I read with interest in today’s US print edition of the Financial Times an article highlighting the wavering economists views for 2011. Numerous signs of a pending inflationary push are building. Commodities of many types are going up in prices. Different parts of the economy are set to see price increases pushed through, which will eventually have repercussions on government reporting of consumer price indexes.
One article mentioned how ZF Friedrichshafen, a German automotive parts supplier, is “watching” 37 of its smaller suppliers with “concern”. The organization uses a range of risk management levers to determine which vendors are of most concern to it. Interestingly this relates to MDM. Risk management is, after all, a driver for many organizations. Banks that want to keep up to date views on where risky loans and counterparties are in their overall customer base adopt MDM programs (they may not call it that, but this is what it is) to assure “single version of customer”. Manufacturers that are critically dependent on a range of suppliers likewise seek to maintain “single version” of suppliers and the amount of their revenue/demand, via their procurement/spend, that is potentially held hostage to them.
But the article, which also followed a similar message from Bosch, the world’s largest automotive parts supplier by revenue, reminded me of my supply chain days. This exposure to risky suppliers, and its potential impact on disrupting a supply chain, is a core SCM discipline. As I mentioned above, manufactures are very well aware (or should be, by now) of the potential impact on revenue/sales that a risky supplier might have. In my days long before MDM existed (that’s another story) I would spend my time walking the SCM halls of industry talking about this issue. Data was often part of the problem; not just master data (the supplier itself) but all the other data that SCM and procurement applications need to do their job. This was a kind of “application specific master data”, if you will.
Even before this I remember my first significant job. It was with E.G.& G. Sealol, at the time a division of E.G.& G. The manufacturer, based in the UK, made precision sealing devices for submarines (including nuclear subs) as well as aircraft. We were an MRP I, then MRP II user – a precursor for ERP. We even implemented S&OP – according to Mike Salmon (some of the UK MRP’s would know who that is). The guy that ran “Purchasing” reported to the Director of Manufacturing. He had been with the company for many, many years. He was “the man”. He did everything – strategic sourcing, vendor selection, sourcing, procurement, planning, ordering, tracking, as well as assisting accounts payable and replenishment. He used card based schedules to track on hand inventory and orders. His “risk management” process would take a weekend of his life – he would take all the cards home in his Mk2 Capri and come back Monday with an estimation of the size of risk we ran.
This was a time when IT was known as DP – or Data Processing. IT was one man. I remember him well, too. The tool we used was Honeywell DPS6. It was one of Europe’s first “net change” MRP systems. In fact you could run it in “perpetual” mode which was as close to in-memory as we could get, anywhere. This must have been the mid to late eighties? There was no such thing as BI. In fact I was a business user, and I discovered (read: hacked) into the systems “query tool” called QR6. It was not very user friendly but with knowledge of how data was stored in the system, one could mine anything. And I did. And I found all manner of things. I finally replaced that “DP” lead and took over the department myself. Fascinating times.