Norway


In 1998, then Gartner analyst Art Mesher developed a framework that is arguably the most well-known of any such supply chain paradigm – maybe only rivalled by the Bullwhip Effect.ar

That framework is the “3 V’s of Supply Chain,” those V’s for the few who probably can’t readily cite them, are Visibility, Variability and Velocity.

The funny thing is, to the best of my knowledge, the 3 V’s were not – at least initially – delivered under the common analyst medium of a written “research note.” Rather, the Three V’s were first delivered as a presentation at a Gartner conference. Later, the Three V’s construct was further elucidated in a series of research notes.




Gilmore Says….





But here Mesher makes a critical point: in the multi-party world we operate in, at the end of the day: Who owns the supply chain data?





What do you say?

Click here to send us your comments
 

Mesher eventually went on to become CEO of supply chain software firm Descartes, where he led a remarkable turnaround and created a large amount of shareholder value.

Upon the 20 year anniversary of the first unveiling of the 3 V’s, Mesher agreed to do a “part 2” in an interactive discussion at last Fall’s CSCMP conference, updating, in effect, 3 V’s thinking for 2019.

And with a certain appropriateness, that discussion was supported not by a written paper but by another presentation deck.

Before we look at that, a quick review of the origina 3V’s. In very summary fashion:

Visibility: Having a more granular and real-time view what is happening in the extended supply chain – a never ending but necessary journey

Variability: The force that requires all kinds of expensive buffers (inventory, capacity) to be created in the supply chain, a that thus must be managed – but in some cases can be exploited. Mesher today also references “The ability to manage the unique combinations of customers, products, channels, and supply chain management processes” as core to the Variaibility challenge.

Velocity: At a macro and micro level, the clock speed at which a given supply operates. You may remember Dell’s focus on supply chain velocity receiving much attention at about the same as the 3 V’s was released.

I interviewed Mesher in 2005, and he noted that the framework was created in 1998 in large measure to encourage more companies beyond the cost reduction focus that characterized most supply chain initiatives at the time, towards those that used supply chain improvements to fuel profitable growth.

“My belief was that companies would view the 3 V’s differently as they moved from a focus of saving money by cutting costs to increasing profit by growing revenues and market share,” Mesher told me in 2005. “For example, saving money focused on the improving the velocity of the order-to-cash , while improving profits focused on the improving the velocity of which new products and channel configurations could be created or recreated.”

That battle – between viewing supply chain as primarily a cost center that serves the organization best by reducing those costs and seeing the supply chain as a revenue and customer value driver – of course continues to play out.

Mesher also noted then that the 3 V’s will have different importance for different companies. “The three V’s are somewhat like an equalizer in music – different songs are best heard with different settings of mid versus treble or bass,” he continued. “All supply chains are not created equal; some are long (global) and very focused on coordinating and controlling material flows, working capital optimization, and channel management. Short supply chains – regional or local – tend to be more focused on service policy optimization and asset utilization. I would suspect that managers of these different types of supply chains would have different views of the priority rank of each of the three V’s.”

So how does Mesher view the 3 V’s here in 2019?

He first nicely connects at least two of the V’s – Velocity and Variability – what the profound changes being unleashed by .

“Private labeling foreshadowed the collapse of the competitive advantage long enjoyed by the dominant mass market brands. 20 years ago, it was sufficient to differentiate on product quality alone. Our services and logistics merely protected that inherent product value,” Mesher now observes.

He adds that “Today, the window of time in which an offering maintains its advantage through product attributes and mainstream brand stature alone is collapsing. Logistics are the new differentiator, and carving a meaningful role within the discovery-to-delivery experience is the key to differentiation longevity.”

Today though, Visibility is has become really just table stakes – you have to have deep levels to really compete effectively – though that is not to say there aren’t still real differences between companies in terms of the Visibility they have achieved – and also can leverage.

“Knowing what has already happened no longer offers advantage,” Mesher says. He also says supply chains today are characterized by “resources in motion – people, conveyance units, assets, documents, and money.”

As a result “Perhaps what is needed is to have an Internet not just of things but of nouns and verbs: people, places and things all interconnecting and feeding real-time information engines that understand actions (verbs) performed by subjects (nouns) and state or place (context of action) to create end-to-end supply chain visibility,” Mesher says.

That’s pretty deep. But here Mesher makes a critical point: in the multi-party world we operate in, at the end of the day: Who owns the supply chain data? To the data victors will go the spoils. He also says that we have few accepted norms about how and when supply chain data should be shared – a very good point.

On velocity, Mesher says “Enterprise systems and their associated processes were not designed for the environment in which we now operate. In the always-on always-connected surveillance economy, data is ubiquitous, but our systems cannot react to this information and are not built for communal process enablement.”

He adds that “Tactically, we are witnessing a quest for the frictionless transaction, where things simply happen and everyone magically gets paid.”

This, he says, is connected to the dream of the “smart contract,” a concept generally from my view promoted under the Blockchain umbrella.

“Strategically, winning companies will harness velocity and design themselves in a way that allows them assemble and disassemble ecosystems and compete through this dynamic [supply chain] reconfiguration, Mesher says.

On the last V, Mesher says “Managing Variability strategically involves intentional planning around what needs to be standardized versus what needs to be unique.”

However, there is often tension between those that wish to standardize everything – and hope to somehow avoid variability – and those that wish to compete on differentiation.

More broadly, Mesher says the companies that can reconfigure their supply chain networks and relationships with suppliers, customers and logistics service providers and execute successfully across changing ecosystems and react to ever changing requirements and threats will be the winners. (So you can say there is certainly also an element of Velocity in this view).


As a result, he also sees fewer long term partnerships, and more temporary relationships to meet needs for some finite period of time.

There is a lot more in this interesting and valuable update of the 3 V’s, with much of the truly innovative thinking for which Mesher has always been known – including suggesting that we replace the long standing “4 P’s” of marketing – product, place, price and promotion – with an interesting set of new P’s.

You find that and the rest of the presentation here: 3Vs (Visibility, Variability, Velocity) Part 2


Any reaction to the 3V’s – Then or Now? How do you see them playing out today? Let us know your thought at the Feedback section below.

Your Comments/Feedback











































Srihari


Senior Consultant, Infosys

Posted on: May, 22 2016

Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different. 

That would only give a complete perspective with all the players in the pool.




Mike O’Brien


Senior editor, Access Intelligence

Posted on: May, 26 2016

Surprised to see Home Depot fall off the list; thought they were winning with Sync?




Julie Leonard


Marketing Director, Inovity

Posted on: Jun, 27 2016

Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.




Carsten Baumann


Strategic Alliance Manager, Schneider Electric

Posted on: Aug, 19 2016

The IoT in this year’s (2016) Hype Cycle is on the ascending side, entering the “Peak of Inflated Expectation” area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn’t this contradicting in itself?

Editor’s Note: 

You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field.

So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions.

Why IoT generically is not on the curve this year I wondered myself.

 

 




Jo Ann Tudtud-Navalta


Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines

Posted on: Aug, 21 2016

I agree totally with Mr. Schneider.

I have always lived by “put it in writing” all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can.

This “putting in writing” can also be used for almost anything else.  Here are some general benefits (only some) of “putting in writing”:

1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding.
2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email.
3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on.
4. There will be a document to refer to at any time by any one who needs clarification.
5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future.
6. This can also be compiled and used to teach future new team members.  “Learn from the past” it is said.

There are many more benefits.  Mr. Schneider is very correct about his call to “put it in writing”.




Sandy Montalbano


Consultant, Reshoring Initiative

Posted on: Aug, 24 2016

U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of “Made in USA”.

Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate!

The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative’s free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm




Robert


Transportation Manager, N/A

Posted on: Aug, 30 2016

 Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!




Ian Jansen


Mr, NHLS

Posted on: Sep, 14 2016

SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP.

I’ve worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many “picks” per day.

I’ve learned that one doesn’t have to remind Germany about your EDI orders.




Don Benson


Partner, Warehouse Coach

Posted on: Sep, 15 2016

Challenge – to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment 




Jade


Admin, Fulfillment Logistics UK Ltd

Posted on: Oct, 02 2016

Of course we all need to up our game. We need to move with the , and always be one step ahead of what the future will bring.




Mike Dargis


President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net)

Posted on: Oct, 03 2016

Thanks for the article, but I know there’s a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.




Blaine


Inventory Specialist, Syncron

Posted on: Nov, 16 2016

Lora, great article! I agree that companies choose the ‘safe’ solution more often than not. My solution is a bolt-on for legacy ERP’s and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships.

Blaine
blaine.schultz@syncron.com




Bob McIntyre


National Account Executive, DBK Concepts LLC

Posted on: Nov, 21 2016

This is a game changer in GE’s production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network. 




Kai Furmans


Professor, KIT

Posted on: May, 22 2017

I am referencing to the comment that leasing of warehousing equipment (beyond forklift trucks) is a vision for 2030.
Just recently in Europe, such a business model has started, see here: https://next-intralogistics.de/

I am following with a lot of interest, how the business develops.




Stuart Rosenberg


Supply Chain Consultant, First Choice Supply Chain

Posted on: Jun, 05 2017

If we limit the standard on judging or determining the best supply chain to just three calculations it does not tell the entire picture.  Financial performance metrics are valuable as they capture the economic consequences of business decisions.  But supply chain managers make decsions and use organizational resources that impact a company’s financial well being.  Where is a firm’s earnings over a period of time determined by sales less product costs and general/adminsitrative costs?  Where is the metric for determining the sources and uses of cash from three perspectives – operational, investment and financial?  Where are these supply chain metrics: on-time delivery, lead time, response time to customers, product returns, procurement costs, network distance, inventory carrying costs, forecasting accuracy, sourcing time, etc,.  Without knowing the results of all these supply chain calculations the there must be a question as to the accuracy of the 25 top supply chains.




Dustin Calitz


Project Commercialization Manager, Mondelez

Posted on: Jun, 06 2017

I feel this ranking misses the mark in SC. It does not seem to consider a key indicator in days inventory on hand, which is key to determining a SC company’s ability to forecast, manage inventory costs and reduce aged stock. In additiion I realize it’s difficult to understand what goes into the customer survey, but would I assume specific metrics are being asked. For examples customer’s opinion on service level differentiation and the ability to deliver the right product on time, which should then be allocated a bigger weighting than 10%. It would also be interesting to take a view of the above list’s SKU portfolio complexity, seasonality and launches/promotions. I would again assume some companies on the list above have a far more complex SC to manage and lead, ultimately requiring a lot more innovation within a SC to stay ahead of competitors, and ultimately satisfy their customers demands.  I understand above metrics are difficult to measure, as mentioned in the article, but they somehow need to be considered to give a true reflection. 




Michael Hurd


Lean Consultant, Unemployed

Posted on: Jun, 10 2017

A Very Good Article…

While some feel that lean is a scam that pushes for more out of the personnel and out of the companies through reduction of waste and adding value for the customer, there are several things to remember:

1) Lean methodologies are designed and implemented to reduce time wasting, so this may seem that you are working harder as an employee.

2) Lean methdoligies only work when everyone from the janitor to the owner of the company get involved and back the program.

3) Lean methods are there to make you work smarter not harder, although it may feel you are working harder.

4) YES… Sometimes lean methodologies fail! This is due to project overun or taking on too large a problem and trying to fix it all in one go and not taking the smaller problems that are associated with the large problem and fixing them first. Sometimes fixing the small problems leads to resolution of the larger problem.




Akhil


Director Supply Chain , skuchain

Posted on: Jul, 31 2017

The Supply Chain technology is not considered a problem because traditionally supply chains are thought to be cost centres unlike sales functions. The tendency, in general, to limit expenses and cost cutting on upgrades for technology and for talent have been hindering progress for the businesses. Supply chains lack real time visbility and above all trust across the value chain (not that the participants are dishonest) rather it’s about the cascading effects referred to as the bull-whip effect which causes higher magnitudes of disruptions. 

Supply chain real time information should top the list .

Another problem is that of multi homing as so much data is available across several feeds of IOT/Email/Internet /Mobility/ERP that organisations tend to have issues around finding a single platform to collate them for meaning analysis. 

Blockchain (if deployed appropriately) can be a great solution for solving the issues around the supply chain.




Mike Ledyard


Vested Program Faculty, Vested Way / University ofTennessee

Posted on: Aug, 04 2017

Excellent article.  It very much points to the need for Shared Risk / Shared Reward as we teach at Vested.  Suppliers will respond when they are made part of the team, and they have a lot to bring to the game.  The service provider is the subject matter expert in the services provided, and in an excellent position to enhance the capabilities and services offered by the shipper.




Andrew Downard


Managing Director, AD Supply Chain Group Pty Ltd

Posted on: Aug, 05 2017

As the article points out it is not a lack of technology that is holding back performance but rather a failure to form the right sort of relationships.  As well as the length of such relatiohships, practitioners should consider employing arrangements that incentivise both parties to innovate and deliver levels of performance and profit that neither thought possible.  By far the best model I have come across to achieve this is the Vested Outsourcing model developed by from the University of Tennessee.  See www.vestedway.com for information on the model and studies that show how others have benefited from creating a Vested deal.




Najma


logistics, threelineshipping

Posted on: Aug, 23 2017

Very informational article. The major focus of logistics is on e-commerce. There is a need to optimize every component of logistics by following the latest trends and technologies. Thanks for uploading this article.




Sameer Shukkla


Consulting Partner, Wipro Inc.

Posted on: Sep, 17 2017

I have recently co-authored a white paper with my colleague wherein we have looked at 2 fundamental guiding principles  –

1. Always have enough to Sell / Produce
2. Do not have excess to Sell / Produce

These 2 Golden Rules can be the foundation of keeping optimal inventory levels and for organizations to achieve the same. We have looked at a framework which tries to reduce the phase mismatch between Demand & Supply, and tries to bring the shape of the supply curve closer to shape of the demand curve.

We have classified symptoms and underlying root causes for the above “Phase mismatch” and “Curve Mismatch” between Demand and Supply, and then talked about addresssing those individual root causes to strive towards Leaner Inventory levels while maintaining or improving service levels.

So to answer your question, we feel the Companies which have addresed these causes have been able to keep DIO horizontal or even going down, while others have not been able to control rising DIO because of not addressing the root causes.




Simon Eagle


SCM Consultant, Camelot MC

Posted on: Sep, 17 2017

You ask why turns are flat or declining despite lots of attention and technology. The answer is, I think, 2 fold: the supply chain environments VUCA (Volatliity, Uncertainty, Complexity, Ambiguity) is on a continuous upward curve and this means that forecast accuracy inevitably declines in parallel – and much of that inaccuracy is hidden by the statistics. For instance a company with, seemingy good, 80% mix accuracy will find that figure is skewed so high by the few high volume / low variability items. 80% of the items will be achieving considerably less than 60% error.

So most item level forecasts used for driving replenishment through an MPS (be it ERP or APS) are simply leading to unbalanced stocks, service threats and continuous expediting / fire-fighting. These schedule interrutions are “variability” that is disrupting flow and, thereby, increasing lead-times, using unplanned capacity and generating excessive (and still unbalanced) inventories.

The replacement in ex-stock supply chains is “enterprise(s)-wide” pull which also uses “push” for extreme/exceptional events. Its other key characteristics are that the supply chain is decoupled and is demand-driven. And now it can be implemented using SAP since they announced they they have co-developed an enhancement for IBP that supports this transformational way of working – up to 50% inventory reduction, requiring less capacity and shorter lead-times all while achieving planned service levels. See https://www.camelot-itlab.com/en/camelot-demand-driven-lean-planning-suite-for-sap/ and https://www.linkedin.com/pulse/supply-chain-flow-what-why-how-simon-eagle/




John Smith


Research & Development, Octopus Solutions

Posted on: Sep, 18 2017

IoT is without a doubt starting to become a major factor in the profitability of various companies. In the manufacturing sector, we will see it come into the front by the end of 2020 completely. Various sectors have already adapted IoT solutions like the security industry or companies offering BPO Services India. Contact centers not just in India and China but across the world have adapted technology following the principles of IoT. The manufacturing sector is soon going to follow.




Girish Maniyar


Chief Manager Development Initiatives, Asian Paints

Posted on: Sep, 28 2017

I  can speak with some context. While efficiency and tools can reduce inventory, we also see the number of SKUs and new products increasing, and also the number of sales/depot points. This means the inventory in such cases, can start with very high number and with more customization and choices available to the consumer, so there is no end to the long tail of products available within a category. It is unlikely that the slow/dead goods are written off so easily to be not included here.

A larger question, would it be purely an IO problem or also a Demand Planning (Forecast Error) problem? A higher cycle time of service but a better fill rate can improve inventory performance, by aggregation. But a bad forecast can do away all the good work you do in inventory planning.

Do you have numbers for decorative coatings in the list? I did not see something there only for decorative coatings.




Reo B Hatfield


Chief Operating Executive , BestTransport

Posted on: Oct, 20 2017

My opinion is that peaks and valley are just nice graphics to explain.  Smooth responses save the day.   3PLs  just adjust to the climate and the areas of movement of Logistics.    One purpose of the 3PL movement was to adjust to an always changing market.   They will never be fixed and will flex as the logistics changes.   3PL companies have vast knowledge of their business.  Their success is their ability to move up and down as the market flows.  They bring a level playing field to the transportation world that in the past was rigid but looked good on spreadsheets.  Industry graphic personnel like to be able to answer all the changes because they can only see documents.  3PLs see the needs, the issues, the positive changes and the knowledge to know why and when to adjust.   They (3PLs) have smoothed the waves of the past and everybody likes to see the spikes so they know something is there to clearly report on. Smooth sailing is boring but sure gets you where you want to go. 




Catherine Dennis


Supply Chain Manager, Indak Mfg Corp

Posted on: Oct, 26 2017

So the horrific and severe worldwide allocation of electronic components is not an issue?  Don’t tell that to the automotive buyers.  It’s HORRIBLE.  Lead times out to up to 76 weeks.  Why not write about that?  It’s killing us, our customers and the big automakers.   




Huub


Logistics Manager, Shell

Posted on: Nov, 11 2017

I suggest McKinsey to do a bit more research in Prof Gattorna’s dynamic alignment. This article only scratches the surface a tiny bit. Much more to be found reading about the alignment concept.




Joseph George


Farmer, Field Vista

Posted on: Dec, 07 2017

Primarily Vision is required followed by Assigned Focus on objectives.  Or maybe just love for USA.  The market will not find its way unless it’s for organic vegetables and RRR.  Two to three years later will take two to three years longer to the end of the decade, and this is viable today.  God bless america from its present distraction.




Gary Buchs


Owner Operator , Self, Landstar Business Capacity Owner

Posted on: Dec, 17 2017

In My Opinion, the fact that capacity will tighten should be obvious to everyone engaged in the transportation. 
Capacity to move freight isn’t how many trucks or trailers are in the system or what a computer 
program says, it still is truck driver based and poorly-managed companies won’t be able to imporove
this fact.  Investing in people is still most important!

Get ready to pay higher prices for goods and services. I think we could lose 10% of Capacity in many areas. 




Dan


Pres., Bioptechs

Posted on: Dec, 20 2017

After all the ground we have lost in the productive sector and the additional burden that loss of our productive momentum has placed on our society, somebody tell me why so many people are against the actions necessary to restore our vital productive infrastructure! It is like the left enjoys shooting itself in the foot!




Jayaram


Business Development, Raghava Logistics

Posted on: Mar, 04 2018

Great article and thank you for summerizing the predications. 

What does it mean to country like India where the labour is still cheap? Where the logistics cost is still on the higher side compared to some of the developed nations?




Herb Shields


President , HCS Consulting

Posted on: Mar, 06 2018

 I agree that robots can replace some amount of manual labor in logistics centers.  However as you mention, the labor pool is shrinking.  We need more training programs such as the one provided by the Greater West Town organization in Chicago.   Www.gwtp.org.  (It is a program that your readers should find interesting.)




Billy


Associate, BJO

Posted on: Mar, 13 2018

Thanks for this very informative article.




Doug Murless


Country Manager, krunchbox (www.krunchbox.com)

Posted on: Mar, 18 2018

Gone are the days when consumers will wait for a retailer to have the product back in stock, those days are done. We live in the “I want it now” society and with Amazon in their pocket consumers can easily “now” it to themself the next day right from their phone.

The importance of product availability is under the microscope at all as an empty shelf equals lost customers, a poor customer experience and entirely abandoned purchases.

We are on a mission at krunchbox to help suppliers fix their product availability and sell thru and improve their buyer relationships, hopefully before their retail partner fines start rolling in and or we see more retailers close.




NikhilSingh


Executive, Carmatec INC

Posted on: Mar, 21 2018

You are correct There are government programs to encourage investment at small and mid-size manufacturers, but McKinsey says these programs generally have smaller budgets, less certainty of ongoing funding, and more constraints on their mandates than comparable programs in other countries. Policy makers should examine which existing initiatives are producing the most promising results, then scale up those efforts and commit to them for the long term.



Source link
thanks you RSS link
( http://www.scdigest.com/firstthoughts/19-03-07.php?CID=15263)

LEAVE A REPLY

Please enter your comment!
Please enter your name here