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Feb. 1, 2007 - Supply Chain Digest Newsletter
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First Thoughts by Dan Gilmore, Editor

What is a Supply Chain Best Practice?

We all hear a lot of talk about supply chain and logistics “Best Practices”, including from me. But what are they, really? Are they truly useful?

This column was spawned, in part, from a panel discussion I moderated more than a year ago on Best Practices. It went in a direction I don’t think the panelists or the audience expected. By the end, we were discussing not Best Practices per se, but whether the concept was really meaningful. Somewhat to my surprise, neither the panelists nor audience, at least in this case, thought it really was. One consultant on the panel at one point near the end went so far as to say “Best Practice is baloney.”

Now, in fairness, this was a discussion centered around distribution center operations, and I think processing in a DC tends to be pretty situation specific, making (perhaps) the use of Best Practices less clear.

To further think through this, we decided to get the opinions of a number of supply chain and logistics experts.

Ralph Drayer, ex-Chief Logistics Officer at Procter & Gamble and who now runs Supply Chain Insights, thought I was batty for even questioning the concept of Best Practice: “Shame on you! Of course there is such a thing as Best Practices,” Ralph told me. “The fact is that every situation is NOT really that unique, and believing so only adds to unnecessary complexity, cost and consumer value erosion.”

“That's why the consumer goods to retail industry pulled together under ECR  [Efficient Consumer Response] and the Global Commerce Initiative to develop and publish Industry Best Practices for common processes," he added. "P&G did the same thing internally as we globalized our operations. A Best Practice is developed by a group of expert users who share their knowledge and experience to define the best method of operating a common process.”

There is strong merit in that perspective, to be sure. If a process is common across a company, then surely there is a “best way” to do it most of the time within that enterprise. And if a process is common across businesses generally, it would seem there is an opportunity for Best Practice – or is that commoditization?

Gene Tyndall, well-known consultant and SC Digest Contributing Editor (and a friend of Drayer’s) had a somewhat different view: “The term “Best Practices,” and the relentless pursuit of them, has caused more trouble than benefit.  Everyone believes they need to find them, but then they cannot even define one, much less adopt it,” he said. “Even if you find one, it will change very soon, as someone else tops it.”

He added: “The trick, when you find one, is to "adopt and adapt" the practice to your unique situation.  This is what people struggle with.  I have argued for years that Dell and Wal-Mart (and others) do indeed have some, but others cannot adopt and adapt them. High-techs have struggled to do so, and K-Mart failed miserably.  Others just say that their business models are different, which is a cop-out.

He also stressed the role of metrics: “Best Practices without performance measures, or metrics, are useless.  Just like benchmarks, which without practices or processes are also useless.”

Jim Tompkins of Tompkins Associates, whose company runs a benchmarking consortium, agreed with Tyndall’s last point, focusing on the “result” aspect: “A Best Practice is a process that produces the best benchmark for a specific task," Tompkins said. "So, if the task being considered is inventory accuracy and one determines that 90% of the companies like my company, which have a benchmark of 99.8% or higher for inventory accuracy, utilize cycle counting, then cycle counting would be a best practice for my company. Furthermore one could look into the specifics of the best practices of cycle counting to gain more insights into how to best perform cycle counting.”

Ed Marien, well-known to many from his supply chain leadership at the University of Wisconsin and on-going consulting work, also focused on using benchmarking and metrics right. “The problem with many Best Practice comparisons is that they forget the metrics side,” he said. “The problem with many benchmarking studies is that the focus is upon the metrics, which may not be defined the same across companies or industry comparisons are made based upon metrics only, without considering the How To’s.”

I think I will make a "Part 2" of this column in a few weeks, incorporating some of your feedback. Netting it out here, though, I like the simple way Stephen Craig of transportation consultants CP Consulting answered when I asked him about whether there was such a thing as Best Practice. He answered: “I don’t know if there is Best Practice, but there is clearly Good Practice.”

SCDigest Technology Editor Mark Fralick took a similar tack, and maybe even summed it up best. In working with clients, he said, “I don’t worry so much about Best Practice as I do in eliminating Bad Practice.”

Now that’s something I think we can all agree on.

We only included a portion of the excellent feedback we received from our commentators. You can read their full comments nearby in News and Views – you’ll enjoy them.

I would like to do a follow up to this – help us out by sending your thoughts on the topic of “best practices.”

How would you define best practices? How can they be best applied? When a “best practice” is promulgated across an industry, does that make it a commodity capability/process? What else do we need to consider here? Let us know your thoughts at the link below.

Let us know your thoughts.


Dan Gilmore


Supply Chain 

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News and Views

Feb. 1 , 2007

This Week’s Supply Chain News Bites – Only from SCDigest

Do weak carrier results and projections finally signal a slowing economy?

Retailer Charming Shoppes names ex-Borders exec head of supply chain

Oracle’s new vertical thinking

Surface Transportation Board finalizes rail surcharge regulations


Feb. 1, 2007

Experts Discuss the Use and Value of Supply Chain Management and Logistics Best Practices

Full comments from Ralph Drayer, Gene Tyndall, Ed Marien and Jim Tompkins on Supply chain Management best practice

Feb. 1, 2007

Best Practice Tip: Management -  How to Handle the Employee Passed Over for the Job You Won

Whether you are a manager or an exec, navigating this scenario is never easy

Jan. 31, 2007

RW Baird Says Consumer-to-Retail RFID Activity Lags Active Tag Market

But Investment firm believes Wal-Mart reader roll-out and lower hardware prices will spur EPC growth in 2007

Jan. 31, 2007

Four of the World’s Largest Retailers Form Coalition to Promote Acceptable Working Conditions for Global Supply Base

Tesco, Wal-Mart, Carrefour and Metro join in endorsing a new global initiative to encourage a unified approach to promoting good working conditions in the supply chain

Jan. 25 , 2007

Crossing the Marketing and Logistics Divide

Overcoming the barriers to improved internal collaboration


Q. What countries are the two leading suppliers of oil to the United States?

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

We received a decent number of letters on out "top 10 supply chain trends of 2006" column, a few of which we print below. More next week. That includes our feedback of the week from the Vice President of Logistics of a medium sized consumer goods company, who asked to remain anonymous, for reasons that will be clear when you read the letter.

We have a few more short suggestions on that topic, feedback on our piece on understanding on-demand TMS costs, and an unusual but interesting letter from a writer from Singapore on a story from awhile back on the rise of the mega-sized ocean cargo ships.

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 Top 10 SCM Trends of 2006

Your list of supply chain trends is very interesting. I was especially intrigued with your selection of “the greening of the supply chain” as the number 1 trend. As a consumer goods company, I can tell you that we are looking at several initiatives that are designed in part to “look good” to Wal-Mart in terms of its green supply focus.


I also think you were right in citing “supply chain leaders [Dell, Wal-Mart] stub their toes” as something to consider. I don’t know if it’s really a trend, but you are absolutely right that for years these companies have been heralded as supply chain leaders by commentators who really can’t say why they are leaders, or more importantly “how.” What are they really doing that is different than the rest of us? We work with Wal-Mart, and they do many things well, but there are also many things they could improve, and virtually every consumer goods company with supply chain sense knows what they are.


It is clear that if you are a successful company, or the largest company in your industry, commentators tend to assume that there is a great supply chain too. I wouldn’t be surprised, for example, to soon start seeing stories praising Apple’s supply chain, with their growing popularity with the IPOD and soon iPhone, etc.


Keep up the thought-provoking articles.


VP Logistics

Consumer Goods Company

More on 2006 Trends

I would add to your point about consolidation, not just technology vendors, but also manufacturers, 3PL's, transportation companies.  Consolidation has been a reality for many years and will undoubtedly continue to impact all segments of industry and supply chains.


Herb Shields, CMC
HCS Consulting

For US based corporations the weaknesses of the dollar is a concern and an opportunity. I would list this as one of the top ten supply chain trends


Professor Blair Williams

SCM Polytechnic University, NY

On On-Demand Applications

Many thanks for yet another great issue of Supply Chain Digest. You're doing us all a great service by educating and informing your readership about what's happening in the supply chain industry.


Regarding your January 19 edition, which discussed on-demand vs. traditional TMS solutions, the on-demand software deployment model is certainly a viable one for users who need a TMS. But the trend toward on-demand delivery of business applications isn't limited to TMS. The upside benefits of an on-demand TMS (e.g., low total cost of ownership; fast implementation, time to value and ROI; reduced need for internal IT infrastructure and resources; ability to start with just a few users and easily ramp up; less of a general hassle of maintaining and upgrading on-premises hardware and software; etc.) are just as compelling in other business areas. That's why Salesforce.com and its on-demand competitors have chipped away a massive chunk of a market once dominated by Siebel, Oracle, SAP and others in the CRM sector over the past few years. Similarly, in the ERP sector, NetSuite (backed financially by Larry Ellison of Oracle) calls itself "SAP for the rest of us," and other on-demand solutions are also making a splash there.


The reality is, comparing on-demand applications with their on-premises software competitors certainly makes a lot of sense across the board. Beyond TMS, what about other types of SCM solutions? Given all the benefits of on-demand delivery, such as those stated earlier, more companies would be wise to evaluate on-demand WMS, OMS, LMS, performance management, and sourcing solutions.  


Many folks have shared with me their views of on-demand solutions in general, and I've read various articles published on the subject. Based on the comments I've seen and heard, it comes as no surprise that the people who pan the on-demand concept often work for the on-premises software companies who have the most to lose. After all, shifting from a short-term revenue model (selling and installing expensive software and hardware) to a longer-term revenue model (selling low-cost subscriptions) would devastate their share price and anger their stockholders. But many of us will recall all the naysayers from the early 1990s who fought client/server architecture and clung to their highly centralized, mainframe-based systems.

Where are they now? Ironically, many of them are probably reading your newsletter, delivered to their email clients from an email server.


Look ahead. The trend toward on-demand software delivery is on the rise, and SCM in general -- not just TMS -- is a huge part of its growth.


Steve Hopper


On Mega-Ships

Why did these mega-ships come in the first place? In other words: Why were they built on yards capable to build these giants?


That was similar to the change of older type ships as traditional cargo liners that finally had to make place for containerships. The demand was there and a smart 'fella' saw the potential of containerized cargo transport at sea and began with his OIL TANKER!


Now the foresight continued and the demand came side-by-side. Then the research was done on the drawing boards at the Classification Bureaux, at the  ship-owners' Offices and at the Yards. Competition plays a role. On these drawingboards are designs ready for 13,000 TEUS!


The questions:


Can the owners cut costs and give the customers a bit?


The answer is as simple as an answer from Oil Companies!


They say that they have done tremendous research and used capital no-one gave them a reduction on/for.


I was 36 years at sea and 16 years as a Captain in both oil and general cargo/bulk trades.


Gannah Antlers



Q. What countries are the two leading suppliers of oil to the United States?

A.  To the surprise of many, neither is a country from the Middle East. Number 1 - Canada. No. 2 - Mexico.

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