Conference Interview of WAM Systems CEO, Jack Weiss
Logichem Europe 2011
Antwerp, Belgium
April 6, 2011

• What are the top supply chain trends for 2011?
• What solutions does WAM Systems supply to address these challenges?
• What’s your view of the market for the next 12 months?
• What brings you to Logichem Europe 2011?

• Oil prices vs. natural gas prices
  Currently around $110/BBL—the highest price in 12 months—oil prices remain volatile, varying up to 50% over that time.  Most European chemical companies use oil-based feedstocks making high oil prices a leading concern.  Many of their US counterparts use natural gas-based feedstocks—four (4) times less expensive than oil on an energy equivalent basis—which gives US producers a big advantage at the moment.
• Competition from nearby imports
  New pressures are emerging from Middle East producers who continue to eye the nearby European market with the competitive advantages of comparatively lower feedstock costs backed by increasing capacity that continues to come online.
• Slow domestic GDP growth vs. global investment
  With the exception of Germany, European economies are projected to grow at very low rates—lower than the US and far lower than emerging markets.  On top of this, European chemical companies—like their US counterparts—are investing heavily in new plants in China, despite fears that China market growth may slow.

Growth in emerging markets and feedstock advantages held by producers outside of Europe are driving a big increase in regional trading flows.  In response, European chemical companies are reorganizing from regional planning organizations to global planning organizations to better manage material flows across regions. In many large, multinational chemical companies inter-regional flows have increased by over 50% in recent years.

The European chemical industry’s near-term challenge will remain navigating these increasing pressures while working to stabilize growth in the region.

New projects mean change, and change is often viewed internally as a threat. When you get ready to propose changes, it behooves you to get management behind you. Otherwise your path to an improved supply chain could be blocked. To ensure the project continues to move ahead, follow these steps to get backing from those who can help you most.

5 Ways to get Management Buy-In

1.       Interview them. What are their objectives and how does supply chain help/hurt their ability to meet them?

2.       Ask for advice. How would they proceed? What do they need to see from you to support the project? What are the Top 3 Risks in gaining approval?

3.       Understand the process. How do projects get reviewed and approved? Who is involved? Identify decision makers and their role in the process. Why were other projects rejected?

4.       Communicate early and often. These folks are tuned into changing priorities and can keep you up to date.

5.       Secure approvals from individuals before groups. Ideally, your final meeting is a rubber stamp approval.

This is the third step in our suggested roadmap for building consensus within an organization.

Your project to improve will live or die based on careful planning. Knowing which steps to take when seems complicated. But continuing your careful progression of data gathering, needs assessment, communication, and collaboration ensures successful change.
5 Ways to Build a Roadmap for Change
1.    Prioritize the low hanging fruit first. Which improvements will have the biggest impact with reasonable cost and risk? These are the best early candidates.
2.    Listen to the priorities of management.  Moving these early in the roadmap increases your chance at success.
3.    Examine dependencies. Are certain project phases prerequisites for others?
4.    Develop a roadmap based on evolving your capabilities over time. Companies don’t instantly move from middle-of-the-pack to industry leaders overnight. Realize that it takes time and build this into your roadmap.
5.    Communicate and validate the roadmap with business leaders. It’s much easier to adjust to feedback early in the process.

Many supply chain professionals are already well-aware of the shortfall of their existing planning processes and technologies as critical components to support their planning needs. However, before changes and improvements can come to the rescue, they must secure organizational buy-in behind the idea of process and toolset improvement – no easy task.

We  launched a series of posts to present successive stages of building consensus within an organization like yours.  Consensus behind the idea of improving your company’s supply chain planning processes, workflows and supporting technologies.  By following a slow, careful progression of data gathering, needs assessment, communication, collaboration and presentations that address the all-important “what’s in it for me?”, you can quickly find that your planning team is underway with a project to improve that will deliver results to everyone who will be impacted by the new changes.

5 Ways to Build a Benefits Case

1. Analyze your performance and measure opportunities to improve. There are tools and technologies to perform analysis on your real-world data to get at this.

2. Measure typical improvements from similar companies. Industry analysts, consultants, and tool providers collect this data.

3.  Collect anecdotes from your supply chain and business colleagues where your process and tool ma… imparted business performance. Tell these stories as part of your pitch.

4. Gut Check. Your analysis against your internal experts – asses what do you this this number will turn out to be from the analysis?

5.  Validate your business case at a ll level of the organization. Do contributors agree with your conclusion? Do those with the power of approval support your numbers?

Walking the halls of WAM you will inevitably overhear someone explaining the challenges facing a given company in getting their supply chain planning needs addressed.  Specifically, getting started with an internal project to address certain problem areas—and, often, even just getting consensus among the planning team that the problems need addressing in the first place.

Frustrating indeed for those few planning professionals who can see the potential improvements down the road.

As an outside observer of this recurring phenomenon, we see some companies struggle for years to get started and others move through it with relative ease by carefully assessing the potential and presenting the benefits in a language that speaks to each person’s needs.

If you’re reading this and are about to roll your eyes with a “yes, but you don’t know what it’s like in my company…” read on.

We’ve decided to launch a series of blog installments that present successive stages of building consensus within an organization like yours.  Consensus behind the idea of improving your company’s supply chain planning processes, workflows and supporting technologies.  By following a slow, careful progression of data gathering, needs assessment, communication, collaboration and presentations that address the all-important “what’s in it for me?”, you can quickly find that your planning team is underway with a project to improve that will deliver results to everyone who will be impacted by the new changes.

We’ll organize our series into top-5 lists that summarize the approach for each stage, and start with stage 1 as a fact-finding mission.  Gather information, gather needs, gather expectations, align everyone’s input to root causes that can be recognized, understood and addressed by real steps to be taken in the future.  Our first stage is to find the problems and opportunities.

Top 5 Ways to Find the Problems and Opportunities

1. Benchmark Your Current Planning Process – Where are you on business processes? How do you compare to competitors, to best-in-class? The largest benchmarking program in the process industry is here.
2. Seek the Pain – Interview your planning and business colleagues. Ask them for stories about how gaps in business processes or tools cause pain/poor performance in your organization. Capture your thoughts in an organized spreadsheet.
3. Identify Root Causes – Why is the pain there? Is it inherent in your business or caused by poor processes or the wrong tools?
4. Connect the Root Causes to potential solutions. – Are the roots of the problems in process or supporting tools? (Hint: Typically it’s both.) Describe how tool changes and process changes will directly and concisely address these problems.
5. Validate your findings. – Present your findings to the planning team. You’ll build support, test your theories, and find new ideas.

And, stay tuned for the next step: Building a Roadmap for Change.

In talking with executives throughout the process industry I am often asked the question, “Do we really need to plan our Make-To-Order business?”

First let’s define Make-To-Order. Most folks say they are Make-To-Order (MTO) if they’ll only produce when they have a firm customer order in hand. But reality is usually a little fuzzier – most businesses are a combination of MTO and MTS/MTF. And realities like fixed batch sizes, economic order quantities, and product wheels further muddy the waters.

There are lots of great reasons to get your head up from the grindstone and think about what’s coming down the road. Here’s a few:

Top 5 Reasons MTO Businesses Should Plan
1. You can buy raw materials cheaper if needs are known over a longer horizon
2. Planning out farther allows lower-cost production now – think product wheels and EOQ
3. Capacity planning helps avoid future bottlenecks and allows profitable production allocation
4. Demand shaping strategies can maximize profit – think promos or pruning less-profitable business
5. Providing more-accurate projections of financial performance makes your boss happy

So you may think the customer is always right, but don’t let that stop you from looking down the road further and plan for future success.

Two weeks ago we held our annual WAM Insight conference. As I mentioned in an earlier post our goal this year is to start the ongoing conversation about recovery – getting back on target in supply chain planning in 2010 after the disruptions of the previous two years. Both the co-hosted webinar with AMR/Gartner and the conference were planned as kick-off events supporting this conversation. Reading the responses from attendees, I’d say we were successful.

I was glad to see so much excitement from the WAM community about this year’s theme of recovery. The presentations by supply chain leaders showed concrete steps taken to navigate the troubled waters of 2009. In an afternoon roundtable session we shared many accomplishments, challenges and insightful best practices that companies are employing to move forward.

We built time into the schedule to allow everyone time to talk in smaller groups or one-on-one. And after the official end of that day’s agenda, we enjoyed a first class networking dinner  at a local restaurant. Our second day focused on the WAM Supply Chain Solution. The WAM development team shared updates and a preview of what’s to come.

With WAM Insight 2010 now behind us, I’m encouraged by the support for continuing the discussion online, as well as face-to-face in 2011. That’s when we take Insight on the road for regional discussions.

As 2010 starts, a relatively positive outlook emerges in the process manufacturing industry. There are some indicators showing that we are at the on-ramp to the road to recovery.

With these hopeful vibes in mind, WAM is starting a year-long conversation about how to recover. Our point is to gather you – folks in the WAM community, working through this – to share your ideas, issues, hopes and dreams for the whats ahead. We can share what we hear, you can share what you know and together we build a best practices knowledge base.

To kick-off this conversation, we are co-hosting a webinar with AMR/Gartner. The webinar, titled Get Your Supply Chain Planning Back on Target in 2010, features AMR Research analyst Paul Lord and WAM COO John Kamal.

In his position with AMR/Gartner, Paul has his fingers on the pulse of the SCP community. And John offers very specific examples of organizations realigning their supply chain goals in order to successfully bridge recession and recovery. The video of the event is in the right column of this page, I urge you to watch it and join in on our conversation.

Graham Packaging – a leading packaging producer supplying the food and beverage industry recently started working with WAM to model both the physical and economic constraints of Graham’s supply chain. Now in its first phase, the project will optimize the allocation of production across sites and enable a collaborative planning environment, all moving the company toward a streamlined monthly planning process and improved annual capacity planning decisions.

Arkema – a diversified chemicals manufacturer with operations worldwide is also focused on improving its internal processes in order to meet the new challenges ahead. The Kynar division has started a global initiative to standardize tools and share supply chain management best practices across all of its plants.

Lonza Pharmaceuticals is highly focused on its goal of achieving best-in-class industry operating performance. It has adopted the WAM solution to address demand planning, and sales & operations planning, to support a user community of over 300 global users in marketing, distribution, manufacturing, and purchasing.

We welcome these organizations to the WAM customer family. And we are excited to help each of them realize their goals of implementing a solution capable of supporting their incredible diversity of product lines and supply chain business models.