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How supply chain metrics are used?

SDExec.com reports on the results of a survey carried out by Maxager. The principal finding of the survey was,

Many manufacturers believe that it is important to measure the speed at which products are made, but very few have systems in place to do so

The survey results amply show that while everyone is aware that there is a problem, few have a solution:

The survey results showed that although respondents overwhelmingly (92 percent) believe that analyzing the speed with which they produced profitable products was important, 71 percent don’t have software or systems in place to do so. The result is that very few manufacturers (5.7 percent) have the ability to use a metric that is aligned with return on assets (ROA).

Here is a snapshot of Maxager’s solution to the problem:

Combining production velocity with margin produces a profit-per-minute metric. Being time-based, this metric is directly linked to ROA. It can be used at an operational level to measure the profitability of individual products, customers, deals, markets, sales regions, salespeople and production facilities. Then, everyday decisions about which products to make, who to sell them to and where to make them can be made collaboratively to maximize annual corporate profits and ROA.

What do you think? Does it work?

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Supply Chain Metrics – A first cut

If you’ve come across the term KPIs or Fill Rate or Inventory turns, chances are that you’re aware that all these terms fall (not exclusively though) under the rubric of a topic called Supply Chain Metrics. In this first post about Supply Chain Metrics (of what I will be hoping is a series of posts), I want to assemble an intersection of the most common Supply Chain Metrics as might be observed in practice. Beware, there is no uniform standard for these metrics across firms and so terms that mean one thing in one firm might mean something approximately the same with slight differences.
Here’s an initial list of metrics that I have assembled
Supplychainmetric.com
1. Back orders
2. Cycle Time
3. Fill Rate
4. Inventory Classification (ABC)
5. Inventory Turns
6. On time shipping and delivery
7. Perfect Order
The Power of Metrics (DMReview)
DMReview organizes supply chain metrics using the following four dimensions:

1. Response-Time Metric (timeliness dimension)
2. Visibility Metric (process efficiency dimension)
3. Productivity Metric (productivity dimension)
4. Shrinkage Metric (profitability dimension)

Building and leveraging Metrics Framework to drive Supply Chain Performance (Infosys)
They outline the key characteristics of the right metric as including – Reliability, Validity, Accessibility and Relevant. They also elaborate that:

• Metrics are most useful when embedded in a metrics model that represents a business process
• The criticality of a metric is determined by the process performance insight that it provides
• Metrics need to be assigned to roles that have process execution, monitoring and tracking responsibilities

Supply Chain Benchmarking (AMR Research)
AMR Research focuses on 8 high-level operational processes:

* Request to quotation
* Order to delivery/cash
* Perfect order fulfillment
* Inventory management
* Source and make (with cash to cash)
* Operational planning
* New product development time
* Supply chain management costs

Read the rest of this entry »

Is an IBM and SAP Marriage in the Works?

SCDigest reports on strong rumors about merger talks between IBM and SAP.

These are just rumors, to be sure, and have been circulating at some level for almost a year.
SAP has strongly denied the rumors during that time, though chairman Hasso Plattner unintentionally put some fuel in the fire last May by saying to the German Financial Times last year that: “There are only three potential buyers [of SAP]: IBM, Microsoft and Google. Of all companies, I don’t see anyone else. If shareholders think that a combination, and not independence, is better, then it will happen.”


From the services model that IBM follows, it makes sense to acquire a behemoth like SAP purely for its installed base and then sell all sorts of services to them. But the larger question is – what’s the room for growth here? From a software sales point of view, the market is pretty much saturated. My own view of the ERP behemoth is that given the utter complexity of something of the order of SAP/Oracle and the implicit insistence that the firm adapt to SAP’s version of reality – there is quite an opportunity for an intelligent class of enterprise software to make deep inroads.
Whatever the big honchos at IBM are thinking, I’m skeptical of such a merger simply because of revenues from any sort of installed base growth. The market space where there is some growth potential seems to be:

IBM and SAP have an existing partnership to bring ERP to the small and mid-sized company market. Penetrating these smaller companies has been a key marketing goal of SAP for the past few years.

The question is – why pick an elephant (or a sheared down version of an elephant) to run what needs to be, strategically and execution-wise, a nimble organization? Any new entrant in the enterprise software space needs to enter via the small and mid-sized company market because that’s where the behemoths are concentrating their efforts.
Old Chinese (Confucius) saying: “Do not use a cannon to kill a mosquito.”
This makes for an exciting few years ahead.

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A review of Transportation Management System (TMS) players

Inbound Logistics has posted a review of Transportation Management Systems (TMS) players in the market. They note:

Still, at the heart of all TMS products is a software engine that strives to create maximum transportation efficiency for its users.

All the major players are listed as well as whether they offer a licensed or hosted version of their particular solution. Take a saunter that way!

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Update on the Top 3PL listings

First off: Thanks to Logisticsgal who directed me to the Inbound Logistics report on 3PL providers here. Inbound Logistics has assembled a comprehensive chart to identify the capabilities, competencies and specializations of the Top 100 3PLs in N. America. There is no ranking of these 3PL providers though.
Logisticsgal also asserts that Dick Armstrong’s list of top 30 3PL providers is not that useful because those 3PL providers have to pay to be included on the list. That is quite different from the objective of that ranking which is to list those providers by decreasing magnitude of revenues. I did surf the web to find similar reactions to Dick Armstrong’s list – here is one such reaction but about the list from the previous year. There is always a difficulty in estimating the revenues of private 3PL providers and so I agree that the numbers of private 3PL providers should always be taken with a grain of salt as suggested by the contributor on the linked thread.
Logistics Today also has a list of 3PL providers whose capabilities are assessed and listed in a comprehensive manner.

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Wal-Mart boss says he will press suppliers in race to go green

From across the pond, The Guardian reports,

The chief executive of the world’s biggest retailer yesterday stepped up the pace in the race to be green with a series of initiatives to cut its own giant carbon footprint – and those of its suppliers, customers and staff.

The report further elucidates what Lee Scott, Walmart’s CEO has in mind about going green,

Mr Scott outlined his “Sustainability 360” campaign in London last night at a lecture to UK business leaders hosted by the Prince of Wales. He said the vast retailer, which is the world’s second biggest company after Exxon Mobil, was determined to make its merchandise “affordable and sustainable” so that customers could “do the right thing … for this planet”.

Editorializing within a news report is quite common at The Guardian – see if you can spot it:

Speaking to The Guardian before last night’s lecture Mr Scott insisted the new initiative was not part of a “greenwash” PR campaign to improve the image of Wal-Mart, which is regularly accused of crushing smaller rivals, squeezing suppliers and paying poverty wages to thousands of workers.

Nevertheless, if The Guardian editorializes, Lee Scott grasps and employs myth effectively:

Yesterday Mr Scott said the moment Wal-Mart decided to get serious about sustainability was when Hurricane Katrina devastated New Orleans. The “desperate images” of the chaos, he said, “pushed us from a learning process into taking more aggressive action.”

Is it true that Hurrican Katrina devastated New Orleans? But we cannot let facts get in the way of a good grounding myth. I do believe that foundational myths (and here I’m using the word myth as deliberate falsehood rather than another usage which would be more along the lines of embellished legends or history) are quite necessary to creating a change in direction such as the one that Walmart is attempting to make here in going green. What it is is a good story?

t also provided a welcome boost to the store’s reputation when Wal-Mart staff opened stores to hand out food and drugs and the retailer’s relief trucks arrived in the flooded city before the US army. “Hurricane Katrina changed Wal-Mart forever,” Mr Scott told last night’s lecture.
In the wake of the hurricane he set three groundbreaking goals: to switch the entire group to using renewable energy; to achieve zero waste and to sell sustainable products. His new plan takes that further.


Now, I don’t think Walmart will ever get credit for the things that they did (in part because of an efficient supply chain that prepared for the aftermath of the storm just like retailers such as Home Depot and Lowes usually do) post Katrina because it is a symbol of something more than just “regularly accused of crushing smaller rivals, squeezing suppliers and paying poverty wages to thousands of workers.” A symbol of everything that is wrong with American capitalism, corporations etc?
Now, what is the meat of the story? If you want a flavor:

Mr Scott himself walks the talk, to an extent. His family car is a hybrid Lexus SUV but he crossed the Atlantic in a private Wal-Mart jet, one of a fleet of more than 20, with just four passengers on board.

Read the rest of this entry »

Top 30 3PLs in 2006

3PLWire alerted me to the publication of the Top 30 3PLs of 2006, a list compiled by Richard Armstrong of Armstrong & Associates released his annual report of the top 3PL providers in North America.

Rankings are based on total annual revenue in N. America.

Well, it looks like GENCO made the list this year and at the #24 position. Well, its good to know that even if it were a Top 25 list, GENCO would have still made it.
The Top 30 3PL list:

1. UPS Supply Chain Solutions
2. C.H. Robinson Worldwide
3. Schenker USA/BAX Global
4. Expeditors International of Washington
5. Schneider Logistics/Dedicated
6. DHL Contract Logistics (Exel)
7. Penske Logistics
8. EGL Eagle Global Logistics
9. UTi Worldwide
10. Kuehne + Nagel Contract Logistics, North America
11. Ryder System
12. Caterpillar Logistics Services
13. Hub Group
14. Menlo Worldwide
15. Meridian IQ
16. J.B. Hunt Dedicated Services
17. TNT Logistics North America
18. Werner Dedicated Services
19. Landstar Global Logistics
20. Greatwide Logistics Services
21. Transplace
22. NFI Industries
23. PBB Global Logistics
24. GENCO
25. Logistics Insight Corporation
26. Ozburn-Hessey Logistics
27. Total Logistics Control
28. BNSF Logistics
29. A.N. Deringer
30. Kelron Logistics

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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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