sc digest
July 23, 2015 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Who Really has a Supply Chain Strategy? bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet New Stifel Weekly & Expert Insight bullet Videocast/On Demand Videocasts

Download Our Complimentary White Paper Now
To Learn the Ten Steps to Finding the Right Mobile Device

first thought


Supply Chain Graphic of the Week
Growth of Sustainable Product Sales

Mercedes Embraces a New Logistics Model for Auto Parts
3D Printers Threaten Hollywood Revenue
Big Blue has Unenviable Streak Going
NRF Revises 2015 Retail Sales Forecast Down


June 29, 2015 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: Can A DC Have High Picking Rates With Low Picking Productivity?


Download Complimentary White Paper Now To Learn the Ten Steps to Finding the Right Mobile Device


Weekly On-Target Newsletter:
July 22, 2015 Edition

Cartoon, WMS Myths, LTL Review, Supplier Innovation, Africa Sourcing and more

Stifel Transportation Weekly for July 20, 2015

by John Larkin
Managing Director and Head of Transportation Capital Markets Research Stifel Financial Corp.

Thought Leadership Video
Is Now the Time to Finally Leverage Retail POS Data?
SCDigest editor Dan Gilmore and Fred Baumann of JDA on a new research note from Aberdeen that says the promise of POS data has not been realized - but there is still hope.

Warehouse Management System (WMS) Myths Part 1

by Mark Fralick



The State of Global Sourcing and Trade Management

Please Take the Brief Survey Now.

Get Copy of Report


What percent if the US LTLT market do the top 5 carriers control?

Answer Found at the
Bottom of the Page

Who Really has a Supply Chain Strategy?

You would think, here in 2015, some 30 years into the "supply chain era" that to me started in the mid-1980s, that supply chain strategy would not remain so little understood and with not much in the way of accepted structure or formal adoption.

I will briefly mention an incident a few years ago, where a supply chain director for a fast growing retail chain approached me at some conference. In essence, he said that for the past 10 years or so, all his company's supply chain could focus on was try to keep up with the growth in terms of overall sales and new store counts, and that as a result there wasn't a lot of time to worry too much about an overarching strategy.


"I will note here that Paul Dittmann of the University of Tennessee found in 2013 that just 18% of the members of his Supply Chain Forum had a formal supply chain strategy, so perhaps the JDA group actually overstates the reality a bit."


Send us your
Feedback here

But company growth was slowing, and there was a sense of "what do we do now?" beginning to take hold. What we need is a supply chain strategy, he said - but they were very unsure what one really looked like. I think this is not unusual even today.

So I am going to devote two or three columns to supply chain strategy over the next couple of months and hopefully shed some light on this important topic.

In early May, I attended the Spring meeting of JDA Software's Demand Optimization Council (DOC), a group of some of its leading retail, manufacturing and wholesale customers who share insight and activities in the supply chain. It's a good group, managed by David Johnston, and I have been attending as sort of a guest contributor for the past five years or so.


Each meeting has a theme, and this year was a very basic one: what was each member company's top supply chain initiatives for the year? Good topic, but it seemed to me that supply chain initiatives sure ought to be connected to supply chain strategy, right? One would hope so.

I worked with Johnston to construct a brief survey around strategy and initiatives for DOC members to respond to prior to the meeting. While we only had a little over 20 respondents from this small group, I am confident the results are not that much different than if we had received 100 surveys. The results from that effort provide a nice intro to the subject of strategy.

So I started with the basics: do you have a formal supply chain strategy? As shown below, it was a mixed bag, with 36% saying Yes, another 36% saying No, and (as I suspected) 27% saying "Sort Of." One of the Yes votes was in fact a retailer that said it was creating a formal supply chain strategy for the very first time.

I think that sounds about right: roughly a third each in the Yes, No, Sort Of categories. I will note here that Paul Dittmann of the University of Tennessee found in 2013 that just 18% of the members of his Supply Chain Forum had a formal supply chain strategy, so perhaps the JDA group actually overstates the reality a bit.

I hope we can agree that this state of affairs is generally not good. What companies I assume must have instead of a formal strategy are perhaps yearly tactical plans or maybe even some what you would say are strategic initiatives, but what are those really connected to, and are they actually what the company needs to move forward successfully or optimally?

In terms of refreshing those strategies, about 36% of DOC respondents said they update their plans annually, versus the 36% that had no strategies to update, and probably the same 27% in the "Sort Of" state that said their strategies are updated "as needed." What is your company's approach to strategy refreshes?

As I assume is obvious, a key role of a supply chain strategy is to bring that plan into close alignment with the company's overall strategies and objectives. And here the results were pretty good. Of those companies that answered either Yes or Sort Of to the do you have a strategy question, fully half said their strategies were a 7 out of 7 in terms of aligning with corporate strategies. The other half had varying levels of alignment, as shown below.

See Full Image

If this result is accurate, it certainly represents a lot of progress over the past decade.

Changing direction a bit, I also asked respondents whether they saw the major opportunity for improving their supply chains from internally-focused efforts, efforts related to better integration/execution with external trading partner, or both. 64% said the greatest opportunities were internal, versus 36% who said it was a mix of internal and external. No one said the best opportunities were externally focused, which is interesting. Says we are hardly near the end of internal supply chain progress.

Now, part of "alignment," it seems to me, is how supportive a company's CEO is for supply chain initiatives. Here, the results weren't quite as strong, with only 18% scoring that a 7 on a 1 to 7 scale. 55% scored their CEOs as a 5 on this scale, and smattering of others just 3s and 4s.

That results reminds me of the Harvard Business Review piece Dittmann, Reuben Slone (now head of supply chain at Walgreen's), and the late Tom Mentzer from the University of Tennessee wrote for CEOs called "Are You the Weakest Link in Your Company's Supply Chain?"

Finally, I asked the DOC members where a series of investment activities rated on the priority list, again on a 1 to 7 scale, the results of which are shown below.

General "supply chain execution" topped the list, with an average score of 4.9, I suspect a result driven by the need for Omnichannel investments by retailers and consumer goods companies. But that was followed closely by general supply chain planning and "what if" planning/scenario analysis initiatives, the latter driven I guess from the ever increasing focus on supply chain risk mitigation.

As the chart notes, a few categories, such as big data and mobility, had what I called "high polarity," meaning some companies saw these areas as very high priorities, others as very low, with few in the middle, even if the average score was in-between.

There was more, but I am out of room. More interesting than all of that was an exercise in which I asked everyone in the room to write down his or her definition of what a supply chain strategy is.

The results were all over the map, to say the least, which sort of illustrates my early points here. More on that - including thoughts on strategy from some industry experts and eventually my definition o - in coming weeks.

Any reaction to these data points? Do most companies have a formal supply chain strategy? Should they? Let us know your thoughts at the Feedback button or section below.

View Web/Printable Version of this Column

Thursday's Videocast:

Understanding the Supply Chain Business Intelligence Landscape

Including Highlights from a Major New Report from Supply Chain Digest, Discussed with Leaders in the Supply Chain Industry

All registrants will receive a copy of the new report, released the day of this broadcast.

Featuring David Telford, Senior Director Sector Group & Industry Partner Lead of Qlik,Yogesh Goswami, Senior Manager, Strategy & Operations with Deloitte Consulting LLP and SCDigest's Dan Gilmore

Thursday, July 30, 2015

New On Demand Videocast:

Conquering the Omnichannel Challenge - Today and for the Long Term

In Rapidly Changing World, Retailers, Manufacturers, Wholesalers Need Fast Action but Long Term Strategy

Based on a Major New Report from Supply Chain Digest

Janet Wall, Senior Product Manage with IBM Commerce, Vali Fayen, VP Product Management at JDA Software and SCDigest's Dan Gilmore

Now Available On Demand

On Demand Videocast:

Expert Panel on Supply Chain Risk Management - Major Auto OEM, Palo Alto Networks, More

World Class Panel to Discuss on Leading Practices to Manage Supply Chain Risk

Register for this outstanding Videocast to hear the full story

Gary Lynch, CEO at The Risk Project, Brian Jenkins, Risk Financing Manager at General Motors, Vonnie French, VP Supply Chain Operations at Palo Alto Networks, Bindiya Vakil, CEO at Resilinc. and SCDigest's Dan Gilmore

Now Available On Demand


We received some a number of emails on our story on the small retail chain Peltz Shoes publicly abandoning its item-level RFID program, some through are partnership with the good folks over at RetailWire. You will find a selection below.

Feedback on Peltz Shoes RFID Failure:


Source tagging is the key. Also, it sounds to me that someone did not setup the printing process correctly. There is a method to read, write, verify, and log the RFID tag during the printing process. This is NOT what the printers do normally and not what most of the label prep packages do. Without it, this can happen. So that does not surprise me.

I do think it is odd to do a press release on a failure though.

Tom O'Boyle
Director of RFID
Barcoding Inc.


Peltz has some solid points but it sounds like the people that helped deploy his RFID operation did an install and split. The system must be maintained properly. Peltz might have decided to not pay maintenance fees which would add to the problems. We are missing all the facts for a full post-situational analysis.

Tom Redd
Global Vice President, Strategic Communications
SAP Global Retail Business Unit


I gotta say, this sounds like sour grapes to me rather than fundamental issues with the technology. Plus, if they made their tagging technology purchases in 2009 - I mean, there have been two to three new generations since then of both the tags and the readers. It's surprising to me to find that a six-store chain was willing to take this kind of project on. And rather than focus on RFID for the supply chain, I might have recommended that they start with one store. For shoes I always thought the benefits came from store associates not having to go back and check to see if they have the shoe a customer wants in the right size - they could get the inventory while standing with the customer.

Sounds like an odd project: odd design, odd motivation, odd focus. Having said that, I'm definitely not necessarily defending the technology. But it just goes to show that any technology needs a defined project, a pilot with specific goals and a plan for how to take that pilot to a wider implementation. Sounds like several of those steps were missing.

Nikki Baird
Managing Partner
RSR Research


The global supply chain is based on RFID, from raw materials to the end user. It is not designed to be unique for a single shoe store. Peltz experiences are not surprising. The idea of having store labor add the chips is ludicrous. The chip should be part of the manufacturing process when the shoes leave the manufacturer. The box can then be followed from China or Italy across oceans to docks to warehouses to trucks to the store.


What is happening here is that high-level productivity technology is being implemented by low-level non-tech labor.


Gene Detroyer



Q: What percent if the US LTLT market do the top 5 carriers control?

A: FedEx Freight, UPS Freight, YRC, Conway Freight and Old Dominion control 54% of the market by revenue.

© SupplyChainDigest™ 2003-2015. All Rights Reserved.
PO Box 714
Springboro, Ohio 45066