Lora Cecere of Supply Chain Insights – The Art and Science of Supply Chain
As an enterprise strategist, Lora focuses on the changing face of enterprise technologies. Her research is designed for the early adopter seeking first mover advantage. Current research topics include the digital consumer, supply chain sensing, demand shaping and revenue management, market-driven value networks, accelerating innovation through open design networks, the evolution of predictive analytics, emerging business intelligence solutions, and technologies to improve safe and secure product delivery.
She comes to the stage with over forty years of diverse supply chain experience. She has spent nine years as an industry analyst with Gartner Group, AMR Research, Altimeter Group prior to the launch of her own research firm Supply Chain Insights in February 2012. Supply Chain Insights is focused on bringing unique insights to supply chain visionaries through open content, innovative research, monthly webinars, public training and an annual event, Imagine the Supply Chain of the Future.
She is a prolific writer. Lora contributes to this blog 1-3 times a week while actively maintaining a blogging presence as a LinkedIn Influencer and contributing to Forbes. She also writes regular columns for Consumer Goods Technology and CSCMP Quarterly Review.
Prior to becoming a supply chain analyst she spent fifteen years as a leader in the building of supply chain software at Manugistics and Descartes Systems Group, and twenty years as a supply chain practitioner at Procter & Gamble, Kraft/General Foods, Clorox, and Dreyer’s Grand Ice Cream (now a division of Nestlé).
Publications such as The Wall Street Journal, Business Week, Fortune, Inc., Forbes, Information Week, ComputerWorld, Financial Times, Supply Management Review and Consumer Goods Technology frequently seek Lora’s point of view.
Listen to the Podcast
In this episode Lora discusses:
- Why Supply Chain Technology is not about ERP
- Finance as the art of removing value from every step and fighting it with blockchain
- How data harmonization and synchronization are better than integration
- IoT making the Supply Chain more proactive
Read the Transcript
Sales and Marketing Automation Tools mentioned in this episode of Stack and Flow:
John J. Wall: Hello and welcome to Stack & Flow. I’m John Wall.
Sean Zinsmeister: And I’m Sean Zinsmeister.
John: And today’s guest is Lora Cecere. She’s the founder and CEO at Supply Chain Insights. She blogs at supplychainshaman.com. Her background covers all kinds of supply chain stuff, including Manugistics and a bunch of the analyst firms, so she has a wide array of perspective to give to us and talk to us about how Supply Chain fits into the stack. Sean, how are you doing? What’s going on?
Sean: Doing really well. I was really actually excited to have Lora on the show today because we spend a lot of time talking to folks and practitioners and marketing and sales executives, and really, I wanted to bring this other dimension into the conversation, as well, because I actually got a chance to listen to a couple of podcasts about folks from Supply Chain who had actually attended the recent MarTech Conference that was in San Francisco just a few weeks before. Talking about a lot of the interesting intersections between marketing technology, and obviously big data is a very prominent discussion point in both sort of camps.
Lora, my first question is, I wanted to orient our audience a little bit before I start to ask more specifics. My first question was: Did you get a chance to attend the big Gartner Supply Chain Conference that was the last couple weeks? Were you there and present or were you following virtually?
Lora Cecere: A little bit of story. You know I used to work for Gartner and I was supposed to present, and two days before the conference, they called and dis-invited me, so seems that they didn’t want me to be there. I did follow some of the announcements. I am very familiar with the event, but yeah, so I was supposed to be there and got disinvited. I guess it’s a great compliment to get disinvited.
Sean: (Laughing) I would say so. I get disinvited from a lot of things, and everything’s a notch in my belt that I say.
John: Judged by our enemies. That’s the important thing. (more laughing)
Sean: That’s the key. Lora, again, to orient our audience, some basic 101 questions, because I don’t think that everybody really understands what Supply Chain is. How do you define Supply Chain to somebody who’s new to it? Where do you start?
Lora: I define it as the flow of goods, services, and information and cash, from the customer’s customers and the supplier’s supplier, and the Supply Chain is a web of relationships. It’s not linear and it requires bidirectional flows to orchestrate trade offs market to market from our channel relationships to our supplier relationships, and it’s grown increasingly complex over the last decade from globalization, from the outsourcing of goods and materials, and also the pace in which we have to move.
In the 1980s the Supply Chain was regional and it was slower. Now, it’s much faster and it’s global and it’s far more complex. Does that help? How’s that definition?
Sean: That definitely is excellent, and already I can tell just from the definition, there are so many similes to the type of language, but also the way that we think about sales and marketing technology today, but I’m curious. It might just be an opinion of one, for me, from just what I’ve been following and reading and looking at on social media, but over the past, maybe, few years, it feels like Supply Chain has gained more awareness. More people thinking about it. First of all, is that true? Are you seeing the same thing? Number two, what are some of the main drivers? Is it just technology that is adding to the imagination around robotics and machine learning, and of course, internet of things. We’ll dive into some of that. What are some of the key drivers that might be building upon that awareness?
Lora: I think that the … You know, I’m biased, so just bear with my bias. I have followed the evolution of technology for the last three decades and sales and marketing is fairly easy as it compares to Supply Chain, and the evolution of the last decade of commerce, computers and mobile phones, we’ve done a complete rethinking of B2C, business to consumer. E-commerce, omnichannel, mobile commerce, social commerce, and also looking at: How do we manage channel relationships and make and use technology to make sales and marketing more efficient?
When we get to the back office in the Supply Chain, B2B is the same way it was 40 years ago, still EDI documents. The documents have to be opened, sort of like mail from the post office. It’s not bidirectional. It doesn’t move at the speed of business. And, what’s happening is, we have automated sales and marketing and we’ve made those vertical silos more efficient. They’re bumping up against the Supply Chain that is out of sync with what they’re trying to do, so the Supply Chain can’t ship a unit of one very easily. It cannot personalize very well. For globalization to be able to do localized assortment is very, very difficult. The ability to orchestrate across bill of materials, or across sourcing, or compliance is more difficult, so the sales and marketing team is being drug into Supply Chain discussions, because the actualization of sales and marketing programs is requiring Supply Chain at a very different level, so that’s my perspective. Your thoughts?
Sean: I think that is aligned completely, because when I think about things like, I’ll use a big word, visibility, which covers a whole, many dimensions across Supply Chain. I’m also thinking about things like inventory management and demand forecasting. How are managing those sort of marketing spikes in order to understand how much inventory we’re going to move. I think that stuff actually is, not only just opens up a new door of opportunity for technology, but also is another reason why we’re seeing marketing technology enter the conversation.
That was something that I remember, listening to an episode of Supply Chain Radio and they were talking about that intersection of MarTech. Are things like the announcement that was made about Infor and Marketo kind of partnering together for good of market? Is it something that you’re just seeing, again, driven by some of the ERP vendors, which is sort of the main centerpiece of a lot of these Supply Chains?
Lora: You know, the ERP vendors would like it to be about them, but it’s about much more than them. In the traditional Supply Chain thinking, the belief was, I’m going to take data from my ERP to your ERP and magic would happen, and that’s not the reality of the world. What we’re seeing is the rethinking of things like EDI through blockchain on the rethinking of Supply Chain finance through disintermediation of banking through Bitcoin, or the rethinking of Supply Chain visibility for multi-tiers with real time data through the internet of things, or the cognitive computing, where Supply Chains learn as we sleep and we can move data much smarter than we can today.
I think it’s the confluence of technology really butting up to the issues that we have in the Supply Chain that are making people go, “Oh, yeah. That Supply Chain thing, maybe it’s kind of cool after all.”
Sean: That also sort of segues nicely to what I was thinking about, which is the question just around data and that flow. When I think about things in the sales and marketing realm, people are thinking sort of the inside out approaches really starts with CRM, what’s happening in marketing automation. How do you use those to sort of model and qualify things and use that data to better profile who we’re selling to?
Now, businesses are starting to get a little bit more sophisticated, now procuring external data from third party vendors, as well, whether it’s to understand their total addressable market or find more contacts and accounts to reach out to. When it comes to the data acquisition play for Supply Chain, obviously the inside out, to me, feels like, ERP has a wealth of data that can help with Supply Chain decision making. Is external data a new frontier for Supply Chain? What are some of the early wins there and how are businesses approaching as that starts to continue to evolve?
Lora: Well, I think that the inside out approach makes a very efficient silos that don’t make effective Supply Chains. ERP and CRM made sales and marketing efficient within silos, but not necessarily sales and marketing to work better together. And we also find in ERP that it’s made customer service and manufacturing and procurement and transportation into efficient silos, but they don’t necessarily work together very well either, because most people cannot see the larger view. They cannot orchestrate across silos. They can’t make choices on things like cost to serve, or how to match inventory to orders in smart ways, or how to deploy tight materials in times of constraints.
As we look across the Supply Chain and we think about: How do we orchestrate across the silos against the balance sheet, total cost, or total inventory, or total units filled? And we make smart choices. That’s not going to come from ERP. ERP is the system of record from transactions. What’s happening is, the building of Supply Chain systems of insight, and when I talk about Supply Chain, I’m talking about crossing over sales and marketing and commercial teams and building outside in processes that allow me to sense and learn off of channel data, allow me to sense and learn off market data, whether it’s weather data or price data. That’s allowing me to sense and learn off supplier data. Maybe it’s commodity increases that need to drive a change in a bill of material.
Those are the changes that we’re starting to have happen right now, so it’s not being driven from ERP. It’s being driven by business leaders who know that what they have today doesn’t work and they’re looking at the confluence of technology and how this can be working better together.
Sean: What about, sort of … There’s a couple of brands that come to mind that some folks might not be familiar with, GT Nexus, which was acquired by Infor. And then, another one that comes to mind is, they have the product graph. I can’t remember the name of the company, now, that they’re called. But, they’re essentially trying to pull together all these external data. Is this a new model that you see sort of taking on? In terms of just … Well, I guess, let me take a step back for a second, because one of the problems and challenges I look at when I think about Supply Chain is the amount of third parties. Whether it’s 3PLs (Third party logistics – editor) or third party manufacturers that all might be on separate systems, but this sort of decentralization makes it hard to really gain that type of visibility for everybody, and the knowledge share from the outside in approach. Are the models that GT Nexus and the like are sort of making to sort of build out that external data and make it available, is that a part of the solution? Or, do you see that carrying forward?
Lora: It’s part of the solution, but what we’re seeing is the need to build network of networks with interoperability across networks, which would allow us to look at: How can we work better across networks, interoperability? Things like blockchain and streaming data through Apache Spark and the ability to do that kind of work. Are you familiar with the work we’re doing on the network of networks?
Sean: No. Talk a little bit more about that. I think it would be interesting.
Lora: What we’re doing is, we’re asking companies like GT Nexus, SAP Ariba, E2open, Elimica to work with us on: How can we have better interoperability using blockchain and side chains and serialization and open source code, Hadoop, blockchain, Apache Spark, Kafka, to be able to work on interoperability, because it isn’t about integration. It’s about synchronization and harmonization of data.
Let’s start with: What’s the difference between integration and interoperability and synchronization and harmonization of data? Every company has a different item number for the same thing, and so you’ve got to translate data. You just can’t integrate data, and every company uses a different time horizon and they use a different calendar, and so as a result, you’ve got harmonized data. What you call a week may be different than what I call a week, so I’ve got to synchronize and harmonize data across the Supply Chain.
But, I also need to have an immutable chain of data that is secure, and we believe that blockchain allows that immutable chain of data. We’re seeing it work with the financial community, so that people can write on the immutable chain and then it can be transferred so that you have either security compliance, or you have social responsibility compliance, or you can have community registries, and that’s what we’re doing. We’re working on: How can we use blockchain and the feasibility to communicate across all of the operating networks, whether they’re private networks like CH Robinson Transportation, or they’re public networks like GT Nexus and Elemica and E2open? How can we, basically, work the data so that it can, basically, be usable by companies in an immutable form? And then, what we’re trying to do is then take that to the next level to say, “How can we drive financial disintermediation?” Because every transaction, finance is the art of money changing hands until there’s nothing left.
Supply Chain is the art of adding value at each step, and so, if you think about all the P-cards and credit cards and bank charges, there’s a bank charge associated with every step in a Supply Chain. The question is: Could we disintermediate banking through Bitcoin and the Bitcoin alternatives to be able to allow people to not have to have third part intermediaries? That’s what we’re trying to test in the network of networks? Does that help?
John: Yeah. That is interesting. What are the challenges within that? Obviously, blockchain becomes a replacement for financial intermediaries and finance charges. Are you going to have to struggle with whether that’s public or private? What are you expecting to face in problems in rolling that out?
Lora: It’s new, so we just have to get it to work. There’s no guarantees, but we know what we have today isn’t going to work. Like you mentioned, the work that Infor’s doing with GT Nexus. Well, that’s a limited set of transaction and it’s primarily ocean or apparel. How do we move that to retail? Or, how do we move that back into chemical? All of the Supply Chain operating networks that we have today are working within limited spheres, so what we’re trying to do is bring them together to be able to automate networks.
Sean: One question. Speaking of automation, obviously the hot topic nowadays in technology is all talking about AI, and predictive analytics and things like that. There’s some really interesting examples around predictive maintenance, like some of the work that GE and Predix is doing. What are some of the examples that are exciting for you about thinking about where AI is currently playing and where it could be playing more of a role down the road?
Lora: Artificial intelligence means different things to different people, so if I think about what we’ve got on the ability to do master data transformation, it’s really fascinating because today we have people hard coding data. We don’t have to have that in the future. We can use text mining. Also, sentiment analysis, which allows us to mine unstructured text from social or sentiment to be able to look at things like warranty data or quality data and match that to customer issues.
Right now, customer call centers take six to eight weeks to detect a problem, but if we’re listening to social sentiment, we can see that within days and make corrections, and that comes through unstructured text mining with cognitive computing to answer the questions they don’t know to ask. When Kellogg’s shipped cereal with smelly liners, they didn’t think to ask: Do my liners smell? But, if they would’ve been listening to Twitter, they would’ve known it pretty quickly. The ability to listen is not something that’s easy for a company, so those are some of the things that we’re working on.
Sean: What about in terms of things like demand forecasting? It seems that … I remember reading that Gartner sees, in particular, a shift moving away from the sort of statistical learning to using machine learning. Are we still a few years behind? Are you seeing this put more and more practice? How far along are with with businesses adapting machine learning for forecasting?
Lora: I think we’re five years away from Supply Chain planning, where Supply Chain learns as we sleep. What we’re doing is working, about 7% of companies are working on: How can they adapt cognitive computing to be able to do that kind of work? And, it’s very promising, but it requires a different level of technologies group and understanding and it’s still very new.
John: How about using that, as we’d mentioned, internet of things? Is this something that will become part of Supply Chain or is it going to be just infrastructure that already exists or has been built on its own? How do you see that impacting things?
Lora: Yeah. I’m working with a lot of clients that are saying, “Can we change the current processes to be better with the internet of things?” I think that’s very promising because, if you think about the whole processes, whether it’s replenishment, or whether it’s sensing off of manufacturing lines. How can we make that work better? Let me give you an example. I was working with a company called Linux International, and Linux International was looking at: How could they change service?
If you think about it, they make heating and air conditioning units, and the issue is that you can never predict the hottest day or the coldest day, and the heating and air conditioning units break down on those first days. They said, “Could we put in a sensor into the air conditioning unit that tells us when you’ve got a bearing, or a screen, or a filter, or something going wrong?” Instead of you calling in and asking for a service tech, they would call you and ask, “When is a good time for you to get a repair or talk to you about the condition of your heating and air conditioning unit?”
One of the issues is, we can never have service parts in the way we do it today. We can’t predict when a unit’s going to fail and we’re always looking for parts and people aren’t happy. But, could we change service through the internet of things? We’re also doing that with manufacturing lines to be able to look at: When should we take a manufacturing line down? Today, we do it on the basis of meantime failure. But, in the future, could we do it sensing off of the manufacturing lines? A lot of work is being done there on digital manufacturing and process companies.
But, I also work with a company called Costa Coffee, which is a coffee house in England, and they also have units into the Greater European regions. They basically installed internet of things so that they could work on replenishment off their coffee machines in real time. If you went and got a mocha espresso, they would record that and they would record the amount of coffee and the amount of cream in the cup. Then, they would drive replenishment off of real time usage. And they changed all of that and use it to really drive the demand signal.
Now, if you think about someone like Coca Cola, you go to your average McDonalds or Wendy’s you have those neat little machines that you can go and you can push your button and you can get, I don’t know, diet root beer with cherry, or whatever. That signal could go to Coca Cola, but it doesn’t today. As we automate the consumer experience in restaurants, or vending machines, or smart shelves, or cars, OnStar, we’re able to better serve the Supply Chain through the internet of things to transform service, to transform replenishment, to transform demand. That coupled with cognitive computing helps us to take this to the next level to look at how satisfied our customer is.
How do I put added services onto that particular experience to make them even happier? Those are examples of outside in processes. Whereas today, we have inside out processes. We wait for orders and shipments and we have big gaps between silos because the silos of sales marketing and Supply Chain don’t work very well together. Everybody’s arguing about: Who is the real customer and what does the real customer want? This allows us to see real time. What is the customer doing? What do they want and how do I upsell the customer or how do I delight the customer in a different way?
Sean: When we think about the different technologies built on top of each other, we always think about the stack. I’m curious. What does the Supply Chain stack look like for … Again, just thinking about the top companies who have high performing Supply Chains. What are the stack? Even not necessarily the specific vendors involved in it, but how do you sort of think about the Supply Chain stack today?
Lora: Well, we have the system of record, which is ERP. ERP is the system of record for all transactions, orders, cash, and inventory and shipments. It’s needed, but that is not the system of insights. The system of insights will be outside in and it will work on channel data, whether it’s internet of things, or whether it’s on time delivery, point of sale data, weather data, and sentiment data. That data is unstructured and it’s streaming data, and so it looks different than it does in the past.
This system of insights will be the confluence of cognitive computing, internet of things. And then, we have the need for interoperability across value networks, which I believe will be blockchain combined with operating networks, like you had mentioned, Infor or GT Nexus. That is a type of operating network and will drive interoperability across those networks and into financial systems to be able to allow a real transformation in productivity of manufacturers, retailers, and distributors.
John: How about the landscape of manufacturers and distributors. In so much of Supply Chain, you’ve got the distributors kind of in the middle, and a lot of times that’s a bottleneck for information to the manufacturer. Now, you’ve got all this outside data. Do you see that changing the landscape and more distributors being disintermediated, or will this web that you’re talking about, will they be able to get this information across through all parties involved? What do you see happening there?
Lora: We don’t know, but what happens is, the established companies are less willing to disintermediate than disruptors are able to drive new business models. Amazon, whole new business model. All of our consumer products companies could have gone directly to the consumer in the year 2000, and they didn’t because they didn’t want to disintermediate retailers and distributors. And now, they’re trying to build those relationships and build e-commerce channels. But, they were slow to do so because they weren’t willing to dis intermediate.
Let’s think about Uber. What’s Google doing with cars, right? Again, it’s an example where the business process disruptors were able to dis intermediate in the traditional guys aren’t. This kind of opportunity, you either disrupt and disintermediate, or you’re replaced with a new business model.
You’ll remember back when Kodak had the patents for digital cameras and they weren’t willing to disintermediate the value chain to get rid of the traditional camera. That’s very pervasive in the traditional world. And so, how do we disintermediate and rethink outside in? I think that’s a challenge for the company that’s moving from vertical silo, nearer thinking, to outside in and what’s possible.
Sean: When we think about the sort of Supply Chain standouts like the Apples, and maybe even the Starbucks of this world, it’s amazing when you talk to Supply Chain managers and folks in the process, how much of things are still done on phone, email, and spreadsheets, versus relying on some of this more advanced technology, if you will. If you had to look at today, what’s the balance of talent that you need for a high performing Supply Chain, versus technology? Do you see that weighting, shifting more towards the technology side, or how do you see that playing out?
Lora: Well, all Supply Chains today depend heavily on phone, fax, email. In fact, despite all the spending, we’ve spent 1.7% of revenue on back office systems, which have been primarily ERP and advance planning and business intelligence. We have what I call Excel ghettos in companies, where people pound out on their Excel macros and put data into systems, and that’s because we really don’t have the planning systems or the BI tools that most companies need. Supply Chain’s just too complex, so as we think about this next evolution of technology, and Supply Chain’s pretty new. The first time source, make and deliver were ever used together was 1982, so we haven’t been around as long as sales, or marketing, or finance, and so we’re still getting our sea legs.
As you think about this evolution of technology, what we need are people that are critical thinkers, system thinkers, and people who can ask hard questions and people that can adapt with change. Many people are coming out of business school accepting that today’s Supply Chain systems are best practices, and not questioning and not really pushing back, and we need more critical thinkers, and we need to be able to test and learn, and to be able to do process innovation. Whereas today, most of the funding is toward product innovation. We take a new product through Stage-Gate processes.
But, if we think about process innovation and we think about disintermediation and new business models, the ability to test and learn with new technology is a capability companies need to have. What does that mean in the talent set? The first talent we need is leadership, leadership that does not accept the Supply Chain as it is today and really presses for the digital Supply Chain outside in. A leader who is very influential and can really align with sales and marketing. Most Supply Chain organizations have a large gap between sales and marketing. Strong leadership, strong influence skills, and also the ability to embrace new ways of working.
At the manager, director level, we need system thinkers and problems solvers and strong math skills and strong understanding of the business and the ability to ask hard questions and to hold technology vendors accountable for technologies that work. If we look at all the money that we’ve spent on inventory trying to minimize safety stock, we could have probably funded world peace. We get kind of lulled to sleep from the vendors’ technologies and not really ask the hard questions. We’re the shortest on planning, analytical skills, and data scientists, and the ability to really bring new forms of analytics to bear and planning. That’s what’s happening in Supply Chain.
Sean: As we’re coming up on the end of the show, I wanted to play just a quick, little, almost lightning round game with you, Lora, which is, if you look at Supply Chain, hype versus hope. What sort of technology do you feel is sort of the most hyped up and, which do you feel has the most hope for solving some of the big challenges in Supply Chain?
Lora: I think the biggest hype is around ERP. We’re in the trough of disillusionment in ERP. ERP is a wonderful system for a transaction’s record, but we hyped up all of the ERP vendors as the next generation of Supply Chain planning and BI, and what we really have are Excel ghettos. We’re, right now, in the trough of disillusionment, where people are looking around and going, “We spent millions of dollars on what? And we’re really not much better off.”
I think the hope lies in the confluence of cognitive computing, blockchain, and internet of things, and to be able to build outside in processes. To do that, we must learn from the past and learn to rethink today’s processes and close the gaps between sales and marketing and realize that the efficient Supply Chain does not start with efficient silos. It starts outside in with the customer and orchestrates market to market.
John: Lora, that’s great. We really appreciate you taking the time to talk to us. If folks want to learn more about what you’ve got going on and the work you do, what’s the best way to follow up?
Lora: Well, we have all of our research. We give it away and it’s on SupplyChainInsights.com, which is my company. I also write a blog for Supply Chain leaders on the Supply Chain Shaman, which you referenced earlier, and we have an annual conference, and we webcast it throughout the world. It’s free for people that want to tune in. There, we’re actually talking about the technologies and having the innovators talk about their experience. And, I also write for Forbes, if people want to follow me there, and I write for LinkedIn. We do our research articles, where we actually take quantitative surveys and we correlate them to 15 years of financial data on Supply Chain Insights. I’m hoping people follow us. If they have questions, we answer any question we get.
John: That sounds good. We’ll include links to all of that in the show notes so people can find that stuff. Sean, how about for you? Anything you’re promoting or working on right now?
Sean: Always, John. That wouldn’t be doing my job. No. Everything, you can follow. Just Google Sean Zinsmeister. You can grab me over at Twitter @szinsmeister or head over to infer.com and you can see all the latest and greatest and stuff I’ve been thinking about and writing about.
John: That sounds good. You can find more from me over at marketingovercoffee.com, and that will do it for this week, so until next time, thanks for listening and we’ll see you in the stacks.
July 19, 2017
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