Taking supplier collaboration to the next level
Closer relationships between buyers and suppliers could create significant value and help supply chains become more resilient. New research sheds light on the ingredients for success.
By Agustin Gutierrez, Ashish Kothari, Carolina Mazuera, and Tobias Schoenherr – Companies with advanced procurement functions know that there are limits to the value they can generate by focusing purely on the price of the products and services they buy. These organizations understand that when buyers and suppliers are willing and able to cooperate, they can often find ways to unlock significant new sources of value that benefit them both
Buyers and suppliers can work together to develop innovative new products, for example, boosting revenues and profits for both parties. They can take an integrated approach to supply-chain optimization, redesigning their processes together to reduce waste and redundant effort, or jointly purchasing raw materials. Or they can collaborate in forecasting, planning, and capacity management—thereby improving service levels, mitigating risks, and strengthening the combined supply chain.
Earlier work has shown that supplier collaboration really does move the needle for companies that do it well. In one McKinsey survey of more than 100 large organizations in multiple sectors, companies that regularly collaborated with suppliers demonstrated higher growth, lower operating costs, and greater profitability than their industry peers.
Despite the value at stake, however, the benefits of supplier collaboration have proved difficult to access. While many companies can point to individual examples of successful collaborations with suppliers, executives often tell us that they have struggled to integrate the approach into their overall procurement and supply-chain strategies.
Several factors make supplier collaboration challenging. Projects may require significant time and management effort before they generate value, leading companies to prioritize simpler, faster initiatives, even if they are worth less. Collaboration requires a change in mind-sets among buyers and suppliers, who may be used to more transactional or even adversarial relationships. And most collaborative efforts need intensive, cross-functional involvement from both sides, a marked change to the normal working methods at many companies. This change from a cost-based to a value-based way of thinking requires a paradigm shift that is often difficult to come by. more>
Posted in Business, Economic development, Economy, Education, History, How to, Net, Science, Technology
Tagged Business improvement, Collaboration, Internet, McKinsey, Skills, Supply chain
Official talks on construction and operation of a new TSMC semiconductor chip manufacturing fab the in U.S. is promising but riddled with political and technical intrigue.
By John Blyler – Will the news of a new semiconductor fab on U.S. soil be a boost to the economy and technological stability or is it merely a fanciful political scheme? To answer that question, let’s start with the news that has created so much discussion in the electronics space.
Recently, the Taiwan Semiconductor Manufacturing Company (TSMC) announced its intention to build and operate an advanced 5nm semiconductor fab in the U.S. state of Arizona. TSMC, headquartered in Taiwan, is the largest chip manufacturer in the world. The company currently operates a fab in Camas, Washington and design centers in both Austin, Texas and San Jose, California. The Arizona facility would be TSMC’s second manufacturing site in the United States.
The new manufacturing plant would be supported with funds from Arizona and the U.S. government. The fab will have a 20,000 wafer-per-month capacity, create over 1,600 jobs directly and thousands more indirectly, explained the company in a press statement.
This by TSMC is welcomed in the U.S. but not without controversy. Shortly after the announcement of the new fab, the U.S. Department of Commerce announced new restrictions on TSMC’s second-largest customer, HiSilicon of China – which is fully owned by Huawei. Some industry experts feel that the two events are related to the issue of U.S. export control.
Here’s where the political side of the TSMC fab announcement begins to emerge. Huawei, already part of the US trade war with China, was recently placed under new and more stringent export control. On May 19, the Commerce Department issued new rules to more fully close off Huawei’s access to the semiconductor chips it needs to build cellphones and 5G infrastructure. This could conceivably block China’s big telecommunications company from entering the much desired global 5G mobile network space. more>
Posted in Business, CONGRESS WATCH, Economic development, Economy, Education, History, How to, Net, Science, Technology
Tagged Business improvement, Capital, Congress Watch, illusion, Internet, Manufacturing, Semi Fab, Technology
How to build a data architecture to drive innovation—today and tomorrow
Yesterday’s data architecture can’t meet today’s need for speed, flexibility, and innovation. The key to a successful upgrade—and significant potential rewards—is agility.
By Antonio Castro, Jorge Machado, Matthias Roggendorf, and Henning Soller – Over the past several years, organizations have had to move quickly to deploy new data technologies alongside legacy infrastructure to drive market-driven innovations such as personalized offers, real-time alerts, and predictive maintenance.
However, these technical additions—from data lakes to customer analytics platforms to stream processing—have increased the complexity of data architectures enormously, often significantly hampering an organization’s ongoing ability to deliver new capabilities, maintain existing infrastructures, and ensure the integrity of artificial intelligence (AI) models.
Current market dynamics don’t allow for such slowdowns. Leaders such as Amazon and Google have been making use of technological innovations in AI to upend traditional business models, requiring laggards to reimagine aspects of their own business to keep up. Cloud providers have launched cutting-edge offerings, such as serverless data platforms that can be deployed instantly, enabling adopters to enjoy a faster time to market and greater agility. Analytics users are demanding more seamless tools, such as automated model-deployment platforms, so they can more quickly make use of new models. Many organizations have adopted application programming interfaces (APIs) to expose data from disparate systems to their data lakes and rapidly integrate insights directly into front-end applications. Now, as companies navigate the unprecedented humanitarian crisis caused by the COVID-19 pandemic and prepare for the next normal, the need for flexibility and speed has only amplified.
For companies to build a competitive edge—or even to maintain parity, they will need a new approach to defining, implementing, and integrating their data stacks, leveraging both cloud (beyond infrastructure as a service) and new concepts and components. more>
- How chief data officers can navigate the COVID-19 response and beyond, Kevin Buehler, Holger Harreis, Jorge Machado, Satyajit Parekh, Kayvaun Rowshankish, Asin Tavakoli, and Allen Weinberg
- Designing data governance that delivers value, Bryan Petzold, Matthias Roggendorf, Kayvaun Rowshankish, and Christoph Sporleder
Posted in Business, Economic development, Economy, Education, History, How to, Net, Technology
Tagged Data architecture, Digital transformation, Innovation, Internet, McKinsey, Productivity, Skills
Ever closer to an optimally cost-efficient assembly-line operation
By Chuck Burke and Vanessa Sumo – Companies such as Dell and BMW use an assemble-to-order production strategy that keeps common components on the factory floor, ready for final assembly into the type of personal computer or vehicle that a customer orders. This is great for companies looking to satisfy a large volume of demand but that don’t want to build whole units in advance, to avoid any unsold products.
However, the difficulty of estimating how much of each component to hold in stock and how to allocate components to each product can keep companies from maximizing ATO’s benefits in practice.
A cross between two alternate production strategies
Make-to-stock strategy: MTS managers forecast consumer demand and match anticipated orders with an inventory of fully assembled products.
Make-to-order strategy: On the other hand, MTO systems wait for a customer’s order to arrive before starting production. Because this can include procuring parts and assembling components, MTO often results in a longer lead time.
Assemble-to-order strategy: An ATO strategy aims to combine the best of both systems—its flexibility lets companies fulfill large orders relatively quickly with minimal unsold inventory, yet still allows customers to partially customize orders. Here is how it works:
Managers must decide the quantity of components to order even before they can ascertain customer demand for their products.
When customers’ orders arrive, managers must then choose how to allocate the supply of components to each product for assembly. more>
Posted in Business, Economic development, Economy, Education, History, How to, Net, Technology
Tagged Business improvement, Capital, Chicago Booth, Health, Internet, Skills
An operating model for the next normal: Lessons from agile organizations in the crisis
Companies with agile practices embedded in their operating models have managed the impact of the COVID-19 crisis better than their peers. Here’s what helped them cope.
By Christopher Handscomb, Deepak Mahadevan, Lars Schor, Marcus Sieberer and Suraj Srinivasan – For many companies, the first, most visible effects of the COVID-19 pandemic quickly created a challenge to their operating and business models. Everything came into question, from how and where employees worked to how they engaged with customers to which products were most competitive and which could be quickly adapted. To cope, many turned to practices commonly associated with agile teams in the hope of adapting more quickly to changing business priorities.
Agile organizations are designed to be fast, resilient, and adaptable. In theory, organizations using agile practices should be perfectly suited to respond to shocks such as the COVID-19 pandemic. Understanding the experiences of agile—or partially agile—companies during the crisis provides insights around which elements of their operating models proved most useful in practice. Through our research, one characteristic stood out for companies that outperformed their peers: companies that ranked higher on managing the impact of the COVID-19 crisis were also those with agile practices more deeply embedded in their enterprise operating models. That is, they were mature agile organizations that had implemented the most extensive changes to enterprise-wide processes before the pandemic.
That suggests implications for less agile companies as economies reopen. Should they set aside the agile practices they adopted during the pandemic and return to their traditional operating models? Or should they double down on agile practices to embrace the more fundamental team- and enterprise-level processes that helped successful agile companies navigate the downturn?
We analyzed 25 companies across seven sectors that have undergone or are currently undergoing an agile transformation. According to their self-assessments, almost all of their agile business units responded better than their nonagile units to the shocks associated with the COVID-19 pandemic by measures of customer satisfaction, employee engagement, or operational performance.
Executives emphasized that the agile teams have continued their work almost seamlessly after the shock, without substantial setbacks in productivity. In contrast, many nonagile teams struggled to transition, reprioritize their work, and be productive in the new remote setup. The alignment between agile teams’ backlogs and their business priorities allowed them to shift focus quickly. more>
Posted in Business, Economic development, Economy, Education, Healthcare, History, How to, Net, Technology
Tagged Agile management, Business improvement, Health, McKinsey, Pandemic, Productivity, Skills
With great fiber count comes great responsibility
Spatial Division Multiplexing (SDM) cables are a key focus area for submarine network innovation in 2020. Ciena’s Brian Lavallée explains how SDM cables offer massive increases in submarine cable carrying capacity and the challenges associated with these new wet plant designs.
By Brian Lavallée – In a recent blog entitled “The Submarine Network Seascape in 2020”, I wrote about what I believe are key areas for focused submarine network innovation in 2020. One key area is Spatial Division Multiplexing (SDM) cables. This new wet plant design allows submarine cable operators to “side-step” the Shannon Limit by expanding Channel Bandwidth (B) in the equation, which is the usable optical bandwidth in the submarine cable. In other words, the more bandwidth available in the cable, the more capacity is enabled. It’s as simple as that.
Once a submarine cable (wet plant) is laid upon the seabed, the Channel Bandwidth (B) is fixed and is dictated by the number of fiber pairs and the total usable optical spectrum of the optical repeaters (a historical industry misnomer of what are today, optical amplifiers). This means that once a submarine cable is deployed, one must improve the Signal-to-Noise Ratio, on the right side of the equation above, to increase the Channel Capacity (C). This is exactly what the industry has been doing for years with constant technology innovation taking place in the Submarine Line Terminating Equipment (SLTE) and the coherent modems they house.
However, as we get ever-closer to the Shannon Limit of a submarine optical fiber, we start to experience diminishing returns in terms of the upgrade leaps in total information-carrying capacity of the optical fiber. This means that the industry focus must shift back to the wet plant interconnecting the SLTE coherent modems.
Compared to rapid, ongoing SLTE coherent modem innovation over the past decade, the wet plants they connect to have witnessed comparatively less innovation – until recently. One way to expand the Channel Bandwidth (B) in the equation above is to add many more fiber pairs to the submarine cable to provide a higher aggregate of usable optical spectrum in the submarine cable. This is referred to as Spatial Division Multiplexing (SDM). Modern submarine cables have 4 to 8 Fiber Pairs (FP), while SDM offers 12 to 16 FPs, and potentially more in the future.
As an industry proof point, the first SDM submarine cable will be Google’s transatlantic 6,400km Dunant cable, which supports up to 250Tb/s of overall capacity provided by an aggregate of 12 fiber pairs – very impressive! more>
Posted in Broadband, Business, Communication industry, Economic development, Economy, Education, History, How to, Net, Science, Technology
Tagged Broadband, Business improvement, Ciena, Fiber optics, Internet, Skills