Daily Archives: January 11, 2008

the doctor Would Like to Assure Mid-Size Distributors that (Logistics) Opportunities Do Abound

the doctor recently stumbled on an article titled Globalization – Risk and Opportunity for Mid-Sized Distributors, and was quite disappointed. Even though the article suggests that there are lots of opportunities for mid-sized distributors who are flexible, transparent, collaborative, and customer-focussed, it asks more questions than it gives answers. This leaves one the impression that the opportunities will not be there until the questions are answered, and that, more importantly, there might not be any good answers.

Furthermore, like the article titled Impact of Globalization in Creating Sustainable Competitive Advantage, which the doctor stumbled upon while looking to see if there were any good articles out there that would point mid-size distributors in the right direction, it didn’t seem to say anything specific, or anything new for that matter. I don’t think there’s a single mid-size distributor out there who does not realize that at no other time have distributors faced such an urgent need to know themselves – their capabilities, their relationship potentials and their willingness to put aside comfortable notions of doing business in favor of growing in unforeseen ways and that their core must be built around the customer because, with rising energy costs (and, thus, rising logistics costs) on top of the quickening pace of globalization, they’re all feeling the crunch. I don’t think there isn’t a single distributor that isn’t asking the question “Here’s what they [my customers] are buying – how do we supply it?” every-time they lose a bid and I don’t think that simply telling them to ask What are my strategic competencies? What do I provide that the customer needs? And the corollaries: What does the customer need that I don’t provide, and what do I provide that the customer doesn’t need is very useful. If they’re not asking these questions already, they’re out of business. And more importantly, what do product evaluations have to do with a distributor who’s just an intermediary who enables the global supply chain and merely wants to stay an enabler, and not become a product or brand manager?

The answer for a mid-size distributor that wants to seize new opportunities and keep business from migrating to the bigger distributors, or the customers themselves, is the same answer that the big distributors give when a customer asks them why they are the best partner – bigger, better, faster, cheaper – but instead of “bigger volumes, and better prices”, the mid-size distributor is instead providing “bigger service, better value“. More importantly, the distributor is providing this “bigger service, better value” by using its nimbleness and hunger to partner with 3PLs, Global Trade Specialists, and (Network) Optimization Providers to offer its customer an integrated global trade and logistics management platform to help them get the right product at the right price at the right time – every time. Let’s face it, despite the importance of optimization and the value it brings – either due to its price tag, (perceived) lack of usability (as many solutions aren’t very usable), or the fear it inspires in transactional-focussed old-school purchasers, most organizations have not yet adopted either sourcing or supply network optimization solutions. Furthermore, it’s only recently that the compounding security, regulatory compliance, denied party lists, and classification codes have multiplied to the point where management of all of the information has become virtually impossible (even for the largest organization with lots of manpower) and only within the past year that solutions to manage this level of trade data complexity have emerged. Finally, only the largest organizations have dedicated logistics teams with preferred 3PL firms or carriers.

Therefore, any mid-sized distributor who could offer its customers access to an on-demand web-based integrated global trade and logistics management platform is going to be much more attractive than your standard big box distributor who still believes that you should buy from them because they have the most volume. After all, without these systems, how are the big box distributors going to know that the trinket from Zimbabwe contains remains from an endangered animal that is banned from import into Canada, or that the US has just put a certain Chinese manufacturer on its denied party list for one too many batches of tainted toothpaste.

So don’t fret, opportunities abound – especially if you’re willing to be innovative. Then you’ll truly be your customers’ first choice.

Supply Management in the Decade Ahead IX: Leveraging Technology Enablers

This post continues our coverage of Succeeding in a Dynamic World: Supply Management in the Decade Ahead (a detailed report based on research jointly undertaken by the ISM, A.T. Kearney and CAPS Research), and our review of the seven critical supply strategies for succeeding in a dynamic world in particular, with the fourth critical supply strategy identified by the report – the leverage of technology enablers.

Ten years ago, the use of information technology in supply management was just emerging. As of today, an enormous amount of technology has been introduced to make supply management “easier” and more effective. In the next ten years, there will be both a continuation and expansion of technology introduced over the past decade and the introduction of totally new technological advances that will continue to expand the scope of supply management.

The report addressed what supply executives will want from technology in the future. Their wish list consists of ease of access; visibility through web-based tools; collaboration platforms for everything from product development to operations to schedules; tracking and simulation; powerful tools for risk, compliance, and supply market analyses; and user interfaces that can be grasped as intuitively as customer-focused e-tailer’s sites are.

In the future, these supply managers will focus increasingly on collaboration and collaboration-enabled technologies, advanced analytics will become common, and needed information and interaction with suppliers will become external rather than internal. Other strategies employed will be the use of a common company-wide data store for supplier, item, and service data; integrated applications and processes for supply-management; the embedding of best practices in supply management tools; and using tools that provide transparency of operational information throughout the supply chain.

The authors of the report believe that 2007 was the year where we “crossed the chasm” with respect to most of the functional areas in supply chain management and that we will thus, from this point on, see continued refinement of technologies already introduced. Specifically, spend management will continue to expand its flexibility for analytics and companies will be less challenged by the need to perform extensive data cleansing; optimization will continue to expand its feature set and capabilities; and contract management software will become more integrated.

New technology introductions over the next ten years will go beyond sourcing and compliance into more value-based areas. For example, collaboration tools will be linked to PLM and future tools will allow workflows for different supply chains to have different sets of processes. The emerging technology solutions, whatever they are, will leverage improved analytics, broader data integration, and collaboration.