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First Thoughts
  By Dan Gilmore - Editor-in-Chief  
     
   
  - Oct. 2, 2014 -  
     
 

Supply Chain News - Trip Report: CSCMP Conference 2014 Part 2

 
 

I am back with part 2 this week of my full review and comment on CSCMP 20014 last week in San Antonio.

In part 1, I offered my general summary of these year's conference and some of the high level details of the program. Again, the daily video reviews of the conference happening can be found here: CSCMP Day 1 Video Review, Day 2, and Day 3.

You may also be interested in our analysis in OnTarget this week on what companies have contributed to the conference this year and over the last two years in terms of panel discussion and presentations: Which Companies Contributed to CSCMP 2104? A shout out to Caterpillar, Home Depot, Kimberly Clark and Starbucks for their leading levels of involvement.

Gilmore Says:

Tucker said that while there are issues, the driver shortage right now is primarily a phenomenon at the largest carriers only, much less so at mid-sized ones.


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Today I will primarily summarize the key takeaways from the educational sessions I attended across the three days, meaning the "breakout" type sessions on Monday and Tuesday, with 118 sessions offered in total across three time slots each of those days, and then my choice from one of three "megasessions" on the short Wednesday morning program. I will repeat my call first made last week to add back a fourth educational session on each of the first two days - I want the chance to hear more.

Out of the chute Monday morning was an outstanding session on maximizing the advantage of taking over inbound freight, presented by Bill Michalski of technology provider ArrowStream and Steve Hobbs of large distributor US Foods. The basic idea: just taking over inbound freight from vendors can only get you so far, and which side can drive the lowest costs under traditional approaches is based on who has the biggest volumes and carrier clout.

But the receiving company does have a huge cost savings potential not often leveraged - optimizing purchase order timing and quantities to deliver maximize transport efficiency. Such an effort can lead to savings of 15-25%, it was claimed. Michalski started off with a simple but real example of freight being moved by vendors in Chicago and Indianapolis to an Atlanta DC. The Chicago loads went out each week 90% full, while the trailer cube from Indianapolis varied and often went LTL. By adjusting the POs to both vendors, the Chicago trucks started going out 99% full (stopping in Indy on the way), and the Indianapolis loads were also improved to deliver a 20% total freight savings.

US Foods on its own recognized this opportunity, and several years ago tried to build a spreadsheet-based tool to direct their buyers on how to order. But the tool wasn't inline with the software that buyers or logistics managers used, and was a nightmare to maintain, so the program died. Most would just give up, I believe, but US Foods stuck with it, eventually hooking up with ArrowStream's Cloud based software to do the same thing, but better. And it is working, with saving implied in the 15-20% range - which is huge.

I am not sure what the "secret sauce" is in the optimizer tool being used, because this is something very different. It was almost as if they didn't want to commercialize the presentation by going into too much detail there, but of course that is the whole key - and not easy. More on this soon. Lots of opportunity for others, I believe.

Also on Monday, Doug Gray of Caterpillar gave what is clearly the best and most detailed presentation I have ever seen on the value of supply chain visibility. Caterpillar (perhaps borrowing from somewhere else) has defined four levels of visibility maturity: (1) where is my stuff?; (2) why isn't it moving?; (3) how can we move it better?; and (4) how can we impact network behaviors?

For number 2, Gray said visibility (GT Nexus) showed 1 out of 4 inbound moves from Asia to US West coast, rail, drayage, then truck to US factories had a container stall somewhere along the way. Now that they can see it, they started placing calls to find out why, and correct the process flaws that were causing the delays. The number of inbound delays is now down to 1 in 20, and the reduction in lead time variability has or will take out some 10 days' worth of inventory in that logistics flow. Gray gave real examples of the other four stages as well - excellent. More on this soon also.

Sears VP Jeff Starecheski gave a good presentation Monday afternoon on the future of omni-channel retailing/fulfillment. First, hats off to him for doing a fine presentation, by himself, no technology vendor or consultant needed. The first half was OK but not much beyond the usual description of omni-channel challenges, but Starecheski got more interesting and bold in the second half of his talk.

He offered a series of sort of "must haves" going forward for success retail efuflillment, which included having "one giant pile" of inventory from which all channels at a company can access - but interestingly not necessarily at the same cost/service across all channels. A total "24 x 7" mindset must be developed, he said, with dynamic customer order promising and dynamic order routing available in real-time, all the time. And he sees lots of innovation coming in last mile delivery, saying that while UPS and FedEx will of course be huge players, they won't be the only ones in the mix, seeing for example real possibilities in Uber or an Uber-like service to make customer deliveries, especially for orders needing delivery in just a few hours at manageable costs.

He also predicts a new generation of Distributed Order Management systems (DOM) that will go well beyond selecting optimal sourcing points for individual orders to optimizing a broad array of choices for both consumers and retailers - he calls what is coming "COOL," for customer order orchestration layer.

On Tuesday, Ron Coblentz and Glenn Trahan of Mondelez (created when Kraft split into two companies in 2012) gave a presentation on mobility in the supply chain that frankly was not what I was expecting. But it was interesting in its own right, in large measure for what it said about the coming era of "perfect logistics" I have been talking about.

There are multiple components applied to a retail customer in Mondelez's direct store delivery model: a route driver, a merchandiser, a sale rep, and customer service. While naturally they all had to work together, before they weren't really tied together by technology, a condition in part the result of falling under different corporate command structures (logistics, sales, etc.).

That meant, for example, that if a delivery driver was late - which they often were - a merchandiser may be stuck waiting unproductively at a store until the driver shows up. Now in progress is a technology and process revolution in which all these parties will be connected. The dispatch of merchandisers is linked directly to the driver's real-time ETA. Merchandisers themselves are now on a workforce management system, similar to an engineered labor standards system in a DC, that calculates how long each store stop should take considering units delivered, what SKUs, characteristics of the retailer, etc.

In what on the outside would appear a pretty well-run system today, Mondelez sees big cost savings potential from taking synchronization to the next level - as it approaches perfect logistics. This also connects to what is sometimes called "autonomous logistics," stemming partially from "internet of things," thinking, and which involves jointly synchronizing the product and service supply chain through high levels of visibility, smart software, and event management. It's coming, believe me.

Lastly, 2014 distinguished service award winner Mike Regan hosted a Wednesday megasession on the "real world" of transportation management. Usually these panels have CEOs of big trucking companies or similar participants, where this one had Steve Robinson, ex of Walmart now at Starbucks, but other than that three people I had never heard of. My initial reaction was: they couldn't get any big names to stay the extra day, so this is what we get. My expectations were modest.

I was wrong. Regan must have known these "no names" would in fact be very insightful. Before their comments , based on a question from Regan, I would estimate 80% of the audience said by a show of hands that they expect transport costs to rise more than 5% over the next year. Get ready.

Jeff Tucker, CEO of Tucker Company Worldwide, a 3PL/broker, somewhat shocked the audience early on by saying the truck driver shortage was overrated. He said that while there are issues, the shortage right now is primarily a phenomenon at the largest carriers only, much less so at mid-sized ones. He offered as support that there are an additional 30,000 for-hire truckers in the US than there were 30 months ago. Not all agreed with him, but this would actually explain some things.

Robinson said every rate negotiation with a carrier today has to be paired with discussions about what the shipper can do to make the carrier more efficient or the driver to have an improved experience. Bob Voltmann of the TIA organization warned electronic loggers to be mandated soon will create more customer service issues than realized, and that recently enacted laws against driver "coercion" also put shippers at more risk than they know.

Good stuff - I am out of space. Full stories on all these soon in OnTarget.

Did you attend CSCMP? What were your thoughts? Any reaction to any of these supply chian presentation? Let us know your thoughts at the Feedback button (email) or section (web form) below.

 
 
 
     

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