First Thoughts
  By Dan Gilmore - Editor-in-Chief  
  May 20 , 2011  

Supply Chain News: Trip Report - WERC and ISM Conferences


Well, it was a busy conference week, as I attended the Warehouse Education and Resources Council (WERC) and Institute for Supply Management (ISM) conferences, both in Orlando, missing as a result both the SAP (also in Orlando) and RedPrairie user conferences due to the conflicts. In general, right or wrong, I will go to an association event over a vendor event, though there is no doubt that most association events are getting more and more commercial each year as they search for cash...

I try to regularly attend the WERC event, but had only been to the ISM conference once before and that was some time ago. I can say both conferences were very worthwhile, and share a sort of admirable attendee "commitment" to the respective disciplines of distribution center management and supply management/procurement that is different than most such professional organizations.

Gilmore Says:

Kemp made the great point that while many companies consider the two dimensions of impact and likelihood in analyzing supply chain risk, a third dimension is needed - velocity.

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Thousands of you have seen my video reviews of each conference, but if you would like to view them they can be found here: WERC Video Review, ISM Video Review. I am also offering some highlights here.

One of the things that WERC does well is a set of roundtable meetings where pre-registered attendees usually numbering 15 or discuss a particular issue. I decided to go to an afternoon roundtable session on crossdocking in the DC. It was actually a repeat session from the morning, both of which were "sold out" based on pre-registration, but I managed to get a seat anyways as there were a few no shows, and conveniently the gate keeper taking names stepped away for a few minutes. (Yes, I snuck in.).

Think I caused moderator Mike DelBovo of 3PL Saddle Creek Corp. a bit of heartburn when I mentioned upfront that I thought crossdocking outside of retail was largely a myth. I came out of the session with that opinion largely intact, though recognizing that a lot depends on how you define crossdocking. For example, one definition says cross docking includes "pool distribution," where a manufacturer sends goods to a local DC (usually 3PL run) where goods are moved directly to local delivery trucks, as well as merge-in-transit. An expanded definition increases the use of the technique.

I meant specifically cases where non-retailers are "opportunistically" cross docking to reduce handling costs, but this is very hard to do, for reasons ranging from FIFO issues to the challenge of marrying received product with stored items for an order. Retailers have it comparatively easy because of the approach where anything ordered or pushed can go on a truck using a "door per store" model is the norm, and obviates the challenges manufacturers have.

But the session was interesting. Companies want to understand how to make this work. One large consumer health care company receives offshored goods at specific DCs based on where the origin is (Asia, Brazil, Europe, etc.) and sends the receipts on to other DCs in the network. But the barrier to crossdocking those inbounds is that its existing WMS just doesn't do this well - the WMS wants the goods to be in a "pickable" location before it can allocate the goods to the DC "orders." The company can make the inbound receiving location pickable and then turn it off again, but that is a pain.

Somewhat surprising to me, system issues were highlighted as a big barrier to crossdocking. Another company said the way its ERP system worked, goods received one day simply could not be allocated for orders until the following day. So the best it could hope for is to have received goods sit in staging/temporary storage overnight.

Not exactly crossdocking, but a wine/spirits distributor has closed down several local small DCs by using "dismountable containers." That is, it now picks specific local delivery routes at its main DCs into containers that are put on special trucks (four to a truck). Those containers are then simply dropped in a parking lot, where they stand on "legs" until pick-up by the route drivers again using specialized equipment for that day's deliveries. Very innovative, but the high costs of the equipment means the approach can only be used for the highest volumes areas.

At the ISM conference, "supplier risk management" was not surprisingly a key theme, with a full track worth of presentations that seemed to be very well attended.

I went to a great presentation that included respected supply management elder statesmen Robert Kemp and Dave Nelson, but highlighted by a great presentation from Goodrich's Susan Modeland (who ironically, through no fault of her own, saw her presentation go down for awhile).

Kemp made the great point that while many companies consider the two dimensions of impact and likelihood in analyzing supply chain risk, a third dimension is needed - velocity. In other words, is the risk likely to be slow to have an impact on the company (say currency swings) or rapid (say a disaster at a single source factory).

Modeland asked how many attendees had really done a good job at identifying all their important supply chain risks, and very few attendees raised their hands. Goodrich hadn't either until a few years ago, but even more impressively has built some world class tools to manage supply chain risk.

That includes a real-time dashboard that gives executives a continuous view of the risk landscape, from sourced components that may be subject to high commodity or currency price swings to the status and reliance on key suppliers (when is the agreement up, and what are the risks in the upcoming negotiations).

Even more impressive is Goodrich's risk "register," in which the supply management organization monitors the global landscape looking for emerging risks at specific suppliers and from sources such as political and macro-economic developments, natural disasters and many more. Goodrich analyzes the emerging developments and filters them using various criteria, ultimately reporting consistently to senior management on those that matter, along with mitigation strategies suggestions. Think very few companies have taken it this far. (Presentation of the year candidate for sure.)

Ok, almost out of space, but will do a few more highlights. May be a part 2 on this, since I saw lots of good stuff.


• Session on slotting optimization was packed - think this is an area where companies correctly believe there is a lot of opportunity for improvement.

• Kimberly Clark has found great success with its "supply chain network of the future" carving out 25-50 thousand square feet of space for co-packing operations right in its DCs, versus the separate contract operations it and most CPG companies have used in the past. Takes much transportation costs out, and reduces inventory 1-3 days. KCC is using its traditional 3PL partners to do this, most of which had little experience to start. It has been a success, but there are many questions for both sides to get this right.


• Advanced Micro Devices' Whitney Taylor did an excellent presentation on use of on-line auctionS. I was struck by the fact that probably 90% of the 100 or so attendees were using reverse auctions already - the key is gaining real critical mass. Absolutely key, Taylor made clear, is having a solid strategy on using on-line auctions generally and for each specific procurement "event."

Rodney Glass of HID (the former Hughes (as in Howard) Identification Systems) did a great job providing insight on supplier involvement in new product development. A key point: getting to good is not too hard; getting to great is much more difficult. My takeaway: this is almost exclusively a people/culture issue; the benefits can be great, and investment to get there is low.
• Tyco's Shelley Stewart won the prestigious J. Shipman award. See my interview with Stewart in the video.

More on all these soon on the pages of SCDigest.

My quick comments on both conferences - WERC: loved the detailed session descriptions and key slides in the conference program. Why doesn't everyone do this? Suggestion: get a little bolder with part of the program; tackle some tougher/newer topics.

ISM: Impressive size - more than 2000 attendees. Attendees highly committed to the supply management discipline - amazingly so, actually. Suggestion: some sessions more specifically addressing how to manage trade-offs (e.g., auctions versus partnerships, to be overly simplistic).

Did you attend wither the WERC or ISM conferences? What were your thoughts? What is your reaction to Gilmore's review and comment? Let us know at the Feedback button below.

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