This Week in SCDigest:
CSCMP 2008 Review and Comment
Supply Chain Graphic of the Week, plus more Supply Chain News Bites
SCDigest On Target e-Magazine
New Blog - Gilmore's Daily Jabs
Expert Insight - Sorting it Out: Sorting Completed Picks for the Smaller DC
From RetailWire: Penn Traffic Turns Buying Over to C&S
SCDigest Introduces "Distribution Digest"
Your Supply Chain Questions Answered! This Week's Question - Should Receiving be Counted as a Product Touch?
Trivia, Supply Chain Stock Index
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October 9, 2008 - Supply Chain Digest Newsletter

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CSCMP 2008 Review and Comment

I am just back from Denver and the Council of Supply Chain Management Professionals (CSCMP) annual global conference. Thanks to the many of you who have written with kind words for the daily video summaries offered by myself and Gene Tyndall. If you would like to catch any of those three broadcasts, you can find them here: CSCMP Video Reviews

Overall, it was a good show, though it didn’t seem to have quite the usual energy. That may have been at least partly the result of news of the latest stock market stumble we kept hearing each day.

The weather in Denver was beautiful, and the building right-sized for the 3000 or so attendees, once you figured out the somewhat confusing convention center layout.

Descartes Systems CEO Art Mescher received the Distinguished Service Award for his many years of thought leadership in the industry. Perhaps most notably was his work in the 1990s at analyst firm Gartner, where Mescher developed the incredibly influential framework of the “3 V’s” of the supply chain (visibility, velocity, and variability), among many other contributions he has made to the SCM discipline.

Network equipment giant Cisco Systems, as the only Green entrant, won the Supply Chain Innovation award for a new process for return/retired products that has dramatically reduced solid waste. That the Green entrant would win was a near certainty, I predicted, but I pulled for Cisco this year as I did last year for Motorola for being the only nominees without one or more 3PL, consulting or software partners listed as nominees with the real company.

Not surprisingly, there was a lot of Green emphasis in Denver, with a Green Supply Chain track and the topic also covered in many other sessions. A little too much so for me - am I the only one that is finding Green presentations getting a bit redundant? There was no track this year on RFID, though there were a couple of sessions on it in other tracks, including one that I am told had some interesting stories about use of RFID in manufacturing.

Gilmore Says:  
"Ulrich made a powerful case that exponential, game-changing improvements in technologies like computing power, nano technology, robotics and yes, RFID, will soon radically change our world and put many companies large and small out of business, while giving rise to new ones."

What do you say?
Send us your Feedback here  

From my own experience and talking with others, the Sales & Operations Planning track, run by Chris Moye of Alvarez & Marsal Consulting, was uniformly excellent. Transportation-related sessions in general seemed the best attended, as did sessions on study/survey results (people want to know what others are doing/what’s happening out there), and operationally focused presentations (people are always looking for the practical).

Below are some highlights from a few of the sessions I attended. We will detail these and several other presentations in more detail in our weekly On-Target newsletter over the next few weeks.

Christian Verstraete of HP gave a very interesting presentation on how HP’s Printer group in Europe uses the concept of different “supply chain pipes” linked with product lifecycles to optimize total supply chain costs.

A “pipe” is a different physical route, and for HP includes where the final postponement of the printers for specific country or customer requirements is performed. On a quarterly basis, HP looks at the respective costs of those “pipes” and where each product is in terms of its lifecycle and unit forecast. It then plans which pipe will be the most cost effective for each SKU for the next quarter. For example, at the peak of the lifecycle, postponement is actually often performed in Asia, because customers frequently order full container loads that make Asian shipping economical (versus doing postponement in Europe).

Sometimes, the determination of the pipe is actually made on an order-by-order basis. The cost analysis also includes a sophisticated consideration of inventory costs (“Inventory-Drive Costs”); that’s critical because the pipe with Asian postponement centers and ocean shipping direct to customers has the lowest labor and logistics costs but must be balanced against the need for the channel partner to hold more inventory as a result of longer order lead times.

Procter & Gamble’s David Mills gave a very good presentation on its use of new “demand sensing” technology. What is that, you may ask?

A “black box” of sorts (from Terra Technology) that takes a variety of daily inputs (not yet POS, but several other feeds of order and shipment data), and then performs a variety of calculations and “pattern recognition” techniques to create a detailed, daily forecast for the next 42 days. That updated forecast is used to drive production scheduling, short-term inventory planning, store replenishment, etc. With a reduction of safety stock levels of 10% and short-term forecast improvements of 30% in the pilot program, plus many other benefits, P&G is actually executing a “turbocharged roll-out” of the tool across the globe. (You can find a P&G case study on this technology at our Inventory Optimization Resources page).

I was struck at a session on taking control of inbound logistics in manufacturing at how uncommon this apparently still is in that sector (versus say retail). Logistics managers at John Deere, WMS (a gaming systems company) and baking products maker Continental Mills all described the early journey they were on to take control of inbound. In the case of WMS and Continental, nearly all the freight was simply bundled in the purchase price of the goods. In John Deere’s case, it picked up the freight bills, but it previously had little idea whether suppliers were really using its routing guides or not.

Key takeaways from that session: in addition to lower total supply chain costs, sell the benefits of greater visibility and early warning systems for potentially late supplier shipments to get support from manufacturing for the inbound strategy, and have your data ready to show suppliers the cost of non-compliance with routing guides.

Zeiss Vision used Lean techniques, including a whole new way to think about slotting (predictability of demand, not total volume, to drive ABC classification) to significantly improve results at a DC in Kentucky.

The Wednesday keynote by futurist James Ulrich was simply excellent. I know CSCMP wants attendees to stick around for day 3, but Ulrich should have been the day 1 main tent speaker.

We will provide additional details soon, but Ulrich made a powerful case that exponential, game-changing improvements in technologies like computing power, nano technology, robotics and yes, RFID, will soon radically change our world and put many companies, large and small, out of business, while giving rise to new ones.

For example, supercomputers are becoming so cheap that they will allow incredible new deployments of optimization software to make near real-time decisions much more frequently on the shop floor or distribution center. Ulrich cited an example of a retailer whose inventory deployment optimization run used to take 6+ hours. On a supercomputer, it now takes 17 seconds, and is run several times per day. RFID chips the size of dust particles are coming, as are a new generation of robots, etc.  

The message – get on top of what is going to happen in these areas right now, or you may go the way of the dinosaur in just a few years.

As always, I have a few thoughts on how the conference could continue to improve.

  • I don’t know if a real analysis would support me, but I sensed this year an overly strong “3PL-ization” of the conference. This is a condition that has actually been a problem for some local CSCMP roundtables over the years (too many 3PL members overwhelm the “user” participants), and could backfire if it gets worse for the global conference as well.

Just to make the point with an example, the three companies on the “Taking Control of Inbound” panel were all clients of the same 3PL, which also happened to have the chair of the track and the moderator of the session. The discussion, while good, would have been much better with a balance between those who took control of inbound themselves and companies that decided to outsource.

  • Let’s shorten the speaker bios and company overviews in the presentations. I don’t know if some edict went out about bios this year, but they were way too long in general, especially on panels. Combined with too many slides on the profiles of their companies by most presenters, and it simply took way too long in many sessions to get to the meat of the matter. Brevity is a virtue.
  • CSCMP should go back to the days in the 1990s when it made audio recordings of the presentations available (at a cost) right there on the show floor. I talked to many people frustrated that they couldn’t make one session of interest while attending another at the same time. While CSMPC sells a CD now with audio and slides of many presentations, it doesn’t come out for months. The interest in the material is highest at the conference – you lose interest in those sessions that you missed quickly after the event.
  • I’d vote for more “half tracks;" trying to fill every session slot over three days leads to overlap and reduced quality  

But, as always, I came away smarter and inspired, and look forward to seeing you in Chicago for CSCMP 2009.

Did you go to CSCMP 2008? What were your reactions? Any sessions seem especially good? How could CSCMP make the conference better? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

Web Page/Printable Version of Column

*** Upcoming Videocasts ***

Selecting ERP Systems for Mid-Market Companies

A Discussion on Understanding the Differences Between ERP Offerings and the Right Way to Structure an ERP Selection Project for Success

October 16, 2008


Strategic Supplier Management in the Supply Chain Series

Session 3 - Implementing Successful Vendor Scorecard Programs: How Do You Measure Up?

October 15, 2008


Blurring the Line Between Manufacturing and Logistics

An Integrated Approach to
Materials and Inventory Management

October 14, 2008


Exceed Consulting

This Week's Supply Chain News Bites Only from SCDigest

Supply Chain Graphic of the Week - Dissatisfaction with 3PL Technology Capabilities

Supply Chain by the Numbers: October 10, 2008


Despite approval of the $700 billion economic rescue package, relieved Wall Street investors were unable to shake their fears and repair their frayed nerves. As a result, our Supply Chain and Logistics stocks index results followed the broader market in its seemingly endless dive.

In the software group, Ariba led the descent of those with double-digit losses (-24.1%), followed by SAP (-20.6%), Descartes (-17.7%), JDA (-14.8%), Logility (-12.7%), and Manhattan (-10.8%).

In the hardware group, Zebra fell 12.8%.

In the transportation and logistics group, Yellow Roadway’s plummet of an astonishing 38.8% overshadowed its announcement of an official merger of subsidiaries Yellow Transportation Inc. and Roadway Express Inc. and a name change from Yellow Roadway Corp to YRC Inc.  Also within the group and suffering double-digit damage was Norfolk Southern (-19.7%), Union Pacific (-15.6%), Prologis and CSX (both -15.4%), Burlington Northern (-15.3%), CNI (-15%), J. B. Hunt (-14.9%), and Ryder (-11.1%).  

See stock report.

Each Week:

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

Weekly On-Target Newsletter
October 9, 2008 Edition

Gilmore's Daily Jabs

Supply Chain Comment: The Flexibility Imperative

In Tumultuous Times, Agility - and Visibility - Are Essential

This Week On Distribution Digest
  • Is there Hope for RFID in the Distribution Center?
  • Holste Can a Low-Cost Sorting System Work for Smaller DC Operations?
  • Video: Labor Management Systems Overview
Sorting it Out by Cliff Holste

Sorting Completed Picks for the Smaller DC

Can a Low-Cost Sorting System Work for Smaller DC Operations? Our Cliff Holste Says Yes

BrainTrust Panel Discussion Question: Is the Deal Between Penn Traffic and C&S Wholesale Grocers the Way of the Future for Regional Supermarket Chains?

Penn Traffic Turns Buying Over to C&S


Strategic Supplier Management in the Supply Chain Videocast Series

Session 2: Perfect Order Achievement: Think outside of the box for
perfect delivery of the box!



What was a noticeable attribute of a CSCMP session that featured a panel discussion on technology that was made up of Don Bowersox of Michigan State, Ralph Drayer (ex-Chief Logistics Officer at Procter & Gamble), Bill Copacino (now CEO of Oco and former head of Accenture's supply chain practice) and Joe Andraski of VICS and formerly Nabisco?

A. Click to find the answer below

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Featured Question and Answer:

Should Receiving be Counted as a Product Touch?

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Feedback continues to pour in each week – but we want more and, with this in mind, are pleased to announce our new “Fuel for Thought” program. If your response is selected as our Feedback of the Week, we’ll send you a $20 gas card. Must have complete name and company, and you can only win once every three months. Send in your Feedback regularly! Make it thoughtful if you would like to win.

We received many, many letters on our piece on End of a Software Era” vendor, on the announcement of the acquisition of i2 Technologies by JDA Software.

That includes our Feedback of the Week on this topic by Mike Friedman of Estee Lauder, plus another from Chris Gates of retailer New Look. We have another letter on our piece looking at “How Real is Green Supply Chain,” and one on our interesting piece on use of Dynamic Slotting in the DC.

Good responses all – have a look.

Feedback of the Week – On End of a Software Era:

Good article. I would have liked you to go into more detail on the points you made. I share a little bit of sentimental feelings about the loss to the supply chain community of these two companies as independent entities.

After watching these companies with some fascination from my chair in industry in the late 90’s, I decided to jump ship and work for Manugistics as an implementation consultant starting in early 2000. They were in the middle of a nice upswing in license revenues and everyone was wildly optimistic about the growth prospects. This was around the time that I2’s market cap was going bonkers and both companies were chasing all those crazy B2B and e-business deals for which they were never well prepared to add real or lasting value.

I think you hit the nail on the head when you said that Manu should have stuck to its knitting. Greg Owens did the employees of Manu and its customers a real disservice by recklessly chasing growth in areas outside the firm’s circle of competence. I knew things were headed south when they issued $250 million in debt to by Talus. Greg used to leave these rah-rah voice messages once a month to all the employees trying to fire us up. He always talked about the stock price and market cap which to me seems like a bad idea for any CEO.

As it turned out for me, I only worked there about a year due to family reasons, but I look back with fondness on the heyday of Manu. I think there is something we will not get back when all the marbles are with the big boys like SAP and Oracle. I always assumed SAP would eventually eat Manu’s lunch, but the unfortunate thing is that no matter how much time you give them, they never seem to equal or surpass some of the functionality in the supply chain planning applications.

Mike Friedman
Estee Lauder Companies

More on End of a Software Era:

As a successful European retailer of fast fashion product, we have selected an “small company” inventory optimisation product (from Quantum Retail), which the big players came nowhere near in terms of matching the innovative science or fit to our business model.

This would appear to be a niche – albeit a sizeable one – which I’m not sure could not be filled through organic growth if the company is smart enough, with a strong enough vision of where they want to go to. These innovators can do this as they can be nimble, they don’t have the baggage of legacy, and they can start from where the customer now wants them to be, not where the last release left them.

Chris Gates
New Look

On Dynamic Slotting:

Slotting optimization certainly is the way to go. Tyler rightly noted that the level of initial algorithmic work can indeed be taxing but with the benefit of a smoother and more efficient warehouse operation.

Depending on the granularity of the system, information visibility and mobility will play a crucial role in enabling dynamic slotting optimization. This would require quite a bit of integration work both with the WMS and the optimization engine.

A good starting point in understanding its benefits (however big or small) would be to carry out a simulation study -- this may provide us with a quantifiable insight.

KOH Niak Wu

On How Real is Green SCM?:

Good article. I see three areas of this current green movement:

1. Green that benefits a person individually, like better insulation in their homes that saves on utility bills. This type of Green will continue to be popular.

2. Green products and services that businesses push because they earn more profits with them. This type of Green will also have staying power.

3. Green that is politically forced on people for the supposed “good of the planet.” This type of Green can only survive in a robust economy. As we are seeing now, high fuel prices will cause all but the fringe elements to demand a move away from Green as it is politically defined today.

Blaine J. Painter
Logistics Analyst


Q. What was a noticeable attribute of a CSCMP session that featured a panel discussion on technology that was made up of Don Bowersox of Michigan State, Ralph Drayer (ex-Chief Logistics Officer at Procter & Gamble), Bill Copacino (now CEO of Oco and former head of Accenture's supply chain practice) and Joe Andraski of VICS and formerly Nabisco?

A. Each has been awarded CSCPM's Distinguished Service Award some time in their careers.

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