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March 6, 2008 - Supply Chain Digest Newsletter
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First Thoughts by Dan Gilmore, Editor

Pulling Your Supply Chain

If you are not in the process of transforming your supply chain to meet the demands of today’s market dynamics and the realities of a world that is now flat, your company is going to be in serious competitive jeopardy.

Gilmore Says:

"For LaHowchic and Bowersox, a Responsive Supply Chain is built on six pillars: consumer connectivity; operational excellence; integrative management; real-time responsiveness; leveraging the network effect; and collaboration."

What do you say?

Send us your comments here

That, in a nutshell, is the message of Start Pulling Your Chain – Leading Responsive Supply Chain Transformation, an outstanding new book by two of the most well-known names in supply chain management: Nick LaHowchic, former supply chain executive at Becton Dickinson and The Limited Brands, and Michigan State University’s Dr. Don Bowersox.

In many ways, I wish I would have read the book before writing last week’s column on The New Supply Chain World Order, which has generated quite a bit of reader feedback. It certainly would have added to my perspective, as LaHowchic and Bowersox cover in part very similar ground, arguing that traditional approaches to supply chain processes, organization, and information flow are simply not suited to this new supply chain era.

I liked this quote from Ralph Drayer, former chief logistics officer at Procter & Gamble, in the book’s introduction: “Successful companies in the 21st century will be those that exploit web-based information technology and drive the use of collaboration to more strategically transform their supply chains.”

LaHowchic and Bowersox say it this way: “We believe that traditional business organization models and leadership behavior can and must radically change to survive and prosper in this new order of global affairs.” I am glad we all agree it is “a new order” of some kind.

In reality, many “supply chain transformations” come when a company has its back to the wall – deteriorating financial performance, major customer dissatisfaction or defections, etc. The powerful message of this book is that consumers, customers (e.g., channels), and supply chain networks are evolving so rapidly, across a global tableau, that even companies that today have what might appear to be well functioning supply chains need to begin a new process of transformation right now to position themselves for success in this shifting landscape.

How? In this limited space I can hardly do justice to the full scope of ideas and models LaHowchic and Bowersox present, but here are some of those that seemed most important to me:

  • It’s not a new idea that we’re much better off with a “pull”-oriented approach to supply chain than the traditional “push” models, but LaHowchic and Bowersox say that changing technology (e.g., the web, visibility) and a greater understanding of how to build a more responsive supply chain organization can finally make a true pull-based model a reality.
  • Companies must therefore build their own versions of a “Responsive Supply Chain Model” – one that in most respects simply wasn’t possible without the flow of information now available. For LaHowchic and Bowersox, a Responsive Supply Chain is built on six pillars: consumer connectivity; operational excellence; integrative management; real-time responsiveness; leveraging the network effect; and collaboration.
  • The reality is few companies and even senior supply chain leaders know well how to apply these principles to achieve a new type of supply chain organization and performance. That’s understandable – the changes in technology, virtualization, and global competition have come rapidly, and traditional vertical/functional views of supply chain management are very hard to unwind. The world is simply changing faster than most of us can keep up with.
  • Whatever your business or industry, it is critical to deeply understand end consumer consumption. To get there means significant investments in connectivity.
  • I loved the chapter on Operational Excellence. LaHowchic and Bowersox make the great point that one key to developing true operational excellence is to “de-average” most of our traditional supply chain metrics – which often hide significant performance issues. Most supply chain executives “would be shocked to find that firms across a variety of traditional industries completely serve fewer than 50 percent of all orders. Reality gets lost in averages and statistics related to channel complexity or in a supply chain journey half traveled.”
  • In the consumer packaged goods-to-retail supply chain, is there any better indication of the progress we still need to make than to know that the highest level of shelf-level stocks outs in grocery stores is during the peak shopping period of Sunday afternoon – in other words, when the revenue penalty is greatest for manufacturers and retailers. But the problem persists.
  • The pervasive belief that there exists an ironclad trade-off between operating costs and customer service levels is, in reality, often a mirage, masked by metrics that fail to capture the real costs of service failure.
  • One of the biggest challenges to transforming into a Responsive Supply Chain is developing an understanding of how to process information coming from multiple levels on both the buy and sell side about what is happening right now. This is radically different from the hierarchical, linear flow of information most of us grew up with, and represents a real challenge – but may be less of a paradigm shift for the new generation of supply chain managers at the center of today’s connected world in their personal lives.

Several years ago, I came to the conclusion that in the end, the only sustainable competitive advantage almost any company can have is the ability to consistently react to market opportunities faster than the competition. A company’s products, engineering, proprietary manufacturing processes/technologies or even a powerful brand simply no longer confer long term, sustainable advantage.

But those who can build superior Responsive Supply Chains have a real chance.

The book can be found at its own web site – Start Pulling Your Chain. I encourage you to have a look.

What’s your perspective on the key ideas of LaHowchic and Bowersox’s new book? Are most companies prepared to make this kind of transformation? What do you think the keys to success are? What about the barriers? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

Want a printable version? Go to:


Dan Gilmore


Videocast Series

Optimizing Supply Chain Performance with On-Demand Transportation Management and Vendor Compliance Technology

Part 1: Achieving Actionable Supply Chain Visibility and Improved Vendor Compliance

March 10, 2008

Part 2: Using On-Demand TMS to Power Inbound and Outbound Transportation Excellence

March 24, 2008



Best Practices in Distribution Center Design, Operations and Management Workshop

Achieve New Levels of Performance in Warehousing and Distribution with our Outstanding Logistics Training Program

April 8-9: Dallas
April 15-16: Chicago

Workshop Leader: Ken Miesemer, former Director of Distribution and International Logistics at Hershey Foods.

More information, and to Register


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

March 6 , 2008
Supply Chain Graphic of the Week- Key Dimensions of Procurement and Sourcing Effectiveness

March 5 , 2008
Supply Chain by the Numbers: March 5, 2008


Although the major indices began last week strong, they lost a bit of ground throughout the week and as February 2008 drew to a close.

Our Supply Chain and Logistics stock index also closed out down overall for the month.  In the software group, i2 was up 7% for the week, but still off 5.4% for the month.  In the hardware group, Zebra was up 13.4% for the week and also up 4.5% for the month.  In the transportation and logistics group, Yellow Roadway suffered the index’s biggest losses for the week (down another 10.5%) as well as for the month (down 23.4%).

See stock report.



Bringing Lean Strategies to Companies in Process and Hybrid Manufacturing Industries

How to Reduce Waste, Work-in-Progress inventory and Cycle Time while
Increasing Throughput via Improved Resource Utilization

More Information or to Register

Sorting it Out

by: Cliff

Top Management Involvement is Essential in Fostering and Sponsoring Distribution Automation Improvement Projects

Does your
Environment Foster Ideas that Drive Continuous Improvement – or Are Creative Proposals Immediately Shot Down? Some Companies are Committed to Material Handling Excellence


Q. What percent of over the road truck drivers are independents?

A. Click to find the answer below

EXPERT INSIGHT: Guest Contribution
by Ken Ruehrdanz, Business Development Manager, Dematic

Conserve Power, Be Green and Save Money with Material Handling Automation

With Power, Less Can Mean More - More Environmental, More Money

EXPERT INSIGHT: Guest Contribution
by Ken Matson, President, Invar Systems

Sortation System Upgrades

Often, the Upgrade Path Can Be The Least Disruptive and Most Economical Choice to Increase Material Handling System Throughput


Each Week:

-Global Supply Chain
-Distribution/Material Handling
-Trends and Issues

Weekly On-Target Newsletter
March 5, 2008


Reader Question: Can Bucket Brigades Work with Mechanized Order Picking?

Reader Question: Is there a True Global RFID Standard?

See our expert answers at the links above. Share your knowledge or perspective.

Or, ask your question


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We're really behind again - bear with us. But keep the letters coming! In the next few weeks, we'll start adding feedback right on specific story pages, so you can see what others are saying.

The Feedback continues to come in at high levels.

Our Feedback of the Week is from J. Michael Zachary of Tompkins Associates, commenting on our piece on Inland Ports. We had several readers respond to our articles on Boeing's supply chain disaster as it moved way to far in outsourcing key components of its new 787 Dreamliner. Well-known auto ID expert Burt Moore weighs in on the new approach to using 2B bar codes with embedded URLs that launch web pages, and Bob Ferrari was one of many who liked and commented upon our list of experts and their supply chain predictions for 2008, while Justin Huffman of Pinnacle Foods Group was surprised by some of the TMS data we reported.

Give us your thoughts on this week's Supply Chain topics. As always, we’ll keep your name anonymous if required.

Feedbacks of the Week - On Inland Ports:

Having been in the Port/Maritime Industry for more than 20 years and inland ports being a buzz word for as long as I can remember, it is important to note what is “old” and what is “new”. The “new” is the booming logistics centers like Alliance, TX; Joliet, ILL and the Port of Tacoma’s South Sound Logistics Center in Maytown, WA. It is where transport modes come together with warehousing, distribution, assembly and light manufacturing co-exist and flourish. Many times these are in customs bonded and free trade zone designated areas.

The transport modes most critical are highway and rail. However, air is becoming very fashionable and in some cases (Alliance being one) is critical to the success. Waterborne transport plays a minimal effect.

However, with all that said, your point that this concept is not for everyone is very key and to the point. Too many regional, state and local business development enterprises see an inland port, or logistics center, as an answer to all of their economic development woes. Besides your North Carolina example add to the list Front Royal, VA and Quincy, WA. They key to the “non-success” of these later two examples is the railroad desire not to fully engage in a rail shuttle between a nearby seaport and the inland port. Thus more trucks on the road.

Inland Ports will play a key role in the ever-changing global supply chain and logistics of major shippers but they need to be planned with a strategic view of the entire, systematic view of the global supply chain. This includes foreign (off-shore) sourcing strategies, transportation and distribution strategies (all water via the Suez, all-water via the new Panama Canal or intermodal from the West Coast) and local/regional distribution strategies which is directly impacted by regional, state and federal environmental and economic requirements.

J. Michael Zachary
Sr. VP, Global Supply Chain Services
Tompkins Associate


While the results are very shocking, I definitely believe they are also very accurate! I would also venture to say that some of those “in-house” TMS’s are probably based off of some sort of Excel spreadsheet but they were probably too embarrassed to say that or their IT department admit to it. It is astonishing to see how our industry refuses to utilize technology which most best of breed systems or commercially purchased systems utilize in order to be effective and productive. I don’t know if companies are just unwilling to invest in a real TMS (i.e. a system that’s infrastructure is not based on a Microsoft bundle application) because it is job security due to the fact that even the most basic TMS (commercial or best of breed) can eliminate the need to have Pat Smith spend their day typing information into a spreadsheet or if it is just self-induced ignorance.

Great Article but doesn’t help my current frustration with our industry. It is sad that third-world countries are hungry for new TMS programs/technology, while the majority of companies in the US are happy sticking with the ole trusty abacus!!!

Justin Huffman
Pinnacle Foods Group, LLC
Logistics Manager

On 2D Bar Codes to Trigger Web Pages:

I see what you're saying about a 2D symbol launching a web page and itis intriguing. Perhaps as intriguing as the idea of using a 2D symbol is that of having a web page to provide a "filter" between a corporate database and the outside world, thereby addressing the issues companies have about providing trading partners access or having to communicate data to an external 3rd party database.

As far as the test result example, in this day of e-mail and easy electronic communication, I'm not sure why the results couldn't be sent electronically and, ideally, imported directly into the customer's database. However, for other applications, I think it might have considerably moremerit than just providing information.

For pharma e-pedigree, for example,it might be the ideal way to show the complete pedigree of the item because the web page could pull data from diverse sources while not granting access to any of them, thus helping ensure the security of the overall system.

I don't know of anyone doing anything along these lines but it is a very interesting concept.

Burt Moore

On Boeing's Supply Chain Troubles:

Boeing’s experience with the lack of visibility into the supply chain is a common problem. Where as before, popular opinion suggested that it only affected smaller businesses, now there is clear evidence that this problem affects all business both large and small!

A fundamental value at is to deliver to our clients transparency into the supply chain. To the point where accountability of suppliers has an immediate impact on the health of the supply chain and strengthens the relationship.

Joseph Rodriguez
Master Contractor
Beijing Marco Polo Global Trade & Logistics Services Ltd

Tremendous article! It could be the start of a book....

Its great to hear a realistic account of what can and does go wrong with out-sourcing. It would also be interesting to get an account of the real costs involved. The planned savings are not nearly as great as they seem initially. I hope the Italian instructions really helped them assemble the final unit...(hahaha)

Also, a good job of outsourcing requires on site engineering support, especially for the first critical items. Without it you may as well go to the casino.

The hardware shortage is classic. Nobody thinks about running out of them, until the line is shut down. On my next airplane flight I am going to examine those rivets a little closer as I board....

Scott McQuin
Connectivity Solutions Manufacturing

On 2008 Supply Chain Trends:

I believe that Jim Tompkins’ and other insightful 2008 predictions, highlighted in this column, provide a lot of food for thought.

Our global economy is changing quickly, driven by many geo-political factors. As Jim and others have pointed out in their predictions, the original motivations to perhaps source manufacturing or supplier capability within China or other parts of Asia was too often driven by a singular cost factor of labor. As manufacturers increasingly add more informed, as well as more sophisticated decision-making capabilities that analyze total landed costs, and incorporate the complete cost picture, that original sourcing decision becomes more problematic when placed in broader context.

The existing high cost of and demand for energy will probably continue into the foreseeable future, and supply chain organizations will be once again challenged to respond with alternative strategies. Labor cost increases in China and other countries, are causing manufacturers to seek the next lower-cost alternative. Emerging, higher growth global economies will reinforce the need to build more sophisticated local logistics infrastructure. It’s no wonder that 2008 predictions conclude a movement to continuous near-shoring, dual-sourcing, and network reconfiquration. There are already signs from major manufacturers that the shifts are underway, and 2008 promises to be another interesting year for our profession.

I would conclude that many of these predictions point to three critical agendas for supply chains in 2008:

Integrating supply chain strategy within overall business strategy. In my view, this would umbrella integrating value-chain operations, planning, risk management and execution strategy with the overall business strategy. Perhaps the time for supply chain strategy to make its presence in the board room has finally arrived. It’s time for the profession to move beyond vertical mentality.

Making improved analytics, intelligence, and more timely decision-making the prime supply chain process initiative in 2008. Let’s build upon the successes of lean and postponement, and move toward total network visibility, with the ability to sense and respond to any product business or fulfillment need.

Investing in broader and deeper skills across the various supply chain functions, global suppliers and global regions, insuring that the whole supply chain is much better positioned to respond to any challenge

Yes, there are interesting times ahead, and supply chain should be a proactive leader, not a follower.

Bob Ferrari
Managing Director
The Ferrari Group


Q. What percent of over the road truck drivers are independents?

A. Approximately 9%.

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