Kinaxis has been enhancing its response management software for several years now, improving its capabilities to meet the needs of global manufacturers. Global manufacturers require solutions and services designed to drive quick response throughout today’s complex global supply chains.
For more background on trends in supply chain management (SCM) and global manufacturing, please see previous parts of this series—Who Could Object to Faster, More Responsive Supply Chains?, The Need for Multi-enterprise Responsiveness—Can It Ever Be Achieved?, and Is There a Remedy for Non-responsive Supply Chains?. For more information on the evolution of Kinaxis’s response management offerings, please see A Response Management Pioneer Offers Its Solution.
Kinaxis RapidResponse 9 and RapidResponse for Demand Management
In mid-2007, Kinaxis announced the release of RapidResponse 9, which features a number of innovations that further redefine response management capabilities.
RapidResponse 9’s first improvement is that it shortens time-to-resolution through proactive event monitoring and alerting capabilities. These capabilities allow users to sense and respond to hundreds of daily business exceptions and opportunities in real time, and thus drive even greater efficiency of business operations.
With RapidResponse 9, users know when unexpected events occur much sooner, and they can resolve problems more quickly. They can easily create and tailor their own alerts according to their interests and responsibilities (for example, “notify me if any orders are going to be more than five days late,” or “notify me if our on-time delivery rate drops below 95 percent.”). Users can also define when and how they would like to be alerted.
Further, with the application’s RapidResponse 9 Message Center, alert management and viewing are centralized in one place, enabling quick identification and prioritization of which issues to tackle first.
The second innovation RapidResponse 9 features is the ability to engage the right people to make the right trade-offs, compromises, and course corrections for an unexpected event. In a global, distributed organization, decisions about such problems are often made in a “knee-jerk,” panicky fashion, and without fully understanding the impact of these decisions or having the right people with the domain expertise to determine the best course of action.
In terms of people-centered collaboration, RapidResponse TeamForm automatically detects who in the organization would be impacted by an unexpected event and who could provide insight to a proposed action, ensuring the right people are quickly engaged in formulating responses. In other words, the tool automatically recommends the team that should collaborate on resolving a problem. TeamForm selects these people based on encapsulated logic and responsibility profiles with regard to commodity codes, customers, regions, etc. As a result, TeamForm shortens response time and increases the efficacy of taking appropriate actions.
As action teams are formed to collaborate, conduct what-if analysis, and respond, contextual information is shared with team members so they understand the situation and why they are being included. Furthermore, as action teams collaborate and determine the best action to take, commitments from team members are tracked so that everyone understands the course corrections being made. The system also documents all the course of action’s corrections, and it defines an objective for the collaboration. The capability also monitors the results and notifies the team when the objective has been reached (or not, for further escalation).
With Message Center and TeamForm, Kinaxis RapidResponse 9 provides visibility for better operational performance management, but these modules cannot drive effective action or response on their own. The true benefit of visibility can only be realized when it is bundled with analytical capabilities for decision support, and when there is a means by which people can easily connect and collaborate to reach the best possible resolution, and then take action.
Kinaxis RapidResponse 9 not only sends users alerts if an order is going to be late, but the solution offers alternative remedies, as well as the option to conduct a number of what-if scenarios to assess the ramifications of each alternative. The performance analytics enables trend-based key performance indicator (KPI)-monitoring; when negative exceptions occur, users can drill down to understand the root cause.
Mitigating Inventory Liability
In an outsourced contract manufacturing environment, inventory is often shared among multiple parties. This sharing of inventory determines the impact of schedule, policy, or contract changes before they take place, and thus identifies strategies to reduce liability or, conversely, to reach agreement on the settlement value using contract-specific terms.
The big question brand owners seek to answer when working with customers is how to minimize the financial liability associated with holding the amount of inventory that is required to meet specific customer-service levels while maintaining the flexibility to adjust to unforeseen events, such as sudden shifts in demand. In today's heavily regulated financial-reporting environment (see Important Sarbanes-Oxley Act Mandates and What They Mean for Supply Chain Management), inventory liability is a material supply chain risk between brand owners and contract manufacturers.
To help brand owners deal with the above risk, RapidResponse Inventory Liability Manager 9, an optional module, integrates the proactive management of inventory liability directly into the response management process. The module allows both brand owners and contract manufacturers to monitor and measure liability exposure by using demand and demand change waterfall charts (a waterfall being a type of report or view of information, used to represent forecast projections over periods of time that transition into actual demand history over the same time period) and reports to understand the impact of proposed response actions and to conduct comparative analysis of inventory exposure.
Inventory Liability Manager 9 enables the ability to track high watermark liability to determine the level of a component’s liability within its lead time. Using supply contracts, brand owners and contract manufacturers can easily determine liability of the purchased part with minimal data. Using demand contracts, brand owners and contract manufacturers can determine liability of the component part.
Kinaxis has recently made moves to help users realize a more measurable return on investment (ROI) through predefined resources and system integration. Namely, as RapidResponse continues to be enterprise resource planning (ERP)–agnostic, there have been ongoing improvements in terms of data integration, such as the RapidResponse Adapter for SAP ERP. Currently, there is support for the SAP R/3 v4.7 and SAP ERP 2005 product releases. As for faster system integrations, the solution now offers a single sign-on capability, whereby users can seamlessly sign into RapidResponse 9 from enterprise portals. On the other hand, RapidResponse Sandbox is an on-demand test environment to test configuration changes and upgrades, or to conduct training prior to rolling out to the production environment.
Bringing Response Management to the Demand Side of the Organization
RapidResponse for Demand Management, a new service introduced by Kinaxis in February, 2008, is purpose-built for the unique challenges faced by sales, customer service, and demand management organizations, as they respond to daily changes that occur inside the sales and operations planning horizon. Coupled with the traditional RapidResponse for Manufacturing, the solution now leverages the above-mentioned features to convert problem escalation into an appropriate action. Also, both solutions compare forecasts with actual orders and produce better response actions. But while RapidResponse for Manufacturing monitors part-level inventory visibility to adjust supply schedules and to seek alternate sources within a distributed supply network, RapidResponse for Demand Management monitors finished goods inventory visibility to adjust demand priority and to supply allocations within a distributed fulfillment network.
Moreover, the vendor points out that it has built a strong business by placing an emphasis on people rather than merely on technological wizardry. The strength of the Kinaxis team lies in its staffers’ expertise and knowledge of both software and manufacturing environments, and in their close customer relationships. These human factors have brought about a close connection between customer requirements and the actual product. Good examples of this connection include a number of customer-driven capabilities by Kinaxis based on engagements with the customer’s specific requirements like the above solution for inventory liability.
The most recent out-of-the-box capability is multi-enterprise management for brand owners, which joins a number of previously developed capabilities, such as alternate part management (APM), clear to build (CTB), model/unit effectivity (MUE), engineering change analysis, capacity analysis, constraint manager, inventory pooling, and others. For more details, see Can Webplan Reconcile Planning and Execution?.
Room for Improvement Remains
This brings us to the fact that Kinaxis will have to expand its supply chain expertise beyond its traditional stronghold of managing manufacturing resources in terms of capacity planning and scheduling within a multisite or multi-enterprise context. Kinaxis indeed appears to be ahead of the pack in operations-level applications for concurrently optimizing demand, available-to-promise (ATP)/capable-to-promise (CTP) and inventory management, while taking constraints and daily realities into consideration. Still, at this stage, RapidResponse does not encompass the holistic view of the entire global supply chain’s possible complexities, which may still make one area more efficient at the expense of inefficiency in other areas (so called suboptimization).
For example, the product does not address multimodal transportation as a shared or coordinated service, which leaves the manufacturer’s purchasing team to “own” the inbound goods (i.e., make its separate plans about how to get the stuff in), while someone else, such as a sales department or a shipping, third-party logistics (3PL) provider, will likewise own the outbound goods.
There is not much integration of transportation and warehousing processes at this stage either, which leaves out many, possibly more appropriate, and justifiable daily decisions with regard to using cross-docking, break-bulks, or direct shipment (see Drop-shipping—Internet Retailers' "Little Helper"?). Furthermore, merchandise planners do not get much useful output from the system to help them decide which pricing, promotions, and product assortments to run, and thus gauge different effects on demand.
In other words, there are so many other points (besides manufacturing plants or distribution centers) within a global supply chain where things can go wrong and where an astute response management system would be useful. For instance, delays and unplanned events often occur at customs and border crossings, in exporter-importer banks, and in transit, especially when the goods change hands between waterway and road or rail transportation carriers.
Given the above problems, other collaborative SCM areas that Kinaxis might want to better address in the future in order to expand its opportunities include sourced components and parts compatibility testing, pricing aggregation and fluctuations, cooperative marketing within trading partners, coordinated field and external services, international trade logistics (ITL)-global trade management (GTM) and accompanying documentation, payment adjudication, and so on.
The “blessing and curse” situation (good news/bad news) for Kinaxis is that most competitors do not cover all the bases of wider supply chains either, but the clutter of point solutions that address some areas only confuses the customer and makes it difficult for any vendor to espouse a differentiating value proposition. Indeed, the functional capabilities tend to reflect the vendor’s birthright, so that the vendors coming from the logistics space exhibit strong collaborative planning capabilities in transportation management or in GTM, but they are typically lighter in demand planning or in intelligent response to constraints and exceptions, and vice versa. On the other hand, the existence of so many vendors, with so many nuances in their offerings, presents a challenge both to the vendors in differentiating their products, and to the users in selecting a vendor.
Indeed, many other vendors can enable companies to efficiently manage trading relations, demand management, and fulfillment processes. Companies such as Descartes, RiverOne (now part of i2 and renamed i2 MEI, standing for “multi-enterprise interactive”), Viewlocity, or TradeBeam in supply chain event management (SCEM), visibility, and performance monitoring, are able to connect disparate systems to provide all parties with real-time information on current movements and trends. Adexa and Preactor have some interesting value propositions with regard to intelligent planning and operations-scheduling under constraints and disturbance factors. And the likes of Exostar, E2Open, and Mitrix have their on-demand software as a service (SaaS) offerings that help supply networks’ visibility and execution.
In terms of inventory liability capability, Optiant, SmartOps, ToolsGroup, MCA Solutions, and LogicTools all have inventory optimization solutions that create plans to minimize inventories across the network (but with achieving desired customer service targets), which can nibble at Kinaxis’s potential customers. Also, in many markets, Kinaxis is far from a household name, owing in part to its relatively small size, its name changes, its budding install base, and its lower visibility typical of a privately held vendor.
Finally, in addition to the likelihood of prospective customers “doing nothing new” and sticking to their existing Excel spreadsheets, another challenging irony, applicable not only to Kinaxis, is that not many companies are yet able to connect SCM operational metrics to the strategic corporate metrics. Given human nature, RapidResponse, by bringing greater transparency to supply chain operations, may even be stonewalled by some insecure managers who could perceive the solution as preventing them from covering up unattractive figures and blaming them on someone else (see Why Most Balanced Scorecards Are Subverted).
Many global discrete manufacturing and distribution corporations have been realizing that even the finest forecasting techniques (with rocket science number-crunching algorithms) will not help them in unplanned situations. As such, they need to transition from a forecast-based supply chain to a demand-driven one, by establishing a multi-enterprise response management competency. That is, action teams throughout the supply chain have to be sanctioned with the right tools and technology to establish shared processes, data, and metrics among trading partners.
The aim is to more quickly and effectively respond to demand changes as they happen, leading to such benefits as more accurate order-promising, lead-time reductions, and lower inventory levels and risk. Successful enterprises with appropriate performance management metrics in place are characterized by their ability to articulate strategies into easily understood and repeatable action plans. They also emphasize data-gathering from monitoring the performance of the action plan, and fine-tuning it via ad hoc, what-if simulations.
All the manufacturers of Kinaxis’s focus, with their complex supply chain environments (i.e., having multisite environments, a large percentage of outsourced operations, and a high incidence of demand variability) and suppliers that need access to aggregated demand and ability to respond rapidly to unplanned events, should evaluate RapidResponse. However, given Kinaxis’s penetration in the hi-tech industry, the most apparent candidates are electronic manufacturing services (EMS) contract manufacturers and brand owners, which have the choice between on-premise and on-demand alternatives.
Original equipment manufacturers (OEMs) and contract manufacturers from such industries as automotive, aerospace, industrial equipment, or medical devices should inquire about needed extensions that cater to their particular industry requirements. Also, generally speaking, at this stage, ideal manufacturing prospects are those that mostly build to order and ship directly, as they are not burdened with outbound warehousing and multimodal logistics issues.
Discrete manufacturing companies with existing ERP or SCM products in house should evaluate Kinaxis RapidResponse in addition to their incumbent planning systems. This is because of the vendor’s success with the solution’s ability to coexist with disparate systems—customers have found that the application often complements and improves upon the solutions offered by their existing transactional enterprise applications. Kinaxis’s existing customers should evaluate the recent enhancements within the latest product suite release for additional value.
This concludes the five-part series Who Could Object to Faster, More Responsive Supply Chains?