High Tech

One Network Solutions for the High Tech Enterprises

The high tech supply chain addresses the global market of about $2 trillion for electronic products, in three large areas - IT products, consumer electronics, and non-IT markets such as aircraft, cars, refrigerators, and x-ray machines.  The end-demand for the first two categories is extremely ephemeral, especially in the very short term, however, the industry overall is cyclical punctured by spectacular busts and volatile boom cycles. Broadly, speaking the industry has to reckon with demand tsunamis on one end along with meaningful waves of supply (capacity /constrained components) disruptions on the other - the supply chains or enterprises that make up the industry hence being in a constant whip-lash. As if this roller coaster is not enough turmoil, the industry is going through disruptive changes – digital convergence, leadership (think IBM - Wintel, Web - Web 2.0), and applications-relevance (solve basic problems related to hunger, water, energy, safety, etc.).  

At the end of the day, every enterprise in this sector is part of the community  with a clear:

• Demand network - Buyer of services and products, Channels, Distribution, Value Added Resellers (VARs), Retailers, downstream partners – internal and external parties and enterprises; and,
• Supply network - Trading partners that are involved with the design, source, make, move, and deliver aspects, upstream partners – internal and external parties and enterprises.

And every enterprise has to reckon with: demand variability, supply variability, and lead times. Lead time is largely comprised of physical and system latencies. One Network eliminates the system latencies - improving responsiveness while dramatically cutting costs.

Additionally, by converging planning on to the real time execution data, One Network also reduces demand and supply variability.

Traditionally, each enterprise has been internally focused and forecast-driven. The forecast was used to align internal operations, inventories, and capacities and this process was called “supply chain planning.”  Supply chain execution was defined as the last minute steps to deliver the forecasted demand and it includes aspects like order management, logistics, etc. If there were any unforeseen demand changes or supply disruptions, the construct of “plan-to-forecast then execute” became hapless. To overcome that, companies have created complex optimization models and padded with just-in-case inventories and capacities all of which have a financial impact.

The 20th century way to managing each silo (enterprise) is not going to work with the 21st century tsunami-like dynamics of the demand and supply networks.   A single shared process across the silos, driven by actual demand-consumption may not be the ultimate panacea, but we have seen recently the converse – multiple silo processes with a “plan-to-forecast then execute” sequentially – fails spectacularly and consistently.  This is in spite of the fact that we have safety shock absorbers like excess inventories and capacities.  With the advent of responsible consumption of resources and CSR (Corporate Social Responsibility) goals, these excesses need re-invention.

To succeed, organizations need to re-invent themselves. Forecast-driven planning has to be replaced with customer-driven actual demand. AMR calls this Demand-Driven. Actual customer demand, not forecast, becomes the center of the operating universe, around which all operations, inventories, and capacities – internal and external – are aligned. While the original demand forecast remains a key step in the process, it must be complimented with real-time sensing of changes at the forward-most locations with the ability to translate those changes into a fully-constrained near-term demand (orders) plan that is both communicated and executed across the trading community.  It should be noted that the near term order plan (or forecast) is “calculated” and not arrived using the traditional forecasting techniques (data mining, time-series or frequency analysis). In our experience, we have seen near term forecast error rates drop to low single digits with this kind of approach.

According to AMR, “Traditional supply chain processes are shifting from a supply-based focus on transactions and inward-focused metrics to an external focus on the design and management of relationships. We call this transition demand-driven value networks (DDVN). Demand-driven value networks are holistically designed to maximize value across the set of processes and technologies that senses and orchestrates demand based on a near real-time, zero-latency demand signal across multiple networks of employees, suppliers, and customers.”

AMR Benchmark Analytix research on the impact to becoming demand-driven:

1. 10% higher revenues
2. 5-7% better profit margins
3. 15% decrease in inventories, and
4. 17% better perfect order performance.

Why One Network

One Network Enterprises is an innovator of multi-party supply chain solutions for the global networked enterprises. One Network provides on-demand solutions for such demand and supply networks and the various parties (organization, departments, silos, systems, etc.) that constitute the value network. In our vision, such networks will eventually coalesce into one seamless network, since the business processes are fluid across the entities, much like the social networking phenomenon. They come together for certain projects and break apart, each relationship is different and cannot be predicted or pre-defined. The overall relationship may continue but the details may vary based on the product, project, service, constraints, lifecycle, etc. Here is the list of the underpinnings of One Network that make this possible (over the traditional fixed enterprise or extended-enterprise solutions):

1. Multi-enterprise shared processes – The operating model across multi-enterprises has been largely transactional, based on peer to peer messages such as B2B (ftp, EDI, Rosetta Net, web services). Let us walk through the typical steps - When an enterprise receives such a p2p packet at its door-step, it has to scrub and translate it and then makes sense of the data, often using custom logic, since it is oblivious of much of what is going on within its trading partner’s four-walls! Since each trading partner is unique, it ends up with multiple custom applications, a maintenance nightmare. Next, it then has to force-fit this data into an essentially enterprise-centric process and data model, often an ERP. No wonder collaboration although much bandied is the brunt of many jokes and then “trust” is blamed for the failed operating model. 

One Network has created multi-party and multi-enterprise network with demand-driven capabilities that are complimentary to existing enterprise processes and applications. One Network powers a single shared process with appropriate permissions, across the parties and enterprises such that everyone has near real time visibility. It cuts down the traditional information latencies which amplifies the effects of demand and supply variability. For example, a large Fortune 1000 consumer products company has been receiving the POS (Point-of-Sale) data from it retail partners such as Walmart for years but the usage has not provided any operational improvements.   However, with the use of services from One Network, the manufacturer now has actual visibility across the retail network. In this example, this extends through 4500 stores of Walmart and all the DCs for all SKU and flow combinations. 

1. Multi-enterprise data model - The fundamental enabler is the multi-enterprise and multi-party data model - ability to represent multiple parties within value network. We can model all parties - the store, the retailer DC, the manufacturer DC, the plants, co-manufacturers, and suppliers. That’s multi-party. Traditional solutions are not architected to do this since they are enterprise-centric. 
2. Multi-enterprise transactions – Next, we need to model multi-party transactions.  An order is both a buyer and a seller’s transaction.  Forecasts, shipments and movements are other examples. When one models the forecasts, orders, inventories, and shipments at every point in the value network, one can now manage the process with greater accuracy and better results than conventional systems. 
3. Multi-enterprise permissibility framework  - this allows all parties their appropriate view into the same version of truth without creating copies of data and/or adding latencies

1. Multi-enterprise many-to-many network - this allows each enterprise to connect once and get the instant connectivity with all the trading partners. Every enterprise can take on a full hub status – in other words they can manage and transact business with ALL their trading partners. It benefits every member. This is a fundamental difference from the first generation version called marketplaces or business process hubs /networks – with fixed processes there was no competitive advantage between companies. Additionally, the first generation hubs were based on transactional technology, while One Network focuses on value-based process and relationship enablement.

We now want to take a time-series view to manage the present situation as well as anticipate the future. So at each level in the value network we want to model a time-series view of anticipated demand and supply, so we calculate the upstream forecasts based upon the aggregate downstream forecasts.  To accomplish this we need the multi-enterprise network model, the transaction data as well as the system resource scalability to accommodate massive data processing load inherent in this problem. For example, Walmart has 4500 stores and 110 DCs. Del Monte has 45 forward DCs and 60 manufacturing locations. With 17 weeks of forecast the number of location-forecast combinations becomes enormous, and thus only specialized computing architecture can manage. Conventional planning tools are incapable of generating and managing this data because they were never architected to do so.

1. Multi-Enterprise Business Process Platform, ME-BPP - This allows each relationship to be changed as required. And also develop new multi-party capabilities as needed. It is a complete business process management environment. For example, an enterprise may offer variations of its VMI program – one driven to traditional DC forecast, another driven to actual shelf-consumption, yet another driven by the provision-er of services, and so on.

1. Multi-Enterprise Sense and Respond framework – In the example above, since the data is accurate and current, the ability to sense exceptions as early as possible is enabled and since all the required parties (customers, supplier, carriers, etc.) on the same network, the collaborative execution and response is seamless with minimal delays.   This has reduced forecast error rate to the low single digits for the near term while service levels have become world-class and at much reduced costs.

Continuous integrated planning-and-execution along with incremental re-planning becomes the fundamental DNA of the network system.  This is called Sense-and-Respond across the multi-party network and the basis of an adaptive enterprise.

“One Network’s solution can do both planning and execution and provides solutions that can cover a wide variety of user roles and functions. …More and more, there is a need for the creation of globally integrated supply chains, with all trading partners (suppliers, customers, shippers and carriers alike) functioning as part of a single, large supply chain rather than a bunch of individual ones.”

Nari Vishwanathan
Research Director, SCM
Aberdeen Group

One Network Delivery methods and Solutions

One Network recognizes that a lot of effort and money has been expended especially into the traditional enterprise-centric systems and also most of the bandwidth of the IT staff is consumed by the run-and-maintain aspects. This leaves precious little bandwidth so our primary method is to deliver these solutions as Software-as-a-Service or SaaS. SaaS in an on-demand paradigm of IT solutions delivery that allows for trial before usage, pay for what you use, and rapid value with minimal IT hassles. According to an Aberdeen study - SaaS can provide capabilities similar to traditional implementation with up to 40% lower costs! One Network provides solutions in a number of various areas each of which is largely a plug-and-play with the current infrastructure.

One Network has developed multi-party solutions using its Platform (Refer Platform technical paper for more details) for:

1. Data Management
2. Transactions and Execution Management
3. Continuous planning and execution

The power of One Network platform is such that anyone – any Enterprise, 3rd party, or One Network can develop such solutions using the Platform-as-a-Service or PaaS paradigm. The concept is similar to applications on iPhone, Facebook, or Force.com. The differences being that instead of dealing with generic apps, here the applications have to content with multi-enterprise supply chain business processes and preserving the sanctity of multi-party transactions and data models.

One Network has Customers using its SaaS solutions in the following areas:

1. Data Management
2. Order Management
3. Procurement
4. Manufacturing
5. Inventory Management
6. Deployment
7. Transportation
8. Demand Management
9. Replenishment
10. Store Operations

Each of these solutions is available on the network as a service.  You don’t have to implement the entire solution, rather you “mash-up” the relevant SaaS with your Enterprise process such that you can extend into your trading partner value network.  This allows you to simplify the truly end-to-end supply chain while making it much more responsive and dramatically reducing costs.

High Tech Inbound Network

One Network operates a demand-driven network with more than 80 OEMs and 300 Suppliers.  Signals from the actual point-of-consumption at the various OEM factories and warehouses are harmonized and provided to the various Suppliers with minimal delays. The output is consolidated and useful such that the Suppliers do not need to guess anymore rather concentrate on creating the supply in the most cost-effective and optimal manner. Companies like Arrow, Avnet, Acal, Vicor, Drager Medical, Rockwell, etc. have been operating on this  network for more than 2 years and achieved much higher service levels while reducing inventories and obsolescence. Another benefit that the partners have realized is that this allows them to keep up the data quality especially with customer and engineering part changes that is part of High Tech environment

Figure 2. High Tech Supplier Network

 Top High Tech SaaS offerings from One Network

1. End to end Visibility
   Powered by OneNet, a data management service, One Network can provide broader visibility into inventories, orders, forecasts, shipments, etc. across internal and external parties, enterprises, and systems. A customized perspective can be configured for each role that provides the timely alerts and exceptions with minimum delays. This is a necessary requirement to powering a demand-driven environment.
2. Demand Sensing Traditional demand management has been content with passive demand management, largely within the four walls of the enterprise.  The ability to sense actual demand consumption and detect anomalies at the most granular level (Ex. Shelf stock-out, phantom inventory, poor sales, etc.) is known as Demand Sensing. 
3. Demand Translation The ability to translate the foremost actual consumption to every upstream node from the while netting out inventories and factoring the replenishment policies and rules at every node such that future demand is calculated.  Since the near term demands (or more precisely order forecasts) are continuously calculated vs. forecasted, it is much more accurate. We also take care of data issues such as cleaning, harmonizing, and missing elements.
4. Promotions Management
5. VMI
6. Inventory Planning
7. Demand-Driven Distribution Planning with Order Aggregation
8. Last Minute Allocations
9. Inbound Order Shipment prioritization
10. Transportation Planning and Execution
11. Purchase Order Forecast Management with Suppliers

According to AMR,

“Bottom line: with the price fluctuations of materials, the increased complexity of supply networks, and the compression of product lifecycles, buying groups need frequent and more accurate demand information to tune supply commitments dynamically. It is not the forecast per se, but the ability to sense and translate demand across the organization to make smarter tradeoffs.”

AMR