Monthly Archives: August 2009

New and Upcoming Events from the #1 Supply Chain Resource Site

Now that your vacation is (almost) over, it’s time to dive back in and soak up all that you can in your quest to become the best Procurement Professional you can be. That means it’s time for Sourcing Innovation to resume it’s bi-weekly event update posts that point out some upcoming events that you might not want to miss.

But first, let me remind you that the Sourcing Innovation Resource Site — which tracks almost three thousand blogs, events, publications, archived webcasts and podcasts, corporate sites, and other resources that you can use — is always immediately accessible from the link under the “Free Resources” section of the sidebar. And since new content is always being added, and new events are always being listed, it’s worth checking out any time you’re looking for resources and events to help you out with a certain task, as it is fully searchable.

The following is a short selection of new and upcoming webcasts:

Date & Time Webcast
11:00 GMT-07:00/MST/PDT
Supplier-Nominated Savings: Ask and You Can Receive
  Sponsor: SIG
14:00 GMT-04:00/AST/EDT
What Manufacturers Need To Know About Chemical Facility Anti-Terrorism Standards (CFATS) and How To Prepare
  Sponsor: Industry Week
15:15 GMT+01:00/CET/WEDT
Supply Chain – It’s Risky Business!
  Sponsor: SCC
14:00 GMT-04:00/AST/EDT
E-Sourcing – The technology and best practices that can save you a bundle
  Sponsor: Purchasing
00:00 GMT/WET
Achieving True Consumer Centricity
  Sponsor: Supply Chain Digest

The following is a short selection of new and upcoming events:

Dates Conference Sponsor
2009-Sep-8 to
CIO Summit
   Scottsdale, Arizona, USA (North-America)
2009-Sep-10 to
Sustainable Procurement in Supply Chain Management
   Winnipeg, Manitoba, Canada (North-America)
2009-Sep-14 to
European Purchase To Pay Summit
   London, England, UK (Europe)
2009-Sep-16 to
Iasta reSource
   Chicago, Illinois, USA (North-America)
2009-Sep-20 to
CSCMP Annual Global Conference
   Chicago, IL, USA (North-America)

Don’t forget to review the resource site on a weekly basis. You just might find what you didn’t even know you were looking for!

And continue to keep a sharp eye out for new content!

Fines and Delays Could Hit U.S. Importers Hard in 2010

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Today’s guest post is from Matt Gersper, founder and president of Global Data Mining and co-owner of CUSTOMS Info. Matt has over 20 years of experience in process optimization and data mining in the business domain.

Failure to comply with the Importer Security Filing (ISF) regulations could bring financial disaster to unprepared U.S. businesses. There are three major reasons business leaders should assure their companies are compliant and each reason has direct bottom-line impact.

First is the risk of significant penalties for non-compliance. The ISF regulations, commonly referred to as “10+2”, state an importer can be fined $5,000 per filing if an ISF is not timely, complete and accurate. The penalty phase begins January 26, 2010.

This chart shows penalties that could be incurred in just the first 60 days of the penalty phase for 5 companies. Penalties of this magnitude would quickly get a CEO’s attention, and could have a devastating impact on any business. You can calculate your potential exposure based on the number of ocean entries you have.

  Import Value Ocean Entries Potential Risk
Company 1 $2,784,000,000 10,969 $9,140,000
Company 2 $1,076,000,000 39,111 $32,592,000
Company 3 $806,000,000 5,541 $4,617,000
Company 4 $104,000,000 1,306 $1,088,000
Company 5 $83,000,000 869 $724,000
    2 months of penalties (Jan 26 through Mar 25, 2010)

Second is Custom & Border Protection‘s (CBP’s) renewed commitment to enforcement and revenue collection. CBP’s recently published Trade Strategy for Fiscal Years 2009-2013 makes it clear just how important revenue collection has become to the U.S. Government. Shockingly, CBP’s report lists “Enforce US Trade Laws and Collect Accurate Revenue” as its number two strategic goal ahead of “Advance National and Economic Security“.

Third is the impact supply chain delays could have on your business. A recent study by the National Association of Manufacturers (NAM) estimates the ISF regulation will create a permanent 2.8 day delay in supply chain speed.

This chart applies the cost model of supply chain delays from a Purdue University study and estimates the annual financial impact that would be incurred if these five companies suffered the 2.8 day permanent delay.

  Import Value Delay Days Estimated Cost
Company 1 $2,784,000,000 2.8 $62,361,600
Company 2 $1,076,000,000 2.8 $24,102,400
Company 3 $806,000,000 2.8 $18,054,400
Company 4 $104,000,000 2.8 $2,329,600
Company 5 $83,000,000 2.8 $1,859,200

While some importers hold out hope that the penalty phase will be postponed by CBP, hope is not a strategy. “I’d let my CFO know the penalty phase will be going into effect as scheduled and the implications could have tremendous negative impact on the bottom line”, says Beth Peterson, President of BPE. Peterson has been a strong advocate representing the interests of industry to CBP regarding the impact the ISF regulations could have on U.S. businesses.

American Shipper, BPE and the International Compliance Professionals Association (ICPA) conducted a research project to understand the current state of ISF compliance, the impact this regulation has (and will have) on the supply chain, the challenges that companies are facing in their attempts to comply with ISF and the best practices importers can leverage to comply with — and ideally benefit from — ISF compliance. Their study revealed 3 of the top 4 challenges importers are having with 10+2 compliance are related to data management.


  • Nearly 60% of companies have challenges providing timely ISF data.
  • Nearly 40% struggle to collect complete ISF data.
  • Around 20% have problems with the accuracy of the data they are providing.

These are the very three issues causing penalties to be assessed. To make matters even worse, the penalties estimated above could be twice as large since the regulations state that fees can be as high as $10,000 per filing if two or more violations occur. For example, the filing is not timely and is it not complete.

Modern database and workflow applications can dramatically improve a company’s data management efficiency and significantly bolster capacity to achieve ISF compliance. Web-portals, or central information hubs, allow parties around the world to collaborate and interact online, with the same information, though a single platform. Here are six tips that can help you select the right solution to achieve ISF compliance and improve data management.

  1. A secure website accessible worldwide by any authorized user.
    It should provide control over multi-party collaboration and the ability to grant privileges by user and role.
  2. A centralized database that is the system of record.
    A “single version of the truth” for 10+2 and other customs information about every item enterprise-wide.
  3. Easy upload of data from any system, business unit, or supplier.
    It should provide easy to use features to normalize, view, sort, filter, and work with data.
  4. Easy integration with existing systems.
    It must manage the data used by your various business applications that support your global trade initiatives.
  5. Leverage best-practice functionality in a manner that increases productivity.
    Web-based applications can automatically update users about recent changes to the system and its data.
  6. Unparalleled visibility and oversight.
    Automatic record keeping of the critical data elements created in each step of the workflow in every business unit around the world which is required to meet the reasonable care standards of modernized custom agencies.

Selecting a system that meets these requirements will dramatically improve a company’s enterprise-wide data management efficiency, help achieve 10+2 compliance and avoid financial penalties. In fact, 10+2 can be a hidden opportunity for strategical companies. Optimizing inefficient data management processes can improve supply chain performance and deliver a positive return on investment. For example, improving supply chain speed by just one day would be worth $800,000 per year to a company importing $100 million annually.

I strongly advise executives of companies importing into the U.S. to act with urgency. According to estimates by the CBP, “it takes sixty to ninety days to ramp up and be filing correctly”. Best-in-class companies are funding cross-functional teams to develop a strategic enterprise-wide solution, using 10+2 as a catalyst to optimize currently inefficient business processes, and creating competitive advantage for their company at the same time.

Thanks, Matt.

10+2 Strategies for Managing Suppliers

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A recent article in Industry Week had a good article that outlined 10 strategies for managing suppliers. In brief, they were:

  • Understand the true cost and value of the supply chain.
    A supplier cannot be properly evaluated unless you understand the costs they entail and the value they bring.
  • Realize that supplier strategies go two ways.
    It’s not just what the supplier can do for you, it’s also what you can do for the supplier to help the supplier lower costs. Can you secure the raw materials cheaper? Pay earlier and mitigate their need for expensive credit lines (and thus reduce your total cost)?
  • Accept accountability.
    You need to be planning sufficiently in advance to insure that you place all orders with acceptable lead times. You need to insure a supplier has the information they need, when they need it.
  • Incorporate appropriate service levels and metrics into agreements.
    A supplier needs to know precisely what is expected of them if they are to live up to your expectations.
  • Spend equal time aligning incentives and penalties.
    Despite your inclination as a risk mitigator to always worry about the worst cases, you need to also consider the best cases and incentivize the supplier to deliver above and beyond their commitment.
  • Share critical information as early as possible.
    Sharing information constantly, with appropriate security and confidentiality, is critical for successfully managing a supplier relationship.
  • Plan for everyday exceptions.
    Even the best of plans will go astray. Make sure you have a plan that specifies how emergencies will be handled and which party is responsible for what.
  • Plan for major contingencies.
    And make sure to walk through the plans regularly with your supplier.
  • Expect and reward honesty.
    The best supplier relationships require honesty when exceptions to normal operations occur. Companies should require immediate notification without penalty when critical supplier situations occur.
  • Make relationship meetings meaningful.
    Relationship meetings should focus on critical issues, areas for supplier improvement and discussions on how the buying organization can improve the relationship.

To this list, I’d add the following two:

  • Make sure the scorecard goes both ways.
    A relationship is a two way street and the best way to capture this is to do a two-way scorecard. You can’t expect your supplier to deliver stellar performance if yours is sub-par.
  • Educate and train.
    Don’t just tell your supplier what you expect of them, show them and give them the training they need to exceed expectations.

$600 for a Flaming Laptop? We can do much better than that!

Three years ago, Dell made the news in a big way with their flaming laptops which burst into flames, transformed into flamethrowers, or, if you were really lucky, spontaneously combusted! And everyone wanted a piece of the action.

But not everyone had $600+ lying around to get in on the action, and in this economy, even $60 can be hard to come buy for those who want their very own piece of flaming electronics memorabilia. But Walmart was up to the challenge! Their entry: a small, light-weight silver-colored Durabrand DVD player that, when overheated, could burst into flames for a a mere $29! What a steal!


What Is The Baseline For Smarter Supply Chains

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A recent article in RFID Journal states that, according to Karen Butner of IBM, “the baseline for smarter supply chains really is about RFID, sensors, and actuators“. Really?

What smarter supply chains require is visibility … near real-time visibility to be precise. You don’t need RFID chips and sensors to get that. You need processes and procedures that make sure that the status of every package is recorded every time it changes location … from the supplier warehouse to the transport truck to the dock warehouse to the container to the cargo ship to the dock to the transport truck to your warehouse … and that this information is always accessible. The status can be manually updated by a receiving clerk that scans a barcode with a handheld device or, if you are challenged when it comes to new-fangled gadgets, enters a bar-code into a dumb-terminal … which can then indicate if the bar-code is recognized and the state change is expected.

That would seem to tell me that the basis of smarter supply chains with near real-time visibility is not overhyped RFID & sensor technology, but smart people following smart processes that use smart information technology. Am I wrong?