Readers Respond - The Intelligent Supply Chain | Perils of Offshoring Transitions | Weyerhaeuser Turns to SCM for Success | VWR Gets Demand-Driven | Trivia | Reader Feedback

  April 28 , 2006 - Supply Chain Digest Newsletter
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First Thoughts by Dan Gilmore, Editor

Readers Respond – The Intelligent Supply Chain


A couple of weeks ago, I offered my thoughts on The Intelligent Supply Chain, in part reviewing something I had written on this topic all the way back in 1999 and seeing how that thinking stood up today.

While my piece didn’t generate a flood of feedback, we did receive a number of very thoughtful reader responses that I thought were worth sharing in this column. We get a lot of input that our audience really enjoys reading the thoughts of their peers, and part of what SCDigest is about is building a community of supply chain and logistics professionals. So below you’ll find some highlights of some of the best letters we received. We’d still like your thoughts on this topic – send us your feedback.

Lalit Panda, SVP Supply Chain and IS at Harman Consumer Group, noted the potential to more deeply synchronize supply and demand. “I believe there is unexploited potential of significant benefits from linking factory planning to demand signals to reduce the bull whip effect,” he wrote. “While supply network planning is a step in that direction, true integration at the bill of material level for executing to real-time demand changes has been the vision and I believe is still a goal for most companies. The complexity of such an exercise across multi-product, multi-locational production systems cannot be denied but should certainly show results.”

One director of supply chain planning at a consumer company, who asked to remain anonymous, said we needed to focus more on a supply chain organization’s ability to learn as an aspect of intelligence.

“I believe a key element of supply chain intelligence is the ability to be a ‘learning organization’” she wrote. “While we all talk about speed and velocity and agility, the reality is that most companies actually approach supply chain change very slowly and deliberately. But if we could more quickly and easily accumulate what we learn and have that drive strategic and tactical change, now that would be an intelligent supply chain.”

Rich Turner of LMI, who does a lot of work with the U.S. military and DoD, offered some thoughts on the concept: “I like the term "Intelligent Supply Chain"; we have played around with "Adaptive Planning", "Sense and Respond", "Focused Logistics", and other like phrases over the past several years in the DOD,” he said. “Some have even quibbled about the use of the term "chain" and are advocating "supply network" (oh well).  But the use of the word "intelligent" has power -- it connotes both foresight and response, clarity of thought and the application of intellect.”

He also agreed visibility was a key attribute of supply chain intelligence.

“We have not solved this problem in the DOD -- we keep trying to see too much at all times and as a result have not gained focused visibility on the important, priority tracking needs,” he also wrote.  “In our business we overstressed the importance of visibility as a customer value and under-emphasized visibility as the business enabler it should be.”

Kevin Wong, VP of Operations for Nulogy, nicely quite literally answered the questions I raised at the end of my piece. So what makes an intelligent supply chain, I asked?

Wong responded: “The most important shift that will be required for supply chains to become intelligent is for the people managing them to think more intelligently, and more strategically.  Executive leaders must lift their heads up from the frenetic pace of just getting the job done, and recognize the value they will be able to create once they and their partners and customers have greater operational intelligence."

Jon Kirkegaard, DCRA Solutions offered another perspective on supply chain intelligence, focusing in part on clearer ties to financial performance.

“An intelligent supply chain is one that allows all activities and people to be accountable to balance sheet, cash flow-based income statement advantage and or customer order fulfillment metrics for the business,” he said.  “Thus all activities that are supposedly “supply chain” activates can be directly or indirectly measured as to their value add.” 

Finally, James Drogan correctly pointed out that we should have included an element related to supply chain security in our discussion.

“In a security conscious world the supply chain should also be intelligent about the involved parties and patterns of behavior in the chain,” he wrote. He’s absolutely right that today an intelligent supply chain must have a comprehensive approach to securing its goods across the network. I missed it.

Great thoughts from all of these readers. We’ll publish their responses in full next week. Until then, we’d welcome your thoughts on supply chain intelligence or our reader feedback itself.

What do you think makes an “intelligent supply chain?” Is it just another word for responsive? What would you add to these reader comments?

Let us know your thoughts.

Dan Gilmore


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April 28 , 2006

The Perils of Transitioning Offshore Manufacturing

Optical components maker Bookham’s stock is crushed as transition to China factory not smooth, piling on unexpected costs

April 27 , 2006

Weyerhaeuser Restructures to Lower Inventories, Build a More Responsive Supply Chain

New “iLevel” unit to provide “one face” to most customers for the wood and paper manufacturer, as “hub and spoke” manufacturing strategy to be used in other areas of the business

April 27 , 2006

Supply Chain Software Consolidation Continues, as Manugistics is Acquired by JDA

What does it mean for “Manu” customers? Gartner’s Andrew White offers his perspective

April 21 , 2006

Why is Oil at $72 per Barrel, with Inventories at Record Levels?

Is it supply and demand, or speculation fever by global commodity traders?

April 21 , 2006

Wholesaler VWR Finds Getting More “Demand-Driven” and Changing Its Approach to the Business Can Pay Big Rewards


Company a prime example of the dynamics in the wholesale segment


Q. How do you calculate Days Inventory Outstanding (DIO)?

A. Click to find the answer below


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Feedback is coming in at a rate greater than we can publish it - thanks for your response.

We had a tremendous amount of feedback on our First Thoughts piece on Delphi, the UAW, and the Supply Chain, some of which we are publishing this week. That column postulated that the current labor situation between parts maker Delphi and the United Auto Workers would turn out to be an inflection point in labor costs that will impact SCM for everyone.

Our Feedback of the Week on this topic is from Mike Crowell, who says both U.S. OEMs and the UAW could learn some lessons from Toyota. You'll find several other letters, most "short and sweet," and many bemoaning the loss of U.S. manufacturing jobs overseas. More next week, if we missed your letter this time.


Keep the dialog going! Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedback of the week - on "Delphi, the UAW, and the Supply Chain":

You present some very interesting scenarios.

I can't tell you what will happen regarding the Delphi issue, but I can tell you that this is just another case of the unions shooting themselves in the foot. Often unions fail to see/accept the "big" picture that is globalization. The "anti corporate" attitude of union leadership, coupled with their inflexibility, is a sad reality that will inevitably lead to their downfall. Too bad they'll take Delphi and GM with them. The global market (America included) has already shown it is unlikely going to purchase overpriced/substandard autos when compared to the competition and setting up protectionist measures hurts all consumers in the pocketbook.

Yes, shame on GM for negotiating unrealistic wages and benefits in a global competitive environment. Another example of the shortsightedness of US automakers trying to make up numbers for the "street". 

However I believe it is the adversarial relationship culture of the Detroit and UAW leadership that really needs change in order to be more in line with more flexible organizations who understand their competition and how to gain on them over a long period. (It's taken Toyota almost 50 years to become who they are now).

Otherwise, many UAW members will likely someday find themselves in a position where "working for the man" can actually provide a decent quality of life as well.

Mike Crowell

It is unfortunate what is happening at Delphi and GM but it is not a surprise. The automotive industry has been slow to react to the continued pressure of the Japanese. This is an industry where the unions and the management have failed to develop long term strategies that insure continued demand for there products. This is truly an inflection point! The reality is the unskilled labor has been over paid for a long time and the management went to sleep at the wheel. The automotive industry has been the biggest pulse for how unskilled union labor should be paid. Every industry that has unions has followed the lead of the UAW, and asked for higher pay and better benefits. Unfortunately, giving great benefits but failing to produce excellent cars has caught up with GM.  Regardless of which direction this goes whether it is protectionist policies by the government or shuttering plants. There is no substitute for building quality cars that appeal to the public. This strategy has proven to work well for Toyota and Honda.



Terry Thomas

I think that we will become a third world country like so many I have traveled. There will be the rich and the poor. I think it is the end for the middle class American people and labor unions who are like many politicians corrupt. They want to close the gate after the cattle escaped. You can not put the genie back into the bottle.

R Forrest

I bet that [CEO] Steve Miller at Delphi isn't taking a 50% cut in wages. My feeling is that for the US to be more competitive in the world market we need to reduce the gap between the worker and all levels of management. The way to do that is to reduce the wages/compensation from the top and not raise the bottom.


Steve Blair CPIM

Quality Systems Consulting

Editor's Note: Miller actually is working currently for no salary, but certainly stands to make millions from stock options and bonuses.

I think the Union wages in many companies has fast forwarded the flow of outsourcing overseas.  I hope this is successful and long overdue as we must be “worldly competitive” in order to keep jobs in the US. 

Richard Milhollin, CEO
Integrated Logistics Management Solutions


Q. How do you calculate Days Inventory Outstanding (DIO)?


A. Inventory/(net sales/365). As such, DIO measures inventory effectiveness in the same way that measuring "turns" does, but from a sort of reverse perspective.

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