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  Sept. 21 , 2006 - Supply Chain Digest Newsletter
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Featured Report

Register for Access to a Special Report on Lean Distribution

Part 2 – The Benefits of Continuous Processing

This valuable report focuses on the associated benefits of lean initiatives in modern distribution centers with higher than average levels of operating complexity, automation, and downstream customer requirements.


It includes an overview of how many functional areas including, picking, consolidation, sortation, and shipping can all benefit from continuous processing.


First Thoughts by Dan Gilmore, Editor

The Less Sorry State of ASNs

Supply Chain Digest turns three this week! In the third week of September 2003, we launched our first on-line issue, featuring my thoughts “The Sorry State of ASNs”. Then last year on this date, I opined on “The Still Sorry State of ASNs.”

In each case, my point was simple. There is tremendous value in receiving advanced ship notices (ASNs). Combined with all the tools we have available today to make them happen, the use of ASNs in our supply chains should be a lot more prevalent.


As I wrote in 2003, more than a decade after the introduction of EDI and the electronic ASN concept, I was “still amazed 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.”


Last year, I looked at this again. Regarding the intra-company issue, I wrote that, “a project to get ASNs and labeling capabilities in the plant would have a huge ROI from a total supply chain perspective. Yet it doesn’t happen: cost in one part of the supply chain, with the benefit in the other; always other higher priorities; a reluctance to fuss with anything in the manufacturing process.”


I am bringing it up again, because as I looked back on a number of supply chain stories and themes we covered during the last year, ASNs seem finally to making some real progress.


The tools have been there for a number of years now. Yes, EDI is hard, but there are now so many ways to do ASNs over the internet…. Virtually every supply chain software provider has web-based tools to enable suppliers to create ASNs. Maybe accuracy is the issue, as one reader noted last year (see below), but I don’t think that has really been the stumbling block to adoption.


I do believe the recently accelerated focus on “supply chain visibility” has elevated the once lowly ASN. At one level, ASNs were mostly of interest to warehouse receiving operations and retail merchandisers, and hence in many companies just didn’t get a lot of executive support. But in a world of lean supply chains, just-in-time inventory, focus on reduction of variability, etc., doesn’t the humble Advance Ship Notice occupy a critical cog in the supply chain?


Here are some of the stories we’ve recently heard or reported on:


  • ADP Brokerage Services uses web-based tools from HighJump Software to integrate suppliers and create ASNs to dramatically reduce receiving time in the distribution center (case study).
  • Leading beer distributor House of LaRose uses a new warehouse management system and other tools from Softeon to start taking advantage of the ASNs available from the brewer, significantly reducing receiving time and cost.
  • On-line retailer QVC builds a robust ASN management process and system it tightly integrates with transportation management tools from i2 to dramatically improve its supply chain visibility and streamline inbound logistics processes (case study).
  • Apparel retailer Chico’s uses trading partner management tools from Manhattan Associates to gain detailed visibility to activities in offshore and domestic suppliers and (here we go again) receive ASNs that have significantly reduced receiving costs.
  • Ditto for manufacture and retailer Ashley Furniture, which is actually an amazing story of a company using visibility and ASNs to “hedge” its inventory bets, and operate a long supply chain with offshore production as much like a just-in-time one as it seems possible. More on this story soon.


The consistent themes throughout these stories:


  • Use of web-based tools to enable supplier-generated ASNs.
  • Significant (20-40%) reduction in receiving times in the DC
  • Use of ASNs not just to improve inbound receiving, but as a critical element of improved supply chain visibility.


We received some thoughtful feedback last year from readers offering perspectives on the low use of ASNs despite the clear operational benefits. Don Feickert of Raleys noted that “some reluctance lies in the area of confidence with the process.  As long as companies continue to receive shipments containing discrepancies with he invoice, it's hard to see value in having bad information ahead of time.  Until points of origin can consistently deliver exactly what their delivery documents show, the work Around of pre-receiving, followed by any necessary receiving corrections, is less troublesome.”


And he’s right, web-based tools alone don’t mean the ASNs are accurate, and without accuracy they aren’t much good. Still, I believe scorecarding and collaborating can make big headway there, and yes, eventually RFID can eliminate much of these data errors.


David Meyer of Wausau Paper noted the frequent reluctance of companies to actually take out the costs that ASNs could enable. “The commitment to reduce labor is not something facilities usually jump up and down about at a department level,” he wrote us.


That certainly may be a barrier in many organizations. My point again though is the progress I’ve noted in the last 18 months stems in part, I believe, from viewing the ASNs not as a stand alone capability to help receiving, but as a key cornerstone of supply chain visibility.


The tools are there. The benefits continue to be clear and proven. I see lots of progress between companies and their suppliers, though many still have a long way to go. Now, if we could just get that internal plant to DC thing going...


Do you agree we finally are starting to make real progress on ASNs? Is the drive for supply chain visibility what’s fueling the effort, more than just benefits in receiving? What are the barriers to more companies using these tools? If you are a supplier using one of these tools, what’s your perspective? Why is it so hard to do internally between plants and DCs?

Let us know your thoughts.

Dan Gilmore


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This informative white paper from Softeon reviews WMS deployment options within an SAP environment, describes the technical requirements in a straight-forward, jargon-free fashion, and overviews the importance of SAP's certification program for integration external WMS solutions with the ERP and new NetWeaver platform.

Integrating WMS with SAP White Paper



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. 21, 2006

Supply Management: Rebounding Interest in Mexico as Sourcing Location

Simplicity, cost are top factors, data from Ariba shows; see full Videocast

Sept. 21, 2006

$1.15 a Gallon? Leading Oil Industry Analyst Says Prices Could Plummet

Philip Verleger called the spike; now he’s says it’s going the other way; so does supply and demand still work in a world of “peak oil”?

Sept. 21, 2006

In Search of More Growth, Wal-Mart Follows Best Buy in Move to Tailor Stores to Individual Markets

Can Bentonville give up some authority to local managers? Why “Roach Killers” don’t sell well in Boston

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?


Supply chain hiccup delays Sony’s Play Station 3 launch, following similar problems with Microsoft’s X-Box last year

Q. When star CIO Randy Mott joined HP last summer, what was his goal for reducing business applications used within the company (from how many to how many)?

A. Click to find the answer below


Q. When star CIO Randy Mott joined HP last summer, what was his goal for reducing business applications used within the company (from how many to how many)?

A. From over 5000 to 1500 over several years


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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



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. When star CIO Randy Mott joined HP last summer, what was his goal for reducing business applications used within the company (from how many to how many)?

A. From over 5000 to 1500 over several years

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