Sponsored by: HighJump Software, a 3M Company

New Report on Retail Supply Chain Success

New research reveals four key drivers of consumer demand and how well-known retailers are leveraging their supply chains to deliver superior customer service.

Download your complimentary copy today.

www.highjumpsoftware.com/sce/SCDigest20060914/

Thoughts on Digital Distribution and More

Knowledge You Need Before Purchasing Voice-Directed Applications in Your Warehouse

If you are considering integrating voice directed solutions into your warehouse or are just interested in learning more about the benefits of voice directed logistics solutions, this document is a must read.

On-Demand Videocast

Achieving “Real-Time” Supply Chain Integration

How Visibility and Automation with Suppliers Drives Significant Benefits, and Why It’s Easier than You Think

More information, or View it Right Now

Integrated Supply Chain Organization Research Project

Help SCDigest and The Logistics Institute at Georgia Tech with the important research.

Fast, easy web survey.

Summary report to all participants. Go to link above

Best Practices in Warehouse Returns

Ciber's Alex Parvenov offers valubale insight into how to improve the returns and reverse logistics challenge that is an increasing problem for many companies and adds greatly to logistics costs.

Sept. 14, 2006

Supply Chain Best Practice Tip of the Week: Doing Reference Calls and Site Visits Right

Too many efforts don't add much value; see our guidelines for getting results

Sept. 14, 2006

Wal-Mart Says RFID Rollout on Track

“We’re ready to pick up the pace,” says new CIO and ex-supply chain exec Rollin Ford.

Sept. 14, 2006

What is it with Game Consoles?

Sept. 7, 2006

Supply Chain Digest and The Logistics Institute at Georgia Tech Announce New Research into The Integrated Supply Chain Organization

Take our quick web survey, help the industry better understand this key issue

Sept. 7, 2006

i2 Sues SAP over Patents for Supply Chain Optimization

Software patent law is murky; impact on SAP if any unclear; fun stuff is the details that emerge as these suits progress; such suits are likely to increase, says Gartner analyst Andrew White

Sept. 7, 2006

Giant Oil Find in Gulf of Mexico Offers Promise that There is Lot More Oil Out There

World oil prices continue to fall; is this the first of many, or a single exception to the long term trend? increase in U.S. reserves of 50%?

Q. What percent of sales does the average manufacture spend on IT?

A. Click to find the answer below

Do use an RSS reader? Do you have a MyYahoo! or personalized Google page? For these and more you can have SCDigest delivered right to your personal pages, all week long.

1.	Copy our RSS link into your RSS reader - it's easy! www.scdigest.com/rssfeeds.xml
2.	Click on a button below to quickly add it to your favorite reader.

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

We're still behind - be patient if your letter has not yet been published. 

Catching up again this week on a variety of letters we just didn't have room for over the past few weeks. Our feedback of the week stems from our News and Views article on Does Enhanced Supply Chain Security Pay?, in the form of a letter from James W. Cleveland who says absolutely yes. We have one more excellent response to our First Thoughts column on "Are You Treating You VARs Fairly," a few more comments on RFID Adoption: Slower, Better, and one from an article way back, on "The 50% Problem,", and an excellent letter on The Return of Vertical Integration? . Take a look, and join the dialog!

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 the Value of Supply Chain Security.

There is no argument to the substantial value benefit of effective supply chain security (SCS). SCS enables end-to-end asset visibility, velocity and agility. Under adverse conditions SCS underpins brand security and business continuation.

Major US retailers import up to 85% of their inventory from China; and China is responsible for 61% of total US imports.  The importance of securing China supply chains is obvious for both revenue and security. Ideally C-TPAT certification and validation is the base framework to initiate the SCS market; if C-TPAT could be implemented in China or any other major trading partner. The US has no jurisdiction or enforcement authority in China.  Simply put, there is no visa which grants CBP or any non sovereign entity the right of enforcement. The absence of a bi-lateral agreement will continue to be a major roadblock to effective SCS and the market.  The path around this persistent roadblock is a solution that benefits and is inclusive of both China and its private sector.

China stakeholders and other major trade partners must benefit and actively participate in the solution.  The data necessary for effective SCS with interdiction will originate from multiple entities, domestic and foreign. The data governance would be similar to the conduct and settlement of exchanges of ATM and EFTPOS payment instructions. Instructions or rules would control the movement of assets globally.  Assets are cargo whose movement or transfer may be terminated or placed on hold when an instruction is not met. The business case for global settlement of exchanges of ATM and EFTPOS payment is applicable and supports revenue projections.  

Sustained market viability demands multiple sources for both supply and revenue. Market leaders understand the complexities and risks of business in the global commercial environment.  The uncertainty of operations and the potential threat to the health and welfare of employees are challenges to private sector development in 3rd world and developing countries such as Africa and India. But, market leaders know these countries represent opportunity for new business and long term growth. Effective supply chain security will reduce risks, uncertainties and enable development of new competitive sources and markets.

James W. Cleveland,  P.E.

Transportation Security and Asset Visibility

On Treating VARs Fairly:

I have been in the distribution field for years and have found two types of purchasing mentalities.  One is the partner/purchaser who works with his vendors to create new cost savings services though direct cost either savings or process savings providing the lowest landed cost for their services.  The second the “Traditional Purchasing Agent” is usually purchasing a narrow service with silo responsibilities ignoring all of the other elements in his business.  This is typical of the niche you describe.  They use people and resources as much as they can and buy from the lowest cost provider.    

With the partner/purchaser they sometimes pay a little, more for a particular service however ultimately work toward solutions where the purchaser successfully integrates the vendor’s solutions into their business and drives a tremendous amount of indirect cost out of their supply chains resulting with the lowest landed cost or value enhancement for the product delivered.  The Traditional Purchasing Agent – gets a low cost for his service while at the same time creates a suboptimal network, and passes cost of to other silos in his or her organization. Furthermore, they discourage innovation and new ideas, which alienates the creative suppliers, and they start to complain that their vendors do not bring them any new ideas.  My experience the low cost purchasing agent who is not creative and working with his vendors is at a disadvantage when it comes to innovation and delivering low cost or value to the organization.

Obviously, from my comments you know which purchase I prefer.

Peter J. Denil

On RFID:

I agree that there does appear to be a slowdown, but I think that is all it is--an appearance.  It is mid-year, Wal-Mart's mandate is 6 months off and there isn't a lot of press about who is now engaging in enabling their products because they are smaller companies that don't show a whole lot of value unless they tag everything.  It doesn't help the RFID vendors and technology providers to announce those.  It will seem as if it does suddenly pick up towards the end of the year once that mandate draws closer.

With regards to your comments on the conference sessions, I agree whole heartedly.  Every session starts out with a speech on RFID 101, then tries to dance around giving an audience any meat or telling them "how" to make successful implementations.  Most people have that 101 knowledge at this point and are trying to learn beyond that.  Another problem is that the conferences can sometimes be so expensive, the end users aren't attending, but rather only the vendors are. 

RFID Manager

Large CPG Company

Name withheld by request

From what I can see it looks like RFID-Radar is going to change the map.

Direction and distance information from a passive tag at good distances.

We investigated RFID but the metal bins, transponder, multiple reader requirements made it cost prohibitive.

This new wave of technology appears to leave traditional RFID in the dust.

Michael Watton

On Renewed Vertical Integration:

There are other reasons for vertical integration that go beyond protecting raw material/commodity availability.  By being vertically integrated a company can control the cost of vital parts of its supply chain.  As companies become more and more efficient, variances in material costs have a more volatile impact on the bottom line. 

When a commodity becomes "globalized" the consuming companies become exposed due to a new supply and demand curve.  This allows the producer of a commodity to raise the selling price with or without changes to their actual cost structure. 

For example, steel more than double in selling price on the global stage between Q3 2003 and Q1 2005.  Does anyone in their right mind honestly believe that the cost structures of all those steel companies doubled over that same time period?  If, as a consumer of steel, a company owned a steel mill with enough capacity to meet its needs, that company would have had a competitive advantage in its market segment just due to the global economics of steel.  Not to mention the fact that if they had excess steel capacity they could have sold it on the open market for a decidedly higher gross profit (just like all those steel producers did when posting record profits in '04, '05 and '06).

Jon McGregor

Q. What percent of sales does the average manufacture spend on IT?

A. 2%, according to Information Week’s most recent study, lower than the average of 3.2% for business overall. Retail was at only 1.6% of sales, BTW. Sectors like banking, with 6% of revenues spent on IT, up the average.