As technology facilitated by the Internet grows more powerful, supply chain operations are being impacted in new and positive ways.

There is more information available to make a decision about the best location for a warehouse or manufacturing facility. There are new, real-time tools that use simulation and modeling to determine the lowest-cost network possible.

But here’s some irony for you. Although technological advances have greatly impacted our lives and work in many great ways, oddly enough, supply chain network planning is one area in which technology can almost get in the way of developing the best networking plan.

With so many software packages available from a number of vendors, planning a network has never been easier. But oftentimes what I see is companies placing too much emphasis on choosing a software tool versus choosing the best strategy first. The software must fit the strategy to be successful.

Yes, network planning has come a long way since its early days when it seemed like the Wild West – we were all on the frontier of planning a company’s supply chain network. What was guesswork in the past is bolstered by tools and software packages.

But let’s remember – putting strategy before structure is much more important than the many technological tools we have at hand.

What trends are you seeing in network planning? Has your organization reached the transformation phase yet?

For more on the importance of a holistic approach to network planning that puts strategy before structure, read this article: Supply Chain Network Planning Transformed.

Go!Go!Go!

Jim

More Resources

Podcast: Optimizing the Supply Chain with Network Planning

Supply Chain Strategy Solutions

Asia Supply Chain Excellence Report

Lately, business leaders have been asking my advice on preparing for the future. Specifically, they want to know how to best organize their supply chain processes, people and technology to ensure success.

My answer is one long but important term: Organizational Development and Change Management (ODCM).

ODCM is the development of your organization and how you manage change. The way you manage change will impact the success and viability of your business.

Today’s demand-driven supply chains require organization based on demand volatility, risk, and flexibility.

The problem is that many company leaders do not realize that supply chain is no longer about integrating different functions within a company. But with the right perspective on supply chains as a whole – one function impacts another and they are all interrelated – you can prepare your organization to weather future storms.

For more information on ODCM strategies, tune into our latest Tompkins Supply Chaincast, Transforming the Supply Chain Organization for Increased Value Creation, at 2 pm EDT on May 24.

Go!Go!Go!

Jim

Resources

Tompkins Supply Chaincasts

Demand-Driven Supply Chains - Getting It Right For True Value

Photo Credit: Micah Sittig

How great would it be for consumer products companies and retailers if they could combine three strategies that are already proving successful?

1. Gift cards: Great for business, because people usually end up spending more once they use them, both in-store and on-line.
2. Social networks: More than a trend, the usage of social media is well established as the way people connect with each other and keep up with the news and events in their lives.
3. E-commerce: Sales are surging online at a rapid pace.

So, how do you combine these three already good things?

As Reid Hoffman, co-founder of LinkedIn, pointed out in a recent article in the Chicago Tribune, social gifting fits the bill.

Social gifting is a service that works from your smartphone, tablet, or computer. Stores give away gift cards to users of social networks in small amounts, usually about $5 - $20. The recipient spends the gift either in-store or online and then tells his or her friends about the purchase.

The store benefits from the marketing power behind that user sharing the news that he or she visited that store or website. Also, since people usually spend more when they use gift cards, there is a real possibility of additional revenue.

Another use: You can buy your friends gift cards online that can be stored on these devices and then redeemed online or in-store. You can also use social gifting to get a group of friends together to buy a much larger gift card to which many people contribute funds.

It remains to be seen how successful social gifting will be in the long run. But what we do know now is that it is a low-cost option for retailers to implement, and it does help drive sales to retail stores.

What experiences have you had with gift cards? Is this something your company is considering?

For more on recent trends in consumer buying, check out these resources:

The Two Major Factors Driving Growth in Footwear and Apparel

Luxury Retail and Smaller Store Footprints on the Rise

China's Consumer Products Markets: Understanding the Changing Chinese Consumer

For those of you who still shut down your facility once or twice a year to review inventory, I have to ask why. With cycle counting, there is no need for such disruption.

The best way to ensure inventory accuracy is to continually count your products – part of your inventory every day and each item several times per year.

It’s no big secret that cycle counting programs are critical for any company that seeks greater efficiency in the supply chain. And even though it may not deliver perfect accuracy, cycle counting does offer a long list of benefits such as reduced operating costs, higher service levels, improved shipping accuracy, and lower inventory levels.

Some other interesting findings from a recent survey-based report on this topic include:

• Top-performing companies are capable of inventory accuracy greater than 99%, while the average company can achieve 98%.
• Nearly half of companies still use a combination of cycle counting and physical inventory.
• Cycle count frequency rises as the priority of parts increases.
• Scheduling cycle counts is generally the job of an inventory control specialist or inventory control manager.

So what cycle counting initiatives has your company undertaken, if any? Do you need better ways to help you move to cycle counting?

Go!Go!Go!

Jim

To learn more about cycle counting: http://www.tompkinsinc.com/publications/reports/cyclecounting/

Other Resources 

Evolution to World-Class Inventory Management

Cycle Counting Achieves Higher Inventory Accuracy

Inventory Management

Photo Credit: emilio labrador

Sir Issac Newton got it right. We all know, “What goes up, must come down.” But now I ask the question, “At what point, does it come back up – and then go back down again?”

Looks like Newton has a response for that one too: “For every action, there is an equal and opposite reaction.”

This may be true for physics, but do these same principles apply for commodity pricing and availability?

Commodity pricing volatility has become all too common over the past decade, with wild pricing swings. There have also been issues with ensuring ongoing continuity of supply for some commodities, creating complications throughout the supply chain.

An article that we recently published talks about these issues and suggests tactics that supply chains can use to minimize the impact of price fluctuations. Check out the article and let me know what forces you are using to keep your commodity prices inert.

Go!Go!Go!

Jim

Resources

Strategies to Transform Your Supply Chains in 2012 for the Food & Beverage Industry

Supply Chain Trends in Consumer Products

Chain of Uncertainty (Stores Magazine)

The New Rules of Material Handling: How to Design & Implement Adaptable, Flexible Systems (Tompkins Supply Chaincast)

You’ve heard a lot from me lately about e-commerce and making sure you have the right tools and strategies in place to sell online. But this is a very important – and vast – topic due to the retail industry’s rapid movement into the digital age.

So, pull up a seat while I continue on my soapbox. (Wow, did I really use the old-fashioned term “soapbox” as I‘m talking about fast-paced technology?! )

It’s no secret that folks are increasingly using social networks to gain opinions and share pictures. They go to the mall and other shopping centers armed with their mobile devices, prepared to make smart buying decisions and share their experiences with friends.

Likewise, store clerks aren’t always being seen as the experts anymore. Technology is now the expert. Shoppers can see reviews, learn about better prices, and ask friends on social networks for their opinions.

Now, retailers can no longer count on having a one-sided conversation with the customer, telling them what they want. The shopping experience is more personalized based on shopping habits and feedback.

When shopping online, your company needs to focus more on “user engagement” instead of the outdated concept of “user interface.”  Customers must be able to engage wherever, whenever and in the manner that they desire.

This multi-faceted approach to one seamless presentation of merchandise in-store, online, and via mobile device is referred to as “omnichannel” (Read more here). Channel continuity and enterprise selling are also a big part of omnichannel.

So your company needs to be present on all channels and in a way that meets the needs of your customers. The goal is not to be the best multi-channel, but to be the best in each channel.

And today, it is and is not about differentiation. Let me explain. Companies leading the way have differentiated services that separate them from the rest of the pack. But don’t become complacent with your differentiators for very long. As technology and consumer habits progress, these differentiators become standard and new differentiators develop.

And the most critical areas to keep in mind are customer service, convenience and experience while addressing price and selection.

We’ve also noticed that consumer products manufacturers are competing with retailers in the e-commerce market. Read this recent article.

What trends and lessons learned are you experiencing in e-commerce and e-retail?  What can we learn from each other to tackle this new retail reality?
 

Go!Go!Go!

Jim

Resources

Demand-Driven Supply Chains: Getting it Right for True Value

Keeping Up With the e-Giants from Material Handling & Logistics

Say You Want Evolution? Check Out E-Commerce Today … and What the Future Holds

Is Retail Growth Ready to Accelerate in 2012?

The Omnichannel Retail Supply Chain

Photo Credit: Jorge Franganillo

You hear me talk about business relationships pretty frequently.

Well, I’m no “Dear Abby,” but I certainly don’t mind giving my two cents on relationships with logistics service providers (LSPs). You may know them as third-party logistics providers (3PLs), but the industry is moving toward the term LSPs for a broader definition.

As with any relationship, a solid partnership here requires commitment and effective communication. You also need to look for an ally who is invested in your company’s supply chain goals and initiatives.

Although she doesn’t have an advice column either, Valerie Bonebrake, a senior vice president here at Tompkins, is an expert on LSPs and recently spoke with Inbound Logistics on this topic. She offers 10 tips on Gaining More from 3PL Relationships.

What tips would you add to this list?

Go!Go!Go!

Jim

Resources

Supply Chain Consortium for LSPs

LSP Excellence Center

Book: Logistics & Manufacturing Outsourcing

LSPs Focus on People, Perceptions & Intermodal

For Logistics Service Providers, It’s All About Quality of the Customer Relationship

You don’t have to be the CEO of a supply chain consulting firm to see that companies that have built their strategies around the Internet and social media are the ones achieving profitable growth.

The direct-to-consumer market has exploded, and the success of e-commerce companies – such as Amazon and traditional retailers – have left no doubt that consumer buying trends have changed.

Add to that the increasing trend of manufacturers entering the direct market, and we are seeing unprecedented growth. Consequently, these companies are now racing to meet consumer needs. Estimates have put the rise of e-commerce sales in the U.S. at 14% in 2010 and 20% by 2015.

The companies that are seeing this growth – and planning for it – are now asking questions that will strengthen their supply chains and meet consumer requirements.  Some of the questions that I’ve been asked lately include:

• How can I meet the range of product needs of consumers?
• How will my distribution network support a direct-to-consumer model?
• What changes are needed in my supply chain to meet the growing demands?
• Should I fill consumer orders myself or use a logistics partner to support this market?
• What specialized tools and software do I need to be successful in this market, knowing that poor service and complaints can be posted online at lightning speed?

These are some tough questions for supply chains and business leaders. But I am convinced that the time to act is now, before the market opportunities pass your company by.

What action is your company taking to embrace this market trend? Are there any questions that we can answer for you?

Jim

More Resources

China's Consumer Products Markets: Understanding the Changing Chinese Consumer

25 Ways to Lower Inventory Costs

What's So Special About Direct to Consumer Distribution Center Implementations?

Luxury Retail and Smaller Store Footprints on the Rise

Carry less inventory; make customers happier. It is not that simple, but it is in essence of what many of the most successful companies are doing today. 

While reading the Tompkins Supply Chain Consortium’s new report, Finished Goods Inventory Management: Presenting Growth & Adaptation Through Metrics, it is very interesting to note that customer satisfaction ratings (as measured by order fill rates) were not negatively impacted by reducing inventory levels in finished goods.

Survey data revealed that customer satisfaction had increased for nearly 60% of respondents, remained the same for 33%, and declined for 7%. This is at the same time that finished goods inventory levels experienced a 1-9% decrease between 2010 and 2011.

The survey demographics were wide-reaching, with nearly two-thirds of respondents in the manufacturing industry sector and one-third in the retail/distributor sector.

Some other interesting tidbits from the report:

• Controlling inventory has evolved from being a division-wide function to a corporate-wide function.
• S&OP processes are being used much more effectively than in the past, but results remain mixed.
• More than 73% of respondents view inventory accuracy as an important metric, or really the more interesting point, 27% do not see inventory accuracy as an important metric.
• Nearly half of survey respondents are doing a great job on traditional inventory management practices, but true Demand-Driven Supply Chains are still mostly aspirational.

What links are you seeing between inventory levels and customer satisfaction? Do you expect even further inventory level reductions in the future? If so, I strongly suggest you look into evolving to a true Demand-Driven Supply Chain.

To learn more about Finished Goods Inventory Management: http://www.tompkinsinc.com/publications/reports/finished-goods/ 

To learn more about Demand-Driven Supply Chains:

http://www.tompkinsinc.com/publications/monograph/demand-driven-supply-chain/

Go!Go!Go!

Jim

More Resources

Inventory Management

25 Ways to Lower Inventory Costs

Finished Goods Inventory Levels Fall, While Customer Service Indicators Rise

Finished Goods Inventory Management Report: New Views on an Old Issue 

Photo Credit: mrebert

Remember that old expression, “Not for all the tea in China?” Well, China's well-known tea market has a new competitor: The country's consumers are cultivating a growing taste for coffee, according to recent news reports. 

Coffee sales in China were up 20 percent in 2011 over the previous year, and coffee shops are becoming more popular places to socialize.

The general consumer market in China – from automobiles to makeup to really any consumer good you can think of – is growing at a rapid pace. At a recent parliamentary session, China's Premier Wen Jiabao said that his first priority for 2012 is expanding consumer demand through policies that encourage consumption.

These are not the most intriguing things I have heard about China’s consumer market lately, however. Steve Ganster, with Tompkins International’s Shanghai-based office, and Bruce Tompkins of The Supply Chain Consortium, just released a podcast about consumers in China that provides amazing insights and knowledge. It’s available here:

http://www.tompkinsinc.com/industries/consumer-products/consumer-products-podcast.asp

Listen to the podcast audio or read the text transcript to find out:

• Who is the "female prestige consumer" in China and what does she buy?
• What motivates someone in China to buy something, from essential goods to luxury products?
• How can the infrastructure keep up with more and more new stores popping up?
• What does this growing consumer market mean for supply chains?

GoGoGo!

Jim

Photo Credit: Dyobmit

Customer satisfaction can turn on a dime, whether you’re talking about a meal you just had in a restaurant or a logistics service provider’s (LSP’s) relationship with its clients.

The LSP marketplace is highly competitive these days. In the past year, shippers have become more focused on growth, and therefore, more focused on how well their LSPs are performing and what value they bring to the relationship.

The retail, consumer products and manufacturing companies (shippers) that I have spoken with recently are asking some thoughtful questions about their service providers. Questions such as:

• Beyond the basic services contracted, what value-added benefits does my LSP bring?  
• Do they fully understand my supply chain and the expectations of my customers?
• Are they well versed in global trade regulations and their impact?
• What is their plan for continuous improvement as my business needs evolve?

That’s why boosting customer satisfaction and loyalty should be at the top of every LSP’s priority list.

As the new article, LSP Relationships: Satisfying Customers & Building Loyalty, stresses “… expectations for customer service in the LSP arena are high in today’s marketplace, and there is no shortage of options.” The article also explores how to build a better foundation for customer satisfaction and loyalty.

If you are an LSP, how do you stand out in service? How do you ensure customer loyalty? For shippers, do you see a gap between what you expect from your LSP and actual performance?

More Resources

Staking a Claim on Growth: New Opportunities for 3PLs, LSPs

Supply Chain Consortium for LSPs

LSPs Focus on People, Perceptions & Intermodal

Companies that practice sustainability, or green practices that help the environment, do so for a number of reasons.

There are regulatory, legal, financial, and community responsibility and perception drivers that lead to the decision to work toward sustainability. But how many business leaders think of it in terms of managing risks or gaining a competitive edge? Or getting ahead of the game in customer satisfaction?

The pure definition of “sustainability” is: “An approach to business that creates long-term stakeholder value by embracing opportunities and managing risks deriving from economic, environmental and social developments. In short, sustainability is the result when responsible actions lead to long-term success.”

Nothing impacts long-term success and shareholder value like a solid supply chain strategy. So it only makes sense that sustainability initiatives should be built into global supply chain strategy.

And as consumers increasingly demand products and services that are certifiably “green,” supply chains with strong sustainability indicators will become more common. This is an evolving area that is ripe with opportunities for energy and cost savings, increased customer satisfaction, and more effective risk management.

Organizations that take hold of the sustainable supply chain conversation now and develop its potential early will boost their financial outlook as well as the environment’s future.

If you’d like to learn more about sustainability and why it matters in your supply chain, check out this complimentary webcast on Thursday, March 29, from 2-3 pm EDT. Hear what the experts have to say and ask questions.

More Resources

Sustainability Strategies Provide Competitive Advantage for Supply Chains

American Energy Solutions

Sustainable Business Excellence Center