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Ariba lead the pack, over the past week, up $1.48 per share. Oracle, gaining $1.05 per share, is up just over 10% from the previous week. Aspentech's $.81 per share gain secures third place for the week. With a stock price of $3.95 one year ago, Aspentech has increased it's value by more than 82% over the past year.

Transportation and 3PL Providers, FedEx and Ryder gained more than $2.00 for the week, UPS followed with a $1.27 per share gain. Symbol gave back $.98 of last week's gain. The other stocks posting losses are Descartes, YellowRoadway and JB Hunt.

Dan Gilmore
Editor-in-Chief

I spent the last weekend reading The Supply Chain Handbook, a new book from Tompkins Associates that brings together almost two dozen industry thought leaders who address an incredibly wide range of supply chain topics.

It’s a book that should have a place on every supply chain and logistics manager’s shelf (more on that in a bit), but one thing that especially intrigued me was a chapter by Tompkins Associates president Dr. Jim Tompkins on customer satisfaction.

The chapter starts with the simple but powerful principle that “Customer satisfaction is the measure of a supply chain’s effectiveness.“ That crisp statement triggered a number of thoughts. For example, while we often have trouble getting executives to really understand the value of supply chain excellence, most of them certainly understand the value of customer satisfaction – is that the framework we should be using to explain how supply chain improvement really drives shareholder value? After all, in the end, even operating cost reductions allow us to lower prices, which is an important component of customer sat.

Dr. Tompkins then offers a simple formula for understanding customer satisfaction: Customer satisfaction simply equals a customer’s perception of service minus their expectation of service. Not understanding this formula often leads companies to overly focus on internally generated measures that they think serve as a proxy for customer satisfaction, but may not really reflect it.

The book notes: “There is often a major disconnect between internally measured customer service performance and actual customer satisfaction. KPIs are important, but meeting them does not necessarily mean that customers are satisfied. Customers base their satisfaction on how easy it is to conduct business, taking into account such factors as quality of information available, consistency of receipt timing, and others.“ It cites a few examples of real companies that were hitting customer service goals but in fact were experiencing unsatisfied customers. And I loved the anecdote about the grocery chain that invested in a lot of express lines to speed small item purchases, while the customers buying full shopping carts and who really drove the chains’ profits had their wait times increased.

Another challenge for companies in driving customer satisfaction is defining who the customer really is. For many companies, this is not as simple as it might seem. For example, is a beverage company’s customer the distributor it ships to, the retailers the distributor serves, or the end consumer? The real answer is that all of them are customers, and we must organize our supply chain to deliver customer satisfaction at each level. And for most important operational issues related to that satisfaction, “No one function, department, or company can answer these questions without the help of others.“ That again to me is a simple and effective way to crystallize the need for internal and external collaboration – the customer cannot be satisfied without cooperation and coordination of multiple parties and companies.

These are just a few of the topics you’ll find in The Supply Chain Handbook. It brings together such well-known supply chain experts as Gene Tyndall, Gartner's Andrew White, Ken Ackerman, Paul Bender and others, who contribute individual chapters on topics ranging from CPFR to transportation excellence to handy formulas for calculating how much dock space you require. We recommend it. You can get more information at www.tompkinsinc.com.

Is there a difference between customer service and customer satisfaction? Can focusing too much on internal KPIs alone sometimes lead to problems? Do we think enough about the different tiers of customers our supply chains have to serve? And is focusing on how the supply chain delivers customer satisfaction, the right way to improve executive attention?  Let us know your thoughts.

Feedback of the Week - On RFID, forecasting, replenishment, and more:

I have been enjoying your e-newsletter for several months now, and would like to thank you for that enjoyment. I applaud your ability to use fewer words, to say more, than any other business publication I have seen.

I would like to add a few comments to some long-running discussion threads, but must request that you do not make my name public as I suspect that the company that employs me as a production planner would not agree with all of these.

What prompted me to write at this particular time was your recent column questioning whether or not the employment of RFID would increase revenues for manufacturers. You were dead on: when I can't find the brand I am looking for, I will most likely buy another brand at the same store. Who has time (or, considering the cost of gasoline, money) to be driving all over town looking for a tube of toothpaste? The value doesn't justify the investment. But when I do see empty shelves at my local Long's, I don't wonder, “gee, why don't they invest in RFID?'” I reflect, rather, that other factors are at work in making my preferred item unavailable to me.

Most organizations focus their cost-reduction efforts, as another of your correspondent observes, on reducing staff. The local Long's does not employ a person whose responsibility it is to perform continuous replenishment. This could be as low-tech as circulating through the store and making sure that the shelves stay stocked. Gelson's does this, but that is another business model altogether. (More on that later.) Rite Aid is so bad at replenishment that I no longer shop in their stores; the odds that I won't find what I want are too high.

Absent an extra stocking clerk, the store continuously collects information electronically as to what customers are buying. To judge from my Long's receipt, they keep this information in some detail. I don't see their using this information to make a connection between the supply planner having brought in X cases and the store having sold all X. If they don't use this information now, what makes us think that they will use it just because the collection method is different?

Some supply planner, somewhere in the organization, decided to send that store X number of cases of my brand of toothpaste. The store could have sold X + 50. The planner's decision was based on...a forecast, probably? And yet no organization has made it a priority to improve its demand planning. I know that in my own organization, the sales force is rarely held responsible for its failure to add market intelligence to the statistical forecast. Of course, we are also at fault for not integrating our promotions-management system with our demand planning one. But either way, we have made no commitment to improving the reliability of our forecast.

I don't mean to sound anti-technology; certainly it has made our lives easier, our workplaces more efficient, in any number of ways. It's just that I hate to see money ill-spent. (Fifteen years of continuous cost-reduction programs will do that to you.) In the case of RFID technology, we see organizations apparently willing to put themselves at serious financial risk rather than displease Wal*Mart. I am not a believer in Wal*Mart's business model. I think that in the long run it reduces the choices I have as a consumer, because it presupposes that the only criterion is price---- and by price I mean the short-term 'per-unit' concept of price. If I can spend $30 on a set of food-storage containers that will last five years, why should I spend $7 on a set that won't last one? Granted, I have the $30 now, and I acknowledge that other people have only the $7. Part of why those people have only the $7 is that they are employed by Wal*Mart.

As a consumer, I want to be the one to make that choice; not to have it taken away from me by the proverbial 900-pound gorilla. I choose to have a more pleasant shopping experience than Wal*Mart offers. I choose to value quality over per-unit price. I choose to look at the long-term implications of my acts as a consumer. I want to retain the right to choose. I don't think I am alone in this regard--- witness the success of Trader Joe's, whose business model is the exact opposite.

Thanks again for a really, really good newsletter.

Name withheld by request

On managing risks in global sourcing:

Your article prompted me to cite an instance detrimental to offshore sourcing. There are several very large buildings in Chicago that have recently replaced piping at enormous cost. Reliable information indicates one large building is said to have spent $15 million to replace the piping. A building management company told me that they researched the problem since several of their buildings were involved. It seems the pipe was below our ASTM standards.

Does that mean that all pipe made here meets all standards? Perhaps not, but gut feel and experience tells me that it would be a good bet that it was. There are paper certifications (certs without tests). It happens.

It took about 25 years to discover the problem. Hopefully we will have same serious studies much earlier that will allow us to make serious comparisons and quantify them.

You might look at the computer support from Asia. I can tell you personally that at this time it leaves much to be desired and I suspect that it will cost the software companies dearly in sales. Communication is difficult when all parties are fluent in the same language, how much more so when they are not.

Marty Lenow, P.E.