Monthly Archives: October 2011

Can Electronic Postage Really Demystify International Shipping?

A recent white paper by DYMO Endica claims that Electronic Postage Technology Demystifies International Shipping. Needless to say this got my attention because, being aware of the dozens and dozens of issues that can arise in international shipping, postage usually doesn’t make the list.

The paper starts off with some facts that every supply manager needs to know, which include:

  • 96% of the world’s consumers live outside the US and collectively hold two thirds of the world’s purchasing power
  • currently, US-based online retailers that ship abroad acquire 5% of their revenue from foreign orders and this number is rising
  • 14.5% of retailers that ship abroad see more than 25% of total sales from foreign orders
  • rate classes that change annually, tariffs and taxes in multiple currencies, the disparate shipping rules of numerous countries, plus the rigours of complying with customs documentation and reporting are just a few of the challenges of international shipping

And then defines electronic postage systems as:

      software platforms that enable the online purchase and printing of U.S. Postal Service postage, from the computer, to be used for domestic and international mailing and shipping

which is the proper definition of a country-based electronic postage solution. But how does that address the issues of tariffs, the disparate shipping rules of multiple countries, and the rigours of complying with customs documentation? All a typical electronic postage system does is insure that you apply the proper amount of postage (assuming you enter the proper dimensions of the packaged item and the proper weight and choose the proper shipping method, as the system looks up the rate from published rate tables). Now, some solutions from private industry will also produce the necessary documentation, given the necessary information, but then you are venturing into the territory of customs and trade documentation solutions. By definition, an electronic postage system does not produce customs documents. And you need to know how to answer the questions correctly (in what is typically a wizard-like interface) to get the right documentation.

In other words, if you integrate an electronic postage system with a trade and customs documentation system, you will simplify the trade process, as you will know how much you have to pay and what documents you need to include, but you will not demystify it. Many of these regulations are complex, with even more complex classifications for goods (for example, referencing HTS codes, a printer shipped with an installed cartridge is not the same as a printer shipped with an uninstalled cartridge). If you don’t understand the rules and regulations of where you are shipping, and the terminology used by the application, you will still be lost. There’s no magic demystification that occurs simply with the acquisition of such a solution.

However, if you understand the basics of international shipping, and the mandatory rules and regulations of the country you are shipping to, I do believe their claim that average shipping time can be reduced from 20 minutes to 2 if the software is in the hands of a professional in international shipping and logistics.

If you’re a small to mid-size business getting into the international direct-to-consumer shipping game, the white paper is definitely worth a read, but don’t get taken for a ride on the magic carpet. Simplification is not demystification, and you’ll have to learn a little to get a lot from this type of solution.

The Next Practices Xchange Is Only Two Weeks Away!

The Mpower Group‘s next Next Practices Xchange (NPX) is two weeks from tomorrow, Friday, November 4, which means that if you are a Supply Management VP or CPO that wants to discuss pressing issues relating to next practice identification and adoption, you should be on a plane in fourteen days time.

And yes, the doctor will be there. As most of my regular readers know, I’m not that big on conferences. Most of the regular conferences in this space have become, or have always been, fairly mediocre from a Supply Management improvement perspective as they are focussed on appealing to the lowest common denominator to maximize their potential audience, attendance, and $$$’s in their pockets. Just like the now-defunct Purchasing, the content has been watered down like a soda at the KWIK-E-MART to the point where you really don’t want to drink it if your goal is to be a leader in that top 20%, 10%, or 8% (however you want to define it). Given that SI’s goal is education and innovation, they just don’t fit.

However, there are still a few shining lights in the darkness, and the NPX has repeatedly proven itself to be one of those shining lights. In the same league of leading Supply Management consulting firms like Greybeard Advisors (led by Bob Rudzki who recently published Next Level Supply Management Excellence) and Archstone (who were recently acquired by The Hackett Group), The Mpower Group has been trying to take Supply Management into the teens in a big way by defining what the Next Level is and what Supply Management organizations need to do to get there. And while it is a work in progress, a number of the issues they have hit upon in the last couple of years are dead on.

For example, the second last NPX focussed on Training and Transition and the last one focussed on Value. In between, The MPower group has been defining a new methodology for improving performance based on AEIOU: Adoption, Execution, Implementation, Optimization, and Utilization — noting that many of the benefits of new processes and technologies go unrealized because of lack of adoption or proper execution.

For full details, check out the NPX website or contact Theodore Brown at 1-888-5-Mpower or theodoreb <at> thempowergroup <dot> com.

See you there.

JDA and Oliver Wight’s Myths and Realities of S&OP – The Verdict Part II (IV of IV)

In Monday’s post, we presented JDA and Oliver Wight’s 10 myths of S&OP planning, as laid out in recent white paper. Tuesday, we presented their 10 realities of S&OP planning. Yesterday we reviewed the first five myths and realities and offered our own verdict. Today we tackle the final five.

  1. Myth: S&OP is just another executive meeting.

    Reality: When executives take control of the process, they define the information that they need. Graphical views of aggregate information (both qualitative and quantitative) are crucial to an effective S&OP process.

    Verdict: Yes and no. Graphical views of aggregate information are crucial to identify overall trends, historical and projected future, and to quickly identify where reality is diverging from prediction, but hard numbers are going to be needed when it comes time to determine how much a plan is off and how much it needs to be corrected. And executives will define what they want to see, not necessarily what they need to make a good decision. That’s why supply chain needs to lead the process, and why supply chain analysts need to dive in and figure out how to present the executives not only with what they want, but the critical information that is needed to make a good decision.
  2. Myth: S&OP relies on a fixed demand plan or statistical forecast.

    Reality: Demand-shaping strategies and scenarios are evaluated through the monthly S&OP cycle. Executives need to evaluate different scenarios to identify and compare
    the effects on Key Performance Indicators (KPIs).

    Verdict: This is dead-on. Good S&OP uses good modelling and analysis tools to come up with good projections and good plans for presentation, discussion, nudging, and acceptance.
  3. Myth: S&OP processes are too complex and difficult to manage.

    Reality: Winning companies are collaborating with their trading partners.

    Verdict: Yes, but it’s not trading partner data, but POS data that is the most critical. This gives the most accurate view of historical and current demand that can be used to analyze the current plan. It’s only relevant that your supplier can only supply 30,000 units if you actually need 50,000. If you only need 20,000, your need can be met, and how many more units your supplier can supply is irrelevant.
  4. Myth: The finance team is just going to override any S&OP plan that we create.

    Reality: The new paradigm for S&OP incorporates financial analysis into each key step.

    Verdict: Not sure where this myth came from, as it’s usually marketing, sales or manufacturing that tries to override the number. Finance just wants a seat at the table. They will accept whatever plan is accurate, as that will allow cash flow to be optimized in such a way that the greatest benefit to the company is achieved.
  5. Myth: S&OP can be solved with the implementation of a tool.

    Reality: S&OP must have a combination of people, processes and tools working collectively.

    Verdict: Correctemundo.

So what’s the final verdict? Three realities were dead-on. Two were completely whacked. SI couldn’t make sense of one. Three more were only half right. And the last one was ok. SI gives it a C-. While there was obviously some thought and effort put into this paper, and it is worth a read, it would appear that it fails to remember that supply chain is central to successful S&OP (execution), data- and numbers-based analysis is critical to success, and one-size does not fit all, especially for certain categories of fast-moving consumer goods.

Is Your Retail Supply Chain Ready for the Holidays?

A recent article over on SupplyChainBrain on five key lessons e-Commerce merchants can learn from the 2010 holiday season identifies some key supply chain requirements for a successful holiday season that all retailers should keep in mind.

  1. Holiday Shopping Starts Early
    It is now stating well before Black Friday, so your outbound supply chain should be ready to ship as soon as Halloween is over. This means that you should already be starting to build up inventory for products expected to be in high demand.
  2. Cyber Monday Matters, but don’t ignore the rest of the week.
    Shoppers are looking for deals all week. Be ready for a consistent demand.
  3. CyberWeek is big, but the following weeks are bigger.
    Orders increase as shipping deadlines approach. Be ready for a lot of orders, and a lot of outbound shipments, as close to your shipper’s cut off dates as possible.
  4. Average ticket declines are not necessarily a bad thing.
    Especially when volume increases, which is the current trend.
  5. Vertical Markets Matter
    Apparel, Shoe, and Toy sellers increased market share, and may be on a trajectory to do the same this year.

In other words, you need to

  1. Prepare for early demand
  2. that will increase steadily until the shipping deadlines
  3. when you will have to be prepared to ship a large amount of product very quickly and deliver on time.

JDA and Oliver Wight’s Myths and Realities of S&OP – The Verdict Part I (III of IV)

In Monday’s post, we presented JDA and Oliver Wight’s 10 myths of S&OP planning, as laid out in recent white paper. Yesterday, we presented their 10 realities of S&OP planning. Today we review the myths vs. realities and offer our own verdict on the first five myths and realities.

  1. Myth: S&OP process should be owned by Supply Chain.

    Reality: S&OP is an executive process that must be executive-owned and led.

    Verdict: It definitely must be executive owned, but it should be CPO/CSCO led. Supply Chain has to get the goods in and ensure they are pushed out to where sales and marketing needs them, when they need them. And Supply Chain has the most to lose by not ensuring the process goes smooth. The CEO won’t have the time, the CFO will focus on cost, and the end result could be that no department will have their needs met. The CMO will be overconfident and / or overly risk averse and build up too much inventory. The COO (Product Management) will be overly focussed on product quality and not product delivery. And so on.
  2. Myth: S&OP is a tactical real-time process.

    Reality: Advanced S&OP is an aggregate planning process that occurs monthly.

    Verdict: S&OP must look at the aggregate, must look out into the future, and must be strategic, but it must also look at the high-volume items, must treat the short-term and long-term differently, and must adapt in near real time if need be. And monthly is not appropriate for fast moving / short life span consumer goods such as seasonal apparel, cell phones, and trend-based products. S&OP for fashion must be done weekly, over a three to four month sales window. Cell phones must be done weekly, especially just after launch, over a three to six month window. Etc. And if a major campaign is launched, or a competitor releases a brand new product that goes head-to-head with yours, the plan will need to be immediately revisited.
  3. Myth: S&OP doesn’t dive into the details.

    Reality: Aggregate plans from S&OP are translated as necessary into detailed product management plans.

    Verdict: This is correct. For low-volume items, or items with steady, level, sales, plans will not need to be revised or detailed often. But for fast-moving consumer goods, detailed plans will be required. This reality is on target.
  4. Myth: S&OP is really just a review of historical data.

    Reality: S&OP is a fact- and assumption-driven process, not a numbers-driven process.

    Verdict: WTF? Are they serious? Not a numbers driven process? The facts must be numbers based (such as, we have historically sold 100K cans of paste a month and we expect this new marketing campaign to increase sales 20%). Facts are based on data, and data is numbers — not gut feelings. And assumptions are based on upcoming actions, that are expected to impact sales — a number — in a definitive way. Plus, you NEVER ignore historical data. It’s your baseline. If nothing were to change, your sales would stay the same. This reality is from another dimension.
  5. Myth: S&OP is limited to quantitative views of supply, demand and financial plans.

    Reality: Fact and assumption management and the qualitative aspects of S&OP are more important than the quantitative aspects.

    Verdict: Again, WTF? I don’t get it. The whole point of S&OP is to come up with a sales plan that dictates expected demand over time to allow supply chain to define detailed volume and delivery timelines. This is extremely quantitative. And assumptions might need to be altered over time, so a baseline is needed to test what the impacts of an alteration would be. This reality is also from another dimension.

Tomorrow’s post will tackle the last five myths and realities.