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! In the next few weeks, we'll start adding feedback right on specific story pages, so you can see what others are saying.

Catching up on a variety of Feedback again this week. We are publishing still more excellent feedback we received on our Supply Chain Megatrends, Parts 1 and 2. That includes our Feedback of the Week from Jason Rude of Source Medical, who says our inclusion of Lean Thinking in that list may have been off.

You’ll find several other excellent letters on that topic as well, plus one comment on the graphic of the week we ran featuring the Auto ID Center’s 2002 projections for tag prices and adoption, and a good letter on the rise of China’s Dragons in Manufacturing.

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 – On Supply Chain Megatrends:

In response to Dan Gilmore’s statement: “Everywhere I go, companies are moving Lean thinking and Lean initiatives from the factory floor to the broader supply chain.”:

I find it to be quite the opposite. I have noticed the outsourcing trend has captured so much momentum that it overwhelms lean principles. It is now quite common to have taken a product manufactured in Ohio, with a 2 week lead time to distributors throughout North America, and move its production to China where it now takes 4 months, requiring distributors to hold 60 days inventory versus 17; exactly opposite of Lean thinking.

Jason Rude
Director Materials Management
Source Medical

More on Megatrends:

I read your Megatrends with interest and agree in principle. In addition, I would include the following items:

1. Financial Supply Chain - bridging the gap between financial and physical SC, which will change the way corporates are financing business activities.

2. Business Continuity Management (BCM) - Globalization entails risk and corporations need to become smarter in assessing geo-political and socio-economic risk factors, not to mention the 'day-to-day' risk factors contained within any SC. Contingency planning is still pretty much in its infancy and more often than not restricted to IT.

Personally I'd include environmental issues such as carbon footprint within BCM, given that before long, legislative measures will come into force, mainly as another source of revenue (environmental tax, etc.) which impacts on the SC.

Ulrike Rowbottom
United Kingdom

Your description of the Megatrends is accurate and I am looking forward to see the next five Megatrends described.

My question would be how you rate the importance of 'global supply chain footprint', means how a company masters to find the right setup between managing the supply chain and distributed physical planning and execution across continents. China, Offshoring, Outsourcing play a major role, as well as being able to meet customer demand more quickly (e.g., through an optimized network design).

In addition I would like to get your opinion on the influence of private equity activities on global supply chains? M&A and more short-/medium term profit focus is having significant impacts as well.

Michael D’Heur
Manager
PRTM

A thought on Megatrends to add or maybe frame your list as I have had this vision for past 10 years in watching how a lot of US businesses fail to understand value creation vs. short term SEC profits.

Last night I heard 5 analysts on CNBC describe how they expected the US to lose our #1 super power status to China in 30 years or so. They likened it to the way the US usurped the British at the turn of the 20th century at the end of the industrial revolution. They went on to make it clear as investors they see obvious signs that China, Japan, Northern Europe etc. all make it easy for their business to setup domestic operations in the US, but make it hard for US business to do the reciprocal in their countries. One investor, a former professional football player, took it one step further that the US should be using maximum negotiating leverage with China prior to next year's Olympics as the need for China to show “off” prior to the Bejing Olympics as this might be the best negotiating leverage the US has in the next decade. Not sure I agree, but was encouraged to see the competitive spirit.

So here is my Megatrend - that I think translates all the Megatrends back to the average US business / consumer – at some point in the next few years and makes supply chain leaders a lot more strategic than getting the next box out of the DC.

If business leaders and our political statesmen do not act now to leverage the supply chain for US business - worker competitive advantage, we will see the US prosperity engine increasingly unwind and erode and likely at an increasing rate. The fact the Japanese, Koreans, Northern Europeans and now Chinese can do business very effectively on our shores with equal access as US business, yet US flagged business continually struggle to do the same creating domestic domiciled equal footing in these countries, further compounds the trend. I have written extensively on one simple concept US business could use to compete (Domestic Postponed mfgr of offshore components) which all the international competitors use effectively on US shores (e.g. Auto assembly, hi-tech assembly, now appliances etc.). Even dedicated a not-for-profit web knowledgebase www.Texaslcc.org to the education first driven by philanthropic work we have done with the Texas governor’s office, local workforce boards and US dept of commerce and labor.

DCRA Inc’s exposure is US managed business continue to struggle with the concept – often lured by “just make the whole thing in China” CFO mentality and ship a lot of air in containers not realizing the risks to IP, costs, competitiveness, ability to tailor / modify / localize products. I find it part arrogance and part just lack of international multi-continent business exposure but am quite sure it is the mega trend of all mega trends for the US and North America. I don’t find many supply chain pros with this perspective but they don’t often have a strong enough voice to counter the quick profit leadership in charge.

One presidential candidate described all this as the US prosperity engine we have enjoyed since WWII, which was fueled by making things (manufacturing) adding value and taking on tough problems. Engineering business to “win” in global supply chains is the new key to unlock the next generation of the prosperity engines – thus a business Megatrend that encapsulates the right skills and practices in global supply chains. The 5% of top global business already knows this (e.g., Ikea, Phillips, Cisco, Dell, P&G, Nike, etc.) and use to drive global profits… when will we see this trend used to drive US competitiveness ?This is the mega trend I am quite certain has been on us for 5 years or more, yet I am still watching for – yet see little action to address - from our business leaders and statesmen.

Keep up the good work at SCDigest!

Jon Kirkegaard
President
DRCA Inc.

I agree with your choices, but I would add one more, Risk in Supply Chains. If risk is volatility, not pursuing a strategy that reduces it in global supply chains would be harmful to both the customer, creditor, shareholder and capital communities. Recent events, tainted fish, lead paint, toothpaste while clearly indicate a breakdown in quality control; these products were carried form producer to store shelf before discovery. I think supply chains have to get be involved.

More importantly, current generation supply chains are built for efficiency. Perhaps, with a risk component at the product level, supply chains will be split in two—efficient and responsive, where the responsive one is geared to key customers, gross margin, shareholder value.

John A. Deasy
Managing Director
The Transitions Group
A Supply Chain Risk Advisory Business

On RFID Tag Price Graphic:

It appears that neither scenario has completely played out.

Tag (inlay) prices are close to 5 cents, in range of 6 – 7 cents, yet RFID adoption is moderate at best.

Very interesting to see this article.

Tim Hoffman
Zebra Technologies

On Chinese Dragons:

A quote from the past:

“Industrial supremacy is largely a function of the character of the population. If the people of India or China were as competent, from an industrial point of view, as England or the United States, there could be no question as to the race with which ultimate supremacy would lie, assuming the possibility of maintaining the conditions other wise the same. All production is more or less a function of labour, and as the nominal cost in the eastern countries is about one-twelfth the cost in the industrial centers of the United States, the race should be to the "Chinese cheap labor” if it were sufficiently effective.”

From J. Stephen Jeans, "The Shifting of National Industrial Supremacy," The Engineering Magazine. April 1898

Lee Hales

Q. Why is supply chain analyst firm AMR called by that name?

A. When founded in 1986, AMR was an abbreviation for its full name of Advanced Manufacturing Research. It later went with just AMR as the scope of its analysis expanded beyond manufacturing.