Category Archives: Supply Chain

Where’s Our Leonardo da Vinci?

Leonardo da Vinci, the brilliant Italian scientist, mathematician, engineer, architect, inventor, painter, botanist, musician, writer, and the archetype of the Renaissance man, defined an entire movement almost single-handedly and inspired countless scholars to new and dizzying heights. He probably understood the connection between art and science better than any man alive during the last millennium and even conceptualized inventions (such as the helicopter and the tank) that could not be realized for almost 500 years. He was a leader and a visionary and someone who could serve as a focal point for an intellectual revolution.

Now, it’s true that the 20th century produced its fair share of great minds — Einstein, Feynman, Hawking, and Penrose who helped redefine the very universe we live in, to name a few — but most were fairly specialized, and these minds in particular focussed heavily on the fundamental sciences. In the arts we had the likes of Pollock, Warhol, and Lynch and in philosophy we had the likes of Wittgenstein, Russell, Rand, and McLuhan, but, like their physicist counterparts, they never crossed the divide. The only people who attempted to really bridged the divide were the science fiction writers like Asimov, Clarke, Adams, and Gibson. But even the greats never really crossed the line into the “world” of business which would, of course, at least as far as a scholar is concerned, sully true academic pursuits.

When you meander over into the world of business, in which most of us live in today’s mostly privatized world (where the market capitalization of six private corporations exceed 5 Trillion, which is an amount greater than the current GDP of every country in the world except the US, and the top corporation, Race World International, has a market cap that is three times the annual GDP of the US), and you look at the great business minds like Drucker, Kroc, Porter, and Ford, you see little connection to the sciences, except for Ford, who was an engineer.

We’re supposed to have reached a point where the world is flat but executing global trade, travelling internationally, and crossing the cultural divide seems to be harder than it has ever been. Technology is supposed to be simplifying the supply chain but the sheer proliferation of e-Sourcing — spend analysis, RFX, e-Auction, decision optimization, contract management; e-Procurement — P2P, EIPP, e-Document Management, e-Invoicing and e-Billing; logistics — transportation optimization, LTL marketplaces, and 3PL management; warehousing — inventory optimization, warehouse (layout) optimization, demand planning and forecasting; supply chain finance — discount management, receivables trading, and factoring; visibility — EDI/XML, RFID, and tracking; manufacturing — production planning, lifecycle management, performance management, and collaboration; compliance — regulatory, environmental, and carbon management; and other supply chain technologies is challenging even the most technologically proficient of us to keep up. And the new and improved “paradigms” the consulting firms unleash upon us every decade usually end up in the trash by the next one.

Furthermore, while the modern supply chain is, in some ways, more efficient than it’s ever been — at least at the handful of industry leaders, in many ways, it’s in shambles. We need a visionary who understands the art and science of the modern supply chain and the trillions of dollars in global trade it supports every year. Someone who understands the technology it requires and the science behind it. Someone who sees the architecture on which the supply chain is based and how to engineer a better chain based on that architecture. Someone who is comfortable with the underlying mathematics of modern supply chain models and how to use this knowledge to optimize the supply chain. Someone who hears the melodic, almost musical, patterns of a smooth flowing supply chain. Someone who knows the long history of the global supply chain which actually dates back to pre-history (and the realm of the archaeologist) … centuries before the spice trade in the 16th century and at least as far back as the 9th century during the time of the Vikings who traded with the Franks, Baltic, and Byzantine empire and pioneered trade routes down the Volga and Dnepr and to Northern India and China and essentially traded with the entire known world at the time. And someone with the vision to take the best that the art, science, and business schools (of thought) have to offer and take us firmly into the twenty-first century. Because, when you think about it, we’re still operating like it’s the 20th century, and it’s 2010.

It’s unfortunate that da Vinci lived 500 years ago, because if you take a long, close look at the world we’re supposed to be powering, it quickly becomes clear that we could sure use someone like him today.

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Is it Time for a New Renaissance in the Supply Chain?

The Renaissance was a cultural movement that encompassed a resurgence of learning based on classical sources and a gradual, but widespread, educational reform. It was also known for the humanist method of study, which focussed on the study of grammar, rhetoric, moral philosophy, poetry, and history by Latin and Greek literary authors, the development of techniques to render perspective and light in a natural way, and a scientific revolution that began with the likes of Leonardo da Vinci who intermixed art and science in remarkable ways.

After reading a recent article on “Supply Chain 2010” in the Supply Chain Management Review which noted that a “Renaissance” education is needed, I’m wondering if it’s not high time we brought a new renaissance to supply chain. I’m not saying we should dig out the dusty Latin and Greek texts (after all, how many of us could read them? I know a few Greek roots and could probably refresh myself on grade school Latin if I had to but beyond that …), just that we should look back a few decades to when growth was slow and steady, the market didn’t change overnight, and crashes didn’t come faster than we could log them. The Old Normal Is Coming Back, and it wouldn’t be a bad idea if we knew how to deal with it … especially those of us who weren’t working in the real world 20 years ago.

We have a rapidly expanding discipline. Sourcing, Procurement, Contract Management, Global Trade Management, Compliance Management, Green, Sustainability, Logistics Management, 3PLs, Asset Management, Supply Chain Finance, Inventory Management, Warehouse Management, Demand Driven Forecasting, Marketplaces, Supply Market Insight, Warranty and Returns Management, Service Management, IP Management, Talent Management, Supplier Information Management, Supplier Performance Management, Negotiation Management, and dozens of other self-contained disciplines that are impacting every aspect of the supply chain. In addition to having deep expertise in one of these areas to differentiate yourself and offer value above and beyond your peers (to ensure you keep your job in these lean and mean times), you also have to be reasonably well versed in each of these other areas to understand your role, where it fits in your organization’s supply chain(s), and where you fit on the cross functional teams. You literally have to be a jack of all trades and master of one.

We have technology platforms proliferating even more rapidly on a wide array of deployment options that leave even experienced IT pros dizzy. Traditional installed, single-instance ASP, multi-tenant SaaS, single-tenant Cloud, multi-tenant Cloud, Virtual Beowulf Clusters, and so on.

And it’s finally being recognized that not only is Supply Chain the core of the business, with the ability to contribute much more to the bottom line in a slow-growth (or flat) economy than sales and marketing ever will (as every dollar saved is equal to between 5 and 20 dollars of additional revenue as far as the bottom line is concerned), but an opportunity for revenue generation. Robert Rudzki (Beat the Odds: Avoid Corporate Death and Build a Resilient Enterprise) and David Jacoby (Guide to Supply Chain Management: How Getting it Right Boosts Corporate Performance) have written entire books about how the supply chain can boost your revenue and corporate performance.

And that’s just the tip of the iceberg. The experts are realizing that Supply Chain Process is Art and Science, that Collaboration Innovation is required for success, that we’re in for energy and water shortages if we don’t revolutionize our supply chains, that the 106 steps discrete steps to global trade are only going to multiply as more and more environmental and security regulations come into play (as we try to figure out how to truly trade across global boundaries), and that inefficiencies are costing the global supply chain hundreds of Billions of dollars each year.

When you try to achieve a coherence, you realize that we need a way to render global supply chain perspectives in comprehensible ways, a more humanist approach that links the man with the machine — which is extremely unlikely to acquire the true intelligence we have in our lifetimes, that integrates the morals of sustainability and responsibility into everything we do, that uncovers the poetry of an optimized supply chain, that outlines a philosophy for how an ideal supply chain should flow, and that scientifically revolutionizes how we produce and consume throughout the chain. And if that’s not a Modern Renaissance, I don’t know what is!

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Supply Networks CAN NOT be too flexible

Every now and again I see a headline that really grinds my gears. A recent headline over on Supply Chain Brain that asked can supply networks be too flexible is one of them. Even before I read the article, I can tell you I was quite annoyed because a supply network can never be to flexible. When you consider the almost infinite number of things that can go wrong in today’s supply networks, and that the ability to recover on a dime could be the difference between profit and bankruptcy in today’s economic climate for a company that’s operating on razor thin margins, it’s absurd to even ask this question.

Then I got more annoyed when I read the first line, which quoted MIT professor David Simchi-Levi that said “I will not tell you the obvious”. Great … not! Another ivory-towered academic leaving the question vague and open-ended and further strengthening the stereotype that all of us PhDs are arrogant and don’t understand business and the need to get to the point — quickly. (While the former may be true, the latter is not where those of us that left the ivory tower is concerned.)

The saving grace is that before the paragraph ended, the author noted that “companies can spend too much time and money on achieving total flexibility in their sourcing and fulfillment strategies”, which is true. There is always a trade-off, and after a point, returns will diminish quickly. But the question isn’t whether a supply chain can be too flexible — because it can’t, but whether the cost of adding additional flexibility is justified with respect to the risks you are trying to mitigate, or whether the savings that can be achieved by reducing flexibility is worth the risks you are going to add. After all, any flexibility you can get for free is always worth it. You do need to do a(n optimization supported) total value analysis to figure out whether or not you have enough flexibility, or whether you could sacrifice some for worthwhile cost savings, but you never need to ask yourself whether flexibility is good. It’s always good. It’s just a question of whether or not you can afford it if it has significant operational impacts.

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Why Supply Chains in 2015 Will Be Substantially Different Than Today

A lot of supply chain 20xx lists are produced each year, and while many aren’t worth a second glance, Dan Gilmore over on Supply Chain Digest has one of the best top 10 lists on what supply chains will look like in 2015 that you’re going to find. But what’s even more important than the items on his Supply Chain 2015 is why supply chains are being forced to change. I’ll attempt to answer that a bit in this post.

  • Fuel Prices Will Spike Again … to $200 a barrel
    Global demand is increasing daily. Emerging markets want their western lifestyle and the developed world is doing a very poor job of latching on to renewable sources (like wind, water, and solar … combined, these sources could easily power the Global Grids, but it will take a significant change in mindset as well as a very significant up-front investment for them to do so).
  • Generation Y Will Boycot You With Their Wallets if You’re Not Corporately Responsible
    In most surveys, your CSR policy is a greater concern to most job candidates than the size of the paycheck you’re offering. That’s because environmental consciousness is part of who they are and if they have a choice between two products and one is from a company that is not known for its environmentally friendliness, regardless of cost, guess which one they are likely to choose?
  • Product Lifespans will Compress Further
    As we haven’t reached the limit yet, our market induced appetite to always have the latest and greatest will continue to push manufacturers to innovate faster to keep their marketshare. If you can’t keep up, you will be pushed out.
  • Time-to-Market in Emerging Markets will be King
    The economies of Brazil, India, and China are poised to take off like a rocket … and they want what we got. The first company to identify a need and offer an affordable product to fill it will make the $2B in revenue P&G made in its first year on the launch of Tide ColdWater (the first detergent designed for cold water) look like petty cash. (Remember, there are 1.2 Billion people in India and 1.3 Billion people in China and the middle class population in both of these countries will soon exceed the total U.S. population, if they haven’t already given the current state of the U.S. economy and the real jobless rate of 17.5% [CNBC].)
  • Inventory Costs will Continue to Increase
    Not because raw overhead costs will increase, but because inventory-related losses due to theft (which costs retailers alone 33.7B in the US [Nov 10, 2009]]) and obsolescence (which will force you to sell or dispose of inventory at a significant loss).
  • SaaS Will Be Better, Faster, Cheaper in Every IT Domain
    While there may still be application domains where it’s not there yet, you can count on that not being the case for much longer. Furthermore, even if you need your own single-tenant instance or data on site, you’ll soon see full-service completely hands-off managed SaaS where the application self-updates and self-replicates because your “instance” is part of the cloud on which it resides.
  • Real Time Information Will Be Ubiquitous
    Cheaper-than-dirt RFID and the emergence of web-based SaaS will quickly take us from an age where we don’t have enough visibility to where we almost have too much. Will you be ready to deal with it?
  • New Breakthroughs in Automation Will Emerge Globally
    Japan is already giving us robot secretaries and robot cats to keep them company. New production technology improvements can’t be far behind!
  • Emerging Markets Are On Their Way to Becoming the Dominant Global Markets
    As noted above, Brazil, India, and China will soon be three of the top five global economies. (China already is, but it will soon be #2.) Germany, France, and the UK will be dwarfed in comparison. If you’re not aligning your supply chains to serve the new GDP super powers, you won’t be a major player this century.
  • Everything will be Digitized
    iTunes has already killed the CD star; even BlockBuster understands that high-speed broadband will kill the DVD star; and when every smartphone has a 10 MP camera …

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The Most Often Overlooked Risk in Your Energy Supply Chain?

Is it the grid and the possibility of another great blackout (due to a lack of breakers)?

Is it the unpredictable terrorist act that could blow up a pipeline in North America (which includes friendly Canada)?

No, it’s Sciurus Carolinensis!

One little squirrel in one little circuit-breaker in one little substation can knock out power to 9,000 homes with a single nibble, as FirstEnergy customers in North Royalton found out on Tuesday.

Maybe Dark Verne has the right idea when he thinks we need to Get Rid of that Squirrel!.