Author Archives: thedoctor

Which Ideas Should You Have Stolen in 2013? Part II

Back in January, Stores Magazine wrote an article on “20 Ideas Worth Stealing in 2013” that had some ideas worth stealing by your Supply Management and Marketing organizations. But were they all worth stealing?

These articles sounded good on the surface, and were good when you dug in. SI would definitely recommend stealing these ideas if you haven’t already:

  • Meld Physical with Virtual
    This makes a lot of sense. Physical flows should be managed by virtual SaaS supply chain solutions that manage the information flow end to end. And wherever possible, technology that helps the consumer should be integrated into the process as well.
  • Healthy Choices
    In 2010 the CDC (Centers for Disease Control and Prevention) reported that 35.7% of adults are obese and 17% of children are obese in America. It’s just the right thing to do. And if you really want to be healthy, push GMO out of your supply chain. Just because you can splice DNA from completely unrelated organisms doesn’t mean you should. We still don’t know what the long term effects of GMO are. For starters, there was a time when lactose and gluten intolerance was rare. Now it’s common. That correlation is too hard to ignore. Plus the increase in cancer rates in countries heavily reliant on GMO food. It’s just an unnecessary risk.
  • Right-Size the Footprint
    It’s all about lean and sustainability. No waste, no unnecessary drain on the environment.
  • Add Zing to Rewards
    Whether it is for consumers to drive loyalty to your brand, or for your employees to encourage greater drive towards success, zing helps.
  • A Wink and a Nod Toward Innovation
    Innovation is key, but sometimes the only way to succeed if it’s new to you is to take baby steps.
  • Seniors as a Featured Attraction
    All too often, experienced personnel are pushed into early retirement in short-sighted corporate efforts to reduce costs. All this does is push experience and wisdom out the door. Experience and wisdom need to be retained. New employees bring new energy, methods, and technology — but without experience and wisdom to guide the proper implementation, it will be wasted energy, methods, and technology. So focus on the wise inside and outside of your organization and you might find that your potential soars.
  • Flexible Format
    As market and supply chain conditions change, you need the ability to adapt.

So, were these all of the ideas that were good? Come back tomorrow to learn more.

Which Ideas Should You Have Stolen in 2013? Part I

Back in January, Stores Magazine wrote an article on “20 Ideas Worth Stealing in 2013” that had some ideas worth stealing by your Supply Management and Marketing organizations. But were they all worth stealing?

Even though they sounded good on the surface, SI would not have recommended stealing these ideas:

  • Offer More Options
    While it might help a new startup break into the market, options add complexity, complexity adds cost, and unless you are serving the luxury marketplace, your corporate sustainability could be put at risk. And SI is not too fond of unnecessary shipping of product back and forth – that’s just not green.
  • Picture Success
    A picture may be worth a thousand words, but you need the words – in particular, you need the strategic transformation plan to get there, whether we are talking about a new marketing initiative or a new Supply Management initiative.
  • Social Crowd-Sourcing
    Offering progressive discounts against unknown inventory might get attention in the consumer world, but it also risks creating unhappy customers if you greatly underestimate demand. Similarly, how long would you deal with a supplier who would never commit to a price or an inventory level? Especially if you valued your CBI insurance!
  • Place Ad Here
    While using existing programming may sound like a good idea to get your message out in the Marketing world, you risk alienating your customers that do not want to be exposed to advertising in the few aspects of their lives that are still free from advertising. And there is no equivalent in Supply Management that would make any sense at all.
  • Quality Facebook Time
    Facebook is the New Egypt. We don’t need to go back in time thousands of years to when civilization was just learning to preserve its accomplishments for posterity. ‘Nuff said.
  • Friends Helping Friends
    If you don’t know what you need, then you shouldn’t be making a purchase. Period. This is a ridiculous idea.
  • Bring the Runway to the Consumer
    If you suspect demand is going to be high, and that consumers are not going to want to wait long, then don’t advertise your product until you know what the fulfillment date will be. It’s that simple. There’s a point where acceleration becomes so fast that consumers and suppliers can’t keep up. Remember that.

So, were all the ideas bad? No. Come back tomorrow to learn more.

OMG! LCL is MTWI! Should I be ROTFLMAO?

LCL, or Less than Container Load, as noted in this article over on Inbound Logistics on Less Than Containerload, More Than Worth It, was, historically, slow, costly, risky, and nothing to get excited about. But that was before we had consolidators, freight forwarders, and 3PLs who had access to advanced route planning and optimization technology that can figure out the best way to consolidate LCL shipments from multiple vendors.

As the article notes, today’s LCL is much improved, with end-to-end pricing; direct routes and frequent sailings; increased visibility and control; streamlined processes; and packaged solutions that provide security, clarity, speed, and certainty. This is true, and has been for quite a while. Logistics, Inventory, Warehousing, and Route Planning solutions have been pretty damn good for almost a decade now, and this is old news.

The only thing that’s not old news is the fact that many a shipper, still operating on the 3 bids and a buy, using the phone, and doing it like they were 20 years ago, still don’t know the realities of the new reality and are not taking advantage of all of the options that are available.

Good visibility and optimization capability allows 3PLs to consolidate LCL shipments to make FCL for most of the shipment, take advantage of empty miles using services like BuyTruckload.com that allow shippers to save as much as 20% as a full truck is better than an empty truck, increase service frequency to meet demand, and take almost direct routes to the destination. So do what’s best for your business, be it LCL, FCL, LTL, or FTL. There are good options for all of them.

Don’t Confuse Centralized Sourcing with a Centralized Sourcing Model

A recent article over in S&DC Executive on “The Four Vs of Fixing a Decentralized Procurement Model” noted that implementing a centralized model from nothing is no mean feat and then presented the Four Vs” as a good starting point to begin their path forward to centralization of selected spend categories. Centralization of spend is a necessary step on the path to a centralized sourcing model, but that’s all it is – a step.

In order to have a centralized sourcing model, you have to centralized:

  • Talent,
    all of the Sourcing and Supply Management Personnel have to be in the same business unit
  • Technology, and
    all of the operations, even if they are decentralized all over the world, need to run on a common base technology platform
  • Transition,
    all of the processes need to be migrated to common sourcing and supply management processes, with local sourcing only taking place on categories that are truly local (otherwise, sourcing should be center led)

Now, when you are transitioning processes, you should start with sourcing and procurement, as this one-two punch will give you the biggest bang for your buck. The application of good advanced sourcing techniques to categories never sourced this way, or to significantly larger spend volumes, will typically identify savings opportunities in the 10% to 12% range. Then, good procurement systems will make sure that the savings are captured by preventing maverick spend (if the spend has to go through the system and appropriate rules are in place) and making sure the invoices match the POs which will need to match the contracted rates.

And the first step in a good sourcing process is spend analysis, which, if you want to get it right, does require:

  • Visibility,
    into all of the spend in the category being sourced
  • Variance,
    on the spend between sites (which will give you a quick estimate of savings potential)
  • Velocity, and
    to savings which results by choosing categories where contracts are expiring or have expired and where there will be little resistance
  • Value.
    generated from the process in a way that can be measured, tracked, and reported to the CFO.

The four V’s covered in the article are indeed a good starting point on your journey to centralized the sourcing process, but that’s just one aspect of transition, and it doesn’t even address technology or talent, two key factors in the centralization of a Supply Management function.

Stop Blaming the Supplier! Melamine in the Milk is Your Fault!

Research reveals that only 6% of procurement managers and directors have ever been made aware of unethical activity in their supply chain. (Source: EY.com)

As much as we’d like to believe that only 6% of supply chains have unethical activity, given that almost 86% of North American companies have a supply chain reliance upon China alone for key parts1, that’s a pipe dream. Depending on how rigid you want your definition of ethical to be, I’d guess that the number should be closer to 60%.

So why is it your fault if your supplier does it? Simple. It’s because less than half of your organizations do any due diligence in their supply chains! Only 48% of UK firms do any due diligence at all! Even worse, 14% of respondents to the EY survey did not even know what third-party due diligence meant, for crying out loud! You have to do due diligence and you have to ask tough questions and someone who can be trusted has to do a site visit to major suppliers at some point. If you do all this, and the supplier lies through their teeth, then, while your company may still be held financially responsible, it won’t be held criminally responsible and ethically you will know you did all you could (except cut the supplier loose before they did the unethical act, but at least you can cut them loose as soon as they do).

This is why you need good supply chain visibility, document management, and CSR monitoring. There are companies that do this, including Resilinc, Integration Point, and Ecovadis. (See the Vendor Post Index or Resource Site for more.) Reach out and get these types of solutions if you don’t already have them. They will be worth it.

1 Supply Chain Disruptions, Ted Landgraf, Above the Standard Procurement Group, July 15, 2012