@ Supply Chain Management

Who are this year’s Rainmakers? is a recent article about thought leaders identified by DC Velocity for 2010.

This year’s selections represent many different segments of the supply chain discipline: practitioners, academics, consultants, and vendors. But they’re also united by some common threads, including an emphasis on education, training, and people. Through word and deed, our 2010 honorees more than live up to the Rainmakers’ legacy of making a lasting contribution to the profession.

There is also a short Q&A with these professional’s, a sampling of comments that I found interesting are below:

Catherine Cooper [Ozburn-Hessey Logistics]:

Q: What do you consider to be the greatest obstacles to supply chain optimization?
A: One of the great challenges facing our industry is managing a supply chain with the new credit market constraints. With a restriction on working capital, we are seeing lower inventory levels than ever before, resulting in reduced supply chain cycle times and the need for networkwide item visibility. OHL’s customers are making radical changes in SKU [stock-keeping unit] assortments and sourcing methods. The old model of abundance has been replaced with one of scarcity, impacting every part of our industry.

Summary: Volatility is here. Is network visibility the answer? A very small “Yes” but what matters more is the network configuration. Some networks are more susceptible to volatility while others are not – I’ll leave that as an open question for my readers.

Mike Duffy [Cardinal Health]:

Q: What have you found to be the key differences between managing a consumer goods supply chain and a health-care supply chain?
A: For me, a supply chain is a supply chain. The vernacular is very similar, the principles are similar. The biggest difference is where an industry is when it comes to recognizing the role the supply chain can play in driving business performance. In consumer goods and other industries, we’ve identified the supply chain as a key enabler to driving business results. Health care is at a different place on the continuum. Most health-care providers came into existence to take care of patients first and were thrown into the business side of health care second. As a result, the industry as a whole is working to adopt best practices from the consumer products and other industries in order to leverage the supply chain to drive efficiencies and performance.

Summary: A supply chain is a supply chain. Except there is one significant difference arising this past year. The big government is about to slap its paw print over the healthcare supply chain. Anyone thinking about that?

Charlie Guardiola [Burlington Coat Factory]

Q: If you could offer one piece of advice to someone looking to jump-start their career in distribution or supply chain management, what would it be?
A: My advice would be to be a great businessperson first and then apply that business knowledge to the supply chain discipline. I believe that the best supply chain people are those who are great business people. Back when it was called "logistics" and not "supply chain," we were seen as warehouse guys who moved boxes from point A to point B. But things have really changed over the years, and now supply chain is seen as an integral contributor far beyond the four walls of the DC.

Summary: That is some really sound advice. Some of the others identified here talk about greater visibility, confronting volatility etc – that’s something that businesspersons don’t seem to understand all that well. I mean, they get the list of it but they don’t get the gist of it.

Peter D. Gibbons [Starbucks Corp.]

Q: What do you consider to be the greatest obstacles to supply chain optimization?
A: Two things come to mind: talent and coordination across the supply chain. The logistics field needs more well-educated logistics professionals with early hands-on experience who can understand quickly what needs to change and can implement change without negatively impacting customer service and cost.

On top of that, the ability to manage "total cost to serve" from product development all the way through to delivery onto a customer’s shelf is essential. The major change in the Starbucks food offerings over the last two years is a great example of balancing improvements to product quality with a supply chain solution that improved total costs and margin but allowed cost trade-offs, including better ingredients and quality.

Summary: I don’t think that he can say it but I can – Over the last two years, Starbucks learnt the lesson that practically every growth company learns sooner than later: Growth doesn’t last forever. But Starbucks has survived, somewhat, despite the threats from competitors because they’ve taken the value route. And the above is a précis of what initial steps of value discovery looks like.

Lee Hales

Q: You’ve worked around the world. What do you see as the major challenges and opportunities in the era of globalization for businesses, and how does supply chain management fit into that?
A: More of the supply chain action is going to be offshore. Your components are going to be made offshore. Hopefully, you’ll also be serving major markets offshore. The good news for Americans is that everyone speaks English. You can get by almost anywhere in the world. But that is not the best way to approach it. If you look forward, you should learn some Chinese and expect to travel overseas. You will need to know geography, taxation, and currency exchange rates, and also understand and respect cultural differences. You also need to become knowledgeable about global trade management. There’s a whole body of knowledge about what it takes to move shipments around the world. Supply chain managers who know these subjects will be critical to their companies’ success and on a path to executive management.

What I wrestle with and what our clients face are issues in sourcing; investing in manufacturing locations and distribution points; deciding which ports to use and where to locate relative to ports; and how long a choice may make sense as costs and taxes change, and currency values fluctuate. This is one of the most stimulating careers you can find. If you like to see the world and like intellectual challenges and problem solving, this is a great career.

Summary: The global supply chain is here to stay – deal with it. I’m not so sure about that conclusion because that is a paradigm that goes along the lines of – What was, is and will always be. Yesterday’s global supply chain was constructed with the help of free flowing credit and oil – but now, both are under a cloud. Like, I’ve written before, supply chain don’t have to be global – they can fragment and disintegrate quite easily.

From ‘Scuse me but who sprung the volatility back?

Supply chains, especially those that have become enormously complex over long distances don’t have to exist – it is not an iron clad feature of human experience. In fact, it might even be a bug – it hasn’t existed in human history but for the brief blip that has been this three decade or so experiment as well as the Silk Road but that had quite a different structure altogether.

Say it aloud, these supply chains don’t have to exist. And that’s the truth. Maybe, a different sort of supply chain will spring up – local and short instead of global and long. Or something else entirely.

So in the big picture, this sophistication in supply chain structure, technology and management is relevant because the scale and scope has been expanding these last thirty years and at a tremendous pace. As the need to understand, manage and control has grown, so has the need been met in this particular fashion. The promise of future continuing growth in both scale and scope is premised on reaching the unwashed masses – or those who are yet to attain to our supposed state of development. Yet, there is not any universal law of progress that dictates that it should be so – we could head in the other direction i.e. devolve to the state of underdevelopment of those we planned to grown to envelop.

Mark Holifield [Home Depot]

Q: Has the economy affected your remodeling initiative, or is it something you’ve been able to do in spite of the downturn?
A: Certainly the economy has been an issue in the home-improvement business. But we’ve not allowed this opportunity to go by. The slowdown in business, I think, has actually benefited the supply chain transformation. It has been an advantage to not have the pressure of high growth in sales to deal with on top of remodeling our supply chain.

Summary: The luck of the devil is best used when you can get it. If the economy does improve, Home depot is primed to grown its supply chain along with it. But “If” and “When” are the keys.

Derek J. Leathers [Werner]

Q: You’ve been a frequent speaker at industry conferences in the last couple of years. With such a high level of visibility, do you see yourself as representing Werner or the trucking industry as a whole? And what message are you trying to bring to your audiences?
A: First and foremost, I always represent Werner. But we take our position as industry spokespeople very seriously. As a large carrier with business across the entire supply chain portfolio, we are in a position to speak about trends in all aspects of the industry.

The overriding message that we’re attempting to get across is to persuade both shippers and carriers to avoid the very volatile, cyclical approach to rates that has long plagued this industry. I don’t know how successful we’ve been; unfortunately, rates were driven to all-time historical inflation-adjusted lows. Rates will have to bounce back sharply to ensure provider viability in the near term. Hopefully, when we’re back to sustainable levels for shippers and carriers, we can all collectively take a longer perspective. Until then I see continued reluctance for carriers to add any capacity within the next two to three years.

Summary: To say that “Rates will have to bounce back sharply to ensure provider viability in the near term” is really to make a wish and hope. So, he’s really signaling that not only will there be no additional capacity available (and for what one would wonder if the economy just drags along), there will most likely be a cut in capacity. Let’s wait and see.

The rest of the Rainmakers, when the clouds reform…