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A free webinar: Role of outsourcing in reducing cost and Improving Process Efficiency

I want to bring to your attention a webinar that I intend to attend as well titled: Role of Outsourcing in Reducing Cost and Improving Process Efficiency presented by WTG group on Nov 9th, 2010.

This webinar is presented by Jaison Augustine who is VP for Vertical Sales Lead, Shipping and Logistics BU. Also presenting is Steve Cox, MD GTS Express-wide Planning and Engineering from Fedex.

I’m very interested in what notion of cost is going to be used and of course secondarily process efficiency.

A new blog and SCM course to highlight

I want to bring to your attention a new blog dealing with Supply Chain Risk by Daniel Stengel at the Hamburg University of Technology. His blog is called Supply Chain Risk Management and I wish him the best in his new blogging life on this important topic.

And if you didn’t already know, the University of San Francisco has a SCM program that offers a supply chain management master certificate program via distance learning. You can read more about that here.

Well, of late, I’ve been swamped at work and life in general – we’re awaiting the birth of our third child by mid-December. Meanwhile, I’m working on a short piece concerning “Living Wage” and how that affects such giants as Walmart.

Stay tuned for that soon!!

Manhattan Associates sees uptick in supply-chain business

That sort of view should warm the cockles of anyone inhabiting this space but what is it based on? In this article Manhattan Associates sees uptick in supply-chain business, an interview with the CEO of Manhattan Associates is presented.

If you read the article, you would be able to immediately grasp the underlying thought process that produces this sort of view namely the theory of business cycles and the availability of new technology. Perhaps that is sufficient to warrant the intimation that there is going to be an uptick in the supply chain business but color me the skeptical – me thinks only green (i.e. dollars) indicate that.

Even though that lesson has been drilled into CEOs time and again, many aggressively cut R&D and key projects during tough times, just like they do with operating expenses.

But when important capital investments are put on the back burner, companies risk future growth in what can be a penny-wise, pound-foolish move.

Still, many did just that during the height of this recession — if one bellwether firm’s experience is indicative. Some had no choice, given the credit crunch.

“Companies didn’t know where they would get cash, so they postponed investment,” said Pete Sinisgalli, president and CEO of Manhattan Associates.

That’s business cycles right there – nothing more. As for new technology, well, it’s the same old technology – just different this time.

Instead of focusing on just one part of a company’s supply chain, such as inventory control, Manhattan Associates is now selling software that ties together the different stages. The software can maximize efficiency throughout the entire process, from planning to inventory control to distribution.

That’s in contrast to individual software packages that can produce the optimum result in one area, but neglect to factor in others. Without stitching the software together, a company could arrive at the right inventory solution, but it might be tying up too much capital.

I did find this particularly humorous though

“We’re constantly inventing new math and science to help companies operate more efficiently,” said Sinisgalli, who has headed Manhattan Associates for the past six years.

Maybe, we could do with less “new math and science” in the business world for a little while longer until we’ve recovered some business-skeptical sense, given how that just “old math and science” did just a few years ago.

I’ll take the time now to laugh : A very dignified guffaw.

APICS Webinar to Answer the Question: Is your Inventory a Competitive Advantage?

Logility Inc is hosting a Webinar on September 28th on this very topic : Is your Inventory a Competitive Advantage? The write up of the webinar promises:

Every supply chain faces inventory challenges which impact the bottom-line. High inventory levels tie up working capital, and stock-outs decrease revenue. When inventory levels need to be optimized across a multi-echelon manufacturing and distribution network, the complexities become even more challenging. Inventory optimization right-sizes inventory levels, boosts competitive response and grows market share during the economic recovery.

The webinar is presented by:

Sean Willems Ph.D. Associate Professor of Operations Management, Boston University

and

Michael Martin Manager, Global Supply Planning Strategy, Stanley Black & Decker

My quick take on the subject is that neither Inventory nor Inventory Optimization (which I think will be the focus of this webinar) are competitive advantages. Competitive advantage has a very specific meaning and I’ve spent considerable time and effort delving into it. The simple reason that these actions don’t qualify as competitive advantage is that their easily duplicated across the breadth of the competitors.

For my views on Competitive Advantage and the Supply Chain:

Supply Chain Network Optimization and Competitive Advantage – Part 1

Supply Chain Network Optimization and Competitive Advantage – Part 2

Accenture wins $73 million supply chain contract

My introduction to the stateside supply chain of the US government was through the Dept. of Defense of which the DLA (Defense Logistics Agency) is a principal player. So the news that Accenture won a four-year $73 million contract is news that rings close to me.

Accenture has won a four-year, $73 million contract from the U.S. Defense Logistics Agency to integrate its energy supply chain with its enterprise business system program, the consulting company said Tuesday.

And the scale of the DLA’s activities,

When the project is finished, the Defense Logistics Agency will have added more than $18 billion in traceable items to its supply chain, Accenture said. The agency averages 54,000 orders and 8,000 contracts per day and manages 520,000 shipments annually.

APICS Operation Management Body of Knowledge Framework

You can download APICS Operation Management Body of Knowledge Framework (OMBOK) for the minor bother of signing up at their site – Download the APICS Operation Management Body of Knowledge – Second ed.

As they suggest,

The new second edition of the APICS OMBOK Framework defines the scope of the operations management field and positions APICS’ vast body of knowledge to help practitioners and academicians understand the foundations of this profession.

Gain access to the body of knowledge that defines your work. Understand the language, best practices, and techniques that help you succeed.

Enjoy!!!

PRTM Study: Five Key Supply Chain Challenges – Challenges 2 & 3

In this ongoing series about the five key supply chain challenges as reported by PRTM a few weeks ago, I am going to look at Challenges 2 and 3. If you missed the earlier posts in the series, here they are: PRTM Study: Five Key Supply Chain Challenges – Challenge 1 and PRTM study highlights five key supply chain challenges.

Challenge 2: Securing growth requires truly global customer and supplier networks

Most survey participants expect that future business growth will come primarily from new international customers and products that are customized to meet their needs. As a result, more than 85% of companies expect the complexity of their supply chains to grow significantly by 2012.

This I don’t understand – where are the respondents coming from? If business growth is going to come primarily from new international customers, what does that mean other than the fact that overseas growth is going to be met largely by overseas means of production. In that case, the complexity in the supply chain decreases not increases. The control of the supply chain from overseers stateside is going to be more difficult but why must it be controlled from far away?

Nearly 30% of respondents expect the number of manufacturing facilities to decline until 2012, which reflects the expectation that their companies will increase outsourcing to external partners. Similarly, a nearly 30% decline in the number of strategic suppliers indicates that many companies expect to further consolidate their supplier bases. In general, companies in North America and Europe will consolidate their manufacturing and distribution footprint, while companies in Asia will further expand their entire supply chain network.

I don’t really understand this challenge at all. In fact, it is an observation that the trend of offshoring and outsourcing is going to continue, perhaps, even increase. The first stage of outsourcing and offshoring was primarily driven by the need to improve profit margins vis a vis the consumer in the developed world (who was for quite a period on a debt fueled binge). Today, that consumer in the developed world is all but tapped out – well, the answer to that is the consumer overseas whose consumption habits have yet to be tapped to the fullest potential.

Challenge 3: Market dynamics demand regional, cost-optimized supply chain configurations

Survey respondents seem confident that they will be able to deliver substantial gross margin improvements over the next two years. As was the case during the downturn, gains will not come from price increases, but from further reductions of end-to-end supply chain costs.

Unfortunately, few firms will confess that this is not a strategy of their choosing but one of the times imposed on them i.e. there is very little by way of pricing power to be had and therefore it is time to resort to the strong arm tactics of squeezing out your suppliers.

What I found interesting here is the comment from a VP of supply chain of a leading industrial electronics company. He recounts:

“Unit costs are easy to measure. When we move to a ‘less expensive’ supplier, we can see the improvement right away. But a lot of costs are hidden—costs associated with things like quality, site visits, and the loss of flexibility. We often spend more expediting parts from a ‘less expensive’ supplier than we save on the material cost.”

Well, methinks that he has it quite backwards – Unit costs are impossible to measure (especially after the fact let alone before the fact) whereas hidden and unexpected costs can be easily determined (after the fact). This GM-Sloan mentality of calculating, nay, obsessing about unit costs is downright silly simply because it is a fiction cooked up by accountants at the behest of managers who want to be seen doing addition and subtraction.

And on top of that, he has bought into the idea of a free lunch.

The odd thing about these two challenges is that they are seemingly at odds with each other. The modern supply chain is not as regional as it is global. Perhaps, the implication is that it is directed at emerging markets rather than developed ones, the growth in the supply chain has regional constraints on its mind rather than global ones. That does leave the global supply chains originating state side in a nice pickle. No?

In conclusion, there is one observation here and one challenge.

The observation (emanating from Challenge 2) is that offshoring and outsourcing are set to continue for different reasons and possibly at an increased pace. In fact, I would think that this is the decade when a number of corporations are going to become transnational.

The challenge for the supply chain is that it is going to become decentralized in a big way – regional markets, regional supply chains.

I’ve frequently said on this blog that these global supply chains don’t have to exist and it looks like that this prediction is beginning to come to pass. Do you know where you supply chain passport is?

About me

I am Chris Jacob Abraham and I live, work and blog from Newburgh, New York. I work for IBM as a Senior consultant in the Fab PowerOps group that works around the issue of detailed Fab (semiconductor fab) level scheduling on a continual basis. My erstwhile company ILOG was recently acquired by IBM and I've joined the Industry Solutions Group there.

@ SCM Clustrmap

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