Category Archives: Supply Chain

Customer Service That Takes No Action is Not Customer Service

And if you have no customer service, your supply chain performance metric could be significantly lower than you think! It doesn’t matter that the product ships on time, it only matters that the end customer receives it on time and defect-free. And if the product doesn’t reach the customer on-time and defect-free, your supply chain performance is ZERO unless customer service does something to actively resolve the situation.

It seems that Customer Service is Still Going to Hell and Supply Management hasn’t learned anything yet, as per this recent blog post over on the Supply Chain Management Review that points out that A Disgruntled Customer [is] the Last Supply Chain Link. In this post, the author, Rosemary Coates of Blue Silk Consulting describes her recent experience with Target.com’s customer service and their refusal to do anything when the customer not only clearly pointed out the problem but also pointed out the resolution (which is not the customer’s job).

In summary, the author ordered a gift for Christmas from Target.com, well in advance of Christmas, but when the package didn’t arrive in 10 days, she went online to track it. She discovered that it was scanned at the Target.com warehouse, but never recorded in the UPS system. She then confirmed with UPS that they never picked it up. At this time, she contacted Target.com customer support who refused to do anything, stating that she must wait 10 business days just in case, by some miracle, the package left the warehouse, to be delivered long after Christmas. And then they still did nothing. Target.com didn’t even offer a refund until the author complained about the problem on their Facebook site and Tweeted about it. Were they trying to outdo Best Buy in a race for the customer service Razzie?

This story is absolutely ridiculous. The problem could have been solved with a simple UPS lookup, to confirm the author’s complaint, and a simple call to the warehouse to inquire why the package hadn’t been shipped yet. This would have resulted in a “we don’t know, let’s check” followed by a call-back a little later along the lines of “we misplaced it, it will go out in the next pick-up” or “we can’t find it — it’s obviously lost, we can re-package and re-send or you can give the customer a refund”. And within 24 hours customer service could have called the author back on the open trouble ticket with either a “success, it’s going out” or “it’s been lost, would you like a replacement shipment or a refund”. It shouldn’t take multiple complaints for something a simple phone call can fix. That’s not customer service. It’s customer contempt, and it’s contemptuous in a modern supply chain!

Wanna Get Lean? Get Mean About Wasted Time, Effort, Production, and Transportation!

Apparel Magazine just ran a great article on “developing leaner product development and sourcing operations” for anyone looking for an easy to understand no-nonsense common sense introduction to going lean. Focussed on correcting the six-lean sins of the product development process in an average organization, the article did a great job of pointing out that if you are wasting time, effort, production, or transportation, you are not lean.

More specifically, a lean organization does the following.

  • Optimizes Time Utilization
    A lean organization identifies those parts of the cycle that take the most time or that tend to run out of control and reins them in with proper processes and controls. In supply management, if the longest part of the process is identifying suppliers who can meet certain needs, then, even before a product design is finalized, the process to identify suppliers with the requisite technical capabilities and production processes is begun. Then, when the design is finalized and the components need to be sourced, the organization simply needs to select the most appropriate supplier from a small pool.
  • Optimizes Effort
    As highlighted in the article, a lean process does not include unnecessary milestone meetings, [a] lack of communication between departments that leads to a re-creation of plans, [the] development of too many designs that do not get adopted, or the creation of unneeded samples. The requirements for a project are clearly identified and all efforts are aligned with meeting those requirements.
  • Optimizes Production
    There are three optimizations here. First of all, the organization avoids producing more units than are needed (in a given period of time). If the known demand is 100, 1000 are not produced in the hope that the need will magically appear. Secondly, the organization does not add features or functions that are not required by, or do not add value to, the end customer. Third, the organization avoids the creation of process silos to insure that one individual or group doesn’t over-engineer a part or value-add service that goes (well) beyond need or cost control requirements.
  • Optimizes Transportation
    This applies to all steps in product design, development, and distribution — not just the final distribution process. For example, sending partial products back and forth needlessly in the design and development process due to poor process design is waste. In production, if raw materials are transported from Africa to South America for refinement and then shipped to China for component production and the components are then shipped to the US for final assembly, that’s just inefficient, especially if the final products are then sold in Europe. That’s losing sight of the supply management forest while focussing on the old cost trees.

Lean is not a mystical, magical, chimera. It’s the systematic elimination of waste by taking a holistic view.

If You Think You Have Supply Chain Problems, Think About Poor Santa! (Repost)

Santa, who has to travel 2,860 miles per second in order to visit 1,700 homes per second to deliver over 2 Million Tonnes of gifts to boys and girls around the world, has supply chains and logistics challenges that put even the logistics challenges of the largest multi-national or US military (that has to support almost 1.5 Million people on active duty around the world that need everything from food and clothes to jeeps, tanks, and aircraft to do their job) to shame.

Reviewing a few simple stats, that we can compile from this article on The Science of Christmas in the Telegraph, this article on Santa’s Logistics Challenge in the Bangkok Post, and this article that asked What if Santa Had a Supply Chain Problem over on Open Kitchen, we find out that:

  • There are approx. 1.9 Billion children in the world.
  • Approximately 33% of these children have Christian parents.
  • The majority (defined as 90%) will be deemed nice by Santa.
  • In total, about 570 Million children need gifts.
  • If there are 3 children per household, on average, about 190 Million households will need to be visited.
  • Since Santa likely cannot start delivering gifts safely before 9 pm in a household, and since some children will not sleep more than 7 hours (on Christmas Eve), Santa has only 31 hours to make his deliveries.
  • This says he must visit almost 1,700 homes per second.
  • Since Christianity pervades our planet, he’ll have to cross most of the 510,000,000 kms of the planet’s surface.
  • Assuming the houses are equi-distant (which is a fair approximation as they’ll be dense in the city are far apart in rural areas), Santa will have approximately 2.7 km to travel between households.
  • That’s 513 M kms of travel in 31 hours.
  • That’s equivalent to 4,600 kms per second.
  • But this is just the delivery. He also needs to acquire the toys to deliver.
  • Let’s assume 2 toys per child, or 1.04 Billion toys.
  • Assuming a distribution where popular toys are distributed to
    tens of thousands, hundreds of thousands, or millions of children and where unpopular ones go to thousands, or hundreds, of children, we are probably looking at 10 Million toys.
  • While some vendors may produce 100 types of toys, others will produce one, and we can settle at about 10 toys per vendor.
  • That’s 10 Million vendors to manage!
  • If they are scattered all over the earth, and if each toy can go direct or through nearby 3PLs, and if each toy can go by a mix of truck, rail, sea, and air, that’s probably between 2 and 20 lanes per vendor, with 5 being a good number.
  • That’s 50 Million lanes by which goods could be arriving.
  • No wonder Santa needs a Super Spaceship and an army of elves!

Your Supply Chain Is Only As Safe As the Most Insecure Point

Just like a chain is only as strong as the weakest link, your supply chain is only as safe as the most insecure point – and the surprising thing (to you) is that it’s probably not where you think it is (at least not if you do business the local way).

As per this recent article over on the Logistics Briefing Blog on Transport Intelligence, “2012 is a record breaking year for freight criminals”. It was bound to happen sooner or later. As the article points out, with an average electronics shipment valued between 3 Million and 30 Million, these shipments are worth a lot more than most shipments of drugs or even guns, and are more valuable to thieves in more ways than one.

  1. The margins are higher.
    The cost of an operation to steal one of these shipments is typically 10% of the value, or less. It truly is a steal.
  2. The risk are lower.
    Most law enforcement agencies haven’t realized just how attractive these shipments are to criminals.
  3. The downside is much lower.
    If you do get caught, and it’s a first offence, it’s unlikely that you’ll end up in jail (unless the theft was violent and someone got hurt). In comparison, if you’re running drugs, you’re going to jail. Even if it’s just a few ounces of marijuana. (Plus, the chances of being hunted down by a heavily armed SWAT team are miniscule in comparison.)

But what is really going to surprise you is where the crime is picking up. Many of the significant thefts are in the EU! A recent theft in Hungary involved about €3 Million worth of smart-phones. Theft in the Netherlands shot up when the U.K. launched “Operation Grafton” to reduce thefts in Heathrow. And freight crime in Belgium has increased 90%.

So for those of you worried about India and China, think again. (And, as mentioned in the first paragraph, if you’re willing to do business the traditional way in those countries, and grease a few palms, your cargo will be quite safe. SI is not endorsing this, especially if you’re in the U.S. or the U.K. where such actions might be seen as violating the FCPA or the Bribery Act, but just noting that, statistically these countries are safer to ship in than a number of countries in Europe and can be much safer than just about anywhere in the world with the right preparations. The point is that your first instinct is probably not the right one when it comes to judging safe shipping zones.)

The Supply Chain Has Changed a Lot in 60 Years!

Sixty years ago, we had no shipping containers, no Satellite Communications, and no packet switching. That means no standardized shipping, no RFID or cell phone calls to remote locations where landlines are unreliable (because thieves are digging up the copper) or non-existent, and no way of tracking your shipments and status with internet and web-based software.

But all that changed in the 50’s. We had the U.S. Military begin standardization of the intermodal shipping container, which was formally standardized by the ISO in the late 1960s, packet switching research began in the early 1960s, which resulted in NPL and ARPANET, the latter evolving into the internet, and 54 years ago today, ARPA (the Advanced Research Projects Agency) launched the world’s first communications satellite, SCORE (Signal Communications by Orbiting Relay Equipment).

And less than 60 years later we have the modern supply chain. It’s too bad that we didn’t have blogs 60 years ago, because it would be very interesting to go back through the digital archives and relive the New Florence. New Renaissance. that followed WWII. At the time, with the limits of communication technology, the rate of innovation between 1945 and 1969 was quite phenomenal. The current Renaissance didn’t really start until the introduction of the Web 20 years later (in 1989). Something to think about before the world begins again in 3 days. 🙂