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First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  Oct. 7 , 2011  

Supply Chain News: CSCMP 2011 Full Review and Comment


Ok, back from a hectic - and I mean hectic - four days in Philadelphia at CSCMP's 2011 annual conference.

It was noteworthy this year, I believe, because for the first time I can really remember there was some true supply chain news coming out of the event, not just insight and information, as I discuss below.

Gilmore Says:

The top news had to be Procter & Gamble announcing that it has moved beyond Perfect Order to a new metric it calls Service as Measured by Customer (SAMBC).

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I attended the conference wall-to-wall, and submitted daily video reviews Monday through Wednesday, which thousands of you viewed. I received a nice comment from Larry Lapide of MIT, for example, who said, "I wasn’t able to make CSCMP this year as I wasn’t speaking and I had teaching commitments. So I viewed all 3 of your Video Reviews summarizing it. I just wanted to thank you for bringing some useful information to folks like me that could not attend. While I definitely miss the networking aspects of the show, I feel that I at least now know some of the more important trends that were discussed there."

You can find each video review here: CSCMP 2011 Day 1, Day 2, Day 3.

I didn't get official numbers, but it seemed to me the conference attendance was somewhere around the 3000 level that it has seen in recent years. It should be more than that, in my opinion. A big difference it seems to me is that a number of companies that in the past sent 5 or 10 people now send maybe two. Some combination of the travel costs in this environment and the fact that in our Lean staffing world there probably wouldn't be enough people back at the ranch to keep goods moving probably explains that. But it's unfortunate.

Regardless, the event felt busy, with the main hallways often crowded.

I personally like a supply chain-related keynote speaker, but realize not everyone thinks this way; some have told me that surrounded with supply chain material for three days, they welcome a change of pace. Fair enough. I will say that Stuart Varney of the Fox Business Network was certainly entertaining, and focused the last part of his presentation on the demographic time bomb he is certain is coming - the population in developed countries is clearly aging, and there are not enough young workers to support retirees.

"It is simply unsustainable," he said, noting that no country in Europe, for example, has a birth rate per couple of higher than 1.9, with the replacement rate being about 2.1. Many are in the 1.2-1.5 range. Scary. The US is still at about 2.3 I think, and has higher levels of immigration, but we are going to experience the same issues, maybe just a bit less severe that say Russia or Japan. Varney said demographics will be perhaps the dominant political issue in the developed world over the next couple of decades. I will note there are also many supply chain implications, starting with changing demand patterns.

Ok, what was the real news coming out of the conference.

Number 1 had to be Procter & Gamble announcing that it has moved beyond Perfect Order to a new metric it calls Service as Measured by Customer (SAMBC). Just what does that mean? Well, the end measure represents the percent of P&G customers for which it meets all of a given customer's service expectations.

The right way to think of this is that P&G is no longer measures itself only through its own metrics, but now primarily from the way its customers measure P&G - one retailer at a time.

In other words, through a collaborative process, P&G and its customers agree on what set of the retailer's metrics will be used, what the targets are, and how that metric is defined. P&G showed examples across a range of customers; while most had "on-time" delivery as a metric, they were set at a number of different percentages (98%, 95%, etc.) and were defined in different ways.

This could represent a true inflection point in supply chain history, and ultimately become the way many other companies measure there supply chains. It has many, many ramifications. P&G is taking this all the way down to the plant level, for example. More on this soon.

The second piece of news came from Greg Forbis, a senior director of inbound transportation for Walmart. As many know, last year Walmart announced a program to take much greater control of its inbound freight, moving from pre-paid to collect for thousands of vendors. Early reports were that the Walmart was being pretty heavy handed in its approach, in some cases asking for some ridiculous price discounts from vendors who had bundled freight in a delivered price.

Forbis clearly offered a kinder, gentler Walmart approach to the packed session in a large room during the last session of the day, acknowledging that "every situation is different," and at the end saying that if a vendor is resistant to the change, right now they are just moving on to the next vendor.

Forbis made a strong case, however, for how this can make sense for many vendors, and noted that Walmart was actively looking to handle freight for others for moves that may have nothing to do with Walmart. Track chair Michael Cole of Kraft, for example, said his company is using Walmart for some Kraft to Kraft moves in difficult to cover lanes - a function of Walmart's incredible network density.

More on this soon too.

Over the last several years, I have found one of the last day "mega-sessions" to be especially good, and that was true again this year, in a panel discussion on the US logistics "capacity crisis."

Noel Perry, now an economist but with operational experience in the trucking industry, interestingly noted there are two types of capacity: (1) Fixed infrastructure (roads, bridges, rail lines, ports) that lasts a long time and generally takes years to build; and (2) Variable capacity, meaning the number of trucks, rail cars, truck drivers, rail employees, etc., which can have a huge impact on actual capacity in any given period of time.

Perry is not at all worried about fixed capacity in the mid-term, contrary to others. He said utilization of existing fixed capacity is still well below peak levels seen in 2006. That said, he is very worried about variable capacity, especially truck drivers. He expects a shortage of drivers of some 300,000 in the next few years, and that this would take the US back to the very tight capacity levels of 2004. He expects trucking costs to rise 10-15% over the next few years.

Pepsico's VP of Transportation Mark Whittaker agreed, and said the only thing Pepsi and other shippers can really do is to employ strategies to consume less transportation, as his company is doing using better routing, optimization, network design, trailer utilization, etc.

The real news, though, was that Perry said that this extremely worrisome capacity scenario would be more than completely eliminated if proposed changes to current US truck size and weight limitations were amended. International Paper transportation head Tom Carpenter, already involved in the effort to increase truck weight limits to 97,000 pounds, actually went to the question microphone to confirm what he thought he heard Perry say. Perry's response: "Absolutely."

Dr. James Stock of the University of South Florida won the distinguished service award.

There was much, much more, and you will find more details on the above sessions and others in coming issues of SCDigest and our On-Target newsletter.

It was a very good conference, but as always I will offer a few suggestions for improvement:

  • I will repeat from recent years: the conference needs to pull back from the 90 minute session schedule. Frankly, many sessions just don't need or shouldn't have that much time, but more importantly, it overly limits the number of sessions available. Only three session slots were available Monday and Tuesday - that is simply too few.
  • There were separate tracks on distribution/warehousing and manufacturing, but they left me underwhelmed. The manufacturing track was virtually 100% about Lean, and while the distribution track was better, it missed many attractive/more current topics. I think CSCMP is really missing potential attendees here. I offer my services.
  • Let's have one of the two first two day keynote speakers be a true supply chain visionary/thought leader. Isn't this the one event where such thinkers should get the main tent? And/or, let's have a panel discussion with some heavy hitter chief supply chain officers and a fine moderator (again, I volunteer).

Just some quibbles. Again, it overall was a fine event. Next year's conference will be roughly the same week, in Atlanta, for the first time in a long time.

I'll see you there.

Did you attend CSCMP 2011? If not, why not? What was your reaction to this year's event? Any session of insight that really struck you? Let us know your thoughts at the Feedback button below.

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