Increasingly, organizations judge operational success by how fast they can respond to changes in customer demands and global supply conditions. But many manufacturers, especially in electronics, often don’t know exactly what they have to do until the start of each day, so their success depends on making effective decisions that support their overall performance objectives. Ventana Research sees the continued growth of Kinaxis as evidence that companies are adopting best practices and solutions in the realm of Operational Performance Management to increase effectiveness in their supply chains and manufacturing processes.
Increasingly, OEMs, manufacturers and distributors are realizing that their decisions regarding demand, supply, capacity and products can carry unintended consequences. Often they make decisions without anticipating what prove to be inevitable trade-offs, such as the effect that taking an unplanned order may have on purchase cancellations and overall profitability. The source of the problem is that their supply chain processes still operate independently and in a fragmented manner compared to other areas of the organization. Simply put, manufacturers cannot improve operational performance because they cannot connect demand to supply all the way from planning to execution.
Synchronizing the variables in supply, capacity and product engineering, and connecting them to cost targets while meeting customer demand, is not easy. Enterprise resource planning (ERP) and supply chain management (SCM) systems do not address this synchronization, with the result that managers and analysts cannot access all the timely and relevant information needed to make good decisions. E-mail and spreadsheets provide little relief.
Improving operational performance is not about increasing transaction processing speed. Rather, it is about improving classic operation-centric “demand and supply chain” planning and response. But it is more difficult to improve information flow to and from the supply chain than other operational and financial processes because of the large number of people inside and outside the organization who must be linked together to ensure prompt action and execution. Adding to the complexity is the fact that this involves operating across often incompatible automation systems. Manufacturers are now making improvement of these processes a strategic priority.
Kinaxis, an application provider serving what Ventana Research calls Operational Performance Management, offers RapidResponse, which helps manage the gap between planning and execution. Kinaxis has a history of solving these problems and serving global organizations; recently the company was honored by Supply & Demand Chain Executive magazine as a top 100 performer in addressing and solving problems in the area. The nomination cited Kinaxis for providing global visibility and rapid response capabilities to a leading supplier for semiconductor, electronics and network systems companies. Its solution helped the organization respond to changes in demand, understand supply consumption, manage supply disruptions, shorten lead times and reduce excess and obsolete inventory.
Kinaxis’ RapidResponse supports managers who want to take a supply chain strategy from planning through execution, analysts who need to model and iterate scenarios for effective planning, and individuals who need to provide inputs or view information. It packages information in what Kinaxis calls ActiveSpreadsheets. These configurable, spreadsheet-like applications provide on-demand access to information across multiple applications including ERP, customer relationship management (CRM) and product lifecycle management (PLM), as well as existing SCM sources like demand planning (DP) and advanced planning and scheduling (APS). RapidResponse supports finance, operations, and sales and marketing with LiveScorecard, a performance improvement application that allows management to create, compare and score plans for continuous measuring and monitoring. This is critical for an application that crosses organizational areas and requires department managers to buy into mutual targets. It helps break down cultural and political boundaries.
Kinaxis is one of the providers whose offerings operate across an enterprise’s disparate SCM, supply chain execution, ERP and CRM systems to provide strategic operational performance improvement. Providers of larger applications in this area, such as i2, Manugistics, Oracle and SAP, focus simply on providing supply chain analytics or information on top of their transactional and planning applications. This add-on falls short in managing an environment of heterogeneous applications and data and does not help customers make the most of their existing investments in applications from multiple vendors. In fact, these application providers’ data warehouse and business intelligence platforms require significant resources before they can provide an operational performance application.
Recommendation Organizations that want to meet demand and respond to both planned and unexpected events should look at operational performance improvement applications that can link historical performance, planning cycles and execution and can be measured and monitored. Ventana Research sees RapidResponse reducing a significant gap in operational performance by replacing e-mail and spreadsheets that cannot efficiently manage to execution. If you want to improve your manufacturing process and link the demand and supply chain with suppliers, we recommend that you consider Kinaxis.
About Ventana Research
Ventana Research is the leading Performance Management research and advisory services firm. By providing expert insight and detailed guidance, Ventana Research helps clients operate their companies more efficiently and effectively. These business improvements are delivered through a top-down approach that connects people, process, information and technology. What makes Ventana Research different from other analyst firms is a focus on Performance Management for finance, operations and IT. This focus, plus research as a foundation and reach into a community of over two million corporate executives through extensive media partnerships, allows Ventana Research to deliver a high-value, low-risk method for achieving optimal business performance. To learn how Ventana Research Performance Management workshops, assessments and advisory services can impact your bottom line, visit www.ventanaresearch.com.