Category Archives: Supply Chain

Oh No! App Mania Has Hit The Supply Chain!

Prepare to be nickel-and-dimed one feature at a time. It’s coming.

Unlike the author of a recent post in the SCMR blogs, I am not pleasantly surprised by the amount of effort being put into smartphone app development right now. First of all, there’s only so much you can do on a smartphone screen. For the vast majority of analytical supply management applications, smartphones just don’t make sense. Secondly, unless you have constant access to free wifi, you’re not going to want to download megabytes of data and push your mobility bill through the roof. Thirdly, the real value in supply management systems materializes when data flows from one to the next — and all of the relevant data is available. Data stuck in a standalone app that doesn’t do much more than display that data isn’t very useful.

Plus, do you really need 100+ WMS apps? Really? No! There aren’t 100 WMS applications, and if you think there are, then what you are really buying is 100 different instances of a WMS workflow engine custom tailored to a specific situation. You’re paying for 90% of the same functionality 100 times over. I guess it’s good for the vendor if they can create 100 apps by only doing the work required to create 11 and charging you for each and every app, but it’s not good for you.

HighJump, one company that plans to release up to 100 apps a year, may try to tell you that it’s a great idea because it is a way to get new functionality in your system without waiting for a new release, but you don’t need apps for that. If you’re using a true multi-tenant SaaS application, then you get every update the vendor makes as soon as its available, and you get it all for one maintenance fee.

In other words, if you want to needlessly empty the corporate bank account, there’s an app for that.

That Expedited Shipment Has to Be On Time. Who Do You Choose?

No matter how much effort is put into planning, at some point a shipment is going to have to be expedited. It’s going to cost extra, but there is going to be no choice in the matter. The only choice is Fedex vs. UPS. Which should you choose?

PackageFox recently put together an informative infographic that compares and contrasts the two companies, and the net result is that, from a big picture, they are surpassingly similar. But one difference stands out. With 2.4 times as many jets, Fedex rules the air while UPS, with 4.63 times as many delivery vehicles, rules the ground. While there probably won’t be much difference for in-country shipments, if it is international, and has to go air, it might have to go Fedex.

Why You Should Optimize Your Supply Chain

Besides the host of reasons this blog has provided you with in the past, which include:

if the supply chain isn’t optimized, it might not be nimble enough to keep up. As per this recent McKinsey article on building the supply chain of the future, ““the competitor that’s best at managing the supply chain is probably going be the most successful competitor over time“. Furthermore, as supply chains are becoming more splintered, they are getting harder and harder to manage by the seat of one’s pants, which increases the management complexity. In many organizations, instead of increased agility, this actually leads to increased inefficiency as managers struggle to manage the complex splintered chains efficiently.

But if supply chain optimization is employed, the splintered chains can be quickly optimized. But more importantly, an organization can progress beyond managing splintered chains to managing supply chain segments, which is likely the ultimate key to supply chain success in the years ahead. Think about it … if the origin and destination of goods has to continually adapt due to changing low cost locales and emerging (consumer) markets, then the ultimate key to quick adaptation will be to just change the relevant segments of the (splintered) chains and not the whole chains. If the organization was sourcing from Thailand but switches to Vietnam, but is still shipping to the US, why should the whole supply chain change? Maybe it’s still the same ocean carrier, and all that changes is the port and the carrier that gets the goods to the port. And if the organization has general contracts with a number of different international carriers, it will be quick to run an optimization and build the modified change from available segments.

And that, in a nutshell, is why you need supply chain optimization.

Retailers Are Struggling with Cost vs. Value

According to a recent article over on the National Retail Federation’s on “officemax petco and half price books weigh in on retail horizons key findings” on Retail’s BIG Blog, retailers will continue to be challenged by balancing the demand for value and keeping prices down. In addition, seventy-six percent of participants said the top supply chain strategic initiative for 2011 is cost reduction/cost containment. This should not be a surprise. It’s the tail end of a lingering recession, thanks to the jobless recovery — and this translates into less dollars in customers’ pockets to spend. Raw material and transportation prices are going up again, and this translates into higher costs. Unless the value is there, customers are not going to spend.

However, this does show the heightened need for next generation sourcing techniques throughout the supply chain. Retailers need to get the right high-value products on their shelves at the right price. Manufacturers need to source the right high quality materials at the right price. Material suppliers have to source the right high-value components at the right price to process the raw materials. And each has to insure that the materials flow up the chain at the right time to minimize inventory and distribution costs. Not easy without systems and processes that keep the modern value chain in sync.

Do You Know Just How Risky Your Supply Chain Is?

Or that even seemingly unrelated natural disasters can put it on hold? Or that it’s not just unpredictable disasters, like the eruption of Eyjafjallajokull that can bring things to a halt? Even completely predictable events like floods, which occur fairly regularly in most regions over the course of decades, can have devastating effects well beyond the coastal areas.

Consider the recent flooding in Australia’s Queensland slate. It did more than just make coastal areas unusable. It also resulted in significantly increased coal output. BHP, the world’s biggest producer, minded most of its coal products in Australia’s Queensland’s Bowen Basin from three of the world’s largest coking coal mines — Goonyella Riverside, Blackwater and Peak Downs. As a result of the flooding, all three mines were temporarily out of commission and mining is still constrained. This has caused BHPs production of coal to fall 30%. All because of a little extra water. This is not something that would come to mind if you asked an average organization about its supply chain risks.

So do you know just how risky your supply chain is? If not, maybe it’s time you did an assessment.