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November 3, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Iot and the Visible Supply Chain 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 Winners bullet Trivia      bullet Feedback
bullet New Expert Columns bullet Three November Videocasts
  Download the Complimentary Article to Find out the
Four key Reasons Automation is Emerging in the Supply Chain

first thought


Supply Chain Graphic of the Week
Chinese Manufacturing Prices Finally Headed Higher


GE Aircraft Turning 3D Printing Vision Into Reality

Unilever Signs Big Deal with Uber for Trucking Provider
NYK LIne Takes Huge Write Down on Ship Value, Others Likely to Follow
The Robots will Takeover in Next Recession


Download the Article to Find out the
Four key Reasons Automation is Emerging in the Supply Chain


Week of September 28, 2016 Contest

See Who Took Home the Prize!

White Paper Discusses how to Manage Volatility in Developing Markets to Deliver Strategic Success

Holste's Blog: Project Planning Ideas

Weekly On-Target Newsletter:
November 2, 2016 Edition

Last Chance Cartoon, Truckload Q3 Results, SAP and IoT, Watson on MEIO and more

Best-of-Breed or ERP: What's Your Pick for Supply Chain Planning?
by Bill Macdonald
Executive Vice President, International Sales
Demand Solutions, Inc.

Drug Supply Chain Security Act: Is Your Warehouse Ready for Item-Level Serialization?

by John DiPalo
Chief Strategy Officer
Acsis Inc.


What are the top 5 countries for importing goods from China in US dollar value (2015 data)?

Answer Found at the
Bottom of the Page

Iot and the Visible Supply Chain

RFID alone didn't do it. So is the Internet of Things (IoT) going to deliver a whole new world of detailed, real-time visibility in a way that will transform how we manage our supply chains?

In September of 2003, in the second issue ever of Supply Chain Digest, I reported (rather briefly) on the first ever Electronic Product Code (EPC) RFID conference in Chicago. It was a momentous gathering, actually, at the forefront of the "great RFID hope" period that later fizzled, with the announcement then that the MIT Auto ID Center - which invented the EPC version of RFID - was transferring operation of the center to a new organization under GS1 called epcGlobal.

In that original column (which you can find here), I wrote the following: "It did hit me at the show that we seemed to have crossed a major threshold. Many of the world's largest companies have now at least mentally committed to the concept that they will be able to track every product, everywhere, proactively, in real-time. This is not something I think we really were contemplating even a short while ago, and it has significant supply chain (and other) implications."


I believe it was McKinsey that awhile back said most companies will be astounded when they learn how customers actually use their products.


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This view was of course largely coming out of the consumer products sector, led by such companies as Procter & Gamble, Kimberly-Clark, Unilever and others. And I still believe that at the time it was momentous: even with bar codes, it was simply not possible for companies to see all their assets and inventory across the supply chain, in real-time. It was not something companies could even envision before then.

HP was one of the original eight consumer goods companies that famously first began shipping RFID-tagged cases to a few Walmart DCs in Texas in 2004. It soon starting talking about the logistics insights RFID was bringing in early pilots, such as identifying long "dwell times" of pallets of goods in a DC that should be moving quickly but were not.

Heady stuff - only in the end it largely went nowhere. I could write many words on this, but I will summarize the factors for this collapse of RFID in supply chain as these:

• Everyone else in retail decided to wait for Walmart to do the dirty work in terms of vendor compliance and driving down tag/readers costs.
• Walmart screwed its own program up royally, from generally poor project management to taking a one size fits all approach to vendors and product tagging to failing to listen to companies like P&G that had done tons of analysis and knew in what areas RFID could be deployed to add the most value.
• There really was not much value, just cost, for most consumer goods companies in the Walmart program, so they delayed, refused, pushed back, etc.

By early 2009, it was all over, as P&G rather amazingly issued a press release that basically said its pilot with Walmart on tagging promotional displays in-store was proven a success, but it was canceling the program because Walmart wouldn't do anything with the data. Take that Bentonville.

So here we are almost eight years later. There are now many mainstream and successful use cases for RFID outside the supply chain (ticketing, toll booths, tracking healthcare equipment and assets, etc.), and some inside the supply chain, notably work-in-process tracking in manufacturing, which is now commonplace. But in my view it is hardly taking off in supply chain - though that may be changing.

And now we have the "Internet of Things," which, however you define it, is clearly above the strong hype level of where RFID was back in the early 2000s.

So, let's start with this: RFID is a subset of IoT. RFID was primarily about identification - this product is here. But IoT is about more, identification connected to other information, commonly from sensors that can measure temperatures, movement, and additional useful data.

So we have, for example, Caterpillar with many thousand of pieces of equipment out in the field now IoT-enabled, sending data back to Cat that not only can be used to know when maintenance is needed, but also how customers are actually using the product. It can tell, for example, when a given operator is not using an excavator as efficiently as possible. What it does with this information will undoubtedly evolve (sell the insights to its customers?), but this is the level of near-real time visibility Caterpillar and others have achieved. In fact, nearly every maker of big equipment of any kind (e.g., Schneider Electric) is on a similar IoT path.

That's all well and good, but can IoT really transcend beyond those types of businesses? Is it the concept that can deliver what RFID alone could not, which is pervasive supply chain visibility?

I have been as usual skeptical of the thick IoT hype, but I am beginning to come around to an answer of Yes.

Let's look at a few recent developments:

Major Technology Companies are Making Huge Investments: At the recent CSCMP annual conference, GE's chief digital officer for its transportation unit said the company's goal was to be a top 10 software provider globally by 2020. That's right - GE. Much of that software will be IoT related, such as its new "Predix" solution, an operating platform that as best I can gather allows tools for connecting digital data streams, such as from IoT devices and sensors. 

SAP is making huge investments, saying it will spend some $2.25 billion on IoT related software over the next few years. That's a really big number even for SAP. In 2016, it has made several IoT related acquisitions, some for fairly big bucks, and released several applications, such as SAP Connected Goods, a Cloud-based solution designed to generate actionable insights from IoT data from mass-market "things," everything from coolers to vending machines to power tools, using remote monitoring, management and (where appropriate) central control.

These are just a couple of examples. These companies and others could turn out to be wrong, but there are a lot of smart people investing huge dollars - far beyond the money behind RFID - in a bet that the IoT market will be massive. While part of this is responding to perceived demand, the reality is tech tech vendors actually often create the demand.

Macy's Goes All-In in RFID: Painfully slowly, there has been some traction in so-called item-level RFID tagging in retail. The promise: highly accurate in-store inventories, notoriously inaccurate at most retailers.

But what is now really spurring the interest is the trend towards using stores as order fulfillment points, either as part of an "order on-line, pick up in store," scenario, or as the source for shipping products to on-line customers.

In either case, the need for highly accurate in-store inventories should be clear. It seems only RFID can achieve that today. Macy's recently announced it was to soon require vendor tagging of 100% of its SKUs. Other retailers at last are sure to follow suit - especially of course if Macy's strategy pays off. Such tagging will move back up the supply chain.

Recognition that Understanding How Customers Use Products is Key: It's fairly obvious that IoT can provide deep insights into how companies use big machinery - but does it go further than that? 

I believe it was McKinsey that awhile back said most companies will be astounded when they learn how customers actually use their products. Just a few weeks ago, a young UK genius named Josh Valman, all of 22 years old but already consulting with many of the world's largest companies on product development, recently said he was very bullish on IoT for this very reason.

"A lot of the things we make have sensors in them. Even if they're dumb products, we put sensors in, because understanding how people actually use products is so valuable. That data is how you get into niche markets," Valman said.

He added: "Take a mop, for example. If you can see that in Singapore people use a mop in this way [makes forward sweeping motion], but in Thailand they use it like this [sweeps from side to side], that totally changes how you make the thing, how you design it, and how the grips work."

So I am out of space - there will be a part two. The bottom line, though, is this: IoT is heavily hyped for sure, often by those with agendas. That said, its ability to make the "invisible visible" will greatly impact many areas of business, including of course supply chains. And critically, over time, high value-added applications will trickle down into more prosaic ones - like where the inventory is.

And then nearly the entire supply chain will be visible. What we do with that in part remains to be seen.

What are your thoughts on workforce, technology, consumer or infrastructure issues?Let us know your thoughts at the Feedback section below.

View Web/Printable Version of this Column

November Videocast:

A Bold New Paradigm for Supply Chain Planning

The Traditional Approach will Give Way to Apps, Advanced Analytics - Keep What You Have, Add in the New

In this outstanding broadcast, we will explore this new exciting paradigm for supply chain planning in detail, how it can be applied in conjunction with existing planning infrastructure, and why after almost three decades of one planning approach, we may at last be on the verge of a whole new model.

Featuring SCDigest editor Dan Gilmore and Toby Brzoznowski, executive vice president at LLamasoft.

Tuesday, November 15, 2016

November Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Thursday, November 17, 2016

November Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include:
Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Wednesday, November 30, 2016


Just catching up on some of the many emails we received on Dan Gilmore's somewhat controversial First Thoughts column on An Inflection Point in the Consumer Goods to Retail Supply Chain?, which discussed what seems to be an emerging trend by retailers to finally address rampant supply chain variability.

A few of these feedbacks below - more next week:

Feedback on Reducing Retail Supply Chain Variability


Great perspective on this topic. I do however find the following statement hard to believe and would love to see more info on it: "By the way, the on-time improvement has enabled Target to reduce out of stocks at its stores by more than 50% in the past six months or so."

Mike O'Reilly
Customer Supply Chains

Editor's Note:

That statement was made by Target's COO during its Q2 earnings call, but more correctly was referring to on-line inventories in their DCs, not in-store OOS's.

Dan Gilmore


More on Reducing Retail Supply Chain Variability:


I work in the grocery world and all of this stuff that the retailers are trying to do don't seem to have been very successful.

Walmart planning system upgrade turns out to be a giant step backwards in time.

Walmart does a lot of good things but when they make a mistakes they try to over compensate to make it work.

For Walmart, there was more stem reliability and predictability in their old planning system.

Walmart still is the best in grocery planning but they are not as good as they used to be.

Thanks for you weekly communication.

Name withheld by request

Consumer Products Company



Good article.

Indeed I am experiencing what you describe in your article. What you might choose to mention in the future is that there are step-function increases in supply chain cost for the manufacturer as the retailers supply chain expectations rise. Not so much from on-time being reduced from 4 days to 2 days, but when it becomes +/- 30 minutes, as some retailers already are, then additional costs are incurred by the manufacturer for special transportation services. Intermodal becomes impractical, LTL impossible and then everyone is forced into truckload or 3PL consolidators with standing appointments, milk runs with conservative transit times and lots of costs, again being paid by the manufacturer.

Ultimately the efficiency gained in one part of the supply chain is lost in another and ultimately paid for by the consumer. The bad news for the 600 lb. gorilla retailers is that they are increasingly treating their suppliers badly and the suppliers will look for alternatives such as supply chain efficiency pricing brackets, focusing on growth with better behaving retailers and various ecommerce options.

Dave Perry
Strategic Project Manager
Global Supply Chain Design & Policy



Q: What are the top 5 countries for importing goods from China in US dollar value (2015 data)?

A: US ($482 billion), Japan ($160 billion); South Korea ($90 billion); and Germany and Mexico (both $77 billion).

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