I don’t drink coffee much anymore, but I know more than a few folks who have a limitless passion for gourmet versions of the brew. And they tend to talk quite a bit!

Something a friend recently said about coffee production made me start thinking about how the jargon “sole source” and “single source” are used when referring to supply chains.

Although most coffees are blends of different beans, you can buy coffee that is sole sourced. Coffees produced in this way will often be labeled as such, so that buyers know that the bag of coffee beans they are purchasing is from only one place in the world.

What this means for coffee is that the end product is not a blend of beans, but that every bit of it has come from the same farm – and in some cases — even down to the same field.

In fact, the place where the coffee was grown leaves its unique influence in the taste, which isn't the same result as you get from a coffee bean blend. For example, the nutrient-rich soil left behind from volcanic activity that can be found in Costa Rica creates a unique coffee taste as compared to a cup brewed with beans from a farm in Kenya.

Now, if I were to find the perfect cup of single source coffee as a buyer, and suddenly lose access to it because that one farm that it is grown on stopped producing it for whatever reason, that would leave a very bitter taste in my mouth!

It's the same for single sourcing and sole sourcing in the supply chain: The rewards are great, but the risks are also a major concern. If that single source or sole source was unable to deliver the service that only it can provide, the buyer is majorly out of luck.

For those new to the concepts, the two ideas of single source and sole source are not the same.

"Single source" refers to a supplier that is one of many. The buyer could technically go elsewhere for the service, but for whatever reason – higher quality, speed, a good relationship – the buyer only works with that one single service provider.

"Sole source" refers to a situation where a service provider is the only one that can provide something to the buyer. The service can't be acquired anywhere else in the way that it can be from the sole source provider.

A rigorous decision-making process needs to be in place for the buyer to have a successful future relationship with either a sole source or single source provider. And every single time a service provider is required, this process needs to be repeated.

Although cost, speed, and limitations on available options may seem like good reasons to select a provider, what should be paramount is trust. A buyer needs to be able to trust a provider due to the major risks that having sole or single source services can introduce.

There are many benefits to single and sole sourcing – with speed being one of the biggest ones. But before committing to this type of sourcing, the reputation and proven abilities of the provider need to be understood and verified.

I know that coffee drinkers can be very particular and specific about what makes a good cup o’ joe, and buyers looking for suppliers should be just as careful and exacting when looking for a sole source or single source provider.

Do you single or sole source or know an organization that does? Let me know about your experiences.

GoGoGo!

Jim

Listen to the Global Supply Chain Podcast series on Procurement and Sourcing

Strategic Sourcing and Procurement

Photo Credit: Alisdair

I woke up early this morning, had my tea, and started reading business and industry news as per my usual routine.

The first article I read predicted manufacturing production to outpace the overall economy with 5.5% growth in 2011 and 4.6% growth in 2012, which left me feeling all warm and fuzzy inside. The second story told of transportation woes, the third of a decent fourth quarter for logistics last year, and the fourth of driver shortages and high fuel rates.

I was left with enough hope to keep me optimistic, but enough sense to know that we’ve still got a ways to go.  Every day, the headlines change and we’re left with a slightly different prediction of the future.  One thing I know for sure: in times of uncertainty like these, it’s important to work hard, plan strategically and strive for profitable growth.

In a recent conversation I had with Steve Ganster, CEO of Technomic Asia, we discussed the position of strategic market planning in the supply chain and its main role in helping to create shareholder value.  Strategic market planning is really a hot topic now, being the key process to support both short and long-term growth goals for a company.

You can hear our conversation by listening to this Strategic Market Planning and the Paradox of Profitable Growth podcast.

With all of the uncertainty of the coming years, the role of strategic market planning has definitely changed.  Growth initiatives have been put on the back burner as the focus becomes trimming the balance sheet and streamlining operating costs.  Steve and I discussed the advantages of strategically planning for profitable growth and offer up some suggestions on how to achieve it in today’s marketplace.

How do you plan on integrating strategic market planning in the years to come?  What are your goals for profitable growth?

Go! Go! Go!

Jim

Photo Credit: Skeddy NYC

Do you know how your company matches up with the competition?  This question may appear to be deceptively simple. Yet, if you want to end up with the correct answer, it’s important to have the right data and tools.

Benchmarking your company against the competition is a great way to reassess the supply chain and make sure your company is utilizing best practices that can lead to profitable growth.  For example, a recent survey by the Supply Chain Consortium shows that respondents who are taking the initiative to benchmark and research ocean provider rates are seeing a decrease in those rates.

The Supply Chain Core Benchmarks: Understanding Key Metrics report was compiled from the 2010 survey and surveys of previous years to gain keen insight into how companies in various industries compare to each other.  

One interesting tidbit that I found in the report: DC cost as a percentage of revenue is trending downward, compared to the previous year, indicating that improvement directed at cost reduction in the supply chain have been effective.  Some of these improvement activities include increasing the number of distribution operations and developing better strategies to strengthen DC productivity.

Likewise, companies appear to be communicating more effectively with their vendors. The survey reveals that more organizations are now employing the “perfect order” metric with vendors, as compared to previous years. 

You can start learning more about how your company matches up to others in your industry by using the worksheet in the Supply Chain Core Benchmarks Report as a guide. 

Is benchmarking a priority for your organization this year? If so, how are you measuring core benchmarks?

GoGoGo!

Jim


Photo Credit: estrelas

For some, the idea of going to work every day and seeing your brother would be a nightmare.  For me, it has been a rewarding experience! So I am going to use this space today to brag a little.

My brother Bruce has championed a number of successful initiatives at Tompkins Associates for almost a decade now, and believe it or not, we’ve somehow managed not to get sick of each other.

What’s the secret to working with a sibling, you ask?  A sense of humor helps, as it does in general in life and work. I kid him a lot, and he can give it right back to me.

And well, it’s really not that difficult when they’re great at their job and enthusiastic about what they do. Great colleagues (and brothers) like Bruce deserve to be recognized for their accomplishments, and as a recent Supply and Demand Chain Executive magazine “Provider Pro to Know” honoree, he is finally getting that well-deserved merit.

Bruce was selected for this honor because of his contributions to the industry as a thought leader, his cutting-edge supply chain research, and the many benchmarking and best practices reports that he has authored over the years.  Under his strong leadership, our Supply Chain Consortium has grown to more than 500 company members, including such organizations as the Coca-Cola Company, Kraft Foods and Target.

Without Bruce as Executive Director, the Consortium wouldn’t be the premier source for supply chain benchmarking and best practices knowledge that it is today. Chances are, you’ll never know him as well as I do, but hey, that could be a good thing.

Congrats to you, brother.

Go! Go! Go!

Jim

I can’t tell you how many times lately that I have repeated the phrase “uncertainty is certain” in reference to the coming year. This uncertainty was brought about by change, and I am more than certain that it will continue to feed into change.

One of the changes for 2011 is the newly revised International Commercial Terms*, or “Incoterms.” These changes and why it is so important to understand them are outlined in the Supply Chain Consortium’s new hot topic report, International Shipping and Incoterms.

Four terms were eliminated (DAF, DEQ, DES, and DDU), while two were added (DAP and DAT). The modifications – which went into effect January 1, 2011 – define obligations, risk transfer, and cost sharing for the seller and buyer. They represent substantial clarification for the application of the 11 individual terms, consistent with the way global trade is actually conducted since the last update in 2000.

While it’s key to understand these revisions, it is also a best practice to periodically review freight terms as volume changes or lanes become more predictable. This process may be easily incorporated into the freight bid process to ensure that companies take advantage of the price/risk continuum, or, at least, fully understand the big picture.

For more information on the Incoterms changes and the results of an industry survey on international shipping, you can read the International Shipping and Incoterms Hot Topic Report.

What changes are you adjusting to in 2011? Does it involve modifications in shipping freight?

Go!Go!Go!

Jim

*International Commercial Terms are a series of international sales terms, published by International Chamber of Commerce (ICC) and widely used in international commercial transactions.

Photo Credit: rhysasplundh

If you tried to contact your business partners in China recently, you probably got voicemail or out-of-office responses.

In case you haven’t heard, most of the country is on vacation due to the most important of the traditional Chinese holidays – the 15-day Chinese New Year. This includes some of our company’s employees, especially those based in Shanghai at Technomic Asia, a subsidiary of Tompkins International.

This year, our Chinese friends and business associates are spending time with their families and friends as they welcome the “Year of the Rabbit.” The rabbit is known as a symbol of good luck, and as 2011 will be a year for industries to bounce back after the recession, it is great to have some luck on our side along with skills and insight!

In fact, right before this holiday, a survey of U.S. businesses in China – sponsored by AmCham-Shanghai and implemented by Technomic Asia – showed that U.S. companies in China are thriving. And as the growing consumer market in China continues to offer opportunities, we should not discount the financial impact on the U.S. economy from this performance in both profit returns and job creation.

As I have learned, the tradition of this holiday is to give gifts. So I was interested to see how American businesses prepared as Chinese shoppers planned what gifts to give. Demand can soar for all sorts of goods during the Chinese New Year, especially premium ones. The Associated Press reported that big-ticket high-tech items such as iPhones are selling out or only purchasable with reservations.

More modest (but still meaningful) gifts such as cherries or red Washington apples are popular too, as red is considered to be a lucky color in China. Washington State reportedly sent about 9 million pounds of apples to China last year. Many big-name brands tie in the holiday's traditions with their own products. For example, US businesses are known to package their goods for export to China in appropriately "lucky" colors - not only in red, but in gold, which is a symbol of good fortune.

I hope we can all enjoy good fortune this coming year. If you are celebrating the Chinese New Year, have a great holiday and let me know what kind of gifts you gave and received this year.

P.S. Last year, 2010, was the Year of the Tiger. Next year, 2012, will be the Year of the Dragon. So we could consider 2011 as a year that is Caught Between the Tiger and the Dragon.

More Resources

Highlights of China Business Report

AmCham Shanghai

Tompkins International, Chinese

Photo Credit: Tanakawho

Bob Dylan asked in his thought provoking song, “Blowin’ In The Wind”:

How many roads must a man walk down, before you call him a man?

And then he really gets on it with:

How many times will a man turn his head and just pretend he just doesn’t see?

Well, almost 50 years after Dylan wrote this amazing song, this makes me want to ask:

How many times will we turn our heads and pretend we just do not know any better when we see huge organizations make major mistakes?

I know, I know … you can’t sing my question to the Bob Dylan music, but nevertheless, I have had it with organizations that refuse to grasp the reality about the sequence of steps in Strategy-Process-People-Technology. To be successful today, you must:

• First do Strategy
• Then do Process
• Then do People
• And lastly do Technology

The sequence here is what this is all about. If the sequence is broken, then the results will also be broken. But in spite of this, I continue to see organizations get this wrong in a big way. The two most common mistakes that I see are:

• Organizations jumping right into Process without knowing the Strategy
• Organizations starting with Technology (example. we WILL use ABC ERP) without understanding Strategy-Process-People

Well, I have stopped turning my head and am yelling, “Stop the music!” It is time we really grasp the essential rule that sequence matters. Please help pass this along:

• First we do Strategy
• Once we understand the Strategy, then we  design the Process
• Based on the designed Process, we next determine the People
• Working with the Process-People, we then define Technology.

We have turned our heads too many times and found ourselves just “Blowin’ In The Wind.” What song are you singing these days?

More Resources

Strategic Market Planning

Global Supply Chain Podcast

One would be hard pressed to find an industry that is simultaneously as successful, complex, delicate and change-prone as pharmaceutical, biotech and medical products is today.

I am constantly reading reports in this sector about new drug launches, regulations, recalls, expiring patents, counterfeiting and tampering, and acquisition deals. Federal Health Care Reform is law, but certain parts of it are still being worked out in the courts and in Washington, DC. See, complicated, right? But also growing and changing.

In fact, as I write this, one of the world’s largest biotechnology companies, (Genzyme) Sanofi, [NOTE: Corrected 2/4/2011 - Sanofi is the company in discussions to acquire Genzyme, not the other way around as was mistakenly typoed in the original blog post] is set to begin due diligence that may lead to it acquiring Sanofi Genzyme – a multinational pharmaceutical company. If the deal is reached, it will close a long and intense period of negotiations over one of the largest mergers in the past year. To achieve profitable growth, companies such as Genzyme Sanofi are being forced to boost their drug pipelines and find new avenues to increase sales, operational efficiency and shareholder value.

What pharmaceutical and related companies all have in common is the need for a strong yet agile supply chain. You name a hot issue in the pharmaceutical industry – and you can bet it is impacted by the supply chain. This is one of the reasons that our experts recently developed the Top 11 Priorities in 2011 for Pharmaceuticals, Biotech and Medical Products.

Do you see one of your company’s priorities on this Top 11 list? Are there others that should be added? It will be interesting to see where this industry heads next.

More Resources

Case Study: Supply Chain Facility Strategic Master Plan

Top 11 Priorities in 2011 for Pharmaceuticals, Biotech and Medical Products

Pharmacueitcals and Medical Products

 Photo Credit: Erix