September 25, 2003
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When selecting an integration firm (WMS, TMS or other application deployment), and/or contracting with a WMS/TMS provider, make sure both parties spell out very clearly who is taking responsibilities for what roles, and that they have the skill sets to do so. The reality is this is often not clear even between the app vendor and the integrator, and this is a frequent cause of project problems and/or cost overruns. Before you sign anything, ask the tough questions. Assume nothing. Check individuals' project resumes and experience with the vendor's package. You may be surprised at the answers you get.

 

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The Sorry State of ASNs

When the whole Quick Response initiative for consumer goods and retail was getting established in the early 1990's, (UCC-128 carton/pallet labeling, 856 advance ship notices), the majority of those in the industry, both vendors and end users, would have guessed that within just a few years virtually every logistics flow would have been based on ASN visibility and receiving.

Well, there certainly has been a lot done (a lot of progress?) in the retail chain and by many companies in other industries, but I am still amazed, as we approach 2004, at the number of companies, including major corporations, that aren't getting ASN's even from their own plants into DCs, let alone from outside suppliers.

Wow. I met with the CIO of a large restaurant chain recently, who in a discussion of some new web based tools that could make it relatively easy for suppliers to start generating ASNs for them, reacted something like "We wouldn't want to place an additional burden on our vendors."

I kind of thought it was more like supply chain integration, which, by the way, saves you about 40% in receiving time and improves inventory management.

So what's the deal? Ok, traditional EDI is expensive and harder than it should be, but today there are lots of alternatives. It just isn't that hard to get ASN's intra-network - the barriers to doing so seem to be more political/cultural than IT or investment related - the payback for the investment is huge. OK, so there is a cost to manufacturing, and a benefit to distribution, but isn't this what supply chain management is all about - horizontal process integration, looking holistically at lowest total costs? The web should make getting ASNs intra-company and from suppliers a lot easier. So why aren't we further along?

      
 

This Week:
Annual Cass State of Logistics Report finds costs down in 2002

Study ranks user friendliness of logistics web sites - you'll never guess who's no.1.

Bud LeLonde asks: What's the purpose of benchmarking?

Summary and comment below.

   
  Supply Chain Investment News
Logistics technology and transportation stocks were mostly up for the week, with solid gains for UPS, Yellow and most other carriers, while Symbol Technologies dropped 6 percent.
 

 

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NEWS AND VIEWS

State of Logistics 2003
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Did anyone else miss Bob Delaney's, of Cass Logistics, annual report this summer? Here are the highlights: overall US logistics costs were down in 2002, largely driven by recessionary forces and lower interest rates, which drive down inventory carrying costs. Logistics costs last year across the US were $910 billion, or about 8.7 percent of GDP.

The Delaney data is sometimes at odds with other reports/benchmarks. For instance, he has warehousing costs as basically flat for three years, whereas other benchmarks (such as Herbert W. Davis) have had more of an up trend, driven by increased distribution complexity, which seems right. But the Delaney methodology has remained consistent for many years.

Delaney makes the case that logistics reconfiguration (network redesign, collaborative outsourcing) is the best way for companies to take out logistics costs. He cites the work done by Unilever in this regard over the past few years, with outstanding results. Case study presentation made by Unilever this year at CLM in Chicago.

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Is Your Web Site Customer Friendly?
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The Customer Respect Group does research on customer satisfaction and web sites. They’ve developed an interesting framework for evaluating a customer’s experience on a company’s web site. The criteria are grouped according to Privacy (respects customer privacy); Principles (values and respects customer data); Attitude (customer-focus of the site); Transparency (open and honest policies); Simplicity (ease of navigation); and Responsiveness (quick and thorough responses to inquiries).

Perhaps not surprisingly, it’s the Responsiveness dimension that continues to score the lowest in their rankings.

Recently, the firm evaluated the web sites of a variety of transportation and logistics service providers, including most of the nation’s largest truckers and express shippers. The winner – unbelievably, it’s the US Post Office, followed closely by FedEx and JB Hunt.

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Are We Doing Benchmarking Right?
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Bud LeLonde of Ohio State makes a compelling argument that benchmarking as an exercise has been corrupted from it’s original focus on understanding process and best practice to a relentless search for “a number” that can be reported to management as a reason for doing something. Worth considering. Sure numbers are good, as some indication of what is possible, but in benchmarking the “how” really is more important than the result. Supply chain is a journey, not a destination. Context matters.

Nevertheless, LeLonde also looks at some “macrobenchmarks” from Ohio State’s on-going supply chain research, considering best practice in several areas across the retail, hi tech, food/CPG, and chemicals/plastics industries that are focused on the development of “strategic supply chain relationships” with customers, suppliers and 3PLs. Perhaps not surprisingly, hi tech companies are more advanced in adoption of these best practices, chemicals the least progressive. However, chemicals and food/CPG are the most aggressive about their 5-year expectations for logistics cost reduction as a percent of sales (expectations of 31 and 23 percent, respectively).

So, does benchmarking work? Give us your thoughts.

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