First thoughts from the Gartner Supply Chain Executive Conference.

I always feel like a kid in a candy store at the Gartner Supply Chain Executive Conference. First of all as a vendor it is great to get so much practitioner talent in one location. There really is a lot of good thought leadership coming out of the leading companies and it is great to see some of these showcased at the conference as keynotes. This year there was a big emphasis on talent management, with Raytheon leading the way in terms of a structured education and work experience program. I just happened to go to a session discussing Starbucks’ transformation. What I found interesting in this case study was how Howard Schultz, CEO of Starbucks, recognized the need to get operational effectiveness (customer service) and efficiency (supply chain cost) under control when he came back to rescue Starbucks. He recognized that a different approach to operations was required now that Starbucks was no longer a startup. According to the presenter, Kevin Sterneckert, Schultz sent out a company-wide email announcing that Starbucks had gotten into the Gartner Top 25. I wonder how many other CEO’s did this or were even aware of their position? I have heard that one of the principle reasons Tim Cook was hired by Steve Jobs was that Jobs recognized the need for operational excellence to secure the value of Apple’s design supremacy. To get back to Starbucks, they are working with local business schools to develop both external and internal training programs for their operations people, and because the business schools students are aware of the transformation because of case study materials they are managing to attract some of the top graduating talent. On the Gartner analyst side there appears to be a changing of the guard taking place with a lot of fresh new talent coming in. This could be one of the greatest benefits to the industry of the Gartner takeover of AMR Research. The quality of the AMR analysts was always high, but fresh perspective is always welcomed and a broader reach was necessary, though nearly all of the recruits are still in the US. Hopefully this will change over time.  Many of the new analysts were given very prominent roles in the conference, which was great, these include Ray Barger, Mike Uskert, Matt Davis, and Kevin Sterneckert. Three sessions I found particularly interesting were:

• Matt Davis – Segmenting Your Supply Chain to Enable Innovation and Profitability I wrote a blog recently about Matt’s recent article on supply chain segmentation so I was keen to attend his session. He did not disappoint and I was pleased to see that the room was full. Segmentation is a very important step in the overall development of a company’s operational capabilities. It is the realization that to get to higher levels of supply chain effectiveness and efficiency not all demand and supply can be treated in the same manner. What I am hoping Matt is going to explore over the next few months is what this means from an asset perspective. It is easy to say that the supply chain has to be segmented, but how?  Is inventory of the same stored in physically different locations in the warehouses? Or is the segmentation managed through systems, that is a virtual segmentation rather than a physical segmentation?
• Mike Burkett – Maximize Product Life Cycle Value by Aligning Demand and Supply With Product Design It always surprises me when analysts and industry experts exclude explicit mention of product life cycle management, especially new product introduction, from S&OP. There is some much demand uncertainty and the need for supply chain agility so high that it must be considered as part of the S&OP process. Especially in light of some of the data published by Mike as part of his presentation showing the abysmal record of successful product launches. Mike also presented a hierarchy of metrics for product life cycle management, especially product launch, separating out timeliness of launch from time to value.
• Prof Clayton Christensen - Manage Supply Chains to Create Disruptive Innovation Prof Christensen gave a truly inspirational presentation on disruptive innovation that largely debunked the notion of measuring supply chain and operations effectiveness by increase in RONA. I have often made the comment that I considered outsourcing to be a purely financial instrument that no operations person would chose to adopt. Prof Christensen showed how outsourcing essentially saps the company of operational competitiveness over the long term. Equally important was his illustration of how unnecessary cost can be designed into both processes and products, often through the over design of products with capabilities that exceed user requirements. In this context, I find the transformation being forced on western companies by selling into the BRIC countries a very healthy shock to the system. Some of the medical diagnostics companies need a special mention in this regard, and Prof Christensen called them out too, as did Jane Barratt, with product redesign for BRIC countries leading to simplification and huge reductions in size and weight. This ties into Prof Christensen’s description of technology evolution being first centralization and then dispersion where many of the medical diagnostics machines designed for BRIC countries being used in smaller clinics in the West.

There were many other session I wish I could have attended, hence my reference to being a kid in a candy store. Special mention must go to Tim Payne’s session on technology evolution and the relevance of pace layering in this context. In another session, of which I captured the last 10 minutes, Tim emphasized the growing need for response management and rapid planning. I am going to spend time over the next few days going through the recording of the sessions I missed, particularly those of Tim Payne, and providing additional commentary. Stay tuned.