Supply Chain Predictions are Becoming More Obvious by the Day …

but supply chains are not always predictable. So the question is, when are we going to see a completely non-obvious supply chain prediction that, in fact, is going to be reality in a few short years.

Or have we reached a point where supply chain technologies, methodologies, and development chonologies are completley predictable? Everytime I see a list of predictions these days, they are either obvious, generic, or, in the case of this recent article over on EyeForTransport on “The top 10 … or make that the top 12 thoughts for supply chain in 2012”, an updated list of supply management best-practices if you want to be considered a leader instead of a loser.

Don’t get me wrong — the article linked above is one of the best lists of the top 12 things you should be doing now that I’ve seen in a while, but I want to see someone take a step back, look way forward, predict where supply chain will be, and then come out and give what looks like a prediction out of left-field on what we have to do to get there. Of course, the risk of doing this is that you’re a futurist, and some of your predictions will be wrong (and might get you temporarily labelled as a crackerjack), but if even one is right, and spectacularly right, people will forget the mistakes and pronounce you as a visionary when your longer term prediction comes true.

So, with 2013 just around the seasonal corner, does anyone want to stand up, predict major unexpected changes in the supply chain in the next 5, 15, and 50 years, and roll the bones?

Federalist No. 10

In our last post, we discussed how in Federalist No. 9 Hamilton addressed the subject of the Union as a safeguard against domestic faction and insurrection to the people of the State of New York. In Federalist No. 10, James Madison gives us his first contribution to the series while continuing to address the same subject in the New York Packet.

Madison starts off by noting that among the numerous advantages promised by a well-constructed Union, none deserves to be more accurately developed than its tendency to break and control the violence of faction. This is because a government, without violating the principles on which it is based, will not fail to set a due value on any plan which provides a proper cure for the violence of faction.

Given that the instability, injustice, and confusion introduced into the public councils, have, in truth, been the mortal
diseases under which popular governments have everywhere perished, it is vital that the subject be properly addressed and that the American constitutions do so and improve on the popular models for government, both ancient and modern.

There are essentially two methods of curing the mischiefs of faction: the one, by removing its causes; the other, by controlling its effects. There are again two methods of removing the causes of faction: the one, by destroying the liberty which is essential to its existence; the other, by giving to every citizen the same opinions, the same passions, and the same interests. But where the first remedy is concerned, it is worse than the disease. But it could not be less folly to abolish liberty, which is essential to political life. And the second expedient is as impracticable as the first would be unwise. Because, as long as the reason of man continues fallible, and he is at liberty to exercise it, different opinions will be formed. As a result, the CAUSES of faction cannot be removed, and that relief is only to be sought in the means of controlling its EFFECTS.

If a faction consists of less than a majority, relief is supplied by the republican principle, which enables the majority to defeat
its sinister views by regular vote. But when a majority is included in a faction, the form of popular government … enables it to sacrifice to its ruling passion or interest both the public good and the rights of other citizens. This could allow the faction to concert and carry into effect schemes of oppression, which must be avoided.

Fortunately, a true republic varies from a democracy in two respects. First, the delegation of the government, in the latter, to a small number of citizens elected by the rest; secondly, the greater number of citizens, and greater sphere of country, over which the latter may be extended.

In the first case, we can assume that the elected representatives have the wisdom to best discern the true interest of their country and the patriotism and love and justice to see it through. And if that isn’t enough, when you extend the sphere of influence, you
take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common
motive to invade the rights of other citizens; or if such a common motive exists, it will be more difficult for all who feel it to
discover their own strength, and to act in unison with each other. As a result, a rage … will be less apt to pervade the whole body of the Union than a particular member of it; in the same proportion
as such a malady is more likely to taint a particular county or district, than an entire State.

Want to discuss? Join The Federalists on LinkedIn. The open group has been created specifically to discuss the philosophical underpinnings of the governance of nations and their ramifications on the national and international economics and global trade.

Five Precepts for Greening the Supply Chain

A recent post over on the Kenco Blog on “Best Practices for Greening the Supply Chain” contained five precepts for making your supply chain greener that should be shared far and wide. They are:

  • Realize the Contribution of Efficiency
    Part of green is being lean. Lean minimizes waste. Waste costs money. So when you are efficient, you minimize costs, which, all other things being equal, maximizes profit. As SI has said many times before, green not only makes you sustainable, but it increases the green you have in the bank.
  • Assess the Life Cycle Impact of Products
    When evaluating the sustainability of a product, you have to look beyond the raw materials (and their creation/extraction) and production, evaluate (intended) use, and think about disposal. As SI has noted before, the product should be designed for recycling (and raw material recovery) and at the very least minimize, if not eliminate, waste and landfill requirements.
  • Recognize Green Products & Services
    When presented with multiple product and service alternatives, the ability to recognize those that are naturally sustainable is key to embedding sustainability in your organization.
  • Minimize Resource & Energy Use and Carbon Impact
    Pay careful attention to the amount of resources required, the amount of energy required, and the amount of carbon produced. A truly green process utilizes renewable resources, renewable energy, and is carbon neutral. That may not always be possible, but that is the end goal.
  • Give Back to Society
    While it can be argued that a company can be sustainable without being charitable, the goal of sustainability is to sustain both the company and the society that the company is trying to sell its products and services to. Thus, as the article suggests, a company should at least make some effort to display corporate leadership and engage the community and, preferably, give time and resources to sustainable causes in the community.

Great advice for sustainable companies to live by.

Federalist No. 9

In Federalist No. 9, we again have Hamilton addressing the people of the State of New York in the Independent Journal, but this time he is addressing the union as a safeguard against domestic faction and insurrection as a follow-up to his piece on the consequences of hostilities between the states.

He begins the piece by stating that a FIRM Union will be of the utmost moment to the peace and liberty of the States, as a barrier against domestic faction and insurrection. To stress this point, he begins with a discussion of how it is impossible to read the history of the petty republics of Greece and Italy without feeling sensations of horror and disgust at the distractions with which they were continually agitated and at the rapid succession of revolutions by which they were kept in a state of perpetual vibration between the extremes of tyranny and anarchy. These were, after all, republics, and since what is being proposed is a republic, one must address why the current instantiation of the republic will enable a FIRM Union between the states while previous instantiations did not.

The reason the current instantiation will not be subject to the distractions, agitations, tyranny, and anarchy of the republics of old is because the science of politics, however, like most other sciences, has received great improvement since the time these republics were created and the efficacy of various principles, not known to the ancients, is now well understood.

In particular, the regular distribution of power into distinct departments; the introduction of legislative balances and checks; the institution of courts composed of judges holding their offices during good behaviour; and the representation of the people in the legislature by deputies of their own election are wholly new discoveries, or have, at the very least, made progress towards perfection. They are means, and powerful means, by which the excellences of republican government may be retained and its imperfections lessened or avoided.

Hamilton then goes on to quote the French social commentator Charles-Louis de Secondat, baron de La Brède et de Montesquieu, generally known as Montesquieu, who lived during the Enlightenment wand who articulated the theory of separation of powers which is a governance model for the state where it is divided into branches, each with separate and independent powers such that no branch has more power than the others, that is the basis of many of the constitutions in today’s republics and democracies.

This is because Montesquieu was one of the first enlightened thinkers to state that it is very probable that mankind would have been obliged at length to live constantly under the government of a single person, had they not contrived a kind of constitution that has all the internal advantages of a republican, together with the external force of a monarchical government. I mean a CONFEDERATE REPUBLIC. Furthermore, the assemblage of societies that constitute a new one, capable of increasing, by means of new associations, till they arrive to such a degree of power as to be able to provide for the security of the united body is able to withstand an external force and may support itself without any internal corruptions. As a result, the form of
this society prevents all manner of inconveniences.

Furthermore, as noted by Hamilton, since the proposed constitution made the states constituent parts of the national sovereignty, this fully corresponds, in every rational import of the terms, with the idea of a federal government, we have a FIRM Union that should serve as a safeguard against domestic faction and insurrection.

Want to discuss? Join The Federalists on LinkedIn. The open group has been created specifically to discuss the philosophical underpinnings of the governance of nations and their ramifications on the national and international economics and global trade.

True Cost Reduction Doesn’t Increase Risk

While reading a recent article over on the Inbound Logistics site on Serving up the Perfect Meal, I came across the following quote from a general manager for C.H. Robinson that worried me:

“One thing all restaurants are doing is managing labor farther up the supply chain, and pushing inventory levels back to suppliers to manage, thereby controlling costs, keeping inventory fresh, and allowing menu planning variability.”

Can you see why? While managing labour considerations further up the supply chain is a great idea, as it forces you to have good supply chain visibility, and keeping inventory fresh will give you an edge in the food service industry, pushing inventory levels back to suppliers to manage is a disaster waiting to happen unless:

  • they are at least as competent as you in inventory management,
  • they have deep insight into your expected demand requirements over time (at least six months into the future), and
  • they have a basic understanding of the market volatility and the ability to handle unplanned demand surges.

If any one of these assumptions are false, at some point in time, your supplier is going to be out of inventory when you need it most, and you’re either going to have to spot-buy elsewhere, at considerably higher prices, or, even worse, go out of stock and have to slash profitable menu items for the duration of the shortage.

You should only let your supplier manage your inventory if you have deep visibility into the supply chain and collaborate with them to make sure they have all of the data they need to predict your needs as well as you can. And you need this visibility, given that quality, safety, and traceability are critical to a food service provider’s supply chain, especially given the recent introduction of the Food Safety Modernization Act.