Existing mainstream enterprise systems are not meeting the market need for dynamic supply network flexibility. Namely, enterprise resource planning (ERP) and advanced planning and scheduling (APS)-supply chain partnership (SCP) systems are not geared for high-value, operations-level business trade-offs that require educated human intervention. Spreadsheets are used frequently, but they lack the required scalability, become quickly dated, and result in unreliable multiple versions of the truth. Business intelligence (BI) tools are not real-time in nature; they are structured for after-the-fact insight rather than for making execution decisions. Thus, some businesses have turned to a new software category dubbed “response management” to extend the capabilities of the above traditional technologies.
For more background on the evolution of this new area of supply chain management (SCM), please see previous parts of this series—Who Could Object to Faster, More Responsive Supply Chains?, Multi-enterprise Responsiveness—Can It Ever Be Achieved?, and A Possible Remedy for Non-responsive Supply Chains.
Enter Kinaxis—a Response Management Pioneer
This brings us to a vendor that has changed its name a few times while refining its value proposition along the way, but which has certainly not departed from its roots and core competencies. Ottawa (Canada)-based, privately held Kinaxis Inc. today delivers both on-demand and on-premise response management software and services for visibility and coordination to help businesses drive swift responses to the constant changes taking place across global supply chains and fulfillment networks, with the goal of improving customer service and operational performance.
Founded in 1984 as Cadence Computer Corporation, the vendor was renamed Webplan Inc. in 1995. Then, in 2005, the company changed its name again to Kinaxis (a combination of “kinetic energy” and “global axis”). Throughout the years and multiple name changes, the company’s solutions have evolved from memory-resident, multisite production optimization capabilities (i.e., fast-acting manufacturing resource planning [MRP]) into a value proposition of Web-based, collaborative risk trade-off and response, and performance management within a distributed supply chain.
In addition, the innovative product architecture is able to mine information from existing back-office systems (and even spreadsheets or flat files, if necessary) as a basis for multiple what-if scenarios. This connectivity is in response to Kinaxis’s many customers having standardized ERP systems from such established providers as SAP, Oracle, or Baan, to name a few.
Despite Kinaxis’s earlier financial and brand recognition struggles (owing to the market’s infatuation with i2 Technologies’ and Manugistics’ demand planning and optimization APS-SCP solutions), Kinaxis has successfully grown its customer base. Recently, the vendor posted a whopping 300 percent quarter over quarter growth, equating to more than 50,000 users at about 60 major corporate customers, with its solutions in use at over 400 Fortune 500 locations worldwide. This includes the following recently announced customers: Elcoteq, John Deere, Microsoft, Nikon, and Qualcomm. Such global leaders are operating in an increasingly distributed environment and live in a world of constant changes in demand, supply, and product mix.
The company’s better-known Kinaxis RapidResponse combines multi-enterprise visibility, collaborative what-if analysis, and on-the-fly decision support to enable frontline manufacturing and cross-enterprise fulfillment teams to take quick and effective action when faced with the inevitable constant changes mentioned above. This means decision makers are able to make the trade-offs and compromises necessary to respond to unexpected events in increasingly erratic global supply and fulfillment networks. Manufacturers value the ability to analyze alternative response actions before making a decision on a major trade-off; by proactively modeling and scoring different response alternatives, a well-understood and optimal action can be communicated to the supplier or contract manufacturer.
Kinaxis’s customers’ revenues range from $100 million to $30 billion (USD), and they offer products ranging from simple consumer goods to diverse defense systems. Kinaxis RapidResponse has been used in fulfillment and operations management amid thousands of user communities within certain supply networks.
Although its customer base now spans many vertical industries (electronics, aerospace, industrial equipment, automotive, and consumer durable goods), Kinaxis can claim a dominant position among electronic manufacturing service (EMS) leaders. Namely, Kinaxis RapidResponse is in use at many of the world's leading global brand owners (such as Casio, Honeywell, Qualcomm, Raytheon, and Toshiba) and at eight of the top 10 EMS providers.
The Value Proposition of Kinaxis RapidResponse
To put it into perspective, Kinaxis RapidResponse is the umpteenth improvement of the former webPLAN, a Microsoft Windows NT-based groupware suite for manufacturing planners that was introduced back in 1995. The solution would extract data from the host MRP-ERP system, and then quickly regenerate the changed materials plans. The intent was to allow a planner to create or simulate a new plan, and share it with other planners, managers, customers, and suppliers before implementing the it. A slew of additional modules that have since been added to this core tool have supported the expanded decision structure and audience (i.e., multiple planners, multisite master production scheduling [MPS], and capacity requirements planning [CRP]) needed to approve and act on a new production schedule in an informed manner.
The next step for Kinaxis was to build a new type of multi-enterprise manufacturing and fulfillment solution that would knit together the abundant existing information from disparate transactional sources, and then quickly drive better short-term manufacturing decisions and actions. Ideally, users could start with an “as planned” single version of the truth, continually update this version of the truth with real-time data feeds, and finally drive a collaborative decision-making process across the action team.
This is where Kinaxis RapidResponse comes in—not to replace planning, forecasting, or execution systems, but rather to leverage these systems. Namely, a Web-based adaptive response management solution may be a more appropriate approach because these solutions can leverage data from the existing transactional systems, provide real-time analysis of events, and suggest courses of action. In addition, these solutions can provide role-based views of supply chain information to the extended supply chain members across multiple sites, anywhere in the world, and through any browser.
In the early 2000s, Kinaxis announced its intent to deliver its solution on the Microsoft .NET Framework. The initial extensible markup language (XML) Web services developed using Microsoft Visual Studio .NET provided an XML interface to Kinaxis RapidResponse Server. This XML interface–enabled server is the underlying platform that provides real-time adaptive planning and trading partner collaboration over the Internet, shared by thousands of employees and trading partners. The XML interface has since been offered as a component of Kinaxis RapidResponse Server, which leverages the capabilities of the Microsoft BizTalk Server and SQL Server to provide business-to-business (B2B) transaction services and XML event services for real-time distributed collaboration. Other enhancements included a simple object access protocol (SOAP)–compliant XML interface for open access to the platform from both .NET and Java 2 Enterprise Edition (J2EE)–based applications.
The basic concept of Kinaxis’s value proposition comes down to the following tenets: 1) powerful, fast, and continuous analytics in the background; 2) the ability to perform multiple what-if scenarios; and 3) the linking of these scenarios to a Microsoft Excel-like user interface (UI), given that this is the most common data analytics tool. To deliver this, RapidResponse leverages the following three key technologies that enable manufacturers to abridge the dreaded and inevitable reality-gap situation, and respond swiftly to today's problems:
1. Active Spreadsheets with AlwaysOn Analytics
Active Spreadsheets provide Web-based global access to live data feeds from ERP, demand planning, SCP, warehouse management system (WMS), product lifecycle management (PLM), and other enterprise applications. The Active Spreadsheets technology presents enterprise data in a “walk-up-and-use-it” familiar interface, which significantly reduces the initial learning curve. The spreadsheets provide role-based, user-friendly screens with synchronized data feeds. These data feeds are extracted from ERP data and tools designed to enable action teams, including schedulers, planners, buyers, customer service representatives (CSRs), managers, suppliers, and so on.
Active Spreadsheets is automatically and continuously populated with up-to-the-second live enterprise data feeds. When data comes from multiple sources, say from different parts of the business in house or from supply chain partners, the system automatically and “quietly” (behind the scenes) consolidates this information in one place, thereby ensuring a single version of the truth. Even if several users are working with Active Spreadsheets, each user maintains the same single version of the truth via the same view, and even when the data is in the midst of changing, since a change in any cell is almost instantly affected across the spreadsheets of other participants. Such instantaneous updates align action teams around a consistent, continuously updated view of the impact that changes in supply and demand will have on their operations in a familiar, intuitive spreadsheet view.
Additionally, through the built-in AlwaysOn Analytics capability, whose results of embedded complex calculations (for example, capable-to-promise [CTP], netting, multilevel pegging, etc.) are presented in spreadsheet cells, Kinaxis has embedded quick-responding, optimized algorithms. These algorithms automatically and continuously analyze the live data behind the scenes. With rooted AlwaysOn Analytics, enterprises can analyze data based on real-time information and manufacturing algorithms (for example, calculate the impact of a sharp demand change on supply requirements) found in a broad number of transactional systems.
Many other calculations take place in the background, since users request desired information, and the engine then determines which analytics are required to return a result. To that end, Kinaxis offers a library of worksheets with built-in calculation engines: bill of material (BOM), material planning, planning sheet, planning manager, part planning, part properties, buyer workbook, engineering workbook, customers orders, forecast, procurement, constraint management, capacity analysis, inventory analysis, inventory on hand, inventory control, and others.
2. RapidResponse Resolution Engine
RapidResponse Resolution Engine gives manufacturers proactive management capabilities that allow key personnel within various departments and across the extended supply chain, both locally and internationally, to drive effective resolutions to continually changing situations. In other words, instead of producing optimized answers for a utopian and static world, the engine produces a series of alternate action plans for a real and dynamic world.
Iterative modeling capabilities enable team members to propose and detail a number of potential action alternatives that quickly and accurately simulate their entire MRP runs. The embedded algorithms are based on concepts, methods, and definitions contained in APICS studies, such as lean manufacturing and the Theory of Constraints (see Reflections on Lean Philosophy and the Theory of Constraints). In the future, capabilities might extend to the Du Pont profitability model and the generic supply chain operations reference (SCOR) model by the Supply Chain Council, which communicates SCM best practice benchmarks across companies.
The engine’s publishing capabilities enable participants and external suppliers to instantly share suggestions (collaborate) with other group members in real time over the Web. Moreover, multiple security and authorization level controls allow businesses to specify which users may access specific information. Varying combinations of potential responses to changes, such as doubling shifts in a factory, changing engineering specifications, procuring from a different supplier, buying a new machine to increase production capacity, or many others can be instantly modeled and shared online, enabling group participants to merge independent action options and determine which choice is best. Task flows that outline steps for specific activities can be customized to meet the user company’s needs and facilitate the resolution process.
3. Live Scorecard
Live Scorecard enables manufacturers to holistically compare alternative what-if action plans based on real-time information. By scoring proposed action plans against predetermined, real-world corporate performance metrics and key performance indicators (KPIs), Live Scorecard aims at ensuring that any chosen course of action conforms to both day-to-day and long-term overall business objectives and best practices. As the action team assesses the impact of change and explores optional alternative solutions, it should be driven by a balanced scorecard view of business operations.
The scorecard presents operational results “scored” by corporate goals and objectives, where the objectives of business units, departments, and the entire enterprise are aligned. Often, varied disciplines within an enterprise (for example, asset liability management, profitability management, budgeting, forecasting, strategic planning, etc.) are performed separately and inefficiently despite the many similarities among them. The suboptimization of one process inevitably comes at the expense of others, such as the all-too-common scenario of a plant manager chasing higher utilization and efficiency, only to flood the warehouse with unneeded inventory levels.
This problem generally occurs because management does not have a comprehensive overview of the company, while department heads remain accountable only for their departmental strategy—they are not aware of other departments’ data and issues, which might influence their decisions. Thus, a scorecard is an effective tool to ensure management focuses on key business issues in the world of rapid business change and endless global competition.
With Kinaxis RapidResponse, the impact of change is continuously made known to the action team through a live scorecard view. Consequently, costs of the alternatives and their impact on the customer are explored, analyzed, and assessed, and the results can be immediately shared within the action team. The action team stays focused on key corporate and customer objectives as it drives toward a goal-driven optimized solution. To that end, Live Scorecard drives best practices optimization, where trade-offs in costs, margin, customer satisfaction, and other key business issues must be balanced to realize business success. It provides immediate shared comparative results to simulation scenarios so that the team can understand the implications of change, such as a configuration change on a particular customer order and its implications for inventory, production, capacity, margin, etc.
“Response management” as a software category has come from Kinaxis’s need to make the market aware that its offerings are much more than glorified event management applications, since SCEM has long been seen as providing merely passive visibility and alerts.
Kinaxis RapidResponse 7 introduced Live Scorecard and enhanced financial and engineering change analysis in late 2003, and at the end of 2005, Kinaxis RapidResponse 8 shifted from a client-server architecture to a Web services approach, using .NET on the back-end server and Java for clients. The release also boosted performance, partly by increasing the amount of data that the software can crunch to 128 gigabytes, which is crucial for the high volume of items, transactions, and simulations within most complex discrete manufacturing networks. It also featured customer-enabled setup, enhanced alerting (with links to scorecards), as well as partner product integrations, such as reporting and analytics from Cognos.
In mid-2006, Kinaxis introduced the RapidResponse Glass Pipeline as a standard feature of its on-demand Kinaxis RapidResponse service. Seeing that outsourcing was becoming a growing trend, Kinaxis realized that adoption of a software as a service (SaaS) solution to solve supply chain challenges could be a natural extension of a brand owner or contract manufacturer’s outsourcing activities—an extension that offers many compelling operational benefits.
A paradigm shift is now changing the way companies acquire, deploy, and use software so that they can continue to benefit from solutions that can offer capabilities beyond what is available in house. For more on the potential benefits and examples of SaaS SCM solutions, see Software as a Service's Functional Catch-up.
Kinaxis RapidResponse service is built around world-class network security and availability, and the solution delivers service level measurement, global support, application management, and management of all software, hardware, network, and physical environments.
As for the RapidResponse Glass Pipeline, this feature provides a conduit to securely connect RapidResponse to supply chain data residing in disparate systems (whether internal or external to the user organization), enabling an aggregated, multi-enterprise view of the brand owner’s business. Feeding and synchronizing multiple data sources into a single instance of RapidResponse supports the brand owner’s requirement for a multi-tier view of the extended supply chain. It also removes the burden from contract manufacturers and suppliers to constantly produce and share requested data extractions, which can be both time-consuming and IT resource–intensive. Two types of connections flow data through the RapidResponse Glass Pipeline:
- RapidResponse-to-RapidResponse, which offers speed and ease of access to information between two RapidResponse systems (instances). Five of the top 10 contract manufacturers in the world are using RapidResponse, and brand owners working with these manufacturers are now able to access critical information about outsourced products and subassemblies from these partner systems. User-driven setup can often be achieved within days, without the need for IT resources.
- RapidResponse-to-ERP, having been integrated with nearly 40 ERP systems, including a certified integration with SAP ERP. The idea is for multiple, disparate ERP systems to be simultaneously connected to a single instance of RapidResponse, including the brand owner’s own ERP system and that of its multiple partners.
This is part four of the five-part series Who Could Object to Faster, More Responsive Supply Chains? Part five will examine Kinaxis’s latest supply chain response management software release, as well as the hurdles this response management vendor still needs to clear.