Blockchain: The Great Paradigm Shift

During The 2017 Supply Chain Insights “Imagine Supply Chain 2030 Global Summit”

I found myself surprised and confused by a topic I felt I had a strong handle on. Having sponsored my own company’s R&D efforts in blockchain I thought I have a deep and clear understanding of how this technology would mature and become demanded by our client’s clients.

I nearly fell over when Brian Tessier (Schneider Electric) began explaining their pilot to use blockchain to manage the process of onboarding new business partners.

I began mental flailing … “Why would you do that” … “Surely that’s the wrong tool for the job” … “What do they know that I don’t?”… By the end of the summit, it was clear to me that I needed to reframe my expectations around blockchain.

Blockchain, we have all heard about it, so what are its use cases, and what it means for you?

When people describe blockchain as open ledgers, or distributed ledgers, it reminds me of when people used to refer to the internet as the world wide web or information super highway, but in relation to blockchain. Blockchain is the underlying technology behind all cryptocurrencies like bitcoin and ethereum, but it’s much broader than that. It has a potential of changing the way we work and communicate, making it more secure, efficient, and trustworthy.

 

 

“Why the future is blockchain? So what are blockchain’s main advantages? By performing the functions of record keepers and managers it would enhance decentralisation, reduce the amount of intermediaries involved and provide an alternative to how value can be stored. Physical as well as digital assets could be uniquely verified online to prove ownership.

As transactions stored on the blockchain could be independently verified and traced, it would be easier to fight crime, counterfeiting and fraud, reducing systemic risk in the financial system. A distributed digital ledger would make it near impossible to change or falsify data, because data would have to be altered across all the related “blocks” in the digital chain, so any tampering would be exposed. Consequently associated costs would fall, enhancing economic growth and prosperity.“ ~ The Conversation

 

 

“Although there are multiple competing standards, the good news is for the most part the distribution of the blockchain mechanism, as far as the individual packages, most of them are underpin by open source code that lived against relatively similar frameworks. They are going to be crossed compatible. This technology is so fluid, everybody could get started developing in this platform tomorrow….. You can shape the future of this platform, we stand right now for what can potentially be the next internet, so I strongly recommend you and your businesses to grab the wheel and get in…..” ~ Brian Tessier, VP of Innovation, Schneider Electric

 

 

Where are we now? In 2016, Lora Cecera facilitated a workgroup to design and test new approaches, including testing of new technologies like cognitive computing, blockchain, open source analytics, and the Internet of Things. She shared her learning summarized in four main points 1) Hard to Get the Right People to the Table, 2) Detours/Potholes and Spiraled Learning, 3) Trust Coupled with Big and Hairy Data, and 4) Need for Ongoing Education. I couldn’t agree more with the fourth point as we need to adapt to the paradigm shift.

“One of the biggest benefits for the members of this group is learning and ideation on next-generation supply chain processes. It has been fun to facilitate this learning. To spice up the discussion, I brought the smartest technologists to the table to share insights on Open Source analytics, blockchain, IOT and cognitive computing. All of these technologies are moving at fast speeds with overhyped promises. To grasp the potential impact requires a paradigm shift in thinking. Supply chain teams used to thinking in batch processes, with fixed hierarchical representations using relational database models, need to change. The world of schema on read, blockchain, cryptocurrency, rules-based ontologies, streaming data architectures and cognitive computing is all new.” ~ Lora Cecere, Founder of Supply Chain Insights

 

Shift in Paradigms: Lora Cecere, Founder of Supply Chain Insights

 

At Prophit Systems, our research with blockchains and pilot work with the Australian Government, CSIRO’s Data61 has been valuable and tangible. We have been trialing using blockchains to provide proof of sourced materials. As materials are consumed and converted we are providing metadata around the usage, yield and process conditions that were applied during processing to associate the consumed material with the converted product and its new blockchain. The blockchain ledger can then confirm the origin of materials that were consumed in the transformed material.

Being immutable this ledger system offers a positive method to confirm the origin of materials, processes, and services that have been used in the provision of products.

What are your thoughts on blockchain? Any comments gladly appreciated.

Tim Gray

Prophit Systems

During The 2017 Supply Chain Insights “Imagine Supply Chain 2030 Global Summit” I found myself surprised and confused by a topic I felt I had a strong handle on. Having sponsored my own company’s R&D efforts in blockchain I thought I have a deep and clear understanding of how this [...] Read More...

Impact of Additive Manufacturing

At the Lora Cecere’s Supply Chain Global Submit 2017, the session on Additive Manufacturing had particularly grasped my attention. I don’t think anybody questions the fact that 3D printing has done and continues to do amazing things. The questions being asked now are about how we can continue to push the possibilities forward. Additive Manufacturing and Material Science are maturing very rapidly, and will transform the manufacturing industry.

“Additive manufacturing is a rapidly-expanding field and a national strategic priority in many countries in Europe and North America. “As an emerging manufacturing process, it is a disruptive technology that will both complement many traditional manufacturing techniques, and become a major technique in the future, enabling new business models, products and supply chains to flourish,” Dr Xiaopeng Li, Lecturer, UNSW

 

 

Technology companies can provide an array of options to help manufacturers explore broader use beyond rapid prototyping and invest in the next generation of AM technologies, such as hybrid printing, multi-material, multicolored fabrication techniques and touch based user interfaces. Options range from the scanning of physical objects to modeling, designing and slicing software to the materials and printers themselves.

“adidas and Carbon are creating the next breakthrough in athletic footwear, leveraging Carbon’s Digital Light Synthesis technology to bring a new product and platform to life: Futurecraft 4D. Together, we are developing the first mass production process that makes previously impossible midsole geometries with revolutionary 3D printable materials, paving the way for custom, high performance shoes that meet the unique needs of each customer.” ~ carbon3d.com/stories/adidas

 

 

According to Carbon, Digital Light Synthesis is a breakthrough process that uses digital light projection, oxygen-permeable optics, and programmable liquid resins to generate durable products, and the Futurecraft 4D is adidas’ first application of that technology onto a shoe. By the end of 2018, adidas plans on producing more than 100,000 pairs of of shoes using Digital Light Synthesis technology, a technology pioneered by Carbon.

“Carbon’s programmable liquid resin platform uses light to create the shape of the sole, then uses heat to set it, allowing the team to create a print from scratch. In addition to saving on cost, the method also significantly reduced manual post-processing steps of traditional manufacturing. Carbon was able to develop an elastic material for the Futurecraft 4D midsole, which is stiff but resilient, creating a high-performance midsole with optimum energy return.”

 

 

“The Carbon-adidas collaboration made ten times as many iterations possible! Further, each iteration was produced with the same process and material as the ultimate product. These were not just prototypes for assessing a design’s visual appeal: We could actually test midsole performance in the design stage. In other words, Carbon’s technology makes prototyping obsolete. Gone are the days when it was necessary to prototype a product using a technology that does not allow for scale-up.” ~ Carbon

 

 

“Fully-automated 3D printing will revolutionize industrial manufacturing over the next five years. This is also reflected in figures. By the year 2030, an annual growth rate of about 20 percent is predicted for the market. This represents an increase from currently 4.1 to about 40 billion US dollars – but the biggest growth comes from production, not prototyping. Looking at the trend curve for a new technology according to the Gartner Inc. model, industrial AM will have reached its production plateau in about two to five years.”~ RENÉ GURKA, bigrep

 

 

Additive manufacturing means a greatly simplified, highly responsive, and infinitely flexible supply chain fulfills the order. The demand economy is disrupting every sector and when paired with the advent of additive manufacturing, is a true game changer for the manufacturing industry. It should be a warning sign for companies that if they don’t innovates their supply chains, they may become irrelevant as consumers will have more control of the production of their own products.

 

Source: Strategy & Analysis

 

Prophit Systems’ Multi-Echelon Inventory optimization tool “Prophit AutoStock” includes automated predictive algorithms to forecast your future requirements. Our expert algorithms identify products that should be re-categorized, allowing quick and intuitive management of all products at all warehouses, and on demand. All inventories are visible by location, cost, days cover, selling units and storage units for current and future periods. We are all prepared for the future of additive manufacturing.

What are your thoughts on Additive Manufacturing? Any comments gladly appreciated.

Tim Gray Prophit Systems

At the Lora Cecere's Supply Chain Global Submit 2017, the session on Additive Manufacturing had particularly grasped my attention. I don’t think anybody questions the fact that 3D printing has done and continues to do amazing things. The questions being asked now are about how we can continue to push [...] Read More...
Sales Forecasting

Mergers & Acquisitions and Sales Forecasting

When it comes to forecasting strategic acquisitions the need for containment can often result in an organisation’s planning functions not being directly involved in the processes. Initial scoping and feasibility is done at high level, and then project teams dive into risk assessments and due diligence functions.

At what point should the plans of these acquisitions be included into an existing planning system?

Scenario

Recently a Prophit Systems’ client successfully acquired a segment of a competitors business, thereby increasing their market share. To keep the details confidential, only a handful of people were involved in the financial modelling, and due diligence process.

When details of the acquisition became public knowledge the information provided was sparse and only available from the company’s senior management team. This created a number of costly problems that could have been easily avoided.

When Prophit Systems was asked to get involved, the client had realised that the sales figures that they had expected were not materialising.

In order to understand the cause of this discrepancy our team needed to compare the detailed sales to the expected sales. Unfortunately, the sales forecasting only existed at consolidated levels in balance sheets. The vendor had not provided detailed sales forecasts but rather historic sales figures.

To gain insight into where the problems were occurring, we built a forecast based on the historic sales. This forecast was detailed to the SKU, location and customer (SKULC) level. Having this level of granularity enabled us to slice the forecast vs. actual comparisons by item, by customer and by location to identify where underperformance was occurring.

It quickly became evident that the underperformance was localised to one account manager and another significant customer. Once the source of the issue was identified the Sales Manager was able to get to the root cause of the problems, and take appropriate action.

Now armed with a detailed forecast the Sales Manager was able to rapidly understand how the new business was performing, and where the hot spots were. Having a consolidated forecast of their finished goods requirements, they were also able to construct accurate projections of their raw material requirements.

The company’s acquisition also saw its total product volume increase by some 40%, and this led to an increase in the overall raw material required by the new-look business. Having detailed information about the consolidated material requirements our team leveraged this information to instigate a round of raw material price negotiations between the company and its suppliers.

Lessons Learnt

  1. Obtain detailed forecasts as early as possible in your M&A transactions.
    You will need this to build management targets, to help the transition and to facilitate the speed uptake of the management issues
  2. Use these forecasts to chart your progress, and manage the transition of incorporating the new business. This is a risky time, where clients may jump ship. You need to manage the transition carefully.
  3. Your raw material volume discounts thanks to the increased volume demand in an acquisition can be significant. The sooner the data is available to the various teams within the supply chain the earlier these discounts can be brought to bear.

When it comes to forecasting strategic acquisitions the need for containment can often result in an organisation’s planning functions not being directly involved in the processes. Initial scoping and feasibility is done at high level, and then project teams dive into risk assessments and due diligence functions. At what point […]

Read More...
Supply Chain Ship

Do you understand the weaknesses in your supply chain?

As a SCM solutions provider we understand that there are an infinite number of variables that influence a supply chain’s efficacy. This fact can make identifying the true culprit of a supply chain failure incredibly difficult. In many cases when there is a catastrophic failure within a supply chain managers tend to look for direct cause and this in most cases will be identified as one or two outside forces that were beyond their control. However, what these witch hunts fail to do is look at the bigger picture and identify all the factors that contributed to a supply chain disruption.

In John Manners-Bell’s book, Supply Chain Risk, he draws parallels between the Swiss Cheese Model and supply chain management. The Swiss Cheese Model was developed by academics in the risk analysis field. The gist of the model is that factors contributing to everyday operating procedures can be present for long periods of time without showing any symptoms of contributing to a potential adverse effect. It is only once a specific set of these dormant factors come together that operating conditions will see upheaval.

“All organisations have latent conditions – on their own they do not result in catastrophic failure.  However, what is required is an ‘active failure’ which, when these latent conditions align across a network or organisation triggers a disastrous event.”

John goes on to provide an example which most people managing supply chains can relate to.

Imagine a carrier carrying key components to a factory is late with its delivery. Consequently, the factory has to shut down or 24 hours, which sees millions of dollars of production lost. The most obvious culprit to this scenario is the carrier itself.

However, what if the company in question whose factory is standing dormant waiting for the parts was actively pursuing leaner manufacturing, which in turn, had seen a minimisation of inventory and safety stock? What if procurement had also minimised their cost by sourcing parts from a foreign-based supplier and an earlier shipment had been rejected due to a failed quality inspection?

What if when appointing the new supplier the new lead-times had not been accurately accounted for and the potential for something going wrong along the new delivery route hadn’t been factored into planning and forecasting models?

Now all of a sudden the carrier (and the driver responsible for the delivery who was subsequently ‘let go’) aren’t solely responsible for the loss in revenue. In this case management and the relevant systems need to own a lion’s share of the responsibility for the failure.

This reality plays a major role in how we at Prophit Systems develop and implement our offering. We focus on making the input of variables as easy and error free as possible, while making sure that triggers are in place that will alert managers of any potential future anomalies that could impact any part of the supply chain. Furthermore, our reporting tools are designed to deliver transparent insights so that the combination of factors that led to a negative outcome can be identified and addressed.

As a SCM solutions provider we understand that there are an infinite number of variables that influence a supply chain’s efficacy. This fact can make identifying the true culprit of a supply chain failure incredibly difficult. In many cases when there is a catastrophic failure within a supply chain managers […]

Read More...