This Week in SCDigest:

August 16, 2007 - Supply Chain Digest Newsletter
SupplyChainDigest - Your first stop for supply chain information

Become a Sponsor Click here for information on how to become a Sponsor
Send to a Friend Send this newsletter to a friend. Click here!
Subscribe
Not already subscribed? It's free! Click here.

Archives | Events | Feedback

Featured Report

Sponsored by: HighJump Software, a 3M Company

New Report: Reduce Transportation Costs By Up To 30%

Download your free copy of this valuable report and discover key ways transportation management systems (TMS) automate processes and reduce costs associated with getting products to their destination on time. The report also reviews vendor selection criteria.

Download your FREE Copy at:

http://www.highjumpsoftware.com/sce/SCDigest20070816

First Thoughts by Dan Gilmore, Editor

The 8 Reasons Companies Are Buying SCM Software

As we first discussed last week, these are very good times for supply chain software providers, and that means companies like yours must be buying. Gartner’s Andrew White shared some thoughts at what companies were doing through a filter of process automation versus process innovation – interesting comments.

I also noted that with the strong economy, companies were simply buying more components, bringing in more containers, and making and shipping more products. It’s the pressure from rising volumes of the physical supply chain that often drives technology investment.

Gilmore Says:

As always in the supply chain software business, it will hit a trough somewhere down the road, but for vendors right now, times are pretty good.

What do you say?


Send us your comments here

I speak to lots of companies about what they are doing to improve their supply chains, which generally involves, in part, a technology aspect. I’ve been thinking some more about what is really driving software investment, and offer below my eight key drivers of the recent strong levels of supply chain software adoption. It should be helpful for companies to get a sense of the catalysts behind the kinds of investments others are making in supply chain technology.

1. We are in a period of rapid supply chain change, driven most importantly by globalization and offshoring. With that change follows new strategies, processes, and objectives - often driving the need for new technology. Software providers, ranging from supply chain visibility to network optimization to warehouse management (to better handle all that inventory we're bringing in), have benefited from supporting new supply chain network strategies. This is clearly the number 1 factor. (See our Network Planning and Optimization Resource Center from The SCDigest Letter.)

2. Despite some relief from the worst of transportation times in 2005, many companies are still purchasing Transportation Management Systems. Nearly all TMS vendors I know are doing at least OK, and some very well. Companies today simply understand that transportation is a function that requires strong technology support – a big change from the past. (See our TMS Resource Center from The SCDigest Letter).

3. Related to point number 1, and as Logility’s Karin Bursa noted last week, many companies are attempting to become more "demand-driven." While that's not a software application you can buy, most find that to do so requires a lot of technology support, such as supply and demand planning, to provide the needed foundation.

4. Sales and Operations Planning is very hot, and just as with companies moving to be more demand-driven, the right technology foundation makes all the difference. Moving to an effective S&OP process often highlights deficiencies in a company’s current supply chain technology stack, as companies define the “to be” state for S&OP and realize, either before or after they begin the S&OP journey, that better tools than they have are required to optimally understand and balance supply and demand.

5. Companies have found they really can drive tremendous savings to the bottom line from sourcing solutions, such as e-auctions and e-procurement. It’s low hanging fruit, and part of the overall trend towards greater centralization of the supply chain.

6. Years after the internet bubble, companies are also finding real value in applications for web-based collaboration/integration. Many vendors offered these or similar tools early in the decade, but as frequently happens, the uptick in adoption has really just occurred in the past couple of years.

7. In the past couple of years, a few software categories have gone from off the radar to pretty hot. One, Labor Management Systems for Distribution, has been around for many years, but only recently moved to more mainstream interest and adoption (See our LMS Resource Center from The SCDigest Letter).  A much newer category, Inventory Optimization, which helps companies with complex supply chains optimize inventory levels across multiple levels, is also gaining a lot of traction.

8. For now, we’ve come to a reasonable market equilibrium between ERP and “best-of-breed” providers – enough market for both. Some of the worst of the “ERP or nothing” mentality has receded in many companies, and as often as not, if the company should go ERP, it does, and if it should go best of breed, it is. Not always, but enough. The related dynamic is that a company may find it has two or three major centers of gravity entrenched – its ERP system, its supply chain planning system, and its supply chain execution system. It often has flexibility to choose the next app (say transportation management) from which of the three offers the best fit, most value, and least pain.

As we noted before, what I have not seen is a lot of spending on new RFID-based applications, with the somewhat exception of some large consumer goods companies investing in analytic applications, such as those from TC3i and True Demand. I don’t have a great sense for whether companies are again spending money on Manufacturing Execution Systems (MES), a market that never seems to quite get hot. Companies for awhile were reluctant to invest in MES until they figured out what their manufacturing strategies were going to be (e.g., outsourcing), but there is something to this “shop floor to top floor” concept, and regulatory pressures continue to push companies towards more robust manufacturing data collection and control.

As always in the supply chain software business, it will hit a trough somewhere down the road, but for vendors right now, times are pretty good. That means you are buying, and from what I am hearing, the return on investment of late has been good, as buyers have gotten a lot smarter about the buying process and making the implementation work.

What do you think is driving the current good times for supply chain software? Is your company making investments? Where and why? Is there an important difference between process automation and innovation? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

Want a printable version? Go to:

www.scdigest.com/assets/FirstThoughts/07-08-16.php

 

 

Dan Gilmore

FEATURED RESOURCES

New Certified Lean Masters Lean Supply Chain Training and Certification Schedule Released

NEWS BITES

This Week’s Supply Chain News Bites – Only from SCDigest

August 15, 2007
Supply Chain by the Numbers: Aug. 15, 2007

August 15, 2007
Supply Chain Graphic of the Week: Prioritizing Customer Service by Product Classification

August 15, 2007 Procurement News: Nokia Decides Dual Sourcing is the Right Strategy

August 14, 2007
Retail Supply Chain: Where is Wal-Mart's Secret Plan?

August 12, 2007 Logistics News: Will Minneapolis Bridge Collapse Spur Investment Needed in U.S. Transportation Infrastructure?

August 12, 2007
Procurement News: Milk and Milk-Related Products Have Become Part of Agflation Syndrome, as Supply Chain Costs Soar for Food Producers

SCM STOCK REPORT

It was another difficult week on Wall Street, but despite the uneasiness, our Supply Chain and Logistics stock index performed well.

More troubles this week, but we had some winners last week, as you'll see at our full results table.

See stock report.

NEWS AND VIEWS

Lean Supply Chain: Transformance Advisors, ISCEA and Supply Chain Digest Announced New Certified Lean Masters Training Program

Courses Offer Best Lean Training Available, Leading to Lean Master Certification; Fall, 2007 Course Schedule Released

Global Supply Chain: What Will the Supply Chain Fallout be from the Mattel Toy Recall?

Latest in A String Of Product Safety Incidents Likely To Fuel Demands For More Regulation of Chinese Imports; Mattel Finally Names Supplier Involved; Will Western Companies Get Gun Shy About Offshoring?

This Month's Supply Chain Marketing News Exclusively for Supply Chain and Logistics Solution Providers

Expert Insight:
Living Supply Chains

by Dr. John Gattorna

John Gattorna All Pathways Lead to the Customer

Leading Companies are Segmenting Customers by Supply Chain Requirements, Not Traditional Characteristics

YOUR SUPPLY CHAIN QUESTIONS ANSWERED!

Reader Question: Why Should Incentives Be Installed After the LMS is Installed and Implemented?

SCDigest is pleased to welcome Jon Kirkegaard and Noah Dixon as the most recent additions to our growing list of expert panel members.

If you have supply chain or logistics related questions you need answered, ask our panel of experts.

Share your insight.

SUPPLY CHAIN TRIVIA

Q. What specific area is considered by the American Highway Users Alliance to be the worst traffic bottleneck in the U.S.?

A. Click to find the answer below

FEATURED CONFERENCE

SCDIGEST RSS FEEDS

Do use an RSS reader? Do you have a MyYahoo! or personalized Google page? For these and more you can have SCDigest delivered right to your personal pages, all week long.

You can subscribe to our RSS feeds in two ways:
1.
Copy our RSS link into your RSS reader - it's easy!
www.scdigest.com/rssfeeds.xml
2.
Click on a button below to quickly add it to your favorite reader.
Add to My Yahoo! Subscribe with BloglinesSubscribe in NewsGator Online
YOUR FEEDBACK

Feedback is coming in at a rate greater than we can publish it - thanks for your response.

We're really behind again - bear with us. But keep the letters coming!

We received a number of letters on our First Thoughts article a few weeks ago the intriguing work of Dr. John Bartholdi of Georgia Tech on the use of the "Bucket Brigade" concept in Supply Chain, and order picking specifically. That includes our Feedback of the Week from Ed Williams, Sr. Vice President TransTech Consulting, who says his company also invented the Bucket Brigage concept, and that many of the examples cited were TransTech clients. Dr. Bartholdi responds.

You find a few other short letters on this topic as well, including Gordon Hetherston from Duport, who said he was taking our article to his next beekeeping group meeting! Also, Lynne Heuton of Land O'Lakes recommends a book on self-organizing systems. Scott Roy of Wells Dairy comments on the similarities to the Toyota sEWING System.

Keep the dialog going! Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedback of the Week – Bucket Brigades

I just read with interest your article on bucket brigade picking. (July 6, 2007)  I thought you might like to know we were the consulting group at everyone of the facilities you listed and were directly responsible for designing as well as implementing the bucket brigade concept.  We have used that concept with a variety of clients over the past 20 years (from hair care to media as you mentioned).  Currently, we have started using bucket brigade picking in conjunction with voice directed picking.   Random House and Thomson are two recent examples of this success.  In order to accomplish bucket brigade, we had to push the software developer into making some tweaks to their voice systems, but the results have been superb.   This has further increased productivity as well as improved accuracy.  I would invite you to tour or discuss some of those applications.  

Ed Williams
Sr. Vice President
TransTech Consulting

Dr. Bartholdi Responds:

Apparently we and TransTech developed this independently. We discovered it from the math and learned about TransTech several years later. I am still not quite sure whether their protocol is identical to ours -- whether they have overlapping zones rather than, as we suggest, no zones at all. In any event, I believe they were first in getting a successful implementation, but I do not believe they have ever written about it or made the connection to social insects.

David Wolfe, then Sr VP of TransTech gave us permission to list some of their successful clients back when they had many more implementations than we did. When people ask us, we generally refer them to TransTech if they want consulting oversight in implementation.

I have never met Ed Williams, but he is correct that TransTech consulted for each of the companies you listed by bullet point (which is why we do not include any case study on our web page). Some, however, such as Blockbuster Music, subsequently interacted with us. And CVS and subsequent sites on our web page were done entirely by us, as far as we know.

Your article was more than okay: it was excellent.  You explain this better than I!

More On Bucket Brigades :

Very interesting concept.  I do not get involved much with picking and warehousing strategies, but read the article because of the tie in with bees.

Yes - I am a beekeeper.  And you are right, the queen does not tell the drones what to do.  Partly because they basically do nothing until an unfertile queen comes along.  Otherwise they are taking up space and eating the stored food of the hive.  That is why when fall comes the workers (all female) kick all of the drones out.

But your premise is basically still correct - the queen does not tell the workers what to do (either).

Like I said - very interesting concept.  I am going to print out the story and take it to our next beekeeping meeting!

Gordon B Hetherston
Dupont

The concept does have striking similarities to TSS (Toyota Sewing System). In a prior life we put in TSS and it was a very affective approach.  The movement back up stream was called a “bump”. There were zones that a worker moved between but it was mostly tied to  how many zones an employee was proficient at since each zone may be doing a different task using different machines and skill sets. As my prior boss called a well run TSS line “a seamless ballet of movement”. I can see how it could be an affective picking process.  The biggest challenge that we had was getting the employees to want to work as a team vs. a group of individuals.

Scott Roy
Wells Dairy, Inc

Let me recommend Mitchel Resnick's 1997 book, Turtles, Termites, and Traffic Jams (MIT Press).  It is a wonderful book exploring self-organizing systems.  

Lynne Heuton
Project Analyst
Land O'Lakes, Inc
.

SUPPLY CHAIN TRIVIA

Q.  What specific area is considered by the American Highway Users Alliance to be the worst traffic bottleneck in the U.S.?

A. The interchange of U.S. Highway 101 and Interstate 405 in Los Angeles.

Copyright © SupplyChainDigest™ 2003-2007. All Rights Reserved.
To Unsubscribe: Click Here
SupplyChainDigest:
PO Box 714
Springboro, Ohio 45066