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April 12 , 2007 - Supply Chain Digest Newsletter
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Featured Report

Sponsored by : Infor

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First Thoughts by Dan Gilmore, Editor

10 Keys to Global Logistics Excellence

I find something interesting almost every time I have a conversation with companies about their global supply chain challenges. For most enterprises today, it presents a significant and growing issue, and one for which most of them are still relatively immature in their development.

We got some great comments last year on our column The Global Supply Chain: You Better Be Good, which basically suggested that for a growing array of companies, being a leader in global supply chain and logistics excellence wasn’t just a “nice to have” – it would be a key determinant of overall corporate success. I said that I wasn’t sure enough CXOs fully appreciated that.

I recently spoke to a VP of Logistics at a hard goods company who said there has been a sea change at his company in the past year – the CEO had suddenly come to realize that just moving more and more production offshore wasn’t enough. To please Wall Street and deliver real results, they had get a lot better at executing global strategies. So now they have been hiring managers with real global supply chain experience (in some cases from the retail industry), working on the many cross functional processes needed for effective execution, and looking a lot harder at what technology they need to make it all work (more on that in a moment).

Last year, management consultants McKinsey and the American Chamber of Commerce conducted a survey that found a majority of companies believe they are behind their competition in a number of areas related to sourcing and logistics from China, such as lead times, quality, and total cost. What makes this especially interesting is that almost always, as we’ve discussed before, companies tend to over rate their own performance. But when it comes to global supply chain and logistics, a great many feel they are behind. Half of them are right in terms of the competition, and nearly all are right in terms of where they need to be.

I consistently hear stories from companies and consultants who say the savings expected from offshoring initiatives just aren’t materializing. I find this common condition results from one or both of the following:

  • The company did not do a thorough enough job to begin with in estimating total delivered cost, including the cost of increased inventories, real yields from offshore plants, and other factors, and was therefore trying to hit a target that was unattainable.
  • The potential savings were estimated well, but too much of the savings are being dissipated through mediocre execution.

It depends on the company, but for many there are real opportunities to improve in both these areas.

The other issue that keeps cropping up is the area of risk. I had another conversation recently with a supply chain exec, who understandably also wanted to comment off the record. He told me to reduce costs, the company was in fact taking major risks in its global supply chain, some understood, some hidden, that would keep costs lower for the present, but could have a huge financial and market impact if some unfortunate events occurred.

One theme I continue to hear is that technology support for global supply chain and logistics is simply well behind most other areas of the supply chain.  Our friend Dwight Klappich at Gartner recently wrote that, “Even sophisticated companies that have more global supply chain experience and were early adopters have only automated a small fraction of their global trade operations.”

We took all that together and did some thinking and research on this topic, and have just released a report on The 10 Keys to Global Logistics Excellence. As the name implies, we identify 10 key capabilities that we see as the platform for being a standout performer in the global supply chain. It’s got a technology slant, but we found that in this area especially, thinking about the technology has clear implications for people and process as well.

I think you will also enjoy the Diagnostic tool we’ve developed that can help you evaluate where your company is along these 10 factors. It will be a useful self-assessment, and we believe provide some guidance about where you might want to consider beefing up process and technology.

This work takes time and money, and we want to thank the sponsor of the report, RedPrairie, for making it possible.

“Unless companies that are offshoring make majorIn the report, we quote well-known technology guru Erik Keller, who notes that changes [to their IT solutions stack], they will run into quality, compliance and logistics problems sooner rather than later.”

I’ve seen some evidence of more companies appreciating this lately. A decent number of companies, such as HP, have launch “e-visibility’’ or related systems in the last 1-3 years. A lot of visibility tools started to just answer the basic question of “Where is it?”, but many now see it is the foundation for better planning and execution.

We think you will enjoy the report and Diagnostic. As always, we’d love your feedback.

Do you agree most companies are still very early in the game in terms of global supply chain and logistics? Where are the areas that are most ripe for improvement? Why is technology support in this area lagging? Let us know your thoughts.

Let us know your thoughts.


Dan Gilmore


Supply Chain 

Videocast Series

The RFID-Enabled WMS

How Warehouse Management Technology Must Change to Leverage the Potential of RFID in Distribution

It is a unique and outstanding presentation

For more information and to register


A mostly quiet, but positive, week for our Supply Chain and Logistics stock index last week, before the explosion in rail stock prices this week (see Increased Investment in Rail Carriers by Legendary Warren Buffet a Sign of Carriers' Pricing Power).

Only two of 22 stocks were down, though most upwards moves were small.  

See stock report.


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

April 11, 2007
Global Logistics: Panama Delays New Fees for Canal Passage, Promises No Increases through 2008

April 11, 2007
New RFID Tag Promises Benefits for the "Cold Chain"

April 11, 2007
Does Rapid Decline in Mexican Oil Field Prove Peak Oil Theories?

April 9 , 2007
Does Wal-Mart have Super Secret Plan to Spin Off Sam's Club?

April 9 , 2007
Increased Investment in Rail Carriers by Legendary Warren Buffet a Sign of Carriers' Pricing Power


What's on top of Supply Chain and Logistics Executives' Priority Lists?

Interest in supply chain technology developments is growing, ARC Advisory Group study finds; executives keen to understand emerging software trends, relook at optimization technologies

New Supply Chain Digest Report Identifies the 10 Keys to Global Logistics Excellence

Most companies must make major strides to realize the full potential of globalization, research finds; the report's valuable Diagnostic Tool helps companies assess where they stand versus the potential in technology and process


by David Simchi-Levi, CEO, LogicTools

How Network Planning and Optimization Tools Deliver Value

Network planning is typically a two step process: optimize the structure, then optimize inventory placement


by Dr. Edward J. Marien and John Kenny

Improve Product Lifecycle Profitability with End-of-Life Progressive Inventory Disposition (Part I)

Focusing on the end of a product's lifecycle can have a dramatic impact on the bottom line, especially for high tech manufacturers


Have a supply chain or logistics related questions you need answered?

Ask our panel of experts.

See our growing list of questions and answers - share your insight.

Featured Question and Answer: Are there any rules of thumb about when you should use floor storage versus rack storage? Is there usually a "right" answer for a given operation?


Q. What percent of China's exports go 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 now reallyl behind - be patient if your letter has not yet been published

We're just catching up this week with a few short letters on a variety of topics. Out feedback of the week is from Ram Mohan of FusionOps, commenting on our piece on Inventory Pittfalls Revisited, who says losing inventory and losing weight have a lot in commom. You'll find that letter, plus one on someone who says they have no desire to have their shopping habits tracked with RFID-based credit cards and more below.

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 – Inventory Pittfalls

Managing inventory is not very different than personal weight management.

Understanding the problem is crucial. While some aspects of inventory management are common to all, a big part of the problem is unique to every company. In essence, inventory management is complex, unique and subject to change. A cookie cutter approach to solving the problem without properly defining it will not work. What is needed is an approach/solution that addresses the complexity issues, the unique aspects of the problem and finally the fact that the problem is not a static one - the nature of the problem is continuously changing.

Not unlike the personal weight loss challenge we all face! Lean is what we all want to become and lean priciples make a lot of sense. We need to understand our unique process, be prepared to redefine the challenge as the problem evolves and address it with processes and systems that can handle this. There is no quick fix! Personal weight management is a life-long endeavor! Visibility, control and analysis are the disciplines to healthy supply chains.

Ram Mohan
CEO / PresidenT

On Real Time Dashboards:

Information Framework Suite, IFS, is a group of web-based applications which manage data from numerous data points, independent of database type. Key capabilities in supply chain management are bringing together a variety of data sources from different platforms, and create reports for the executive management. Applications in IFS change the way we do this, for example, by automatically compiling and presenting data in dashboards, or auto email reports, even tailored reports. The architecture allows for a more user friendly reporting environment and hosts other applications that provide value to data.

Paul D. Ferrata
Director of Logistics Engineering & IT Solutions
Eagle Global Logistics

On Consumer Tracking with RFID:

Question back at you---Do you want to be tracked?

I don't want to be tracked at ANY POINT! By the use of my credit card, my activities in the store, out of the store...etc. Need I say more?!

Katherine A. Parker
Birmingham, Ala

On Impact of Geo-Political Events on Oil Prices

I love the article on how geo-political events affect oil prices, particularly because it can either save me alot of $$ or cost me alot. I would be interested in better understanding why the Iran/Marines event shifted the price.

Craig McLaughlin



Q.  What percent of China's exports go to the United States?

A. About 20%

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