, yet more important than ever, too.  The only difference between today and when our firm started in the late 80s is that the pace of change is increasing.  And along with it, so is the challenge we all face, in simply keeping up.

You’re not alone.

 

Recently, in an article for APICS Magazine, Jonathan Thatcher, director of research for APICS (an organization long dedicated to supply chain operational excellence), listed a few tips for companies challenged by an ever-increasing number of SKUs (stock-keeping units, or inventory items) they are required to manage.  We thought we’d reprise a few key highlights here today.

Thatcher recommends starting at the top of the cycle: by developing greater “systemic visibility” in your organization using hard numbers and data to support a “systems concept,” which the APICS dictionary defines as “an attempt to create the most efficient complete system as opposed to the most efficient individual parts.”

To begin with then, you must identify the flow of many individual components while also reviewing the performance of the overall supply chain.  Each new SKU increases cost and complexity to the entire system.  As these costs grow, it gets harder to maintain an accurate “cause-and-effect vision” of expense and value for the entire system.  “Even if a new SKU does deliver some new net value,” he writes, “is it enough to profitably pay for the cost of the increasingly complex stocking options?”

Next, he advises, talk to your customers to figure out where to draw the line for SKU proliferation.  Ask them to identify the point where more SKUs become a burden instead of an asset.  This can help determine a potential SKU limit.

To gain executive support for your SKU reduction endeavor, Thatcher says you then need to explain a few things:

  • SKU innovation may be at war with Pareto’s 80/20 law that states that 20% of inventory items make up 80% of inventory value.
  • The right number of SKUs likely reflects the amount of variation and complexity sought by your customers.
  • The wrong number of SKUs squeezes resources and can divert them away from the products that deserve them.
  • Realize that it’s a complicated and often nuanced topic that requires ongoing, shared management effort to overcome these complexity costs.

And finally, Thatcher suggests, “develop a policy prohibiting a net increase in SKUs.  As new ones appear, retire old and low value SKUs to make room.”  Just be sure that these efforts form a part of your overall supply chain strategy that prioritizes innovation, customers service levels and reduced costs.

We like highlighting and learning from stories about companies getting “lean” because helping manufacturing and distribution companies become more competitive through lean processes supported by good software is exactly where we live.

A recent article in the Mar/Apr issue of APICS Magazine about a lean transformation of an Agilent Technologies spinoff called Keysight Technologies highlights the efforts of that firm to transform its supply chain into a more responsive, flexible and efficient one.  The goal was nothing less than to adopt a “holistic approach to develop a comprehensive lean transformation strategy.”

We found a few key takeaways from APICS Magazine’s review of Keysight’s challenges, most notably what they called the three key pillars of their lean transformation.  It’s worth noting by the way that Keysight earned the 2016 APICS Corporate Award of Excellence in Innovation as a result of its lean transformation.  Those three key pillars:

  1. Develop Competency: Ensure all employees across all sites are well equipped with the necessary lean competencies.
  2. Deliver Value: Use lean methodologies to achieve breakthrough results in the areas of cost savings, lead-time reduction and customer satisfaction.
  3. Sustain a lean culture: To derive long-term value from the lean initiative, foster ongoing improvements through a shift in mind-set and the adoption of lean throughout the organization.

While the full article is too lengthy to detail here, we believe that the points above and the anecdote that follows provide some good “thinking points” as you consider your own lean initiatives.  Quoting directly from the APICS article…

“To achieve world-class manufacturing at Keysight, a program was launched that encompasses cycle-time, inventory reduction, greater efficiency and enhanced flexibility.  Entire product lines were scanned in order to identify stock keeping units that had high inventories and were not meeting customer-requested lead times.  These items were then examined based on revenue and cause-codes, and constraints and bottlenecks were identified.  Innovative solutions were implemented one by one to break the constraints.  For example, the component-washing process at Keysight had been a cycle time issue because the activity was shared among many different product lines and could only be conducted in batches.  However, contract manufacturers did not face such constraints, so component washing was moved to that site.”

We cite the above only to illustrate the style of lean thinking, and the measured steps, that we’ve found over time lead to the virtuous cycle of continuous improvement.  Redesigning work centers, optimizing vertical spaces and assembly motion, and implementing other modular concepts are among other efficiency improvements brought about through lean thinking.

Want to hear more?  You can learn more about APICS locally here.  Want to learn more about how to lean out your operation?  At the risk of being commercial here, as we always like to say: We’re here to help!  Contact us (reply to this post).

As software providers, we focus largely on manufacturing (and distribution) clients, and so as a service to all we like to periodically report on trends and developments in the manufacturing sector, such as today’s post about a jobs program that helps Americans get back into manufacturing in a practical, no-nonsense kind of way.

A good start can be found at a workforce initiative in Louisville, Kentucky, called KentuckianaWorks, funded by several entities including local and federal agencies, along with JPMorgan Chase.  Recognizing that “manufacturing jobs are here and growing in numbers” but that unskilled assembly-line work has been replaced by advanced manufacturing jobs, KentuckianaWorks made a large commitment to support training for manufacturing (and other) jobs by designing a five-week “Certified Production Technician” training program, along with a two-week variation, for displaced workers aged 18-60.  Only a bit over half stick around to completion, but those who do find jobs quickly.  The program has already placed nearly a thousand graduates at an average of about $13 per hour.

The skills programs focus on computing and technical skills, as well as basic math and problem-solving – in other words, just want manufacturing managers say they are looking for today.  Meanwhile, over 80% of U.S. executives said in a recent survey that the skills gap will affect their ability to meet customer demand, and nearly as many claimed it would “make it more difficult for them to use new technologies and increase productivity,” according to a recent article in Bloomberg Businessweek.

Over the next decade, well over 3 million manufacturing jobs are expected to become available as boomers retire and economic growth spurs work opportunities.  Those figures come from the Manufacturing Institute in Washington D.C. Yet a “skills gap” means that about 2 million of those jobs could go unfilled.

The KentuckyianaWorks program works with local manufacturers to help design their two courses.  Companies who have worked with KW graduates say that their basic training “sets them apart from other entry-level candidates,” so that once hired, employers can help employees expand their knowledge and increase the likelihood of continued employment and promotions.  Recruiters say that while not every hire works out, the success rate with these trainees is higher than with other hires.

In an era of increasing and often unrealistic clamor and hype about bringing back jobs, it’s programs like these that are helping to make manufacturing hiring a reality, and closing the gap between needed hires and the skills gaps too often found in potential hires.