This Week in SCDigest:

May 24, 2007 - Supply Chain Digest Newsletter
SupplyChainDigest - Your first stop for supply chain information

Become a Sponsor Click here for information on how to become a Sponsor
Send to a Friend Send this newsletter to a friend. Click here!
Not already subscribed? It's free! Click here.

Archives | Events | Featured Report | Featured Offer | Upcoming VideoCasts | Feedback

Featured Report

Sponsored by: HighJump Software, a 3M Company

Groundbreaking New Report: Dirty Little Secrets of TMS

From cost of deployment to the latest features, there are many new things to learn about today’s transportation management systems (TMS). Learn eight dirty little secrets to help you separate fact from fiction when evaluating providers.

Download your free report at:


First Thoughts by Dan Gilmore, Editor

Thoughts from the Supply Chain Road

I have been traveling non-stop for the past many weeks for basically every spring event out there (for the record, that includes the Logility, Manhattan Associates, i2 and RedPrairie user conferences, RFID Live, the Warehouse Education and Research Council conference, DC Expo, the Georgia Tech Supply Chain Executive forum, a visit to Doskosil manufacturing, maker of the Petmate brand and other products for our upcoming video on enterprise compliance label management, and two other private days acting as a modest consultant with companies looking for some supply chain insight).  

After this flurry, I asked myself this week if there were any themes that emerged from these various events, travels and conversations. I think there are, and I’ll share a few, some of which I may expand upon in future columns.

The first is the simply unbelievable pressure that nearly every public company I talk to is under from the top to reduce operating costs to please Wall Street. I have had a number of conversations that included comments like this, from an exec at a large food company: “The expectation for continuous cost reduction is just relentless right now, driven by our CEO’s own focus about earnings and the stock price.” I guess it’s good at one level that the CEO cares about supply chain, but I sometimes wonder if this relentless cost reduction pressure can be taken too far. Not that continuous cost reduction isn’t good and necessary, just that in this environment it can sacrifice the longer term for short term results.

For example, I recently heard of a very prominent company that actually brought a distribution facility that had been outsourced back in house for very short term reasons. I didn’t fully understand the math, but somehow over the next few quarters, this would save a few bucks, even though they still believed the original decision to outsource was the right one and that in the longer term in-house would actually be more expensive. But the pressure on earnings was right now.

So, if the approach is a drive for continuous improvement, that’s good. If you get there by just cutting something, or otherwise sacrificing the future for the now, that’s something else, and I’ve seen some of both.

Relatedly, I am also struck by how lean organizationally it seems most supply chain and logistics are these days. I’ve had conversations with a number of both managers and execs that tell me they are operating at an incredibly thin level of staffing, and that getting additional headcount is very difficult even when the need can be well demonstrated. Good news for the consultants, I guess.

“Lean” as a operating discipline, however, is a large wave that is turning into a tsunami. It’s amazing the number of companies, from every type of industry, that are aggressively pursuing Lean strategies of some kind, and the hunger for Lean training and information is very high. It’s sometimes hard for me to differentiate Lean from plane old process re-engineering, and I think part of it is just the tools that you use. Our Lean expert Mike Loughrin knows the details, however, and he is looking for your input on how we can help your Lean efforts with education and information (See Lean Supply Chains: Let's Get Lean in 2007 .)

As our Mark Fralick noted last week (See SOA It Isn't So. . .), expect to be overwhelmed by technology vendors of every sort with messaging around “Service Oriented Architecture,” or SOA. Certainly, that was perhaps the dominant theme I heard from vendors during my travels to software user conferences and trade shows. SOA is a good thing, done right, but I suspect before too long most end users will have had their fill of SOA hype. As Fralick noted, figuring out what real from what’s baloney isn’t easy.

Lastly, as we’ve noted before, at every event I attend someone comes up and asks me about the global supply chain. The comments are around a set of themes: we’re really new at this, not getting the savings we expected, our people are really new at this, do you know any vendor that does X? (visibility, trade compliance, transportation management, etc.).

Among my responses is, “You are not alone. Most companies I talk to are in a similar spot.” There are certainly a number of companies (Payless Shoes comes to mind) that have been at this global game for some time, and built up a deep reservoir of expertise, infrastructure and process way that are many years ahead of most of us. Then there are companies like Ashley Furniture, that almost in stealth mode are doing some really amazing things to make a long supply chain operate much like a short one. But the mass in the middle is looking for insight and answers.

There’s more, but I think we’ll wrap it up here. For those in the US, have a very happy Memorial Day weekend.

What is your reaction to Gilmore’s Thoughts from the Road? Are any of these themes consistent with what you are seeing with your companies or clients? What’s your reaction to Gilmore thoughts about stock priced-based cost pressure, lean staffing and the growing “Lean” focus, SOA hype or global SCM challenges? Let us know your thoughts.

Let us know your thoughts.


Dan Gilmore


Supply Chain Videocast Series

Driving Costs Out and Efficiency In with
Enterprise Bar Code and RFID
Label Management

Are you meeting changing bar code labeling and emerging RFID tagging requirements with maximum control and efficiency?

In this broadcast, we'll show you how to dramatically reduce labeling costs, better meet on-going compliance requirements, and integrate your supply chain with a enterprise approach to labeling management.

More information, and to register.



Learn more about how to improve your distribution operations.

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

May 23, 2007
Retail Supply Chain: UK's Marks and Spencer Dramatically Increases Spending on Supply Chain Technology

May 22, 2007
Supply Chain Software: InfoWorld Blogger Likes Our SOA Scorecard, Offers His Own Alternative

May 21, 2007
Transportation News: Do We Have a Problem with Truck Drivers and Drugs?

May 21, 2007
Supply Chain News: Chinese Look to Get a Piece of U.S. Companies through Investment in Private Equity Group


Despite another record setting week on Wall Street, our Supply Chain and Logistics stock index had mixed results.

Software provider Logility fell hard this week (down 10.1%) for no reason we can discern, while the biggest gainer was in the transport and logistics stocks - rail carrier Norfolk Southern.

See stock report.


RFID News: Is a "Mini-WMS" or Real-Time Locator System the Answer to Retail Stock Room Inventory Woes?

Retailer Cabela's Simply Puts WMS into Each Store to Locate, Pick and Deliver Inventory to the Floor with High Levels of Accuracy


by Susan Rider

The Top 10 Must Do's for Logistics Operational Excellence

Is Operational Excellence an Illusive Dream? Here are Ten Steps that will help you Achieve this Goal without Spending a Lot of Money


by Mark Fralick

SOA It Isn't So. . .

With All the Hype around Service Oriented Architecture, Who Can Tell What's Real in Supply Chain Applications?


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.

Reader Question: Can we implement WMS and Labor Management at the same time?


Q. What important supply chain related agreement became active on Jan. 1, 1994?

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.

You can subscribe to our RSS feeds in two ways:
1. Copy our RSS link into your RSS reader - it's easy!
2. Click on a button below to quickly add it to your favorite reader.
Add to My Yahoo! Subscribe with BloglinesSubscribe in NewsGator Online

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

We're publishing a couple more excellent letters this week from our First Thoughts piece a few weeks ago, which argued that companies using Supply Chain Network Design/Network Planning tools on a continuous basis were enjoying some important and not fully appreciated competitive advantage. (See Supply Chain Network Optimization and Competitive Advantage).

Our feedback of the week from a VP of Logistics from a very large consumer goods company, who thinks we are right on with the our take on how more continuous network planning can deliver competitive advantage, but who notes the challenges of dloing this across the organization. We also hear from William Kinkaid of CB Richard Ellis, who notes some trends he is seeing in terms of supply chain network strategies.

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 Network Planning and Competitive Advantage

I think you made a compelling case that doing network modeling and tweaking of the supply chain on a more continuous basis can drive true competitive advantage, and that this isn't well appreciated by many in the industry.

We are not doing that, and you have given me some ammunition to revisit this issue and discuss the opportunities with our executive team. The biggest challenge is that we are still fairly functional in our organization, and I suspect this is true for many other companies and their supply chains.

In that scenario, it isn't very easy to go to the Exec VP of Manufacturing every quarter and ask him to make some changes for the good of the supply chain whole.

So, like most companies we get enough will to look atthe network when we really have to every so many years, but there's no question, as you well artilulated, that we are missing opportunities in between.

VP of Logistics and Customer Service
Fortune 200 Consumer Packaged Goods Company

More on Network Planning:

I agree with David Simchi-Levi's (LogicTools) viewpoint, trends and approach, although, the estimate of savings may me off since the rising costs of fuel and the increase in supply chain length due to off shoring.   

One interesting point issue that companies are faced with today is the re-evaluation of their off shoring decisions of the past and have found that some of this production is coming back to the USA.  I think this question is the next one to be answered within a network design since production costs and capacity drive inventory source points and to include them into network design decisions would be powerful.   

I think other interesting aspect of network design is the recent trend of distribution strategies for certain industries moving from national to regionally based.  Large retail distribution networks are currently rethinking strategies to move from few large (1million sqft) facilities to more and smaller (400K sqft) facilities.  This means more inventory, more labor and management, more bricks and mortar to be set off by transportation savings.  

William L. Kincaid Jr.
Vice President
CB Richard Ellis Global Supply Chain Group


Q.  What important supply chain related agreement became active on Jan. 1, 1994?

A. The North American Free Trade Agreement between Canada, Mexico and the United States.

Copyright © SupplyChainDigest™ 2003-2007. All Rights Reserved.
To Unsubscribe: Click Here
PO Box 714
Springboro, Ohio 45066