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July 10, 2008 - Supply Chain Digest Newsletter
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First Thoughts by Dan Gilmore, Editor

Going Global - and Doing it Well

One of the most succinct concepts we printed here is simply this: “When it comes to the global supply chain, you better be good.”

We have moved with incredible speed to a stage where for most companies, their ability to manage a global supply chain effectively is a key determinant of the company’s overall success. It’s just that important.

“Global Logistics and Trade Management” is a subset of global supply chain, referring to the physical movement of goods (logistics) and being compliant (increasingly important) with the myriad of regulations and documentation regarding the buying and selling of goods, plus managing the increasingly complex financial movements that accompany those logistics flows.

Gilmore Says:

"When you hear presentations from companies such as Payless Shoes, Texas Instrument and a few others on how they are managing global logistics, firms that have been doing it for two decades or more, you realize just how much there is to know."

What do you say?

Send us your comments here

Global Logistics and Trade Management is therefore, I believe, both a set of functional disciplines, and a category of supply chain software, as it has come to be known, though as with most supply chain software there are lots of different solutions types within that broad category.

This topic – both from a functional and technology perspective, is clearly a very hot one right now, and comes up almost everywhere I go. What has clearly happened is that for many (most?) companies, the rise of global commerce and therefore logistics requirements has simply occurred much faster than many can deal with in terms of people, process and technology.

If you are interested in this topic, and did not receive a copy in the mail of our Supply Chain Digest Letter on this topic, you can download an e-copy and access a lot of other excellent information at our Global Logistics and Trade Management resource page. Or, send us an email to request a zip file of the Letter and key resources.

Here are some thoughts that occur to me, coming out of some recent experience and research for the Letter.

  • Many companies jump into global supply chain somewhat unprepared. Understandable, in a sense, but this can cause problems. At a recent industry roundtable, a majority of companies, both large and small, said their companies had taken domestic buyers and made them global procurement managers overnight – with predictable results. We have to develop people, but I think one key is knowing what you don’t know. You’ll make fewer mistakes that way.
  • Similarly, we still have a lot of internal disconnects – I hear lots of tales of buyers notifying the logistics team a container they knew nothing about is arriving in Long Beach – that sort of thing.
  • We still struggle with “Total Landed Cost.” As we’ve written about before and resummarized in the Letter, a recent Penn State study found none of the 6 (large) companies studies used all size elements of a jointly defined Total Landed Cost model (though one was close). Perhaps amazingly, none of the six was really comparing expected TLC with actuals, for a variety of reasons.
  • Part of the Total Landed Cost issue is terminology. Our Gene Tyndall and others argue the correct term should be “Total Delivered Cost,” arguing too many only calculate the costs to get product to a domestic port. Lately, I’ve been thinking the term needs to be “Total Supply Chain Cost.” Even though Gene and others of course include inventory and other costs in Total Delivered Cost models, those terms have a very logistics feel, which may somewhat influence what goes into them.
  • I am going to write about this more some day, but we’ve always said supply chain was about the movement of materials, information and cash. The reality is, however, that for domestic supply chains, in my opinion the cash flows are really disconnected from the material flows. Not so in global logistics, where everything from letters of credit to currency swings to tax implications needs to be part of the formula in a much stronger way.
  • Few companies can know all there is to know about global logistics. So you have to pick your battles, and where to outsource.  I think a fundamental question is where you want to invest in people and knowledge to really become good in a country/region. Do you want/need to understand internal logistics processes, regulations, costs, carriers, etc. internal to China? Or South America?  Eastern Europe? These are key questions to answer. You can outsource, of course, and that is the right answer for many company-region decisions, but as Tyndall noted in a Q&A for the Letter, “Do not outsource management. Rather, outsource logistics operations, even some planning, and even some innovation – but keep management in house where it belongs.”
  • On the technology side, the good news is we are finally starting to see Transportation Management Systems that can handle full global through domestic in one platform. They will continue to evolve, but meeting customer demands for these capabilities has clearly been a catalyst for TMS leaders to deliver these integrated global-domestic solutions.
  • In the end, the real driver is adding complexity – times 10. I am still not sure whether the answer is to reduce complexity, or learn to master it, but many companies are somewhat overwhelmed, just keeping their heads above water.
  • Few companies in my experience have really developed a global logistics/supply chain “master plan” for strategy or technology. It has largely been reactionary.

Lots of challenges, but clearly some companies that are better than others. When you hear presentations from companies such as Payless Shoes, Texas Instrument and a few others on how they are managing global logistics, firms that have been doing it for two decades or more, you realize just how much there is to know.

If this topic is of interest, think you will enjoy the Letter and Resource page. Would love to hear your perspective.

What do you see as the primary challenges of global logistics and trade management? What separates the best from the rest? What is your company doing to improve? Do you have to “pick your battles” and outsource the rest? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

Want a printable version? Go to:


Dan Gilmore


On Demand Videocast

Blueprint for
WMS Success


Featured Megatrend:
Push to Pull

Watch Gilmore, Tyndall, Collins Discuss and Debate the Issue

View Supply Chain Megatrends Focused Web Page, Download the Executive Brief


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

July 9, 2008
Supply Chain Graphic of the Week - Supply Chain Software Maturity Curve

July 9, 2008
Supply Chain by the Numbers: July 9, 2008


The downward spiral on Wall Street continued throughout last week’s shortened session and our Supply Chain and Logistics stock index was caught up in the overall market’s slide.

In the software group, JDA fell another 5.5%.  In the hardware group, both Intermec and Zebra were again down for the week (5.1% and 2.4%, respectively). Within the troubled transportation and logistics group, CSX slipped 7.7%, followed by Ryder (down 5.9%) and Union Pacific (down 4%). 

See stock report.


Each Week:

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

Weekly On-Target Newsletter
July 8, 2008


New Life for AGVs in Distribution


Paper explores a new generation of AGV technology based on optical sensors and greater software intelligence that may just cause distribution professionals to take a second look.

Supply Chain InView
By Ann Drake

3PL Bids - The Good, the Bad, and the Only (Part 2)

Six Questions to Assess Whether your Outsourcing Relationship is On Track

Managing SCM Performance

By Kate Vitasek

How Good Is Your Supply Chain Data Quality? (Part 3)

Data Cycle Counts: You Track Inventory Accuracy - Why not Data Accuracy?


When was the first portable “wand” type bar code scanner introduced, which dramatically opened up the number of potential bar code applications?

A. Click to find the answer below


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Catching up as always this week on a variety of letters. Remember, feedback now is also available at the bottom of each article.

Our Feedback of the Week is an excellent letter trigger from our piece on Order Picking and Grinning from Tony Tyler, who offers some insight into pick face slotting. Bob Carver of Vargo also weighs in, saying existing order picking technologies were getting stale.

Tom Hall of VWR Scientific agrees with us that Supply Chain Software is Getting Better, while Yoav Reshef offers some additional thoughts on the Keys to WMS Implementation.

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 Order Picking and Grinning:

Slot choices should be performed dynamically rather than as a batch process.

To do this, place the picks by products in one or more look ahead scheduled cycles, usually to match the transportation schedule and transit times.

If you keep an inventory count by slot, you will know in which cycle you must replenish a slot.

Do not place a replenishment in the same slot, but determine how long, number of scheduled cycles, it has taken to empty the pallet or case rack and then adjust the position within a prioritized and commoditized slot list for that product according to its priority and handling characteristics. Select an empty slot according to the latest determined position in the list and direct the replenishment to that slot one cycle ahead of when it will be needed.

This produces the following advantages:

1. Every slot will be picked to empty. This will verify the inventory placed in the slot and remove the need for cycle counting.  Cycle counting is - in effect, a continuous process and the inventory is always self adjusting.

2. Dynamic slotting is continuously performed, reducing walk times and improving efficiency.

3. In the event of an incorrect receiving count, the picker who may have been requested to pick 4 to empty a slot, can only pick 2, but is directed to pick the balance at the slot that has been prepared with that product on the previous cycle. Hence, the count of emergency picks will be zero, provided there is any of the product in the building.

4. Using RF bar code readers, the picker and the WMS control system are in continuous communication so corrections to picking due to incorrect receiving counts can be inserted at point in the pick cycle beyond the pick which uncovered the shortage.

5. In the reverses case, when told to pick 4 to zero and there is product still in the slot, the picker can enter, balance X. This will adjust the original received case count on that pallet and, in many cases, correct for a shortage count on some other pallet that was received as part of the same shipment. This reduces claims and their associated paperwork; allows reprimands to the actual receiver (we used a financial deduction to the receiver and a financial incentive to the picker).

As the system architect of the custom Canadian Tire's DC control system, I installed this process in 1989 and it has been used successfully ever since.

Tony Tyler,
Tyler Data Processing Consultants, Inc., and
CEO, eF3 Systems, Inc.

More on Order Picking:

Excellent thoughts on order picking. I agree with your assessment that today’s conventional order picking strategies are often stale and based upon decades old technology.

I think you were getting close to a point that I’d like to make, but did not make it explicitly. We are finding that many of the order technologies used in the fulfillment process have been chosen wisely and are appropriately selected for their particular use. What we do find, however, is that they are not ‘used’ correctly.

For example, if an operator, regardless of picking technology, can pick 100 items per minute at peak, why can’t they pick 100 items per minute all the time? The answer does not often lie in the picking technology; it lies in how the picking technology is driven.

As stale as the picking technology may seem, real time order/pick processing software is even staler in many cases. I truly believe that wave-less order fulfillment’s time, particularly in the DTC environment, has come. It requires stepping way outside the box for many supply chain professionals, and truly combines the best of picking, packing and sorting processes. It demands a robust picking strategy, real-time labor optimization (not management) and a ‘thick’ WCS to work. It’s now being proven in the marketplace, in true ‘pull’ order fulfillment environments.

Robert D. Carver, Jr.
Vice President
VARGO™ Adaptive Software LLC

On Better Supply Chain Software

We're currently in the process of installing Manhattan's Labor Management software.  What impresses me the most about the company isn't the software, but their focus on change management.  Engineered labor standards are great, but if the supervisors and managers aren't reviewing the data every day and having conversations with their employees, the project is a waste.

Manhattan has not only provided consultants who help derive the standards and enhance the system to meet customer requirements, but they also ask key questions... "Are the supervisors posting their reports?"  "Are they having conversations with the low performers?"  "Have the HR policies been finalized as of yet?"  "Do the employees know what they're responsible for?"

In addition, on the front end of the process, Manhattan makes sure that the SOPs are correct, that the SOPs are communicated to the associates and that they are all following the SOPs (method observations).  And after the standards are engineered, there is a validation process, which involves heavy floor time for the supervisors.

In essence, I am agreeing with the point of your column.  In the case of Manhattan Associates, I can honestly say that their focus is on results.

They come in talking about how they can help you achieve a 20-30% improvement in productivity, and they show you how.

Tom Hall
VWR Scientific

On Keys to WMS Implementation:

More highlights:

  • Make sure you have a thorough physical inventory in place: terminals, barcode reader, printers, etc. Make head count and see you have enough. This hardware stops working easily. Make sure you have spares (on site or at vendor).
  • See all printouts (reports, barcode staples) are printed correctly, from the right printer!
  • Make sure there is a developing environment for the software.
  • Make a clear cut and make sure you know where is the “border” of the system.
  • Make sure you have mapped all the business process relevant to the implementation.
  • Make cross check between process and users. See that every user had instructions and training for all the process he is involved in, and make sure that in every step in each process there is a trained user.
  • Start with access personal (10-15%) to cover learning curve. These workers change rate is high and it will be easy to reduce the amount as the project stabilizes.
  • Think about a promotion system that is built upon the WMS data. Make sure it takes into consideration personal and group performance.

Yoav Reshef


Q. When was the first portable “wand” type bar code scanner introduced, which dramatically opened up the number of potential bar code applications?

A. 1971, by Norand Corp., later purchased by Intermec.

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