modal it for supply chain segmentation

ECSCIA, European Centre of Supply Chain Information Architecture

Modal IT for supply chain segmentation

Supply chain priorities

Stable & predictable ? Explorative & innovative?


Supply chain objectives


Right product portfolio

Inventory reduction

Lead-time reduction

Quality improvement

ReachFind

Attract

Cost optimization

Product CustomerMaintain

Right technology

Right design

Right speed

Reuse Compliance

Services

Harvest Relate

Supply


Product Customer

Taking an APICS/SCC perspective

ServicesSupply

DCOR

SCOR

CCOR

PLCOR


Supply chain segmentation


How we innovate

How we develop

How we source

How we make

How we plan

How we deliver

How we researchHow we sell

How we contractValue chain 1

Value chain 2

How we harvest

How we integrateHow we relate

How we innovate

How we develop

How we source

How we make

How we plan

How we deliver


How we contract How we harvest



one size doesn´t fit all In a world full of “different sizes”, it´s worth some

effort to consider how

strategies for supply chain segmentation coexist with

strategies for modal IT


How we innovate

How we develop

How we source

How we make

How we plan

How we deliver


How we contractValue chain How we harvest


Priorities



Priorities


Balance in approach to modal IT changes over time ,

within value chains and between value chains

When?

Where?


Supply chain segmentation + modal ITwithout architecture & governance equals

fragmentation. A broken chain, a “Value archipelago”

Success, both in supply chain segmentation and in modal IT that supports it requires an enterprise foundation & orchestration.

Some call it “strategy”, some “culture”, some “team spirit”.(Architects knows it´s voodoo )


EA?


• What core IT landscape principles does the value chain strategy require?• Within that landscape, where does supply chain segmentation motivate deviations

from those core principles?• Where is mode 1 an absolute requirement?• Where can mode 2 be managed?• Where does mode 2 help enhance the roadmap?• Where does mode 2 threaten the roadmap?• Through what governance does EA align landscape roadmap with LOB

value chain and segmentation strategy?


Grey IT


Some like to label “grey IT” as mode 2.

“Grey IT” as in :

“Let´s just try something… anything… on our own.. fast… and figure out the rest along the way”. “

CIT doesn´t understand the business anyway…”


Then on the other hand…It´s been polarized.

Historically, any hint of IT listening to LOB has been referred to as mode 2.


Can´t blame them….. Digital brings spherical organizations that are driven by processes and automation. That change spells career death to middle management in supply chain. The traditional management role of the command hierarchy adds little value when process guides employees and automation executes. ….Running a grey IT project posing as mode 2 might be their last career opportunity….


Think like them


Supply chain professionals tend to like LEAN and LSS,so lets look at modal IT using some LEAN concepts


LEAN Meaning Mode 1 Mode 2 Grey IT

Visual mgmt. See together, know together, act together

Not a major factor. Business expects service to be there

Major factor, Mode 2 requires interaction and sharing

Doesn´t exist. Grey It protects the silo

5 WHY Challenge and seek understanding

Continuous, low key part of the regular governance process

Key to motivate and position the mode 2 effort

Often missing. Often summarized as “IT doesn´t understand the business”, we run..

5S Sort, Set in order, Shine, standardize, sustain

Focus on maintaining the state/continuous improvement

Somewhat disruptive. Important to know how the mode 2 effort fits into standardize and sustain

At best well aligned, at worst in conflict.

Jidoka Push upstream, push to source

Well… applied but still learning

Rarely, mode 2 tends to exist in isolation

Catastrophe

Poka Yoke Proactively avoid errors

Of course Taking chances Wild and crazy..

Plan Do Check Act Iterative continuous improvements

Yes, to protect stability Yes to stay on track while exploring

Yes, but grey It tends to lack self awareness


LSS is great but don´t fall in the LSS IT trap.

Desire for LSS belt certification often involve IT activities That line of business argue are “mode 2” but

tend to carry all the flaws of “grey IT”, leaving both IT and business with building blocks that do not fit into the dynamics of supply chain segmentation


A few observations on segments and modal IT


Plan

…..has been and will remain an supply chain area where mode 2 is highly adopted.Mode 2 fits well in the plan area as this is where new technologies can easily be deployed in small scale for specific segments and then, if fruitful, gradually grow into rigid Mode 1. We saw it in early days of S&OP, in SC collaboration and now in optimization, big data & predictive/prescriptive. Small IT teams working close to business line to explore new potential in ability to process large sets of data through advanced algorithms


PlanS&OP Used to be Mode 2, now

Mode 1

MPS

MRP Mode 1

PP/DS

DRP Mode 2

Forecast Mode 2

SNO

Mode 2


SOURCEStrategic sourcing is an area where mode 2 IT efforts have had a role to play. “Source” should be close to “plan” but as sourcing communities have a tendency to operate on their own rather than act subordinate to planning, the opportunity to establish mode 1 relations between planning and source is often replaced by separated mode 2 efforts in both groups.Both strategic and operational sourcing encompasses a lot of supplier collaboration, areas where mode 2 efforts have historically ruled but mode 1 is destined to prevail


SOURCETender, contract management, spend analytics and supplier performance management adopted SaaS early. This adoption was often done under the illusion of mode 2, while in reality it is often more of “grey IT”. Although seemingly a good fit for SaaS at first glance, these areas are tightly connected to planning, product development and manufacturing. They need the stability of mode 1 to manage integration. Lack of this insight often results in statements like : “We got it in place, its not really being used… you know we still need to work on “master data”…”


SOURCE

Tender Contract Analyze

Grey IT/ Mode 2Moving towards mode 1

Mode 1 although a lot of SaaS that some would label as mode 2

A lot about BI & analyticsShould be mode 1, a “information factory” but often approached as if it was mode 2


MAKEManufacturing benefits from stability but faces constant change driving innovation and exploration. New technologies need to be adapted into legacy production systems, often requiring IT development close to the operational business flow. Is that mode 2? Model factories, standardized equipment and structured governance are ideal states where mode 1 has a natural fit. In reality factories often “make do” and get by through compromise. It takes a lot of grey IT.


DELIVEROutbound logistics is a volcano about to go off….Traditionally, with the exception of some planning / optimization, some telematics & RFID, logistics has been mode 1 territory. Booking and executing transport has not invited to much mode 2 exploration. Although technology & IT intense, complex & expensive warehouse systems are mode 1 territory Given what is happening in terms of IOT, connectivity, autonomous vehicles (AI) and smart networks this is bound to change. Outbound logistics will be mode 2 territory.


DCORResearch and design are activities that are expected to be exploratory and increasingly faster. The IT portfolio supporting them needs to follow but due to the complex nature and need for structure, IT support is a matter of being fast and available within mode 1 rather than practicing mode 2.

Although…. Disruptive change sometimes callsFor assembly of mode 2 teams. Competitive moves or corrective actions in the amend flow can force DCOR to move from stable and predictable to explorative. At it´s worst, this is a “fire fighting practice”. At it´s best it´s a structured routine.


DCOR

TransitionDisruption

Crisis

Mode 1

Research

Design

Research

Design Mode 2

StableContinuous

Adjacent


CCOR

The customer chain has transitioned from hardly any IT support at all to advanced sales management. It is an area full of mode 2 initiatives.

However, digital channels require flawless and fast execution from the supply chain backend. Mode 2 exploration needs to be backed up by a rock solid mode 1 backend.


“Harvest”

“Harvest”, cashing in on accelerated data availability driven by digitalization, IOT and big data analyticsis obvious mode 2 territory

There is no one to follow, no fundament to apply mode 1 on.


Recap, core supply chain perspectives

Stating the obvious… Consider value chain and supply chain segment objectives when determining modal strategy

Looking for low hanging fruit right now? Lok in segments supporting PLAN & DELIVER. This is where buzzwords are transforming to rubber on the road right now. It takes mode 2 to cash in

Want to free up resources? Question why SOURCE invest in mode 2 when there is so much to gain from Mode 1.

Grey IT blocking the way to joint mode 2? Work on culture. Supply chain people tend to be 20 years behind on cultural relation with CIT. That gap is really not helping when building competitive value chains….

Of course, explore “HARVEST” but the fruit is hanging a bit higher, it takes hard work and some failures…

modal it for supply chain segmentation

Leadership & Management