Category Archives: Supply Chain

The New Supply Chain Manager – Global and Local

Supply Chain Digital recently published an interesting piece on three core trends impacting UK supply chain skills in 2014 where they noted that, even across the Atlantic, globalization is taking a new spin.

According to the article, complex supply networks are now deployed to offset inventory risk, balancing low production costs of far away places with short-lead time replenishment from factories closer to market. This allows for an initial order to be made in the Far East and then supplemented by more local sources if sales demand. This allows the buyer to balance cost vs. lead time / stock out / quality risk and indicates that, like the US, the UK is now focussing more on total cost of ownership and optimizing the total supply chain cost and not just the landed cost (even though the transportation costs from Eastern Europe and parts of Asia are much less for them then the transportation costs their North American counterparts need to bear). It’s a good sign, and SI has always maintained that the right sourcing methodology is best-cost country sourcing, and that often means, when the full life-cycle cost (and risk) is analyzed, home-country sourcing is the way to go.

The need to be local is further emphasized by the evolving purchase patterns of the local consumer. E-commerce is being widely adopted and the Amazon effect is taking hold. Consumers want to shop at home, get the goods delivered to their homes, and if something is broken, return the goods from their homes. This is forcing retailers and distributors to adapt to complex and challenging operating models as they need to not only manage the home-delivery process but the home-return process, often getting products back to the factory from which they came for repair, refurbishment, or recycling (as strict laws in the EU, such as RoHS and WEEE, often prevent outright disposal of anything with electronic components).

Finally, it all comes together in the last trend which revolves around the need for a broader skill-set to manage the broad nature of today’s Supply Management initiatives — initiates that are hugely complex in nature and require Supply Management professionals to know how to manage suppliers, production facilities and freight movements across a multitude of countries and time-zones. It’s not easy, but it can be fun!

The (Board) Gamer’s Guide to Supply Management Part : Agricola, Part II-B

Even after reading last week’s post, you still think you’ve mastered the basic game of Agricola, and that you can now manage the basics of an industrial farm at the back-end of your agricultural supply chain. With limited resources, you believe that you can deftly balance growing food with feeding your family (investing in crops versus paying your workers), expanding your farm and/or family versus maximizing the return from what you have (and trading off short-term gains today for long-term gains tomorrow), improving your infrastructure (by upgrading your buildings and making them more resistant to the elements and lowering their annual maintenance costs with some up-front investment) versus focussing on your fields (plowing and sowing your fields) versus raising and breeding animals (and the supply and demand dynamics of the meat-eating versus vegetarian marketplaces), growing grain versus vegetables (and the internal dynamics of the basic commodities market), and raising sheep versus pigs or cattle (and the various preferences of different locales, taking into account that Americans love their bacon and Hindus don’t eat their cows). You still think that because you were ending every friendly family game with a heavily utilized farmyard, a nice balance of crops and animals, a big family, and a better homestead than your peers that you have it all figured out. Think again.

Just like the real world agricultural supply chain isn’t this simple, neither is the full version of Agricola. Adding in the occupational and minor improvement cards adds a broad range of new elements to the game and greatly increases the complexity and available dynamics. Basic strategies go out the window as you try to find new and innovative ways to build a better farm than your rivals, who now have access to new skills, equipment, and innovations to acquire food, grow crops, and raise their animals. Just like every innovation in the real world pulls the rug out from under your proverbial supply chain feet, every occupation and minor improvement has the potential to completely change the balance of power, especially when these occupations are skillfully paired in a complementing manner.

There are 139 minor improvement cards, which include:

  • Loom: Your ability to weave wool into cloth, which you can sell, gives you extra food each harvest (just like farmers who can sell wool and meat versus just sheep can make extra money).
  • Canoe: You’re a more efficient fisherman, and secure extra fish (food) every time you fish as well as reed (for building).
  • Brewery: Your ability to convert grain into beer provides you with extra food during trade as everyone wants a piece of your production.
  • Spinney: You own the woodlot, so anytime another player uses the “take 3 wood” action, they must give one to you.
  • Water Mill: Your ability to covert grain to flour allows you a trading advantage and you can get 3 food for every grain.
  • Millstone: You are more efficient at milling grain into bread and can produce three times as much bread (food) in a single action.
  • Turnwrest Plow: Your bigger and better plow allows you to plow fields three times as fast as your rivals.
  • Carp Pond: You have your own private fishing pond that no one else has access to, can fish before and after your field work, and catch fish (food) every round.
  • Milking Shed: You can milke your livestock and get additional food every harvest.
  • Sawhorse: Your better-equipped work-shed maximizes your ability to build and place fences faster and with less raw-material (and you build every 3rd fence free).
  • Broom: You can clean house faster than your peers, and when you need to, you can discard all the remaining minor improvement options in your hand (that are available to you) and select seven new minor improvement options (that become available to you).
  • Cooking Hearth: While your rivals are struggling with a small fire-place, your state-of-the-art cooking hearth allows you to easily cook grain, vegetables, and livestock and produce a plethora of food with ease.
  • Fruit Tree: Your foresight to plant apple and pear trees allows you to produce extra food each round.
  • Wooden Crane: While your rivals with their pick-axes can only quarry a single stone at a time, your crane allows you to quarry two or, if you add a day-labourer at the cost of one food, three stones at a time.
  • Bookshelf: Your foresight to invest your spare change in a library allows you to not only learn new trades quickly, but excel in them (and earn 3 food every time you embark on a new occupation).

If you have the millstone or the water mill, you will want to embark on a grain-based strategy in the early game as it will guarantee your ability to feed your family (and pay your workers) later in the game. If you have the spinney and/or the sawhorse, you might want to focus more on raising animals as you can expect free wood or the ability to build fences and stables more efficiently than your peers. The turnwrest plow puts you on a more agricultural course as you can quickly plow and sow fields. The carp pond and/or the canoe makes fishing a part of your strategy because it’s cheap and easy food. The crane puts a focus on building and renovation as you can more quickly acquire stone than your rivals. And the bookshelf puts you on an occupational track as every occupation you learn feeds a family member.

And then the strategies become even more complex and dynamic when you try to balance the occupations and the skills they provide with the minor improvements and the equipment that they make available to you. For example, if you have the Turner Occupation, who builds furniture, you can trade 1 wood for food at any time, and this goes well with the spinney improvement as it pretty much guarantees you will get a lot of wood to turn into furniture which turns into food to feed your family. The spinney also goes well with the frame builder occupation, since the free wood reduces the amount of resources he needs to build clay structures even more. The organic farmer occupation and the sawhorse minor improvement go well together, since the first requires lots of pastures and the latter allows you to build fences quicker due to the reduced material requirement. The seasonal worker occupation goes well with the planter box minor improvement which, if your field is beside your hut, allows you to plant additional grain or vegetables, which the seasonal worker can easily harvest. And so on. Just like in a real supply chain, when the right skilled resource has the right tool, her productivity multiplies.

Played properly, this game emphasizes the important relationship between the three T’s — talent, technology, and transition — because advantages come when you pair talent (occupational skills) with the right technology (tools granted to you by minor improvements) to allow you to transition your basic farming operation into a strategically designed one, where the focus of your strategy will transition over the game, from insuring you can produce enough food to feed your family (and pay your workers) in the early rounds to growing your family and plowing fields and building pastures in the mid-game to doing whatever it takes to maximize your agricultural output in the later rounds so that, by the end of the game, you’ve maximized your crop production, filled your pastures, expanded your buildings, and built the biggest, most profitable, and most cost-effective farmyard.

This game definitely requires you to put on your thinking cap and get comfortable in that thinking chair, because, just like when you sit down to analyze a potential supply chain configuration, you’re going to be in it a while as you put your supply management skills to the test.

Game On!

The (Board) Gamer’s Guide to Supply Management Part : Agricola, Part II-A

So, you think you’ve mastered the basic game of Agricola, and can now manage the basics of an industrial farm at the back-end of your agricultural supply chain. With your limited resources, you can deftly balance growing food with feeding your family (investing in crops versus paying your workers), expanding your farm and/or family versus maximizing the return from what you have (and trading off short-term gains today for long-term gains tomorrow), improving your infrastructure (by upgrading your buildings and making them more resistant to the elements and lowering their annual maintenance costs with some up-front investment) versus focussing on your fields (plowing and sowing your fields) versus raising and breeding animals (and the supply and demand dynamics of the meat-eating versus vegetarian marketplace), growing grain versus vegetables (and the internal dynamics of the basic commodities market), and raising sheep versus pigs or cattle (and the various preferences of different locales, taking into account that Americans love their bacon and Hindus don’t eat their cows). You think you have it all figured out and end every game with a fully utilized farmyard, a nice balance of crops and animals, a big family, and a better homestead than your peers. Think again.

Just like the real world agricultural supply chain isn’t this simple, neither is the full version of Agricola. Adding in the occupational and minor improvement cards adds a broad range of new elements to the game and greatly increases the complexity and available dynamics. Basic strategies go out the window as you try to find new and innovative ways to build a better farm than your rivals, who now have access to new skills, equipment, and innovations to acquire food, grow crops, and raise their animals. Just like every innovation in the real world pulls the rug out from under your proverbial supply chain feet, every occupation and minor improvement has the potential to completely change the balance of power, especially when these occupations are skillfully paired in a complementing manner.

There are 66 basic occupation cards, which include:

  • Merchant: his skills in trade allow you to take an action a 2nd action for the cost of 1 food, just like skilled merchants always find a way to take advantage of the situation
  • Seasonal Worker: his services double the amount of grain or vegetables you can harvest, just like more labour in the real world speed the harvest
  • Stone Carrier: this strong man can harvest stone from the quarry twice as fast as the average labourer, just like a skilled labourer is much more effective than an unskilled one
  • Frame Builder: this skilled tradesman allows you to mix wood and clay and still build a solid structure, just like the best engineers know how to mix materials for the best construction
  • Organic Farmer: his ability to command a higher price for his crops allows you to get more for animals that get to free-range graze (in uncrowded pastures)
  • Maid: provides you with one food at the start of each round, as part of her job is to bake and cook (while you plow, sow, and harvest)
  • Plow Driver: this day labourer allows you to plow 1 (extra) field each round for the cost of 1 food
  • Chamberlain: this market manipulator allows you to take actions before your peers have the opportunity to do so, just like an inside man gets you access to new technology before your peers
  • Stablemaster: this master shepherd allows you to hold more animals in unfenced stables than you could otherwise, just like a real shepherd can keep a heard in line without having to fence it in
  • Mendicant: this master begger is immune to the effects of (up to) two begging (debt) cards

And even though these are just 10 of the 66 basic occupation cards, and there are 41 more available in a 3-player game and a total of 103 more available in a 4 or 5-player game, you can quickly see how each occupation provides you with a skill that can significantly impact your strategy.

If you have the seasonal worker advantage, you will focus on plowing and sowing fields early in the game, as you will be producing grain and vegetables twice as fast as your opponents, and will quickly lock-in your ability to produce food and extend your family. If you are the organic farmer, you will play a live-stock centric game and build lots of pastures because you won’t need many animals to rack up animal-based points. If you have the maid, you can focus more on building early on as you will need less food to progress to the later rounds. If you have the Stablemaster advantage, you will build lots of stables early as this will allow you to keep lots of animals without needing to acquire the wood required to build lots of fences. If you are the Mendicant, then you will use this to your advantage in the later rounds to avoid the need to feed two family members and take extra development actions instead. And if you are the Chamberlain, you’ll use this insider’s advantage to stay one-step ahead of your rivals who will have to double-down into their chosen strategy to try and keep up with you.

Just like specialists in the real world give you a competitive advantage and alter your supply management strategies, so do specialists in Agricola. The right ability at the right time can not only significantly alter your best strategy, but even give you a considerable edge over your rivals if they don’t have an skills of comparable worth. And the wide variety of potential skills, and combinations thereof (as your family members can partake in multiple occupations) can make it a different game every time (just like every go to market event is distinct from an informed sourcing perspective). This is what makes Agricola one of the best games out there for sharpening your supply management skills, and a great foundation for getting yourself ready for the ultimate supply management challenge. More to come!

The Storm Clouds Are Coming!

Fifteen years ago, enterprise software was installed on-premise and managed locally. This required organizations with no knowledge of IT or IT management to create IT departments to manage servers and the software services that ran on them. For an organization that didn’t use software in it’s daily operations — such as a manufacturing organization that used manual production lines, an advertising agency that deals in existential image and not physical product, or a real-estate agency that only has to take listings and take cheques — it was an expensive proposition.

Then came the Application Service Providers, better known as ASPs. Using the power of the internet, these software solution providers built their own data centres and hosted the solution for their customers on dedicated machines in their own data centres. However, this solution was not optimal either, as the organization was not only paying for machines, energy, and administrators to run the software, but also paying for these through a thirdparty that added overhead and markup.

This provided an opportunity for more enterprising software delivery organizations that were able to build their applications to be multi-tenant and host multiple clients on the same platform. This reduced the number of machines, kilowatts, and system administrators that were required and thus reduced the overall operating cost. This allowed this new breed of Software-as-a-Service (SaaS) vendor to take business away from the ASPs and advance the state of the art.

But this wasn’t the end. New enterprising software delivery organizations, who realized that their expertise was software and not data centre management, decided that they could do even better if they designed multi-tenant Software-as-a-Service solutions that could be run on someone else’s platform. This would bring more economies of scale into play as not only could multiple solutions could be run on the same platform, but the platform provider could be replaced by another platform provider with a lower-cost at any time. Enter the Cloud, which, like a real cloud is ephemeral, suspended in space, and, in some cases, full of security holes.

Cloud services are ephemeral as any specific instantiation of cloud services last as long as the company behind it has the means and the desire to continue supporting the cloud services. Cloud services are suspended in space since the instantiations may move over time as the service owners switch to lower-cost and/or more secure data centres. And, with the recent revelations on the PRISM program, the cloud is full of security holes to the point where the EU Parliament has called for suspension of the multi-billion ‘Safe-Harbour’ deal over NSA spying because some cloud providers don’t, either because they don’t have the expertise or won’t spend the money, secure their part of the cloud properly.

As a result, supply chains are exposed to additional risks of disruption (if a cloud provider unplugs overnight), security breaches (as some platforms are significantly less secure than others), and privacy risks (as some governments claim the right to all data on servers on their shore that is not associated with citizens or entities of that country or that might pose a security risk under acts like the US Patriot Act).

And this is only one of 14 significant threats to the supply chain in 2014. Would you like to know what the other 13 are? If so, download SI’s latest white paper on the Top Ten Transitions To Tackle in 2014 to Tame the Tolls, sponsored by BravoSolution. (Registration Required) Or, you could just wait and be surprised as the other 13, riding on black swans, one by one, strike at each full moon. Your call.

Optimize Your Supply Chain (and Your Company’s Worldwide Operation)


Today’s guest post is from Srini Vasan, CEO of eShipGlobal, a Transportation Management Software Company.

Our new global economy has opened the door to more opportunities than ever. Businesses have never had so many choices for products and services, or the chance to work so efficiently across borders. Technology has expanded options, as instant communication has made it possible to carry on business in three (or more) continents simultaneously. And the global nature of these innovations makes supply chain management more important than ever.

Companies are beginning to recognize the importance of maximizing supply chain efficiency and minimizing costs. In a 2012 U.S. Supply Chain Survey conducted by IDC Manufacturing Insights, 80% of supply chain managers reported that reducing their total supply chain costs was a top priority. And supply chain improvements can have positive implications across the board: A freight transportation infrastructure study by Boston Strategies International showed that a 10 percent reduction in direct transportation costs would result in supply chain improvements that could reduce companies’ overall operating costs by 1 percent.

Successful management of a global supply chain can be daunting — there are so many moving parts than ever before — but there are steps that can help your company tackle the inevitable issues and take advantage of the opportunities.

Review Your Talent Pool — Three-fifths of the supply chain management executives who responded to a 2013 PricewaterhouseCoopers’ survey said that the “acquisition or development of supply chain talent and skills” was essential to their current success. Note the word “development”. Of course your company can hire new talent, but you can also better utilize existing staff by ensuring their skills are up to date. Provide ongoing and intensive training, whether through internal education or by outsourcing training to supply chain management academies.

Focus Your Energies While Broadening Your Horizons — It’s not just training that can be outsourced. Consider your company’s core competencies. Where does your company shine? What are the tasks your managers and staff must do? Are there any that could be done more effectively out-of-house? Outsourcing can focus your staff’s energies and help them perform at the top of their game. And keeping a global perspective can be very cost-effective. According to a 2013 white paper by Fifth Third Bank (on optimizing the global supply chain), analysts report that companies can substantially lower supply chain expenses by identifying countries or regions with low-cost suppliers (and by keeping managerial staff limited).

Communicate and Collaborate — An optimized supply chain is just that, not a bunch of independent activities and functions, but a chain. All of its links — from small internal departments to large global trading partners — must communicate with each other in order to optimize efficiency. Better communication and collaboration between manufacturers, suppliers and retailers can improve everything from data-driven forecasting to inventory management.

Today’s technology can make communication easier than ever. Andrea Robinson, the UK business development manager for CargoWise, suggests that “using a single automated database ensures trading partners can communicate in a language compatible with other companies to identify common key performance indicators that provide a level of integration for shared systems and processes.”

Embrace Technology — An investment in information technology is critical for supply chain infrastructure development. IT supply chain solutions can:

  • Organize and unify supply chain processes
  • Integrate department activities
  • Enable sharing of software and information resources
  • Provide metrics that help to evaluate performance
  • Provide transparency
  • Offer customer service
  • Identify trends and changes more quickly and enable the supply chain to respond faster to both

Mobile technology can also be a supply chain game-changer. According to Ms. Robinson, “This technology can help improve field sales, merchandizing and marketing, and enable direct services to the consumer (through customized location-based coupons or services that improve employee productivity in the field). Providing information such as provenance, origin, item contents and specialized information on demand about sustainability, local content or manufacturing methodology enhances the brand and allows companies to connect directly with the consumer.”
Of course, an investment in IT is like any other. It’s vitally important to assess your needs, conduct a thorough search, and carefully choose the right solution for your company.

Plan (but keep an open mind) – IT solutions can also aid in planning, by providing information that helps to predict needs, forecast trends, and identify strengths and weaknesses within a supply chain. Companies can (and should) utilize this information to set goals, remembering to be realistic, flexible, and open to input from collaborators. “Adaptability is key!” was one of the takeaways from a recent “successful supply chain optimization by HP” on supply-chain.org, the operator of the largest IT supply chain in the world.

By following many of the steps above, HP was able to “streamline, simplify, standardize” and profit. By optimizing its global supply chain, the company leveraged scale spend and common parts; consolidated suppliers manufacturing partners and logistics providers; eliminated unnecessary or duplicate nodes; reduced the number of drivers; and decreased the number of IT processes and applications used.

HP also learned a few lessons along the way. As mentioned, the company found that adaptability is crucial, as is business continuity, especially during transformational efforts. But the most important idea behind the company’s success is also one of the simplest: Strong organizational leadership is essential. In the end, a thoughtful plan created by collaborative, creative leaders is the strongest link in an optimized global supply chain.

Thanks, Srini.