Supply Chain Now Radio Episode 148
Supply Chain Now Radio, Episode 148
“Demand Planning Insights & Resources: A Conversation with
Bob Collins and Carol Ptak”
Sponsored by ASCM- Learn More: www.ascm.org
Bob Collins, CPIM-F, CIRM, CSCP, CPLP serves as Senior Director of Learning & Development at the Association for Supply Chain Management (ASCM). Bob has over 25 years of experience as a Supply Chain professional, both in practitioner and consultant capacities. A former APICS volunteer, instructor & past APICS President, Bob has spent over 10 years on staff, where he’s been responsible for learning & development, courseware and instructor development. Learn more about ASCM here: www.ASCM.org
Carol Ptak, CPIM-F, CIRM is a Partner at the Demand Driven Institute, the global authority on demand driven education, training, certification & compliance. She is a leading authority in the use of ERP and Supply Chain tools to drive improved bottom line performance. Carol is past Vice Present and global industry executive for manufacturing and distribution industries at PeopleSoft and is considered a demand driven thought leader across industry. A past APICS President, more recently Carol has served as a Visiting Professor and Distinguished Executive in Residence at Pacific Lutheran University. Learn more about the Demand Driven Institute here: https://www.demanddriveninstitute.com/
Scott W. Luton is the founder of Supply Chain Now Radio. He has worked extensively in the end-to-end Supply Chain industry for more than 15 years, appearing in publications such as The Wall Street Journal, Dice and Quality Progress Magazine. Scott was recently named a 2019 Pro to Know in Supply Chain by Supply & Demand Executive, and he founded the 2019 Atlanta Supply Chain Awards and also served on the 2018 Georgia Logistics Summit Executive Committee. He is a certified Lean Six Sigma Green Belt and holds the APICS Certified Supply Chain Professional (CSCP) credential. A Veteran of the United States Air Force, Scott volunteers on the Business Pillar for VETLANTA and serves on the advisory board for the Georgia Manufacturing Alliance. He also serves as an advisor with TalentStream, a leading recruiting & staffing firm based in the Southeast. Connect with Scott Luton on LinkedIn and follow him on Twitter at @ScottWLuton.
Join SCNR host Scott Luton, as he interviews Senior Director of Learning & Development at ASCM, Bob Collins, and Carol Ptak, partner at the Demand Driven Institute. Their conversation revolves around the world of demand planning, including expert insights and helpful resources.
Intro: [00:00:00] It’s time for Supply Chain Now Radio. Broadcasting live from the Supply Chain Capital of the country, Atlanta, Georgia, Supply Chain Now Radio spotlights the best in all things supply chain: the people, the technologies, the best practices, and the critical issues of the day. And now, here are your hosts.
Scott Luton: [00:00:30] Good morning, Scott Luton here with you live on Supply Chain Now Radio. Welcome to the show. In today’s episode sponsored by ASCM, we’re going to be discussing a very hot topic in the world of supply chain – that of demand planning. We also invite you to be sure to check out ASCM 2019, which we’ll touch on a wide variety of best practices, but you’ll also get plenty of information, and best practices, and proven approaches on more successful demand planning at ASCM 2019, one of the leading supply chain trade shows that takes place every year. Full of great content, best practices, entry networking. I’ve really enjoyed going to a variety of these yearly events, and you’re not going to want to miss it. So, this year, ASCM 2019 is in Las Vegas, September 16th through the 18th. And you can learn more at ascm.org. Hope to see you there.
Scott Luton: [00:01:18] On a quick programming note. Like all of our series on Supply Chain Now Radio, you can find our replays on a variety of channels – Apple Podcasts, SoundCloud, Spotify and really wherever else you find your podcasts. As always, we’d love to have you subscribe, so you don’t miss anything.
Scott Luton: [00:01:33] So, let’s welcome in our featured guests today. Our listeners are in for a treat. We are going to be featuring Carol Ptak, partner at Demand Driven Institute LLC. Good morning, Carol.
Carol Ptak: [00:01:43] Good morning, Scott. Thanks for the invitation.
Scott Luton: [00:01:46] You bet. Glad to reconnect with you here. I’ve seen your keynote previously in earlier yearly conferences and elsewhere. And we’re looking forward to picking your brain today, along with a longtime partner of yours, Bob Collins, Senior Director of Learning and Development at ASCM. Bob, how are you doing?
Bob Collins: [00:02:03] I’m great, Scott. Thanks so much for having us on this podcast.
Scott Luton: [00:02:06] You bet. And it is a pleasure, as we talked about kind of before we came live, having dinner with you at the Top 50 Chapter Symposium in Chicago back in October where ASCM was really formally rolled out. Carol and Bob, we’re going to start, as we typically start most of our conversations here, is we want to get to know you both a little better first. So, Carol, starting with you, tell us some more about yourself?
Carol Ptak: [00:02:27] Actually, I started in the manufacturing operations, what we call supply chain now, over 40 years ago. Yes, I’m really that old. I started out on the shop floor at minimum wage, putting parts together. And then, advanced and became a supervisor and a manager. And finally, I got to the level of being a vice president in the second largest software company in the world at PeopleSoft. And I was responsible for PeopleSoft’s vision and its whole strategy around its manufacturing, distribution, and retail software.
Carol Ptak: [00:02:57] And it was there that we came up with the idea of this idea of demand-driven manufacturing. Now, at the time, we had no clue how to actually do it, but it was a really good idea. So, that was in 2003. And during this whole time, I have also been involved with the APICS organization. I’ve been involved with APICS almost this whole time that I’ve been in operations. And I was at the chapter level. And then, I got up to the small manufacturing sig at the national level. And from there, I got to meet some absolutely wonderful people that invited me to run for office at the national level. And finally, rose to being APICS President in 2000. So, they called me the Y2K crisis.
Carol Ptak: [00:03:36] So, for anybody who is playing the trivia game of ASCM, that’s a trivia question, is what year was I president? It’s 2000. And I am still the only female that’s ever served in that role. And I’m delighted to be on today with Bob because Bob and I served on the board of directors around that same time. Bob was one of the region VPs at that time.
Carol Ptak: [00:03:57] So, now, today I’m with the Demand Driven Institute. The institute’s about 10 years old. And what we’ve done is we’ve really taken a page out of the APICS playbook. What APICS was to MRP in its early days, in the ’50s and ’60s, is what the Demand Driven Institute is to the demand-driven body of knowledge in 2019. So, we don’t do any consulting. We don’t do any software. What we do is we’re the caretakers of this whole new and very exciting body of knowledge around Demand Driven.
Scott Luton: [00:04:25] Carol, I didn’t realize that you were the only female to ever serve in that office. And so, we have—we’re going to have to feature you’re on a different series called Full Access, where we talk about some of those trailblazers.
Carol Ptak: [00:04:36] Well, and not only that, it was—yeah, it interesting when I talked to Abe because he said to me, “Oh Carol, we have our first president that’s coming into a position that wasn’t a region VP”. And I was like, “You already had that. And that was me.” And he said, “Well, but chapter presidents.” He said, “Never a chapter president either.” I, sort of, skipped over the whole thing and went directly to the national board. And I always love it when somebody introduces me at conference as the first female president. And I always look at them and say, “So, when was the second?”
Scott Luton: [00:05:08] And our audience can’t tell. I think, Carol, you have got a wonderful, colorful background. And we’re going to walk away with a lot better understanding of what’s going on, not only in supply chain, but certainly in demand planning circles these days. So, great to have you join us. So, Bob, tell us more about yourself.
Bob Collins: [00:05:26] Well, my story is somewhat similar to Carol’s, although not as lofty as she. I actually started on manufacturing floor while I was in college. A few years later, ended up at a small manufacturer working in purchasing, planning, materials management, helped set up a fledgling MRP system for the company. Worked for a couple other companies after that in the purchasing and materials management areas dealing with planning, and inventory management, and all those, kind of, fun things that APICS specializes in.
Bob Collins: [00:06:06] After that, I was in consulting for a number of years, mostly ERP implementation consulting. During this time, as far back as ’92, I got my CPIM. I joined the local chapter. The friend of mine that brought me to my first meeting, actually, brought me to a board meeting, not to a regular chapter meeting. I discovered then that like Annie in Oklahoma, I’m just, “Oh boy. You can’t say no.” Walked away with an assignment, and the rest was history. I was very pleased to join the board with Carol that Carol was on. And my first year, was 1999. I was on the board for six years and, actually, followed her a few years later as president of APICS in 2003.
Bob Collins: [00:06:57] So, I’ve been a longtime member, volunteer, instructor, board member. And then, in 2006, I was actually invited to join the APICS staff. I’ve been here on staff ever since, the last 11 years in the learning and development area responsible for all of our certification and non-certification courseware. We also have an instructor development program with about 800 instructors worldwide teaching our certification and education courses. So, we work with those instructors to help them put their best foot forward.
Bob Collins: [00:07:34] APICS, of course, as you know, became the Association for Supply Chain Management very recently. ASCM is the global leader in supply chain organizational transformation, innovation, and leadership, but it’s built on the foundation of APICS certification training that’s been going on for over 60 years. So, we’re very happy to be in this space, and I’m very happy to be where I am, and happy to be able to share with you today.
Scott Luton: [00:08:02] It is a neat time to see what ASCM is kind of going through as it’s continued to grow and serve as an international resource for supply chain management training, and best practices, and body knowledge. So, let’s dial in. Thanks to both of y’all for sharing some your backstory. Let’s talk now about demand planning. So, it’s become such an incredibly hot topic in business and not just supply chains. Bob, why do you think there’s more interest in demand planning?
Bob Collins: [00:08:30] In our principles operation course, we say the following, “The management of demand is at the heart of operations planning.” As cumulative demand is placed on the firm, it is the responsibility of operations planning to acquire the materials, and components, and schedule the available productive sources to ensure that products are ready, and the quantities, and on the requested due dates to meet customers’ expectations. To add to that, I’d say that demand management is the start of a cascade of decisions all through the supply chain that can positively or negatively affect the company’s ability to service our customer, and can greatly increase or decrease unwanted waste and cost in the system.
Scott Luton: [00:09:15] Carol, your thoughts?
Carol Ptak: [00:09:16] Well, I think it’s become more and more critical for all those reasons and that businesses are realizing the implications of what happens in supply chain affects a company on the bottom line. If you really think about it, demand planning is all about, how do we align the resources of the enterprise to deliver what the customer wants, no more, no less? And so, from an executive in any company, there’s really three characteristics that they’re looking for. One is, how much do I have tied up in working capital? And of course, inventory is a very big part of those current assets that are sitting in working capital.
Carol Ptak: [00:09:51] The second is contribution margin is, what is it that when I look at my revenue minus my variable cost, how much cash am I generating into the company over time? And overall, what’s the size of my customer base? So, by using resources to build those things that the customer doesn’t want, I usually end up having to do a promotion to get rid of it, which affects my contribution margin or I end up carrying a lot of extra working capital. And then, my customers are upset because I’m not delivering to the market what they do want. But at the same time, our customers are becoming ever more fickle. So, I think it’s really become that idea for an executive of saying, “How is it that we can align those resources to what the customer really wants, no more, no less, so that we make the best use of our assets?” which also ties into more and more companies are looking for ethical business and best use of resources in the world. Then, I haven’t been really green in my approach of living in this worldwide environment.
Scott Luton: [00:10:50] The ethical supply chain is certainly getting more and more attention both by folks in the industry and by consumers, right? Let’s talk about the ever-increasing rate of change in the industry and how that presents a significant challenge to business leaders, and certainly, of course, to supply chain organizations. Carol, how does demand planning get done when the environment is consistently and rapidly changing?
Carol Ptak: [00:11:16] Well, this is what’s always been like the Holy Grail. I mean, Bob and I both came off the shop floor, and our attitude was always, “Tell me what you’re going to sell and I’ll build it.” Well, the problem is the sales can’t tell us what they’re going to sell because the customer is so fickle. Product life cycles have gotten shorter, customer tolerance times have gotten shorter, and at the same time, our supply chains have stretched further and further out in time and further and further around the world.
Carol Ptak: [00:11:42] When I was running a plant, all my suppliers were inside the United States. And that was as late as 1990. So, my biggest worry was as if there was going to be a hurricane in Florida. Well, today, now we’re getting parts from China, we’re getting parts from Russia, we’re getting materials out from South America, where China is now outsourcing into areas like Vietnam and Thailand. So, our supply chains have gotten longer and longer. And at the same time that our customer tolerance time is getting shorter and shorter.
Carol Ptak: [00:12:10] And then, add to the extra volatility that we’re seeing in the world today. I mean, one only needs to see—I heard on the news last night that President Trump just deferred the extra tariff on China out to October 1st from September 1st. Well, imagine the kind of bullet disruption that’s going on through supply chains as these tariffs are changing and changing the cost structure of companies that are manufacturing.
Carol Ptak: [00:12:34] So, as we look at this, it becomes—demand planning almost becomes an oxymoron. How do you plan something that you can’t plan? I think the best way to look at it is it’s not about planning demand as such, but it’s planning that capability that the company will have to sense those changes in the marketplace, that adapt their planning and production, pull from the suppliers in real time, and be able to innovate to the new needs of the market. So, it’s become, now, at the level of the C-suite. And as I travel around the world and talk to a lot of boards of directors, the CEOs and the CFOs are now starting to be concerned about supply chain issues.
Scott Luton: [00:13:14] Which is really neat to see, despite some of those pressures and some of those complexities. I love saying that supply chain, the supply chain management function has a seat at the table unlike ever before, which is really neat if you’re in the profession to see that development take place. So, Carol, you’ve already spoken to this little bit, but I want to pose a question to both you and Bob here. Let’s talk specifically about the areas of supply chain that demand planning most impacts. Bob, will you go first?
Bob Collins: [00:13:45] That’s a tough question because I’m not sure there are any areas of the supply chain that demand planning doesn’t impact. Poor or weak demand planning can cost the company inventory dollars by having too much of the wrong things, too little of the right things. We’ve all been in that situation. This can have a huge negative impact on customer service, including on-time delivery, order promising, and concrete inefficiency in the manufacturing process. So, in other words, demand planning really impacts the entire company.
Scott Luton: [00:14:18] Carol, how do you see demand planning impacting across the supply chain?
Carol Ptak: [00:14:24] Well, not surprisingly, I totally agree with Bob. It’s demand planning affects every area of the company. Now, historically, we looked in terms of demand planning of tell me what you need, and I’ll go get what I need. I mean, this was the whole purpose of MRP is, what do I need? What have I got? And it calculates, why do I need to go get and when? And that’s great as long as there’s no variability. The problem is, is we’re living in an area of more variability than ever.
Carol Ptak: [00:14:52] And so, when we look at supply chain now, our importance at the table, that C level table that you discussed earlier, is more important than ever before because, now, what we need to bring are those new ideas of how do we handle this volatile, variable, uncertain, complex, and ambiguous world by bringing an understanding of operational capability to the C-suite. And this is something where supply chain typically has not done that before. And as all of us have grown up, we’ve all been in there whining that, “Well, if only sales would forecast what they’re actually going to sell, then we could…” Well, that excuse doesn’t sit anymore. And the CFOs isn’t CEOs are tired of hearing it. What they wanted to hear is a real solution of given where we’re at, now, what do we do? In supply chain, in our whole supply chain profession is now important, more important than it ever has been before.
Scott Luton: [00:15:41] Completely agree there. I appreciate y’all’s feedback on that question. So, let’s talk about what’s right around the corner. It’s almost here, the retail season is upon us. So, what observations, predictions do you have on how demand planning impacts organizations during the busiest time of the year? Bob, let’s start with you.
Bob Collins: [00:16:02] Thanks, in part, to our new global business environment, corporations are dealing with an increasing number of risks that disrupt their supply chains – new competitors, labor problems, supplier problems, unstable governments, new local regulations. The current threat of a trade war is already affecting how companies think about sourcing materials and the effects those decisions will have for the upcoming holiday season.
Bob Collins: [00:16:28] So, for example, Apple has recently asked its largest suppliers to consider the feasibility of shifting 15% to 30% of its output from China to Southeast Asia due to the concern over the potential China-US trade war. Natural disasters, floods, hurricanes, obviously, impacts supply chain’s ability to deliver. And believe it or not, so do volcanoes. I remember being amazed back in April 2010. A volcano in Iceland erupted, which, although relatively small, we’re told, for volcanic eruptions, caused enormous disruption to air travel, including air cargo flights due to ash clouds all across western and northern Europe for a period of six plus days.
Bob Collins: [00:17:12] So, I read that a hundred thousand flights were cancelled in total, peaking at 19,000 a day. PricewaterhouseCoopers estimated each week of disruption destroyed about 0.025% to 0.05% of the annual British GDP. The same would probably be true with the other European countries. Supply chains are constantly exposed to a variety of risks. Some, within their ability to mitigate. Others beyond that. And that, certainly, affects how, and when, and where some items show up within the retail market.
Scott Luton: [00:17:50] So, Carol, Bob kind of spoke to market volatility and the environment volatility, really. How do you address the volatility, you think, especially from a demand planning standpoint?
Carol Ptak: [00:18:01] I think the biggest thing to address volatility is called relevant visibility. Relevant. Well, what is relevant? All those factors that Bob named are all relevant. So, are they things that only happen once in a thousand years? And the answer is no. All this stuff is going on all over the place. And so, this is where we really need to assess what our supply chain risks are, and then how do we design our supply chain capability, so that we can absorb those risks?
Carol Ptak: [00:18:32] So, within the certain tolerance of what we normally expect of things like hurricanes and floods because these things are—even though the specific area of them might be different from year to year, but just like right now, Arizona, we’re in monsoon season. We know we’re going to get rain. Now, am I going to get rain today? I’m looking at my office window. I don’t think so. It’s a blue sky. But you never know by tonight, because it could be a really, really hot day today, and we’ll get our monsoons that are rolling tonight.
Carol Ptak: [00:18:59] So, we don’t know exactly when, we don’t know exactly where, but we know these things are going to happen. So, it’s about establishing that supply chain capability, using that relevant visibility, so that we can mitigate the variability and volatility that’s in our supply chains today.
Carol Ptak: [00:19:15] For example, down in Colombia, a lot of the Colombian retailers have already moved to the demand-driven methodologies, where, now, they plan their inventory in a different way. One produces very high-end children’s wear. And now, instead of taking one big truck out once a month to deliver to the stores, they now downsize those trucks. And, now, they actually deliver in tiny little tuk-tuks, so they can deliver to each of the stores every day without increasing the number of drivers that they have. So, that means that the factory can get closer to the demand signal that’s coming out of the retailer.
Carol Ptak: [00:19:48] Louis Vuitton, now, plans their inventory in different ways because, of course, part of Louis Vuitton strategy is all of the products are manufactured in France or here in the US, which means that when you think about that, that’s a backwards ocean shipment if you could get into the containers heading over to China, and down to South Africa, and some of those areas. But because they were able to look at that relevant visibility and develop that supply chain capability, they were actually able to remove a number of products off of the airplane and actually achieve the green initiative. At the same time, they improved their customer service and reduced their inventory, all at the same time. But that requires that relevant visibility to define that supply chain capability in response to those supply chain risks.
Scott Luton: [00:20:34] So, let’s shift gears over to technology. We’ve kind of touched on that a little bit throughout this session or alluded to it maybe. But we want to get Carol and Bob’s insight on how technology is helping to enable demand planning. I would argue that, that might be one reason why demand planning is such a hotter topic in business is because it’s—our fingers are closer to the data that we need. It’s easier to get, it seems. So, how do you see technology helping to enable demand planning, especially in ways that are greatly improving supply chain performance? Bob, what’s your take first?
Bob Collins: [00:21:07] Well, I think that what we’re seeing now is new technology that’s building on computers and automation that we’re introducing to manufacturing and distribution in the early ’90s. Pundits now are calling it Industry 4.0 with the advent of artificial intelligence, Internet of Things, blockchain, more sophisticated robots, and other new technologies. And companies have the opportunity, I don’t think many of them are taking this yet, it’s all very new to us, but have the opportunity to start basing their demand planning decisions on much more relevant data in order to improve customer service and satisfaction and reduce waste and costs in their manufacturing and distribution systems. The true power of this new technology is in digitally connecting these machines with one another to create and share information that we haven’t had access to before.
Scott Luton: [00:22:03] A huge opportunity. Absolutely. Carol, what’s your take?
Carol Ptak: [00:22:06] I think my take on this is I, absolutely, agree with Bob. But we have to look at today’s environment, and you’re saying with all these connected devices. And managers today, more than ever, are drowning in data and starving for information. It’s all about relevant information. All computers do, all technology does is it codifies certain business rules.
Carol Ptak: [00:22:28] And there’s a great book that Eliyahu Goldratt wrote back in about 2001 called Necessary but Not Sufficient. And Necessary but Not Sufficient is talking about technology. It is necessary. We need it. We need these new things like Industry 4.0 and Internet of Things, and blockchain, and all these, kind of, things. But what are the business rules that are enabled under that technology? Because as technology changes, we have to change the business rules. As our business rules change, we have to change our technology. It’s a synergy between these two things. And that technology can only provide value. But I mean by value is that it’s going to drive bottom line ROI if it addresses a limitation that the companies facing to achieving its objective. And that’s an if and only if.
Carol Ptak: [00:23:15] So, if we take our current business rules that we developed in the ’50s, codified in the ’60s, and commercialized in the ’70s, and just make it run faster, in my personal opinion, we’re going to tear our supply chains apart because those rules were never designed to take into account the kind of variability and volatility. Both traditional MRP and assume one big thing, and that is we live in a perfect world. The problem is, is we don’t live in a perfect world.
Carol Ptak: [00:23:43] So, that means that we need a new set of business rules, so that we can leverage this new technology. The advents around artificial intelligence is incredible, but artificial intelligence is what’s called adaptive computing. Well, to fully leverage adaptive computing, then you need adaptive business rules. Well, adaptive business rules are based on something called complex adaptive system science. And that’s the critical part because when we look at our traditional roles, our operations rules, operation’s linear event. Supply chains, however, are not linear and they never have been.
Carol Ptak: [00:24:16] So, if we try to automate linear relationships, we’re in for a big problem because the bullet effect will just tear us apart. If we recognize that supply chains are really network of networks, they’re complex adaptive systems, apply the right business rules, then all this technology now can provide a value because when you apply adaptive computing to adaptive business rules, now, you’ve got a very exciting synergy.
Carol Ptak: [00:24:43] And this is where it goes back to getting those right business rules. And that’s what we’re very excited about, the relationship between the Demand Driven Institute and ASCM. Bob and I were both APICS presidents. And one of the things that frustrated us is, how do we bring in new knowledge? How do we bring in new breakthrough knowledge? And Bob and I – sorry, Bob -but we weren’t just smart enough to figure it out. And last year, the board of directors, when they created ASCM, they finally figured it out. And I was really impressed with that decision. And it was to bring in these thought leadership partners.
Carol Ptak: [00:25:16] And so, that’s why Demand Driven Institute is so excited to be part of the ASCM launch, being one of those thought leadership partners, or bringing in an innovated—very innovative but very well-documented and implemented globally in some of the world’s largest company. And the exciting thing is somebody can learn these new business roles in just two days. And so, that’s why I’d like to refer people to the ascm.org/ddi website to take a look at that new knowledge that will allow you to not only address the problems of the past, which the sales just tell me is what they’re going to sell, then I’ll build it, which that world doesn’t exist. We all know that. And at the same time, give us the new business rules that we need to exploit this new technology that we have and drive significant ROI with it.
Carol Ptak: [00:26:07] That’s really what it’s all about because when you look at all the new ERP systems that are out there and all the new innovations, it’s all about real time. Well, what information do we need real time? And that information we need is relevance, that relevant information, so that we use our resources wisely to build what the customer wants, no more, no less.
Carol Ptak: [00:26:27] So, I think this is—I think we’re actually back to the future. We’re sort of back to about 1978 where MRP was just starting to get its legs under it, software companies were starting to write, and new technology was coming out, and companies were getting great benefit from that. Sort of back to the future. We’re there again, but it requires that new set of business rules, that ability to sense, adapt, and innovate, leveraging that complex adaptive system science, so that we can leverage all this new technology.
Scott Luton: [00:26:58] Carol, I want to switch over to Bob real quick, but I want to circle back to you to talk about some of the different workshops that you mentioned, the two-day workshops. I checked out that site earlier, ascm.org/ddi. And I’d love to kind of get a few more details on the different offerings. But Bob, before we do that, tell us more about the partnership between ASCM and DDI.
Bob Collins: [00:27:23] Yeah. Well, ASCM was really excited about this partnership opportunity we have. The Demand Driven Institute programs and endorsements, we see them as very complementary additions to the suite of APICS certification programs. ASCM and DDI partnership really opens up more possibilities for those with the CPIM and/or CSCP certifications and for all supply chain professionals wanting to increase their business planning skills. You’ve already mentioned ascm.org/ddi a couple of times, but that is the place after this podcast that people can go for additional information.
Scott Luton: [00:28:04] And Carol, back to you. You know we love our acronyms in supply chains. It reminds me of my military days in Air Force. So, I see DDP, DDLL, and DDSCF. Can you walk us through those real quick?
Carol Ptak: [00:28:18] You bet. You bet. And I think it really goes back to this reality world that Bob and I have come out of. Bob and I lived through what we called the holy wars. You either did lean or you did MRP. And when theory of constraints came out, it was like, “Oh, no, no, no, no, you don’t need technology.” Bob and I have been at the conferences where people would walk around with an MRP with a knot symbol through it. And we lived through the land of war.
Carol Ptak: [00:28:40] And I think the real beauty of demand-driven is we’ve transformed from the land of war to the land of ant, where please don’t forget what you already know, that CPIM, and CFPIN, and CSCP, this is all great foundation we need, we absolutely need, but we can leverage. So, all the demand-driven methodology is built on four pillars. It’s built on formal planning with MRP, ERP, capacity requirements planning. It’s built on lean, built on theory of constraints, and it’s built on Six Sigma.
Carol Ptak: [00:29:13] So, the programs that ASCM offers, the demand-driven planning program, the DP, is for the people that really need to get down into the nuts and bolts of how this new planning engine called DDMRP works. Boy, you’re going to know, Scott, we took a lot of criticism for calling it DDMRP. Man, a lot of people say that, “MRP is dead. What are you? Crazy? Why would you do that?” But when you’re invited by McGraw-Hill to write the third edition of Orlicky’s MRP, that’s when its name got changed to DDMRP. I’ll never forget that day. And I said to Chad, I said, “Well, Orlicky’s book is like the Bible of manufacturing.” And he said, “Yes. And we’ve been asked to write the New Testament.” So, it became DDMRP.
Scott Luton: [00:29:53] When you refer to Chad, Carol, you’re referring?
Carol Ptak: [00:29:57] To Chad Smith. Chad Smith, my business partner and co-author on all of our books. And I mentioned those four pillars that demand-driven sits on of formal planning, and Lean, TFC, and Six Sigma. And what brings those things all together in synergy and makes them all work together is a whole lot of innovation. And that innovation, ashamed to say, did not come from me. That came from Chad Smith and his team of consultants that were working on the ground trying to solve some pretty big gnarly supply chain problems for some very big companies.
Carol Ptak: [00:30:26] And after PeopleSoft was no longer, it was taken over and destroyed in a hostile takeover, I was teaching at a university for a while, and Chad came to me and said, “Here, I want to show you some technology. We needed somebody that understood software, understands MRP, understands Lean, and theory of constraints.” And he says there’s not a lot of you out there. And we happened to just be coincidentally that we lived about 40 miles from each other.
Carol Ptak: [00:30:48] And when I looked at what he and his team have done, I said, “You guys do realize, you’ve pretty much violated most of the rules of formal planning.” Back to your first question, if you just tell me what you’re going to sell, then I’ll make it. He says, “Yeah, but it works.” And I said, “Well, you do realize that you’ve solved the bullet effect.” And he said, “Well, yeah, we know that. But why is that a problem?” I was like, “You don’t understand, that’s the Holy Grail we’ve been chasing for 40 years. That’s not our problem. That’s the problem.” And so, we’ve been writing and collaborating. So, the smart guy and in this collaboration of Ptak and Smith, he always puts my name first. I think it’s because it’s alphabetical order. So, yeah. He was a smart guy that brought all that innovation together.
Carol Ptak: [00:31:26] And so, the DDP brings out that deep knowledge of DDMRP that the team’s going to need to try a pilot. At the end of the course, we always tell people, don’t believe us. We wrote the book. Go back and try to in your company. And typically, what we see is within about two months ,and the pilots that they produce after this two-day course, they’ve reduced their inventory about a third to a half. Customer service is up at about 100%. And it’s a lot less stressful for the planners. The planners love it because it makes sense. It was built out of the same way MRP was. It was built by practitioners for practitioners. I mean, this is really getting right back to the roots of ASCM in 1950s when this organization first started.
Carol Ptak: [00:32:09] So, the DDP is the really deep dive into DDMRP and how to get started. Well, once you get this DDMRP engine in, the good news is, is it is highly effective. And the bad news is, is it’s highly disruptive because it tends to change lots of things because, all of a sudden, lead times are getting shorter, inventory is going down. The company is becoming more agile. And now, the managers are saying, “Oh, now what?” And that’s what the DDL is written for the demand-driven leader course is written on, how do I manage now this company using metrics that, now, instead of trying to manage by transaction control, we now manage with process control? We bring into play all those Six Sigma metrics, and we link this into sales and operations planning.
Carol Ptak: [00:32:53] That’s an LP. Never had a bidirectional tactical reconciliation process before. Well, now it does. We call it DDSOP. And it’s a new function. It’s not DD in front of SOP. It’s a whole new function where it allows us to take scenarios for management, and then give them concrete information back about what the implications of those scenarios are based on our current operational capability, or what operational capability is, now, required to achieve the vision that they have. We never had that before.
Carol Ptak: [00:33:23] I remember as a production control manager, they’d asked me those questions, and I’d go in my office, and I had a dartboard on the back of my office. And I throw darts at the dart board and say, “Yeah, inventory is going to go up, inventory is going to go down. I didn’t know.” Today, because of the way the demand-driven operating model is set, using DDMRP as the engine, we now can understand mathematically in very lockstep logic what the capability of operations is. So, there’s no more, “I think, I feel.” I think that’s a bad idea. I feel that’s going to increase inventory. We know. We know. because of the strategic positioning, we, now, know what the impact is of those scenarios.
Carol Ptak: [00:34:01] So, that’s what the demands of a leader course is about. How do we set up that DSOP process because, now, DDMRP has given us the capability we didn’t have before? And as I said earlier about technology, as they change the business rules, they need to change the technology. As they change the technology, I need to change the business rules. So, that synergy has to come together at that leader level, at the manager level.
Scott Luton: [00:34:21] So, Carol, real quick for our listeners. So, we’re having Carol Ptak walk through three of the key offerings that is coming out of the partnership between ASCM and DDI. And she’s covered firstly the demand-driven planner, the DDP designation. She just tackled the demand-driven leader, the DDL designation. And then, we have one more here, Carol, and that’s the DDSCF, the demand-driven supply chain fundamentals offering. Tell us more about that.
Carol Ptak: [00:34:50] Well, that’s a very interesting offering because it’s really not about demand-driven. It is really about the foundational pillars that a company needs to have to understand how to become an adaptive enterprise. So, in a way, you could call it the foundation of the adaptive enterprise. And it includes things from, what is the purpose of a business, to what’s a P&L, to what is Lean, what is theory of constraints, what is formal planning?
Carol Ptak: [00:35:18] So, we sort of look at it. It’s almost like you’re going into the store and saying, “Okay, what are all the things that I’m going to need in my supply chain academy as a company to be successful?” And this is, I think, the real beauty of the relationship between DDI and ASCM is because ASCM offers so many of those necessary components, those foundational pillars that are required to become this adaptive enterprise.
Carol Ptak: [00:35:45] DDI doesn’t provide all the education. We do just the demand-driven side. But we felt that there was a need in the marketplace for a foundation course of people that are either brand new to supply chain or people that are in an allied field in supply chain, like they come out of financials, or they come out of R&D, or they come out of design, I think, that they need to understand how a supply chain works. Because back to what we’ve talked about so much on this podcast, supply chain is now more important than ever. It not only deserves a seat at the table. It’s a necessity to have a seat at the table. But those other people at the table need to have an understanding about how supply chains work. It’s not just a black box that you throw stuff into. So, that’s what that foundational course is about. And it also has a professional endorsement that goes with it because there’s some people that say, “You know what? I just want that certificate. I want that professional endorsement. And I don’t want any other certifications.” And that’s fine. And so, that’s what that course.
Carol Ptak: [00:36:42] And it’s a very interesting course because it takes into account the way that ASCM teaches its instructors how to teach. It flips the classroom, if you will. It’s a role play. So, it’s based on a novel called The Missing Links, which is the novel about a story of a company in France that the father is mysteriously killed one night as he was heading to his daughter’s concert. And his daughter has to take over the company, and she doesn’t have a clue. She’s a musician. What does she know about running a manufacturing company?
Carol Ptak: [00:37:14] So, that novel is used in a very innovative way where people role play, whether they’re a shareholder, or they’re a worker in the company, to try to get that cross-functional view of what does that mean to be a shareholder? What does that mean to be an owner? What does that mean to be in different roles in the company? And so, it really aligns with the way that—and I know Bob’s been very involved with this. And the way that they’re teaching instructors is to try to flip that classroom. That it’s not just, “I’m going to throw 100,000 PowerPoint slides at you and talk at you all day.” It’s to create that role play, and then have a learning system that allows people to check to make sure they really understood the content. So, it’s a very innovative class on a number of different ways.
Scott Luton: [00:37:55] So, you can learn more. To our audience, you can learn more at ascm.org/ddi. And very comprehensive offerings. I think a great addition to the APICS and ASCM body of knowledge. So, let’s switch gears. We could talk for hours about demand planning. I think it’s just fascinating to see some of these changes between the market conditions and how the function is evolving. But let’s talk about ASCM 2019, which is just around the corner. September 16th to the 18th. Both Carol and Bob will both be there. Bob, I’d love for you to weigh in first here. What are you most looking forward to at this year’s conference?
Bob Collins: [00:38:34] Well, Scott, I’ve been going to our conferences for two and a half decades now. And I love this time period in the fall. I really enjoy seeing supply chain professionals literally from around the world coming together for learning and especially for networking. This year is also the inaugural event for ASCM, the Association for Supply Chain Management. So, it’s our first conference at ASCM. So, that’s very exciting for us too. We have a couple of great keynote speakers, Fareed Zakaria from CNN and The Washington Post, and Carrie Lawrence, very interesting, the first female aviator to fly the F14 Tomcat.
Scott Luton: [00:39:18] Bob, for our listeners’ benefit, so that, obviously, is a naval aircraft. It has since been retired. But if you’re a big fan of the original Top Gun movie, The Aircraft Maverick Blue, that is the F14. So, that is a really cool keynote to get.
Bob Collins: [00:39:33] Unfortunately, I don’t know who the second qualified female was to fly it, but I do know the first. We’ve got a bunch of educational sessions over 65. Carol will be presenting. I’ll be presenting. But we’ve got a lot of really great people from big companies all around the world who will be giving our attendees tips, ideas, and all sorts of wonderful educational information as well. So, it’s just—it’s always been a great time for me. I always love our conference.
Scott Luton: [00:40:07] So, Carol, what are you looking most forward to?
Carol Ptak: [00:40:10] Well, I’m always looking forward to seeing Bob. That’s always a highlight for me for conference, because I also look forward to conference every year. I’m excited Chad and I will be presenting this year. Chad will be there. So, Chad doesn’t normally travel. We took him off the road several years ago because as I mentioned, he’s the smarter of the two of us. Somebody said to me once, “Well, you’re not stupid.” I said, “I didn’t say I was stupid. I said he’s smarter than me.” So, we kept Chad off the roads, so that we could increase our rate of innovation. So, it’s very rare for him to make a personal appearance. And he will be there.
Carol Ptak: [00:40:39] And Chad and I will be hanging out in the APICS bookstore, the ASCM bookstore. And ASCM will have in a number of the books that we’ve written, including – we’re very excited about – the third edition of the DDMRP book. It was just released today. So, your timing in your podcast is wonderful. It just hit the wires today. And the cool thing about that book is it’s all updated content, but it’s in full color. So, finally, we caught up with the French and the Mexicans. The French version of the book and the Spanish version of the book have been in color for well over a year. So, the Americans finally are catching up. So, the third version of the DDMRP book will be at the ASCM conference in color. Chad and I will be there in person to do signatures.
Carol Ptak: [00:41:23] And we’re all so excited talking about reaching across the ocean. We have one of our French affiliates coming over, and they’re going to be doing a session on what they called DDBrix, which is we call it a series game, which allows people to understand and migrate from push-based manufacturing to pull-based manufacturing and seeing why just pure pull can’t work. And then, introducing the concept of DDMRP and understanding it from a planning and execution perspective.
Carol Ptak: [00:41:19] So, Laurent Vigouroux and Kevin Boake will be here. And Laurent is very interesting. As I talked earlier about that two-day class and how quickly you get results, and Lauren was a plant manager when he first went through the two-day class. And within a few months after his class, he took a half a million euro out of his inventory, and he was a plant manager, and it’s also solved all of the shortage problems. What was interesting for him is he realized that here, he thought his problems were his suppliers. He says it was very embarrassing to realize the problem was me and how we were planning. And once we changed that, how much more effective the company became.
Carol Ptak: [00:42:24] So, there’s some first-hand folks that will be there. And I think we also have some other folks that will be there from [Moog], from Shell Lubricants. And so, we’re going to have a Q&A session where people be able to talk to some of these very small and very large companies. Royal Dutch Shell with Shell Lubricants that’s in a global rollout. And so, we’re trying to figure out who else is going to be at conference, so that we can get them together to have that conversation. But I’m excited about it, and I’m excited to be at the bookstore signing books. And I’m always excited to see Chad, who I only get to see, now, twice a year, pretty much, and Bob. So, I look forward to seeing everybody in Las Vegas in September.
Scott Luton: [00:41:49] You’ve got your plans squared away. It’s great to hear. And registration is still open for ASCM 2019. I think they’re expecting a big crowd. Again, September 16th through 18th. You can learn more at ascm.org. Big thanks to our featured guests today, Carol Ptak, Partner at Demand Driven Institute LLC, and Bob Collins, senior director of Learning and Development, ASCM.
Scott Luton: [00:43:22] Hey, Carol, I want to ask each of you all how our audience, if they heard something they want to learn more about today, Carol, how can our audience get in touch with you?
Carol Ptak: [00:43:31] Well, I’d encourage them to go to demanddriveninstitute.com, and create a complementary. It’s just there right up in the upper right-hand corner called sign in or log in, and create a complimentary log in, and go take a look at some of the case studies. There’s just so—I mean, there’s hundreds of hours of videos in that area. It’s a free content area for just to sign on. And go see that. Go take a look at a company that’s in your industry. Just see some kind of the results. And there’s more information there, of course, about the DDP, and the DDL, and the DDSCF. Check out the website. And there’s a little contact us button there. So, if you need something from us, just pop that, and we’ll get right back to you.
Scott Luton: [00:44:11] And Bob, how about you? How can folks, if they heard something that you touched on that they’d like to learn more about, how can folks reach out to you?
Bob Collins: [00:44:18] Well, if it’s a general item, then the ascm.org probably will help. But if they’d like to reach me personally, that would be great. And they can actually use my ASCM email address. It’s very simple, my first initial, my last name @ascm.org, So, firstname.lastname@example.org.
Scott Luton: [00:44:40] Okay. I really enjoyed reconnecting with both Carol Ptak and Bob Collins today. Thanks to each of you for your time and your insights. And we look forward to reconnecting in a little bit.
Carol Ptak: [00:44:51] Looking forward to it.
Bob Collins: [00:44:52] That sounds great.
Scott Luton: [00:44:53] So, to our listeners, as we wrap up today’s episode, we’d invite our audience to learn more, again, about a lot of what you heard today at either ascm.org or ascm.org/ddi. And be sure to check out other upcoming events at Supply Chain Now Radio. You can find replays of our interviews, a lot of other resources at supplychainnowradio.com. Again, you can find us on Apple Podcast, SoundCloud, all the leading sites where podcasts can be found. Be sure to subscribe, so you don’t miss anything. On behalf of the entire Supply Chain Now Radio team, this is Scott Luton wishing you a wonderful week ahead. And we’ll see you next time on Supply Chain Now Radio. Thanks, everybody.
Upcoming Events & Resources Mentioned in this Episode
Connect with Bob on LinkedIn: https://www.linkedin.com/in/bob-collins-cfpim-cirm-cscp-cplp-cae-b179a41/
Connect with Carol on LinkedIn: https://www.linkedin.com/in/demanddrivencarol/
Connect with Scott on LinkedIn: https://www.linkedin.com/in/scottwindonluton/
Register for ASCM 2019: https://www.apics.org/annual-conference/about/ascm-2019
Learn more about the ACSM & Demand Driven Institute offerings: www.ascm.org/ddi
2019 AIAG/SCAC Supply Chain & Quality Conference: https://myscma.com/scac-events/2019-supply-chain-quality/
Georgia Manufacturing Summit on October 9th: https://www.georgiamanufacturingalliance.com/annual-summit
eft Logistics CIO Forum in Austin, TX: https://tinyurl.com/y5po7tvw
Reverse Logistics Association Conference & Expo: https://rla.org/calendar/1
SCNR to Broadcast Live at MODEX 2020: https://www.modexshow.com/
SCNR on YouTube: https://tinyurl.com/scnr-youtube
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