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Posts Tagged ‘ERP’

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.

 

 

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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…

 

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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…

 

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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.

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pssi_mfgIn our prior post we shared some of the results of a survey done last year by Crowe-Horwath with the American Metal Market that provided some worthwhile insights into the results of IT and ERP initiatives occurring among manufacturers these days.  In that post (found here) we covered plans for expansion, their thoughts on the importance of tech in their businesses, the top factors driving their IT budgets, their top concerns, where they look for new profitability and what sorts of items comprised their budgets.

Today we’ll look at their responses to questions about IT and ERP projects themselves.  Among these:

  • 35% upgraded an ERP system in the past 3 years and 20% implemented a new one.
  • When asked about current and planned IT projects…
    • 28% were planning ERP upgrades to existing ERP systems, and
    • 20% planned to implement a new ERP system
    • CRM and BI (business intelligence) initiatives also ranked as high priorities
  • As to cloud, or SaaS (Software as a Service), half of all respondents had no cloud solutions in any area of the business, and the most cloud-centric task among companies who had any cloud initiatives was for email (24%).
  • Most companies used a combination of both internal and external resources when implementing their major IT projects.
    • Training and ongoing support were the two key areas where external resources outweighed the use of internal resources.
  • When queried about their satisfaction with their ERP systems, the survey concluded that: “In general, respondents are satisfied because they had a new or recently updated system. Generally, respondents are unsatisfied because of outdated technology. Those in the middle have some dissatisfaction due to missing functionality or problems with implementation.”
  • 37% responded that they wanted or planned to move to a new ERP system (another 19% had already done so recently).
  • One important conclusion: 36% of respondents standardized business practices across locations to integrate process improvements into ERP implementation. About 40% engaged in a detailed process analysis or value stream mapping.
  • Companies are upgrading in large numbers today to “modern” ERP systems, and so it’s no surprise that among key findings were that “the most important issues when selecting new enterprise technology solutions were user interface and familiarity, total cost of ownership, and industry-specific functionality.”
  • As to their implementation partners and vendors, they indicated that Technical and Industry expertise were the two most important qualities sought.
  • When asked what were the most important new ERP requirements to meet the needs of changing workforce demographics, end-user reporting tools and a modern user-interface were ranked numbers one and two.

Today’s manufacturers are clearly looking to modern solutions, with feature-rich but usable interfaces that can be distributed broadly across a company.  Even more importantly, they’re realizing the importance of processes and people – well-analyzed in advance of any technology initiatives – to ensure that their tech applications and initiatives are being driven to serve the business purpose first, and not the other way around.

We couldn’t agree more.

 

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pssi_mfgIt’s always worthwhile hearing what the customers have to say about their technology goals and ambitions, so we’re happy to share results of a recent Crowe-Horwath survey of manufacturers (specifically, metals producers, though the results seem representative of manufacturers in general from what we’ve seen).  The 2016 survey was conducted in collaboration with the American Metal Market to examine the role of information technology and enterprise resource planning (ERP) systems in the global metals industry, and covered over 200 companies in the $50M to $1B markets, including producers, processors and some Tier 1 and 2 automotive suppliers.  As such, we feel the results are probably fairly representative of discrete manufacturers overall.

We think the questions and answers gleaned from their analysis will be informative and interesting to anyone involved in the manufacturing sector.  Among their key findings:

  • Plans for international expansion in the next five years are down about 10%, while plans for new downstream capabilities are up by the same percent, year over year. Almost 30% planned on domestic expansion and over 40% were considering M&A activities.
  • 75% of respondents said that technology was important or very important to their business strategy in the next 3-5 years. And yet, about half did not have a roadmap “that linked technology investments to business results.”
  • The top business factors driving today’s IT budgets were:
    • Customer service (51%)
    • Outdated technology (44%)
    • Outgrown their technology (33%)
    • New production capabilities or requirements (30%)
  • Data privacy and cybersecurity were cited as the number one IT business risk, followed by (among others) “obsolescence” and “losing business because systems can’t keep up.”
  • When asked where companies look for new profitability, 46% start with process improvement, 35% with Notably, and thankfully, only 19% cited technology first – a good indication that companies are learning the importance of analyzing their processes before seeking ways to improve them via technology.
  • Asked to rank the components of their IT budgets from greatest cost to lowest, they were:
    • Software (36%)
    • Hardware (25%)
    • Internal resources (22%)

In our concluding post we’ll look at the types of projects manufacturers are planning to engage in (or already have), along with their thoughts on ERP satisfaction and working with their vendor-partners.  Stay tuned…

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digital-transformA recent post by our friends at Panorama suggests there are some myths about “digital transformation” – the process of transforming a company into a 21st century digital enterprise worthy of a quick recap today.  They make 4 points of distinction that companies should heed in the process of their continuous improvement and digital initiatives.

  1. Myth: digital transformation is the same thing as an ERP implementation. Their first point is that digital transformation is not ERP – at least, not ERP alone.  They do not assume a single off-the-shelf ERP solution.  Rather, they are open to best-of-breed, or sometimes hybrid, solutions.  Rarely is one company’s base ERP offering sufficient to serve the complete needs of a company.  We ourselves have found that with any of the variety of ERP solutions we’ve sold over the years, it’s still necessary and useful to utilize that software’s companion, third-party options to extend the reach and capabilities of the core system into areas often better handled by vertical subject matter experts.  Moreover, notes Panorama, ERP solutions are often about incremental improvements.  A digital transformation often requires “a more revolutionary approach to operational and organizational change.”
  1. Myth: your digital transformation software needs to be provided by one ERP vendor. As implied above, a digital transformation opens doors to all manner of new thoughts, processes, ideas and technologies.  So ERP may come from one source, your e-commerce from a second and your warehouse management from a third.  There’s no harm in that if all can be well-integrated.  And that requires people and process analysis, before anyone touches much software or hardware, we might add.
  2. Myth: digital transformations should be run by the IT department. Most enterprise software initiatives must be viewed first as a business project, and then as a “computer” or “IT” project.  We always remind prospective clients: ERP (and by extension, digital transformation, is first and foremost a strategic business investment.  Business and executive involvement here are more important than ever.
  3. Myth: digital transformations are best for every organization. Not always, Panorama points out.  Sometimes, incremental, slow change is best.  They note that… “The key is to identify what type of project you want this to be, and then ensure that you have alignment in how you allocated resources, focus and measures of success for the project.”

Whether yours is an ERP project, a true digital transformation, or something in between, begin with a clear definition of the what the project is, and the pace of change the organization believes it can support.  These will often dictate the steps that should – or should not – be taken after.

 

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