Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Key Supply Chain Conferences to Attend in 2014

Just for Fun | By •

There is no shortage of supply chain and logistics conferences. If you can attend just one, the most important one is CSCMP.

The Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference; September 21 – 24 in San Antonio, Texas

I’m involved in a local chapter, and I find that to also be well worth the effort, particularly the tours of local warehouses, ports, intermodal facilities, etc.

Beyond CSCMP, which I think every professional should attend, the conferences you choose to attend should reflect your company initiatives, what you personally want to learn, a show that can help you grow either through networking or by being associated with a certification program, and – let’s be honest – a location you would like to visit.

In some cases, a vendor or industry organization has more than one offering. In those instances, I’ve selected the show that has the deeper supply chain coverage even if it is the smaller show.

What follows is by no means a complete list.

Industry Conferences

3PL Summit which is held simultaneously with the Chief Supply Chain Officer Forum (put on by eyefortransport); June 11-13 2014, Chicago
Annual Shippers Conference & Transportation Expo (nasstrac); April 13-16, Orlando
APICS 2014; October 19–21, New Orleans
ARC Industry Forum Orlando 2014; February 10-13, Orlando
MODEX 2014 (MHI); March 17-24, Atlanta
Retail’s BIG Show (NRF); Jan 12 – 15, New York City
Retail Supply Chain Conference (RILA); February 23-26, San Diego
Sales & Operations Planning Innovation (Innovation Enterprise); January 23-24, Las Vegas
Warehouse Education Resource Council 2014 (WERC); April 27-30, Chicago

SCM Software Vendor Conferences

HighJump Innovation; April 13-16, Las Vegas
Infor Inforum; Sept. 15-18, New Orleans
JDA Focus 2014; April 27-30, Las Vegas
Llamasoft SummerCon Supply Chain Design; June 25-27, Ann Arbor Michigan
Manhattan Associates Momentum 2014; May 5-8, Hollywood Florida
MercuryGate User Conference; September 8-10, New Orleans
Oracle Value Chain Summit 2014; February 3-5, San Jose California
Ortec OPTIMUS 2014; September 15-17, Atlanta
SAPInsider Logistics and SCM 2014; April 1-4, Las Vegas
TMC Client Forum: June in Chicago
TMW Systems Transforum 2014; September 21-24, Nashville
Transplace – Shipper Symposium 2014; May 12-14, Dallas

The software companies listed are ARC clients and I will be at attendance at many of their shows.  I will also be at CSCMP, the 3PL Summit, ARC’s Industry Forum, and Retail’s BIG Show.  If you are going to be at any of these events and would like to meet, drop me a note (sbanker@arcweb.com).

Is the Traditional S&OP Process Outdated and Heading to Extinction?

Logistics Trends | By •

Last week on Talking Logistics, I had a very thought-provoking conversation with Tony Martins, VP of Strategic Services at Halo Pharmaceutical. Tony is a unique supply chain executive — he not only sees the potential value of social networking in transforming supply chain processes, he’s also a thought leader and visionary in this area, publishing his ideas and models on his blog, Cyber Supply Chain.

Tony speaks from experience. In his previous role as VP of Supply Chain at TEVA Canada (a subsidiary of TEVA Pharmaceuticals), he deployed a social networking solution that greatly facilitated the way employees across various departments and geographies communicated and collaborated with each other to resolve problems and exceptions quickly (see “Want a Fast-Response Supply Chain? Facilitate People-to-People Communication”).

Since then, Tony has continued to expand his thinking on how supply chain processes and workplace structures need to change in response to today’s highly dynamic business environment (a topic Jordan Kass from C.H. Robinson also discussed in a recent Talking Logistics episode, “Why Supply Chain Innovation Matters in a Fast-Changing World”). For example, a concept Tony’s written about is managing in NOW mode, which he defines simply as “If it’s happening now, you deal with it now.” In our conversation last week, Tony contrasted working in NOW mode with the “traditional, cyclical, monthly” S&OP process, which he thinks “is condemned to disappear in the next 5 to 10 years, maybe sooner.”

Watch the short clip below to learn why Tony believes the traditional S&OP process is heading to extinction, and why he believes managing supply chains in NOW mode can only be done using social networking.

Here’s a short excerpt from his comments:

The problem [with the traditional S&OP process] is that it takes three weeks, usually, to deal with something that already happened last month. And you’re doing demand planning with data that is old. By the time you get to the third week of the month, demand has already changed. The world doesn’t stop moving while everybody is having these meetings and producing these [graphs and reports]. The data you see on the graph on the third week of the month is already obsolete. I remember many times going to these sessions with the standard graphs and then having to bring additional graphs to bring everybody up to date on what happened the past few weeks. [This process] doesn’t make any sense, not for the world that goes very fast.

So, do you agree with Tony, is the traditional S&OP process outdated and heading to extinction? More broadly speaking, do companies need to rethink and transform business processes and workplace structures that were designed for more static (less dynamic) business environments? Is greater use of social networking and virtual workplaces part of the solution? Post a comment below and share your viewpoint! Also, watch the rest of last week’s episode to answer this important question: Are you working in a Company of Yesterday or a Company of Tomorrow?

Also, if you are attending the Council of Supply Chain Management Professionals (CSCMP) Annual Global Conference in October, don’t miss the opportunity to engage with Tony Martins in person. He will be participating, along with Craig Dickman (CEO at Breakthrough Fuel) and Bruce Welty (CEO at Quiet Logistics), in the mega session I am moderating Wednesday morning, October 23 on “Mega Trends Impacting the Supply Chain.” I hope to see you there!

Kraft’s Approach to Cutting Inventory Across the Extended Supply Chain

Consumer Packaged Goods (CPG) | By •

In a previous posting, I wrote about how Kraft leverages downstream data to drive supply chain collaboration, based on a talk given by Ron Volpe, Customer VP of Supply Chain at Kraft Foods, at the CSCMP Annual Global Conference last September. In that article, I briefly mentioned that Kraft has truly audacious inventory reduction goals, which is what I want to focus on today.

Kraft’s goal is to reduce its extended supply chain inventory down from 80 days to 40 days of inventory within 5 years. What Kraft means by the extended supply chain, and where that inventory resides, is shown below.

Inventory across Kraft's extended supply chain
Inventory across Kraft’s extended supply chain

Further, Ron believes Kraft can cut inventory across the extended supply chain in half without making major changes to manufacturing or product line depth, like cutting production line changeover speeds or reducing the number of stock keeping units. Leveraging downstream data will be critical to achieving this goal.

In standard consumer goods to retail supply chains, the manufacturer has safety stock in its warehouse based on historical demand as represented by shipment data. The retailer does the same. If the two companies can move to a vendor managed inventory arrangement, then that inventory slush fund can be substantially cut. Now the safety stock targets reflect historical demand placed only at the retail distribution center.

But there is still a safety stock trigger that exists at the retail DC. Instead of reacting to true consumer demand, retailers may well be shipping to stores that do not need the inventory. How can that be? Why would a store place an order on the DC if it did not need the product?

The sad truth is that inventory accuracy at the store level is frequently appallingly bad. The store level category manager walks around with a clipboard, sees voids on the shelf, and assumes that the shelf would be stocked if there was inventory in the backroom. But, finding inventory in a cluttered store storage area is not easy. It is often the case that a consumer goods manufacturer with visibility to inventory in the retailer’s DC and the store level sell-through data, has a better understanding of what the true inventory situation at the store level is.

Using downstream data allows supply chain partners to cut inventory across an extended supply chain in new ways. But it is not easy. And to truly get to a situation where the bullwhip effect has been tamed, retailers also need to do their share of the heavy lifting.

Guest Commentary: The Long-Hyped Promise of Transportation Collaboration Becomes an Award-Winning Reality

Guest Commentary | By •

In 2011, Dal-Tile and Transplace first discussed the idea of a transportation collaboration that would leverage Transplace’s market visibility to pair low-density freight shipper partners with Dal-Tile’s high-density ceramic tile shipments. The clear objective was to utilize transportation capacity more efficiently, reducing costs without impacting the underlying carriers’ profitability, and producing a sustainable and significant win for all involved parties.

Just one short year later, along with shipper partners Convermex, Werner, and Whirlpool, we won First Place for the Global Supply Chain Innovation Award jointly sponsored by the Council for Supply Chain Management Professionals (CSCMP) and SupplyChainBrain magazine.

It may seem a bit like a fairy tale, but it’s actually a true story, and a process model that we are focused to grow five-fold over the next two years.

From the beginning, Dal-Tile knew it would be able to illustrate considerable cost reductions if the right partnerships could be forged. The process has led to some internal as well as external transportation collaboration, all related to executing the optimum balance of weight and cube in a single OTR (over-the-road), IM (intermodal), or rail (boxcar) shipment. While we had to adapt to some unexpected events as the project evolved, we made some excellent decisions along the way, decisions that can be directly related to our success. Examples are:

  • Recognized “Cubic Miles” Opportunity – Undoubtedly the most important factor, Dal-Tile understood the value of under-utilized cubic capacity and the impact of the extensive lengths of haul from tile manufacturing centers to distribution centers.
  • Realized the Need for a Facilitator – While we understood the strategic opportunity, Dal-Tile also knew that no benefits could be derived without the right shipper partners in high-volume origin locations, like Monterrey, Mexico. Owning no “network” of shippers in Monterrey, Dal-Tile turned to Transplace after exhausting its internal resources as well as considering other potential 3rd party service providers. Having extensive operations in both Mexico and the US, Transplace was able to not only offer “boots on the ground” in terms of the Mexican market, but it also developed operational processes that facilitated Customs compliance in the trans-border environment.
  • Defined “Ingredients” for Strong Partnerships – Dal-Tile and Transplace “profiled” the potential partner, based on the following characteristics/ingredients: product density; lane match; freight/operations compatibility; customs approach; product value; and fundamental “headset” towards cumulative benefits sharing.
  • Collaboratively Designed & Implemented Solutions – After identifying and qualifying a potential partner, Transplace and Dal-Tile hosted a series of on-site meetings and ensuing conference calls to collaboratively design a comprehensive logistics solution, considering the needs of the two shippers. This also provided Transplace with the opportunity to incorporate services that neither shipper was able to provide.
  • Execution – Overcame Obstacles, Delivered Results – The quality of the implementation is directly related to the experience and ability to anticipate potential issues in a complex multi-shipper logistics solution. The contributions made by each shipper and the facilitator were a key part of near flawless execution, frequently yielding 15%-25% reductions in net logistics cost.

A significant part of our collective success is also due to our approach in sharing benefits. As stated in the movie Wall Street, Michael Douglas’ character Gordon Gekko said “Greed is good,” probably because it provides motivation to pursue financial benefits. Where you have to check your greed is in terms of how it affects your collaboration partners. Understanding that Dal-Tile’s product density was the primary driver in making benefits available, the company knew that without interested and engaged shipper partners, Dal-Tile wouldn’t be able to realize any cost savings. Although Dal-Tile and Transplace had invested significant intellectual assets, benefits had to be shared 50/50 with introduced shipper partners. Transparency in terms of the cost model was also required so that all parties knew what the benefits were, how they were calculated, and where they came from. The cost model also functioned as an operational model, providing a basis to evaluate operational changes and subsequent downstream cost implications.

Feeling we have a tried and proven operational model, Dal-Tile and Transplace expect to implement six to eight additional partnerships in 2013, generating millions of dollars in logistics costs reductions as well as significant “green” benefits (congestion, fuel, tires, drivers, GHG and associated PM, etc.). As the breadth and scale of the collaborative network grows, it provides additional customs brokerage, transportation services, and cross-docking opportunities for Transplace, who continues to facilitate the collaborative relationships, providing a truly sustainable and competitively differentiated “win” for all involved parties.

Sonney Jones is Division Director of Transportation for Dal-Tile, a subsidiary of Mohawk Industries. He is a bilingual logistics professional with a background in the sales, operations, and engineering disciplines of the logistics industry. His operating background and experience spans much of the Americas, having worked for carriers such as YRC, USF, SAIA, Crowley Maritime/Logistics, and CSX Intermodal. Jones is a graduate of the Mississippi State University College of Engineering.

[Note: Adrian Gonzalez interviewed Sonney Jones and Ben Enriquez (Transplace Mexico) about this collaboration project in a recent episode of Talking Logistics. Click here to watch the conversation.]

Guest Commentary: Supply Chain Resilience, Agility, Efficiency and Innovation

Guest Commentary | By •

During her welcome remarks at the 2012 Council of Supply Chain Management Professionals (CSCMP) Annual Conference in Atlanta, Nancy Nix, chair of the CSCMP board of directors, said that companies should judge the value of supply chains going forward by their resilience, agility, efficiency and innovation. This is a far cry from the traditional view of supply chains as a trade-off between costs and customer service.

That got me thinking about what common thread might run through these supply chain qualities since on the surface some of them seem to be contradictory. For example, when I researched resiliency, the customary prescription was redundancy. Having worked in the IT disaster recovery business years ago, this made sense to me, as redundancy was what we provided. But redundancy isn’t cheap and would be considered at odds with efficiency.

Also, efficiency is often associated with lean supply chains – streamlining operations and taking out waste. But these actions tend to hurt a company’s agility. When the unexpected happens, there is very little wiggle room to respond.

Innovation is the real stumper. By definition it disrupts the status quo. That is contrary to lean supply chains and at cross-purposes with resilience. How could Nancy lump innovation in with the other key supply chain qualities?

After reluctantly admitting that Nancy is probably a lot smarter than I am, and knowing as an engineer in the software business that I’d want to use technology to solve the problem, I decided the better question might be what common supply chain technology could help make all of these seemingly contradictory initiatives successful?

While there are many supply chain technologies that in one way or another support these four initiatives, the one constant across all of them is the need for supply chain visibility – that ethereal concept so many companies have struggled to achieve. Let’s look at how visibility can help companies attain the four supply chain capabilities Nancy says are essential.

Resilience has become a hot topic since the earthquake and tsunami in Japan and the floods in Thailand exposed the vulnerabilities of many supply chains, but it is not new. In a 2003 article on The Resilient Enterprise, Yossi Sheffi of MIT defined it as “the ability to bounce back from disruptions and disasters by building in redundancy and flexibility.” Yet, redundancy adds complexity to supply networks that have already grown more complex with globalization.

The solution to effectively managing complex global and redundant supply networks is near real-time visibility. While extending visibility beyond internal operations has been a challenge for many companies, the advent of cloud networks and communication tools now allow supply chain partners to communicate on a many-to-many network basis that provides immediate visibility to what is happening virtually anywhere around the world. Knowing what is happening – what goods have been produced, what is in transit, where disruptions have occurred – enables companies to recover more quickly from disruptions, but also reduces the uncertainty that would otherwise lead to increased safety stock and greater expense. Thus, visibility can help improve both resiliency and efficiency.

Creating agile supply chains involves more than being able to react quickly when faced with change or disruptions. It requires the ability to see problems coming before they hit you so you can take action ahead of the curve. For example, you would want to know immediately that your container of goods didn’t make the ship leaving China today because the drayage company had an equipment failure rather than finding out when the ship was unloaded in port 20 days later. Or you would want to know now that your new product introduction is quickly selling out at stores so you can immediately send replenishments rather than discovering lost sales from week-end sales figures. Network-wide visibility can provide early warning of these and many other issues so you can react with more agility.

So how about innovation, which by definition causes change? Change disrupts your carefully planned and efficient supply chain operations. The role of visibility here may not be as apparent. Supply chain innovation isn’t created within your four walls like Edison designing the light bulb in his lab. Supply chain innovation comes from supply chain professionals having visibility to everything that is happening across their networks and seeing opportunities to make things flow better. The supply chain innovator’s laboratory is the entire network and visibility enables him or her to analyze supply chain dynamics to understand where change will be most helpful. Therefore, visibility is the precursor to innovation.

Now that I’ve tied Nancy Nix’s four essential supply chain qualities together with visibility as a key enabler, I feel a lot better that they aren’t so contradictory after all. Unfortunately, that still doesn’t make me as smart as her.

James LeTart has over 30 years of sales and marketing experience in the systems technology field. He has spoken at numerous national and regional trade events and his work has been published in many industry publications and blogs. For the past 13 years Jim has been Director of Marketing for RedPrairie, a leading best-of-breed supply chain, workforce and all-channel retail solutions provider, where he has responsibility for corporate messaging and content development. Jim has an Industrial Engineering degree from Marquette University and an MBA from the University of Michigan.

Walgreens, A Leader in Employing People with Disabilities

Labor | By •

CSCMP’s New England Roundtable recently visited Walgreens’ New England distribution center near Hartford, Connecticut. Following a presentation by Scott Sylvester, the Distribution Center Manager, we received a tour of this highly-automated facility. The material handling systems in the DC are truly an amazing piece of engineering. 

However, even more amazing, is Walgreens’ track record in productively employing people with disabilities at this facility and a similar one located in South Carolina.

Walgreens made a corporate commitment that over a third of the workforce at this facility would have physical or cognitive disabilities. All team members are paid the same amount and have the same benefits package. The state is not paying any subsidies for employing people with disabilities. 

But this is not charity; it’s business. Team members with disabilities are held to the same work standards as all other employees. 

How do they accomplish this? 

  • The systems are designed to help people with various challenges. For example, there are computers at the workstations with highly visual diagrams of the work that needs to be accomplished. There are red/yellow/green lights and simple icons on the PCs that show whether labor productivity is on target. There is clever error proofing built into their pick-to-light systems. There are switches that could be thrown to call for a manager if a problem comes up. These accommodations, however, benefit everyone.
  • If you match the right person to the right job, disabilities can become abilities, or even super abilities. For example, folks with certain types of compulsive disorders have the ability to pay great attention to detail. There are jobs that require this level of attention.  
  • There is no “us and them.” They preach this and live it. For example, only the Career Outreach Coordinator knows which team members have disabilities. The managers don’t need to know unless a worker is not performing as expected. If that happens, the appropriate manager is informed so that they are better equipped to coach that employee. Scott mentioned that working in this environment makes you largely blind to disabilities. For the most part, he only becomes aware of workers with disabilities when groups like ours come in to tour the facility.  In short, “this is a culture, not a program. Programs have a beginning and an end.” 
  • The management team reviews everyone’s performance every two weeks. Questions like “What is going on with Scott?” get raised. “He was struggling. Did the coaching work?”
  • If applicants need help filling out a job form, they can ask for assistance and get it. 
  • They have a partner that specializes in training people with disabilities. The partner has a training program that lasts nine weeks where potential hires are trained in job readiness, interpersonal skills, and similar work skills. There is no cost for this program. Many of the graduates then move into a nine week program where they learn how to do the actual work they will be doing. These folks are paid similar to temps. The DC has a large training room with the actual machines and workstations they will be using in the DC. Trainees that successfully graduate from this program then go on the standard nine week probationary program. Clearly, having the right partner is critical to success.
  • Think about transportation issues. Because this is a big facility employing a lot of people, they were able to encourage local governments to add them as a bus stop.
  • When you approach this kind of a program in a big way, accommodations are surprisingly inexpensive. Their average accommodation costs them less than $500 per person. 
  • Early hires should be “Rock Stars; they should have a great attitude; that type of person sells the program.” Nevertheless, even with rock stars, you will need to face a worker’s fears with education. And managers will never have all the answers. They will become “experts” through experience.
  • Finally, never give in on holding everyone accountable. Don’t relax your standards.  

What have the results been?

  • 40 percent of their employees have disclosed to them that they have a disability. They believe they also have people working for who have a disability but have not disclosed that fact.
  • Many of the team members with disabilities value their jobs far more than the typical employee. It gave some a chance to contribute and be recognized, something that, sadly, had been missing for much of their lives. There is significantly lower turnover than average at this facility; folks are less likely to call in sick; there is better adherence to safety standards and processes (if you say “you have to walk between these lines,” employees do it); and when teams are needed for continuous improvement exercises, there is never a lack of volunteers.
  • Based on the automation, the facility was designed to be 20 percent more productive than older DCs. They have met their productivity targets. This productivity is not being achieved at the cost of accuracy.
  • It has increased the leadership skills of their managers. It is easy for a manager to think that a worker is just not trying. At this facility, based on this work force, that is not the assumption. Managers consequently become much more adept at trying to understand how employees think, what motivates them, and how to communicate clearly.

For me, this tour and what I learned was inspirational. Walgreens just became my pharmacy of choice.

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