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December 11, 2015 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet No Supply Chain Blah, Blah, Blah 2015 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 Supply Chain by Design and Expert Insight bullet Videocasts and On Demand Videocasts

  9th Annual Gartner-SCDigest Supply Chain Study


One of the Most Popular and Respected Studies Each Year

As Always, Survey Respondents Receive
Complimentary Gartner Research - a $300-500 Value

first thought


Supply Chain Graphic of the Week
The Future of Retail Chargebacks

Walmart Tops Retail Supply Chain List Yet Again
What Company is Testing Air Cargo Flights out of Old DHL Hub?
Shoe-Making Robots Coming to Adidas
Is New US Highway Bill the Right Plan?


Week of November 16, 2015 Contest

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

Holste's Blog: Project Planning Lessons Learned From The World Of Politics


Weekly On-Target Newsletter:
December 9, 2015 Edition

Cartoon, Top Retail Supply Chains, Is Reshoring Real? Highway Bill and more

9th Annual Gartner-SCDigest Supply Chain Study

One of the Most Popular and Respected Studies Each Year

As Always, Survey Respondents Receive
Complimentary Gartner Research - a $300-500 Value

Simple Models to Solve Complex Fast Delivery Problems
by Dr. Michael Watson

Achieving Higher-Value Supplier Relationships

by Gary M. Barraco
Director, Global Product Marketing
Amber Road


How many miles are there in the US interstate highway system?

Answer Found at the
Bottom of the Page

No Supply Chain Blah, Blah, Blah 2015

It's time again.

More than 10 years ago, I wrote our initial (and somewhat infamous) First Thoughts piece on "Let's Stop the Blah, Blah, Blah." The basic theme: too many presentations at various conferences and other events don't say enough of real value. The jab was aimed primarily at speakers from the consulting, academic, solution vendor, author, and sometimes even the analyst community. This group, as we've noted before, too often tends to be focused on sound bites and restating the obvious, rather than delivering real insight.

As always, I include myself in the category of those speakers who risk blah, blah, blah-ness at times, and recognize how hard it is, especially if you speak frequently on different topics, to avoid going there now and then. I fully admit to falling into blah, blah, blah territory on a few occasions.


"Do you know where your company's efficiency frontier curve is and where you stand in relation to it? Likely not."


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Feedback here

All that said, I offer again our Audience Bill of Rights, which provides some reasonable guidelines for what you should expect and demand from presenters. We have even heard of conferences where organizers are now using some version of this document in communicating with speakers. 

My conference schedule was about average this year. That said, in rough chronological order, I attended the National Retail Federation's Big Show, a CSCMP Toronto Roundtable meeting, ProMat, NASSTRAC, the JDA Software user conference, the WERC conference, the Gartner Supply Chain Executive forum, the LLamasoft user conference, the Logility User conference, the annual CSCMP conference, the MHI conference, and the Penn State Supply Chain Forum.

The only major event I didn't get to was the Institute for Supply Management conference, which as always directly overlapped the WERC event.

I delivered one of our popular trip reports on I believe every one of those events this year in one form or another, including many video summaries.

If I was at your event and have somehow failed to mention it, please let me know. 

So now as always, in random order, is my list of the best presentations I saw in 2015, capped by SCDigest's runner-up and best presentation of the year awards. As far as I know, all those cited are still at the companies they were with at the time of their presentations, but of course that could have changed.

David Butler, with the fine title of VP of Innovation and Entrepreneurship at Coca-Cola, with a quirky but very interesting presentation at the MHI conference on how the beverage giant fosters supply chain innovations though investment in start-ups with ideas that could never get off the ground internally. Great approach, with several successes already.


Reuben Slone, now head of supply chain at Walgreen's, for a basic but very effective presentation on what supply chain is all about, at the Gartner conference. It starts, Slone said, with appropriate product availability - that drives revenue and sales growth. But then that product availability needs to be achieved with maximum inventory productivity (cash flow) and cost productivity (margins). There you have it. It really was quite good as a result of its simplicity.


George Soleas of the Liquor Control Board of Ontario (LCBO), which has developed an intriguing system for palletizing cases of beer, wine and spirits before they are sent to retail stores, using existing material handling system technologies, but with some proprietary software. Wasn't the flashiest presentation, but it was the real deal, with tons of detail - and it led to LCBO deservedly winning the 2015 CSCMP supply chain innovation award.


Sven Verstrepen from consulting firm Tri-Vizor, a spin out coming from some research performed at the University of Antwerp in Belgium, in a presentation that focused on so-called "horizontal collaboration," which involves arrangements with peer companies - sometimes even a company's own competitors. He listed a number of the different ways this is manifesting itself in Europe, which is far ahead of the US on this - but it will be here soon.


Lawyer John Cutler, for his presentation at NAASTRAC on the myriad legal/regulatory issues facing shippers and carriers. This is more like a lifetime achievement award - I have seen Cutler do this presentation many times - and while not exactly the most exciting material, Cutler provides all you need to know in 45 minutes or so. And believe me, there is a lot to know, with a crazy amount of issues at any point in time. Cutler is on top of them all.


Along a similar theme, I will also call out the Demand Optimization Council (DOC) meeting held each year at JDA's user conference, featuring some of its top retail, consumer goods and wholesale customers. Nothing else quite like it, from what I know, as many DOC members present on a given theme each meeting. In 2015, that was key supply chain initiatives for the year, and the breadth of those stories really told you a lot about how different companies think about supply chain matters. The group is well-run by JDA's David Johnston.


Greg Matson of Caterpillar at the LLamasoft conference presented on the industrial giant's massive initiative on what it calls its "engineered value chain" program, in which sourcing, inventory levels and product flow paths are being optimized for every single one of the tens of thousands of parts Cat deals with. It frankly seems a challenge no company would have the resources to tackle, but Caterpillar seems to be doing it. Note to self - follow up on this as promised at the time.


2015 Runner-Up: Holden Bale of Kurt Salmon and Josh Mayer of Belk department stores, also at WERC, on Omnichannel retailing. I am sometimes hard on consultants for flying way too high in these kinds of presentations, but that was far from the case with KSA's Bale, who clearly knows what he is talking about and who offered high levels of detail on what the challenges and opportunities are in Omnichannel retail.  Mayer shared some good detail on the Belk experience. Much more meaty than most Omnichannel presentations.


And the winner for 2015 is Sean Willems, chief scientist at Logility, for his presentation at the company's user conference in San Diego on the "efficient frontier" - in essence, another term for supply chain tradeoff curves, but with some new wrinkles. It was outstanding, and aligned very well with some thinking I have been doing on this same topic. Do you know where your company's efficiency frontier curve is and where you stand in relation to it? Likely not. I wrote on this after Willems' presentation, and will do more soon.

Just FYI, previous SCDigest Best Presentation of the Year award winners were:


2014:Bill Nienburg, VP of Global Merchandise & Sales Planning at Under Armour, for an in your face description of how the apparel giant was going to use supply chain to win in the market - and he really meant it.


2013: Richard Murphy, CEO of Murphy's Warehouse Co., at the WERC conference, on the business case for Green investment in distribution. Great, practical detail.

2012: Raj Subramonian of Dell, with an outstanding, heartfelt presentation at CSCMP on use of "vested outsourcing" to transform a stale 3PL relationship.

2011: Rudi van Schoor, of SABMiller's South African operations at the SAPICS conference there, on stopping a major supply chain planning project in mid-stream and totally and successfully re-orienting the approach.

2010: Chris Gaffney of Coca-Cola, at Georgia Tech on how to bring balance into increasingly challenging supply chain careers, and how with the right formula less can really be more for both managers and the company.

2009: Jim Kellso of Intel at CSCMP, on rethinking Intel's supply chain to work for a new chip whose much lower price point required a dramatically lower cost supply chain.

2008: Matt Salmonson of Old Navy/The Gap stores group, who spoke at an i2 user conference on how to implement software the right way, and make change management happen.

2007: Michael Schofer of Coats North America at i2, describing his company's supply chain transformation as its traditional apparel sector customers were all leaving the US, enabling it to survive.

2006: Paul Mathews of The Limited Brands for his speech on aligning supply chain and the corporate boardroom at the North American Material Handling Show. This was motivational.

2005: Glenn Wegryn of Procter & Gamble, who presented at CSCMP 2005 on how P&G has developed a methodology and set of tools to drive supply chain strategy and planning into overall business strategy and planning - wonderful.


I ran into Wegryn at the 2014 LLamasoft event - he happily referenced his inaugural award!

So, that's our list. Congratulations to the winners. There was a lot I missed of course. I welcome your nominees for any outstanding presentations you had a chance to see in 2015. Many ask if I have copies or links to these presentations, and alas I usually do not, but feel free to inquire, as I sometimes do.

Did you see any outstanding presentations, especially any that were highly visionary or motivational? In general, are you happy with the quality of presentations you see at conferences? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

New On Demand Videocast:

Trends and Issues Global Sourcing and Trade Management

Results from SCDigest's New Benchmark Study on Practices and Technology in Global Trade

You'll learn the results of the survey, unveiled in a new report launched with this Videocast. Not to be missed by anyone interested in global sourcing, global trade management and supply chain visibility.

Featuring SCDigest editor Dan Gilmore, Gary Barraco, Senior Director of Supply Chain Solutions at Amber Road, and Dan Gardner, President of Trade Facilitators Inc.

Available On Demand Soon

New On Demand Videocast:

Using Supply Chain Modeling to Improve Operations and Outperform the Competition

PriceSmart Builds Optimized, Aligned and Dynamic Supply Chain Network

You'll learn about key new trends in supply chain design, where companies are finding the value, and learn the powerful story of how leading retailer PriceSmart has used network design tools to craft its network of the future to support growth, optimize flow paths, and right size inventory levels.

Featuring Frank Diaz, senior vice president, distribution and logistics at PriceSmart, and Toby Brzoznowski executive vice president at LLamasoft and SCDigest's Dan Gilmore

Available On Demand

On-Demand Videocast:

Making Supply Chain Business Intelligence Pay Off for Mid-Market Companies

New Technology Options and BI Use Cases Delivering Competitive Advantage and ROI

Includes demystifying supply chain BI, the keys to deployment success, key trends such as the move beyond scorecards to dashboards, and how new BI offerings are enabling cost-effective, easier to implement BI solutions to mid-market and even many larger companies

Featuring Donna Fritz of TAKE Supply Chain,Tom Dadmun, former head of supply chain for high tech manufacturer Adtran and SCDigest's Dan Gilmore

Available On Demand


As promised, here is a great selection of original responses to our August Logistics Challenge. Many more next week. If you can't wait, you can find additional submissions, most quite good, here in the Feedback section at the bottom of the page.

Feedback of the Week on August Logistics Challenge:


Great Challenge! I wish the whole project was mine.

Without seeing inbound raw material and finished goods delivery patterns, it's difficult to derive a total solution but certainly as you are indicating, there are issues with material planning and with marketing.

For the former:

If each plant is going to do custom mixing, then they need to be accountable for their own BOMs. It sounds like it's a free for all with ingredient transfers becoming so common place that they've lost sight of the associated costs. (This is a typical scenario. Slow and steady degradation of procedures without any checks in place. Most expensive phrase in business - "We've always done it that way".)

Secondly, there are 26 plants. Surely they don't all need to duplicate production. They can each distribute their core non valued added product but specialized mixing and use of certain ingredients needs to be allocated to specific plants using a demand analysis. There would be less production down time, and higher volumes of each ingredient, allowing far more cost effective shipping practices, inbound and out. It would require a new logistics model but it's just math. There is a "best solution". The cost of longer transits would more than be made up through efficiency gains.

Often when there are high frequencies of repeat LTL shipments, there are opportunities for dedicated milk runs which take advantage of truckload rates plus a stop charge verses single skid LTL rates. This also increases operational consistency leading to better materials practices.

For the latter (marketing):

It sounds like there needs to be some education about the cost of the word "guarantee". LTL service comes with none. Even if it has a consistently high on time percentage, there is no guarantee. If the customer says "I have to have it", you are forced to use a higher priced option to achieve the exact same result. A little more communication between trading partners about specific needs is often enough to eliminate or drastically reduce premium freight costs. Getting even more proactive, negotiate larger but less frequent orders, perhaps also taking advantage of dedicated milk runs. Premium freight is a derivative of poor planning and communication, not a conscious service choice. If your delivery parameters are such that they are causing all of the above activity, then your supply chain risk level is as perilous as your costs.

Potential savings:

It's impossible to say without knowing the ratio between valid and non-valid transportation activity but based on the descriptions, I don’t think it's a stretch to imply a potential reduction of 25 to 30%. There is always math to be done around the 'transportation verses inventory trade off' but there is a lot of low hanging fruit in this case. More importantly, the result of turning your supply chain into a performing asset versus an out of control cost center is... priceless!

Steve Hogg
Director, Supply Chain Services
Fraser Direct Logistics

  More Feedback on August Logistics Challenge:  

I found your article very interesting and see the dilemma you described: "Overall spend is high, so it must be the rates". Far from true. Companies need to have competitive rates, no question. But this task should be done later, once the network is understood completely. There are better things to start with.

So, in your article you bring up a few insights:

• Each shipment was sent on its own without consolidation
• Placement of orders and requirements/timing for delivery were not coordinated
• Expedites were used when "normal" mode would have sufficed
• Implied was also that the local plants make their own decision and did not care for "corporate" involvement

Let's start with the order process: Few plants simply produce without an order or a related production plan which is based on customer demand. While different industries have different order patterns, i.e. dynamic (daily, hourly) or more static (weekly, quarterly), there usually is either a plan or a dependable forecast of what might happen tomorrow, next week etc.

• One way to gather that information is to have the plants enter the shipping requirement into a common system. Portal applications usually work well and can be implemented quickly.
• The information should contain shipping volume, weight, destination, also the required delivery date.
• Sophisticated portals also offer the option to "rate shop" to ensure that the cost and delivery requirements are met.
• But my favorite feature of a system is that it gathers shipment information for later analyses.

The next step would be to convert the orders into manageable loads:

• Transportation Management systems, SAAS applications have basic functionality and can combine shipments and do basic optimizations. This would ensure that there are not three different LTL orders shipped to the same destination on the same day. It would provide a lower cost and - if the person entering the shipment was honest about the need-in-plant date - even ensure delivery at the right time.
• Later on, static optimization, using route optimization software and engineering support, can be created. But for now, let's keep it simple.

Now actual load and shipment tenders to the carriers can be created. But which carriers do I use? Are my rates good?

• I always believe that it is best to start with the existing carriers and once patterns emerge, maybe after 2 months or so, to put lanes out to bid to see what the market is doing.
• Data from all plants should be combined and carriers/partners be chosen based on the entire data set.

In my experience, controlling the freight payment process is controlling the network. Few companies check whether the service invoiced was actually provided as described:

• Did the trucker actually use a tarp/flatbed/under deck space?
• Did they wait for 5 hours before they got offloaded?
• Did they ship 500 pounds of freight?
• Furthermore, who authorized an expedite shipment?
• Who authorized a certain carrier to perform the transportation (yes, we all have an uncle who owns a truck and we all want to give him business)?
• By tying the carrier tender to payment, you control who gets paid and unauthorized carriers will not have a chance of receiving payment. Carriers learn really quickly what the process is.
• What works even better is self-billing options. We do that in our company and our carrier base loves it and it provides us with the correct accruals for timely payments based on real events.

But how will you get the plants to play along? Budgets are often held de-centralized at the plants, allowing local decisions to interfere with the common good of the company. I found that third party service providers, Lead Logistics Provider or Control Tower operations can provide the necessary "glue" to put network together, manage carriers and costs.

But more successful companies have centralized their logistics and have put into place checks and balances, even consequences for non-adherence: Requirements are understood for the entire company, authorities are distributed adequately and rate negotiations are done with the entire network in mind.

There is certainly more to it and I could write about this all day.

Christiane Meyer
Strategic Account Executive
Penske Logistic


What an interesting idea for a column!

As you hint, there are probably several ideas that might be rolled out over time.

The first might be to simply force the use of expedited air service for interplant transfers to be authorized by someone high enough in the organization (say the President) that only the desperate will ask. That in itself will severely reduce the airfreight premium.

The next may be to build in a charge for expedited interplant transfers for every customer order that requires it, thereby making these orders less profitable. This makes the additional cost very visible, and may lead to different behaviours in sales and in logistics - "how can we avoid that extra charge?"

Then maybe get back with carriers to see what can be done about making time-definite road services available. This builds confidence that interplant products will arrive as planned, but will also pay dividends on customer deliveries.

This short term plan might knock as much as 10% off the freight bill, through demand destruction and the use of land at 70% of the air rate for interplant transfers.

Then consider a network approach to interplant transfers. Given the frequent materials shipments, maybe a regional warehouse for low volume ingredients, with a mandate fulfill orders overnight to plants within the region. By concentrating low volume ingredients across several demand points, inventory can be better managed. By fulfilling from a regional hub, costs and availability of slow moving ingredients can be optimized.

Then maybe there is something to be done about the manufacturing strategy and scheduling. Pepsi has won awards for the use of regional mixing centres for low volumes, supplemented by local distribution for high volumes. Perhaps there are opportunities in the way the production is scheduled today, like differentiating between fast movers (shipped next day) and make-to-order (shipped next week). Perhaps regional custom mix freight can be shared with inbound raw materials replenishment.

Network design projects can be extremely lucrative, but require fairly sophisticated financial models to evaluate. My opinion would be there is probably another 10% of the freight bill available. This also allows the company to see their logistics costs very clearly, to understand the different costs-to-serve various channels and markets. Finally, customers will be very receptive to a promise of delivery, rather than a promise of shipment.

I'll be interested to see what others suggest.

Nick Seiersen


There are a lot opportunities at this client it seems!

First step I would take is to make sure the shipping managers did not have to memorize every lane's rate and transit time by mode. Most humans cannot memorize all that detail and then execute the "optimal" decision based on all other shipments going on at the same time. Especially when the environment is dynamic which in this case it is (build to order with 3 day lead time from order to shipment). Moving to a TMS would allow this company to make better shipping decisions based on the destination, lead time and volume / weight of shipments.

Opportunities such as consolidating smaller shipments into a multi-stop full truckload may be a better decision considering cost and service level. Doing a TMS first is likely easier given the many options to deploy (e.g., Cloud). This just allows them to better handle the other problem of having to move ingredients all over the network to meet production needs. The high number of ingredient movements are likely attributed to deficiencies in FG forecasting, plant (FG) sourcing decisions and raw material sourcing.

If we tackle the upstream and likely more challenging issues next, we can begin to reduce the amount of ingredients that are moving between plants. Better forecasts allow plants to more likely have the ingredients they need to satisfy production. Plant sourcing decision improvement allows the right plant to make the product given where the customer is located (shipping costs based on transit time), which plant has the raw materials to satisfy the production, and what transfers may need to occur. All of that is optimized based on least cost and meeting the service levels. Lastly, if plants are regularly running low on ingredients, there may be an issue with re-order points, supplier service levels, or timely consumption reporting when used in production. The roadmap for these changes is dependent on their current processes and systems. So my next step would be further exploration.

A lot to do, but think about how much better off they will be in the long run!

Mike Schultz


First off, good for you for having the President's attention... my guess is the Transportation Manager did not for probably a host of reasons.


Regarding your case study, I have more questions than answers but I'll take the bait and offer "the first solution that comes to my mind" (your fork truck driver was a wise person and I absolutely love to tap "unofficial leaders" like that).


I'm going to admit my own bias that freight is almost always a greater % of total logistics costs than inventory carrying. That bias influences my recommendation as you will read below.


I recommend your client consider regionalizing distribution of raw materials to DC's that are within one day of mixing plants. I suggest they use contracted 3rd party public warehouses on variable cost basis so they don't incur huge capital to make the change. I would, however, spend some capital (or go cloud) to implement a WMS that would give them total inventory visibility even where inventory is deployed at contracted warehouses. The WMS should be sophisticated enough to give the economic order quantities to help manage the inventory replenishment process and not let it get out of control.


I would also implement a TMS on a transaction cost basis that would give them electronic, rule-based tendering and carrier performance management tools. I'd make sure the TMS had a good BI tool to give them real-time transportation data verses relying on a post audit/freight pay service for the data. Start measuring on-time delivery in addition to on-time ship.


I would set about to educate the culture on Lean principles. Clearly, the feedback the Transportation Manager received from the Branch Manager wreaks of a culture that does not embrace process flow. It also sounds like the transportation supervisors are that in name only as well. They probably wear many hat which is ok but freight spend is huge so managing that needs to be higher on their priority list.


Lastly, and again admitting my own bias, the single most brilliant thing they can do is to hire me as Vice President of Supply Chain to implement all of the above and save them millions of dollars.

Ross Corthell

Prepare a weekly report of the freight differential of actual versus planned costs. This would be by shipping location, and show the air freight costs and the LTL costs for the shipments of the week, ranked highest to lowest. Copies would be sent to the President, the Plant Managers, Production Managers, and Shipping Managers for each shipping location.

Craig Wanggaard
Apogee Performance, Inc.



Q: How many miles are there in the US interstate highway system?

A: 46,876, most of it originally constructed in the 1950s and 60s.

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