Monthly Archives: May 2012

World Trade 100’s Logistics Trends for 2012 — Do They Have Weight? Part II

Yesterday, we reviewed the seven trends for 2012 that World Trade identified for the logistics sector in a recent article and asked if they had weight. Today, we answer that question by presenting the reality (that SI perceives) with respect to these trends.

  • Buyers are expecting 3PLs to be the new Jack-of-all-Trades.

    While some of the larger organizations are adapting to their clients’ requests, this won’t hold true in all cases. Only where the requests are for services similar to what the 3PL is already offering and where the 3PL has the necessary expertise will the 3PL be able to successfully offer the service for the long term. As a result, some 3PLs will falter (and maybe even fail) and, ultimately, retrench on their strengths and smarter buyers will seek solutions from the right partners. (Going to the supplier to handle packaging, a best-of-breed software provider for a visibility solution, etc.) The 3PL as the Jack-of-all-Trades trend will be short-lived.
  • Mobility is King, the Cloud is irrelevant.

    Call it ASP, SaaS, Cloud, or Web 3.0 — smart buyers don’t care. They just want a solution that works on the go. They’ll settle for what works, and won’t be satisfied with who has the most buzzwords in their product description. That being said, buyers still on the learning curve may fall for “cloud” in the short term, but if they don’t get results, the services provider will wish they were up in the clouds far from the angry buyers’ reach!
  • Transportation is going back to intermodal.

    The trucking phenomenon is over. The value proposition of intermodal rail can no longer be ignored.
  • Capacity is climbing up the issues list — fast!

    Regulations and lack-of-drivers are severely limiting available capacity, air capacity is also limited, and low-cost ocean routes are not going to last forever. As a result, smart buyers always have an eye on capacity.
  • The rate of system/data integration is going to increase.

    As visibility is a necessity in today’s supply chain. Execution integration will also improve as lean and JIT continues to be applied to the logistics chain. But business integration will take time. Trust, and undisputable business cases, will have to lead the way.
  • Near-Sourcing will happen.

    The value proposition is back, and, like the value proposition of intermodal transportation, it can’t be ignored. It will take time, as you can’t switch suppliers, or end multi-year contracts, over night, but it will happen.
  • Sustainability will continue to lag.

    The reality is that at least 8, if not 9, out of 10 companies only tackle sustainability when forced to do so by regulation or pressured by customers. Very few tackle it for the long-term benefits it can provide an organization because, with the relentless Wall-Street focus on profit quarter-after-quarter, an average organization does not want to bear the up-front cost, no matter how great the potential year-over-year reward in the long-term.

And, most importantly, you’re going to see the following trend start to take shape later this year:

  • A renewed investment in logistics/inventory management/optimization software
    Leading, and better-than-average, organizations are not going to be content to let their 3PLs manage logistics after the fact, when most of the cost has already been locked in, but use advanced software to make sourcing decisions that, when sensible, optimize logistics and inventory costs up-front. Like all sourcing technology trends, it may take a year to pick up steam, but it’s going to happen. Too much money is on the line.

That’s what the doctor thinks. Any divergent opinions?

World Trade 100’s Logistics Trends for 2012 — Do They Have Weight? Part I

Earlier this year, World Trade identified the following seven trends for 2012. The question is, how many are taking shape and, of the ones taking shape, how many are relevant for your supply chain. And are any missing? Let’s start by examining the seven trends WT identified.

  • 3PLs are the new Jack-of-all-Trades
    Apparently, demand for 3PLs to play a role in capacity strategies, to provide technologies that optimize planning and enable visibility in increasingly complex global supply chains, and to increase operational agility is increasing. In addition, some shippers are seeking to consolidate their 3PL bases to relieve an administrative burden of managing multiple providers while leveraging a larger, indirect spend pool. And, some 3PLs are offering more value-added services such as contract and custom packaging, return disposal, and even individual store deliveries.
  • Mobility and the Cloud
    The use of M2M technology is increasing, and more software providers are certifying the use of their solutions for off-the-shelf consumer and ruggedized devices. And some are predicting that 2012 will be a big year for “cloud supply chain”. Supply chain technology vendors will seek ways to use the cloud to facilitate application integration and data visibility, and work with material handling equipment manufacturers to bring MHE automation closer to real world application.
  • Transportation Modes
    There will be more adoption of intermodal transport. This is because trucking faces predicted driver shortages, potential highway user fees, and changing governmental regulations — which is making intermodal rail an increasingly compelling proposition. As a result, new intermodal facilities are being built in several U.S. locations. This option can reduce fuel costs, increase delivery speed, and decrease reliance on OTR (Over-the-Road) trucking.
  • Trucking & Capacity Issues
    New compliance mandates for trucking, including CSA (Carrier Safety Administration) and HOS (Hours of Service) legislation, will further increase capacity challenges in 2012.
  • Partner Integration
    Disparate supply chain players will come together to form partnerships and work together to benefit the entire supply chain. This is because smarter commerce requires seamless integration with all partners in the end-to-end supply chain, particularly in the complex global supply chains of today. Furthermore, the expectation is that this partnership will span the business, execution, and technology layers of the supply chain.
  • Near-Sourcing
    There is an expectation that near-sourcing will likely increase, helped by unstable oil prices, rising labor costs in China (and India), the cross-border trucking program with Mexico, and NAFTA. Plus, Central and South America (and Brazil in particular), which are often on similar time-zones, are also viable sourcing options in many industries, and reachable through land-based inter-modal transport.
  • Sustainability
    According to the article, Sustainability will continue to be a focus for shippers and carriers alike, as long as there is a business benefit.

Not a bad list of trends, and some good arguments for. But what is the reality (that SI perceives)? Stay Tuned for Part II!

Three Questions for Job Seekers in the Supply Chain Space


Today’s guest post is from Sudy Bharadwaj, who has been analyst extraordinaire of Aberdeen Group, a VP of MindFlow Technologies (who innovated the sourcing optimization space), CMO of Informance (who brought intelligence to the manufacturing floor), and a Sales Superstar at Inovis (who was one of the largest B2B eCommerce players). (Note that all of these companies made successful exits by way of acquisition.) Sudy is currently the CEO of Hound Technologies and JackalopeJobs.com, a new Web 3.0 job search start-up that is looking to revolutionize the job search process for the average job seeker (and not the average recruiter).

Since I have been involved in the supply chain industry for 20+ years, I thought I would share some observations for job seekers in this space. One interesting fact about supply chain jobs — they are all over the map in terms of qualifications and experience. Some high-end jobs require advanced degrees and lots of experience, while others can be entry-level positions.

Regardless of level, there are some common issues all supply chain job seekers should think about:

Are you a cost center or a profit center/revenue center?
Many supply chain professionals, while knowing they have an important role, do not do as good of a job of fully understanding and articulating their overall role in their ecosystem. Think of what revenue or savings you contribute to the company. By optimizing your supply chain, how have you contributed? Can you describe some customer satisfaction metrics? Cost savings metrics?
One famous example of where you fit in the supply chain: when interviewing an assembly line worker installing seat belts at an automobile plant, the line worker told an executive “I not only install seat belts, I save lives”. That’s a great way to look at the job.

How are you managing, building and maintaining your network?
In any job search, networking is crucial, however, in the supply chain space, it can really improve your chances. In addition to connecting to your former co-workers, how about customers, suppliers, partners, etc? You were part of a supply-demand web, which looks like a large network; treat it like your job seeking network. Rather than looking for roles within your exact industry, can you work with customers and/or suppliers?
When discussing his job with a job seeker in the demand-side of the supply chain (read: sales), the main points were selling of products. The first question I asked was “tell me about your customer”.
     Job seeker: “They are a distributor of XXX products”
Me: “What else do they distribute”?
     Job seeker: “Numerous products, including ABC and XYZ”
Me: “Can you sell those?”
     Job seeker: “Of course”
It may not be so easy, but phone calls were made to the distributor, new introductions were made, interviews ensued, and a new job was started with very different products than the sales executive sold before.

Are you addressing your skills gaps?
If you are an aspiring supply chain professional, or returning war veteran, you can find help from your local workforce office or VA representative. A great example in the Dallas/Fort Worth area is what the Workforce Solutions of North Central Texas has done — they acquired funding to develop certification programs — Certified Logistics Associate (CLA) or Certified Logistics Technician (CLT). Don’t live in the Dallas/Fort Worth area?
This link describes this program.

Try hitting Google and searching for some common phrases. Just for fun, I Googled “supply chain certification program in north Dakota” and got some interesting hits. Some are online programs from out-of-state schools while others are state sponsored programs.

These are three different questions any job seeker in the supply chain space needs to ask themselves as they embark on a new job search.

Thanks, Sudy. And if you are looking for a new Supply Chain job, try JackalopeJobs.com.* It’s still in beta, so this means there are still some kinks to work out, but it’s the first site that combines the power of a meta-aggregator with the power of multiple social networks simultaneously. Not just a LinkedIn or Facebook app, it can utilize your LinkedIn, Facebook, and Plaxo social networks simultaneously to tell you who in your network might be able to help you with a job on all of the major job search sites. And, unlike most job sites that just do simple title search, it uses Natural Language Processing and Semantic Search to find other jobs that might be relevant to you. For example, if you searched for “inside sales” you would not find an “account executive” job at Oracle on other job sites, which is almost the exact same job, just titled differently in a different organization. And if you searched for Procurement, you might not find Supply Manager — but the Jackalope Jobs engine will. Of course, since NLP and Semantic technology are not perfect and still in refinement, not every result will be a 100% match**, but the majority of the results will be very appropriate matches and this approach furthers the the goal of the site which is to expose you to more opportunities that you might be qualified for and able to get as a result of your network than other job sites give you. And if you search different, you might get surprising results. Sudy’s next post will describe how you use the platform to search different.


* Full disclaimer: the doctor is currently serving as CTO of JackalopeJobs and has a vested interest in the site’s success.

* For example, the phrase “human resources” causes the platform no end of grief because not only does almost every job description mention it once (which is easy to filter out), but poorly written job descriptions mention the phrase more than once when the job is not a human resources (related) job, which leads the NLP keyword analyzer and/or semantic engine to sometimes believe the job might actually be related to human resources. So this search will often turn up more false positives than others. However, these jobs typically get weighted down as you will not likely have as many, or any, connections to jobs in a different industry if you are a HR professional.

Take the First Step on Your Next Level Supply Management Journey

And start by downloading the new BravoSolution sponsored Sourcing Innovation WhitePaper on Taking the First Step on Your Next Supply Management Journey [registration required] today!

Lamenting that the acronyms and acclamations are flying fast and furious in the Supply Management space, with phrases like VFS. Hi-Def Sourcing. Next Level Supply Management. Next Practices. leading the way, this paper, which notes that even world class Supply Management organizations have to do something more to maintain their year-over-year contributions to the bottom line with the perfect Procurement storm of high demand, low supply, and high market volatility brewing off of the coast, provides a roadmap for those Supply Management organizations that are looking to begin, or continue, a Next Level Supply Management Journey.

For an average organization, this will be a long journey that could take the better part of a decade. There’s a reason that only 8% of the Procurement organizations make the best-in-class cut (defined as being in the top quartile of both efficiency and effectiveness) in the Hackett Group rankings (which benchmark 73% of the Fortune 100). It’s tough to be the best. (But not out of reach for the dedicated. That’s why the rankings change year over year.)

In order to help a Supply Management organization begin its Next Level journey, this paper starts by defining a 3-Level Maturity Model across nine axes that can be easily understood by any Supply Management organization. While you can argue for 5 (and follow the Hackett Model), or even 7 (and follow a pyramidal model), by breaking the model down at the borders, the reality for most organizations is that they are either are best in class, better than average, or worse than average, and until they are deep in a journey, any classification that is more fine-grained just confuses the issue.

The nine axes are:

  • Sourcing Process
  • Organization
  • Finance
  • IT
  • Product Management & Marketing
  • Risk Management
  • Asset Management
  • Relationships
  • Metrics

And depending on where you fall on the majority of these metrics, this will slot you either into a

  1. st level organization still in the standardization and complexity reduction stage, a
  2. nd level organization in the operational excellence stage of Supply Management, or a
  3. rd level best-in-class organization that has progressed to the head of the pack with its mastery of strategic business enablement.

To find out where you fall, and get some good ideas on how you get there, download the BravoSolution sponsored Sourcing Innovation white-paper on Taking the First Step on Your Next Supply Management Journey [registration required] today!

Have You Reached the Summit of Cost Cutting?

Cost cutting has been a major focus of your average Supply Management organization for most of the decade. A few efforts have been focussed on the long term, but the majority have been short-term efforts. And this is not a good thing, because, as Patrick Dunne of Alliance Boots said in a recent article over on the CPO Agenda everything has to be a long-term activity. Every strategy within a Procurement world, or cost-based management as I like to call it, has to have an end-state.

In a strategic Supply Management organization, delivering a cost conscious culture is the long-term objective, everything in-between, short-term, or medium is initiatives, tactics and strategies towards that cultural change. As Daniel Baun Christensen of Lego says, there are no quick wins as such. Successful Supply Management is all about collaboration. Your customers in your organizations are your stakeholders and if you don’t get aligned there are no quick wins and long-term wins. There is no ‘one size fits all’ in procurement.

But when you engage with the larger business, as Ron Needham of SAP found out, you expand your thought leadership and do a better job of being viewed by the CEO as professionals rather than just the folks who have to save money on pencils. By working alongside the marketing, sales, and IT teams to communicate the role of Supply Management and the value it can bring, you see the stock of the internal Supply Management team increase. For example, they were able to institute a bring-your-own-device initiative, frightening to IT in terms of security and liability, which had the net effect of lowering IT spend and increasing environmental sustainability (as you no longer had executives who needed to carry work devices and home devices).

I take these quotes from the article to make a point — there is a need, and an advantage, to focussing on long term cost cutting and not just short term cost cutting. And if you truly believe that the recession is ending and this is going to be a better year, then now is the time you start. You should have started years ago, but I know that most of you reverted to, or stayed in, the cut-costs-now mentality being forced upon Supply Management by short-sighted C-Suites that should have focussed on the long-term the last time things were good instead of chasing unreasonably high profit margins to increase their Wall Street valuation.

The reality is that the 11% savings enabled by Spend Analysis and 12% through advanced sourcing / decision optimization technologies are not repeatable on the same categories year-after-year. They only deliver these savings because average contracts are 3-5 years and its typically (at least) that long before an average category comes up for evaluation again. As with auctions, savings will deteriorate unless your sourcing strategies are taken to the next level (through VFS or Collaborative strategies), and this next level requires two things:

  • supplier involvement and
  • long-term thinking.

And, unless you take your sourcing strategies to the next level (and take the first step on your next level supply management journey [registration required for download]), you may find, that in these turbulent times of rising commodity, freight, and regulatory-related supply chain costs, you may have just reached the summit of cost cutting.