I’ve spoken with more than a few company leaders lately who have told me that their network designs no longer rely so much on certainty. And even if they have conducted a network optimization within the past three years, they feel that it may already be outdated.

The Tompkins Supply Chain Consortium recently published a report on Supply Chain Network Design Practices, and it could not be timelier.

The report notes significant changes in network design practices as compared to previous years. But this does not surprise me. Businesses are changing many of their practices in order to adapt to the current economic environment.

Another key finding – companies have been decreasing the amount of time between network studies from two years to 18 months. And to their credit, the smartest organizations have made network planning a continuous process in order to keep up with shifting demands, customer requirements, transportation costs and real estate costs.

This is another reminder of the rise in complexity of today’s supply chain networks and fast-changing business environment.

And while the process is typically complex, it needs to be complex as the supply chains we are modeling are complex.

A good network design can reduce costs, improve customer service and minimize capital. Updated regularly, efficient supply chain network designs flow smoothly, distribute information, meet customer demand and contribute to profitable growth.

When did you last optimize your network? What timeframes are you dealing with today? Read the Supply Chain Network Design Practices report and let me know what you are doing to keep up with the growing complexity of global supply chains. 

Jim

Resources:

Hot Topic Report: Network Design Practices - How Sophisticated is Your Supply Chain Network?

Network Optimization in the Supply Chain: Strategies for Reducing Costs

Warehousing and Distribution: Finding Profitable Growth in the Supply Chain

The Five Biggest Mistakes (and How to Avoid Them) When Optimizing the Supply Chain Network

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Photo credit: Horia Varlan

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With our Supply Chain Leadership Forum quickly approaching, I’ve invited the Consortium’s Executive Director and my brother, Bruce Tompkins, to tell us a little more about how folks can benefit through networking at the August 29-31 event in Florida. – Jim

In today’s fast-paced world, how often do any of us slow down enough to stop and talk face-to-face with colleagues about developments in the supply chain field?

When do we take the time to find out what others are doing and seek answers to puzzling questions?

For me, the answer to these questions is: "Not very often."

Is there not enough value in taking this time to learn from others, or do I already know everything there is to know, so why bother? Or is it just a matter of opportunity?

I would argue that it is all about opportunity. There are few opportunities to really network these days, even when you consider the conferences you may attend or the people you may interact with online during the course of working hours. But even conferences today tend to be too fast paced – with packed agendas and speaking whirlwinds designed to educate by lecture instead of through discussion and interaction.

Face-to-face networking offers tremendous opportunities to learn what successes and failures your peers have experienced. You get the chance to ask questions that help you gain a deeper understanding of a topic, as opposed to the cursory view presented at most conferences.

I think there is great value in true face-to-face networking with smart, knowledgeable, interesting people, and so I suggest an oasis in the conference jungle: The Supply Chain Consortium’s Leadership Forum.

The forum is based on a format of breakout sessions in which participants share ideas and insights on a variety of supply chain topics. And there is plenty of time in between sessions for getting to know one another and learning how others in your industry are dealing with today’s toughest challenges.

Check out how to join the Consortium at http://www.supplychainconsortium.com/, and then come network with us this year at the Walt Disney WorldÒ Resort in Lake Buena Vista, Florida.

-- Bruce

Data is only an advantage if you understand three key things: how to collect it, how to react to it, and how to transform it into successful strategy.

As former U.S. Secretary of State Colin Powell once noted, “Experts often possess more data than judgment.”

Certainly, the same holds true for supply chain data. You can collect mountains of data but what are you comparing it to? And what payback are you receiving from the time and energy spent gathering, interpreting and analyzing this information?

I know that you’ve heard of Business Intelligence. Now, companies have the opportunity to dig deeper into Supply Chain Intelligence SM.  Basically, Supply Chain Intelligence equals analytics plus benchmarking and best practices. It’s a new way of turning the supply chain inside out to understand company operations from both an internal and external angle.

It uses scorecards as an easy way to view how areas of the organization such as supplier relations, inventory and transportation are performing as compared each other and to leaders in your industry. Even better: Supply Chain Intelligence uses a powerful SaaS platform.

So, less time collecting and analyzing data and more time reacting to it to improve operations – this is the right way to use “intelligence” and the wave of the future.

Go!Go!Go!

Jim

More Resources

Supply Chain IntelligenceSM: Next-Generation of Benchmarking and Analytics is Powered by SaaS

Positive feedback on Benchmarking News

Webinar: Next-Generation Supply Chain Intelligence: Analytics + Benchmarking

Photo Credit: Jorge Franganillo

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

As 2011 approaches and the 2010 budgets fade, companies are taking a serious look at their supply chain IT (SCIT) systems. But we see many organizations floundering because they don’t know where to begin when evaluating, selecting and implementing systems.

The questions we usually hear are: Should my company upgrade? Or does my company need a completely new system? When should we begin the selections process? How long will the selection and implementation take?

Our very own SCIT systems expert Kevin Hume will answer some of these questions during a presentation at Logistics Management’s virtual conference, Best Practices in Supply Chain Productivity: People, Process, and Technology, on November 18.

With a focus on Improving Warehouse and DC Operations, he will touch base on warehouse management systems, transportation management systems, as well as labor management systems.

Kevin also wrote a recent blog post to help companies that are struggling with long-term and short-term goals for their technology. Read the post to learn more about initiatives that you can take to prepare for supply chain technology in 2011.

We’re also interested in learning more about your plan and pitfalls when it comes to evaluating, selecting and implementing supply chain technology systems. Let me know what obstacles you’ve had to overcome.

Go!Go!Go!

Jim

More Resources

Supply Chain Technology 2011: Get Tactical with Your Long-Term Strategy

Best Practices in Supply Chain Productivity: People, Process, and Technology

Technology Investments - Plan Ahead for the Payoff

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Photo Credit: Philo Nordlund

Today we’re going to do an exercise. Don’t worry, we’re not going to touch our toes or hop up and down on one leg. It’s more of a mental exercise. Although after we’re finished, you may want to do some running to catch up with your competitors.

Here’s the exercise. You can use a sheet of paper or visualize in your head, whichever suits you. 

Think really hard about what your organizational chart looks like. Now, where does your supply chain fit in? Where is your most senior supply chain executive? Is this person at the director level, maybe the senior director level, or a VP, SVP, or near the top of the chart at the EVP level or higher? 

It’s always helpful to make peer comparisons. To see what other companies are doing, by company size and industry, check out the Supply Chain Consortium’s recent Executive Briefing, The Structure of Today’s Supply Chain Organizations.

This briefing notes that nearly half of all survey respondents have a supply chain leader at or above the executive VP level. And based on their data from previous years, the organizational level of the most senior supply chain executive has gradually moved higher.

It matters today how companies are optimizing their supply chain strategy through their organizational structure, including the types of international and domestic responsibilities given to those senior supply chain executives.

Compare your company’s information to the benchmarks in the briefing and see if your organizational excellence efforts are running ahead of or falling behind the pack.

Go!Go!Go!

Jim

More Resources 

 

The Structure of Today’s Supply Chain Organizations.

http://www.tompkinsinc.com/supply-chain-organization/

Learn more about the Supply Chain Consortium http://www.supplychainconsortium.com/rc/overview.asp

Download the Executive Briefing - Sales, Inventory, and Operations Planning: Crossing Organizational Boundaries  http://www.tompkinsinc.com/operations/siop-briefing/

Bold Leadership for Organizational Acceleration by Jim Tompkins http://www.tompkinsinc.com/books/boldleadership.asp

You’ve seen the opinions of Chris Ferrell, transportation expert and Associate Director of Tompkins Supply Chain Consortium, a couple of times already on this blog. Today, he shares his insight into some floundering international transportation capacity issues.

--- Jim

I ran into my good friend David Croft at a restaurant last week. David purchases global freight for CHEP (the blue pallet guys) to the tune of about 25,000 TEUs across 46 countries. He was having lunch with two reps from one of the major NVOCCs (or, Non-Vessel Operating Common Carrier – a consolidator or freight forwarded that doesn’t own its ships) and discussing the recent capacity crunch that international shippers have been experiencing.

He invited me to sit down and, after the obligatory discussion of families and football, we got down to business – specifically talking about the state of the steamship industry.

Well, as you can imagine, the four of us had an exciting discussion. Here is a top level summary of our conversation, which I think you will find very enlightening.

There are a lot of RFQs going out right now due to panic over the lack of capacity, which is being further complicated by shippers' renewed dedication to inventory management, specifically to holding inventory levels down – both attributed to fall out from The Great Recession. It was the consensus that this panic has been created by the steamship industry.

But unless you're the largest of the large among shippers, you're probably better off waiting to lock in your capacity. The current environment is being fueled by last year's rate crash that made it more economical for the steamship lines to simply dock their vessels and has been further exacerbated by the steamship lines' motivation to recoup some of 2009's losses.

So, with the big retailers conducting their holiday season RFQs right now, one of two outcomes is likely:

1. Either they make enough volume commitments to revive the steamship lines’ capacity, and in turn, rates will stabilize and shippers will benefit in both price and commitment; or

 

2. A combination of conservative projections and tight inventory policies will compel the steamships to keep capacity sidelined, and space commitments will continue to take place on a near transactional basis, with the spot going to the highest bidder.

But since the latter is pretty much what's already happening, there's no major risk to waiting and seeing how things play out.

At this point, shippers need to be sharpening their pencils on their forecasts and volume commitments and be prepared to send out an information-rich, commitment-laden RFQ in late May when the big retailers are done, and everybody understands what this year's rules are going to be.

When the Supply Chain Consortium published its members-only International Transportation Report earlier this year, many of the same industry weaknesses were identified, but we saw the steamship lines putting capacity back into play at the first sign of volume.

These industry experts I spoke with, who interact with and depend on steamships on a daily basis, have made me more cautious now. I still believe capacity is coming back, but it will be a controlled release, rather than an opening of the flood gates. Even if the capacity doesn't return, the experts were able to convince me that there is little risk of things getting worse than they already are.

But that's my opinion, what do you think?

-- Chris

More Resources:

Tompkins Supply Chain Consortium, www.supplychainconsortium.com - the Supply Chain Benchmarking and Best Practices Forum

 

Transportation Optimization

 

Ports and Maritime Freight

 

Supply Chain Logistics

 

What the world needs is another acronym, right? Normally, I would say no way, but this one – "SIOP" – is a good one because it helps organizations of all types evolve to solve problems quicker and with more foresight.

"Sales, Inventory & Operations Planning" used to be called "S&OP" for "Sales & Operations Planning." But more and more, I am seeing forward-thinking businesses couch their strategies in a broader context that involves world-class inventory management.

Simply defined, SIOP is an integrated business management process through which the executive/leadership teams continually achieve focus, alignment and synchronization among all functions of the organization. We’re learning these days that the smartest companies cross organizational boundaries to solve problems in strategy, planning, managing inventory, sales and manufacturing.

In its most basic form, SIOP was developed to address these types of situations; however, it is impractical to do so at the SKU or transaction level. Accordingly, SIOP provides a structured business process that facilitates addressing problems at the product family or group level ahead of time whenever possible.

To gain greater insight, the Tompkins Supply Chain Consortium recently performed an analysis of the level of communication that takes place between functions to address SIOP issues. Data collected from a recent Consortium survey indicates that more than 80% of participating companies have a formal SIOP process in place, and there is virtually no difference in the use of an SIOP process at retailers or manufacturers.

If you’d like more information on the survey and SIOP, you can download the Executive Briefing, Sales, Inventory & Operations Planning: Crossing Organizational Boundaries.

Is your company doing SIOP, and if so, what have you learned?

More Resources

From the Tompkins Supply Chain Consortium: Inventory Management Tops 'Critical List' for Companies in 2010

 

Lessons from the Benchmarking and Best Practices Leaders, from the The Global Supply Chain Podcast (listen here or see the text transcript)

Photo credit: Tim Brauhn

OK, it’s not exactly your father’s Oldsmobile, but we have recently discovered that companies with transportation sustainability initiatives are using many of the same old tools to gauge their success.

The Supply Chain Consortium’s new Transportation Sustainability Report found that a number of companies are using ROI or cost-payback analysis and life-cycle assessment – which are commonly used to measure capital expenditures – to evaluate their environmental initiatives.

These tried-and-true methodologies are not nearly as cutting-edge as some of the initiatives they’re measuring, so therefore they tend to be a very conservative predictor of success. Encompassing the total cost savings of a long-term sustainability initiative can be quite challenging. Consider using some new tools and keep the Oldsmobile in the garage.

Other green business tools used by companies we surveyed include environmental reporting and certification programs, environmental management systems, eco-mapping, and environmental accounting.

Overall, having sustainability initiatives within your organization is a powerful offensive strategy, whether you are measuring cost benefits, environmental benefits, or company benefits.

For more information on what other companies are doing and how you can improve your transportation sustainability initiative, check out the Transportation Sustainability Report. You can also listen to a recent podcast on the topic.

Go!Go!Go!

Jim

The 2009 Supply Chain Leadership Forum in Chicago was jam-packed with some great sessions and even greater opportunities to better understand the challenges facing executives today. I was really looking forward to the evening reception (great food and wine) and the dinner keynote, Charles Fishman.

Charles is a senior writer at Fast Company magazine and author of the national bestseller, The Wal-Mart Effect.

Even with a Target executive in the audience (and he sat the closest to the podium), Charles didn’t fail to entertain and educate the crowd. Whether you love or hate Wal-Mart or are somewhere in between, this is one man who knows his stuff on the mega-retailer. Having devoted years of his life to figuring out what makes this successful and controversial company tick, he can tell you the good, the bad, and the ugly.

While most of the country is aware of Wal-Mart’s influence on the retail world, it still amazes me to hear facts such as:

More than half of all Americans live within 5 miles of a Wal-Mart store

93% of American households shop at Wal-Mart at least once a year

While Wal-Mart may always be looking over their shoulder, they continue to raise the bar and set standards that the rest of the retail world has to live up to in order to compete. As most everyone has already heard, sustainability is their latest mandate.

Top-tier suppliers have until October 1 to complete a 15-question survey that will be used to evaluate the manufacturer’s sustainability efforts (the survey is public knowledge on Wal-Mart’s site)

This plan involves more than 100,000 suppliers globally

The goal is a labeling system that will provide a breakdown of the sustainability of each product

Charles closed with a challenge to all of us "supply chain superheroes" in the crowd. He challenged us to take a good hard look inside the day-to-day supply chain functions now and really assess where we’re headed. How can we step up and raise the bar?

While I don’t really consider myself a supply chain superhero, I’ll take that label any day if it means I’m making a difference in the supply chain world and get to wear a big colorful cape. But I’ll forgo the tights – some other superhero can take on that wardrobe challenge.

Go!Go!Go!

We kicked off the 2009 Supply Chain Leadership Forum in Chicago Monday night with a bang. What a great bunch of folks, and we’re having fun while tackling some tough issues! We are all strangely mesmerized by the innovative hand-dryers in the bathrooms at the InterContinental Hotel, but more on that later.

For those of you who aren’t familiar with the Leadership Forum, top supply chain executives from around the world come together to learn, network and gain solutions to issues in areas such as benchmarking, sourcing and trade management, core benchmarks, packaging, sustainability and technology. This year, more than 50 experts from 30 companies in retail, consumer products, food and beverage, pharmaceutical, high-tech and other industries are in attendance.

Monday night, I led an Executive Summit that began with the statement "Everyone needs a T-shirt that says ‘I survived the Great Recession of 2009.’" We all agreed that was true, as we dived deeper into the topic. Their feedback really supports what we have been saying all along about the economic recovery: You have to look at each sector individually and figure out when your industry has or will hit bottom.

Listening to the economic experts drone on and on about a macro recovery and how the recession will not be over until unemployment goes back up and the moon and stars align just perfectly is not going to help your organization grow and prosper. A strong Comeback Plan focuses on your company and your industry sector. Period.

Here are some of the best lessons that I have learned thus far from talking to attendees:

1) Beer is flat and soup is hot. Meaning that food in general – including soup, frozen pizzas and other inexpensive, eat-at-home cuisine – are doing well right now. Also, beer sales are holding their own. In fact, food and beverage really never tanked, although there have been channel and brand changes in response to the downturn. In addition, there has also been some "trading down" in this sector by consumers who are willing to settle for a less expensive or private label brand to save money.

 

2) Retaining talent is key regardless of budget cuts. More than ever, you need "the right strategy and the right people" to get things done.

 

3) An awesome realization – This is the first time we’ve experienced a recession under massive globalization. And what it has revealed is either a) we’ve gotten so lean that forecasting will have to get better in order to be of any value at all. We really need more base and accuracy measurements, or b) the new norm is that there is no norm, and it’s nearly impossible to make good forecasts today, or c) the truth is somewhere in the middle. We did all agree that companies need several different forecast scenarios for their individual Comeback Plans.

Here are some of the dumbest things businesses have done during the recession:

1) Stopped keeping track of their competitors and what they’re doing and started focusing inward, almost as if they are withdrawing into a fetal position. Wrong. This is the opposite of what companies should be doing.

 

2) Not "standing up on the hills." Failure to launch an effective Comeback Plan is like being in a bicycle race and forgetting that it is on the uphill that you need to stand up and really turn on the juice.

 

3) Cutting the people you will need later – not retaining talent. This was mentioned more than a few times.

Here are some of the smartest things that businesses have done during the recession:

1) Using the downturn as an opportunity to acquire other companies at a low cost in an environment in which private equity firms are uncharacteristically quiet right now.

 

2) Learning from other countries: look at what works there and see if it will work for your organization. Not everything will fit, but a lot of it promises to be very beneficial.

 

3) Stepping up benchmarking to understand where you need the most help, or the most appropriate time "to stand up on your bike."

 

4) Inventory: reducing levels can be smart or dumb – depends on how you optimize other areas in your network and how it affects customer expectations.

 

5) Implementing more frequent network design reviews.

Hand-dryer in the bathroom (I know you were waiting for this one)

There’s a really cool, new-fangled Dyson Airblade hand-dryer in the bathrooms at the InterContinental Chicago O’Hare hotel. Actually, I just learned that it has been around since 2007, but it is new to the majority of our attendees and seems to amaze our staff. Why am I mentioning this? Not sure, other than it is a really cool device, we have photos of it, and it’s just another positive element in the whole Leadership Forum experience.

Look for more later in the week on how the remainder of the forum went and the results of our on-site, real-time survey that attendees are filling out today and tomorrow.

With very dry hands!

Jim