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March 19, 2009 - Supply Chain Digest Newsletter



Readers Respond: Xbox Live and the Future of Supply Chain

A few times per year, I take the easy road, and let SCDigest readers carry the First Thoughts' burden.

That’s my approach this week, especially convenient while having a fairly heavy travel schedule. The topic: my recent column on Microsoft’s Xbox Live gaming system as a model for how the supply chain of the future might look.

The quick summary: I was blown away when my kids started using Xbox Live versus traditional Xbox, and perceived almost instantly the possibilities for the approach to benefit the supply chain. Real-time connectivity, the ability to “date” before commitment as supply chain partners, instant voice and instant message communications, scorecards for game players, and more. My original piece is here: Xbox Live is the Future of Supply Chain.

Gilmore Says:  

Koh Niak Wu from the Singapore Institute of Manufacturing Technology sees the overall approach as a great weapon against the well-known “Bullwhip Effect."

What do you say?

Send us your Feedback here


We received an avalanche of Feedback on that piece, most of which we have on that same page/link. It was almost all very insightful and interesting. Most agreed with me; a few didn’t.

I was glad to see a number of people who responded similar to Kirk Bluebaugh of Hidden Valley, who wrote: “Wow! I use the Xbox system and never looked at the possibilities of networking you can achieve with a tool I use quite often. Great article!”

As I hope everyone understands, our main goal is to ask the interesting/
tough/provocative questions to get our readers thinking, fully aware we aren’t always right on any given topic.

Speaking of which, Lalit Panda, SVP SCM and IS of Harman Consumer Group, somewhat disagreed with me, writing that although he found the piece interesting, he had “a somewhat different point of view.”

“I think from a data and trend visibility point of view, there are enough tools out there to seamlessly share data. What is important in supply chain interactions is management by exception,” Panda wrote. “My concern with real time communications is getting overwhelmed with too much contact, especially in a situation where there are many vendors, and reacting too quickly and dynamically before a trend has really occurred.”

Tom Miralia of Distribution Technology also found the idea interesting, but in the end overblown.

“At first glance, I am thinking that the analogy, though intriguing, is pretty flawed in that in a game most players are focused on the one 'episode,' and in supply chain, we are likely conducting many, many 'episodes' or transactions simultaneously, in some cases across lots of time zones,” he wrote.

“Further, managing relationships across an extensive number of touch points at various levels of authority...there is a lot of opportunity for misunderstanding in the communications,” he said. “Nevertheless, if there were a 'lead' monitoring the whole network from 'above' with alert capability, yet only costing a penny a case (or less), that would be impressive!”

Kerry Enright, however, said that, “This is one of the most interesting and insightful supply chain articles I have ever read.” (Thank you!)

He added: “Isn't this how many advances are actually made - leveraging developments in other areas? The analogy is not perfect, as you say, and it is certainly some years away from happening in the real supply chain, but Xbox Live absolutely can serve as a model to which we should be using to craft the supply chain of the future.”

Similar sentiments from Azucena Tamez of Cardinal Health, who said that: “I loved your article, and I couldn't agree with you more! We need to start thinking outside the box and really pay attention to these new ways of living that are emerging around us. There is so much that we could do by adding some creativity to how we use the tools that are already available to us.”

Erick Barden says he sees the vision, but worries that some “generational barriers” may keep it from being realized for awhile.

“You could not be any more right. The Xbox live service is like no other. Is it possible to see that type of networking in the supply chain field?” he wrote. “I am not so sure, not because of technological restraints, but the current culture within the supply chain field. I cannot speak for all individuals, but at the age of 26 I am always the youngest at the table (by quite a few years)…being the first generation to see the transition from pen to mouse, I feel I am more open to significant changes similar to what the Xbox live service has brought to the video game industry.”

Koh Niak Wu from the Singapore Institute of Manufacturing Technology sees the overall approach as a great weapon against the well-known “Bullwhip Effect.”

“As we know, a major cause of the Bullwhip Effect is information latency, i.e., each upstream entity in the supply chain sees a slight increase in demand -- highly prominent in a forecast-driven environment,” he wrote us. “The mere notion that real-time data is communicated throughout the entire Xbox Live network seems to me that the crux of supply chain visibility (and thus a weakened Bullwhip Effect) can be achieved.”

Jon Fricke of the Snelling Transportation Group at High Road Partners had an interesting take – that this type of technology might actually push more people to a supply chain career.

“You may be able to better attract the top engineering talent that loves to play Xbox Live, but may be currently in Chemical Engineering!” he wrote.

Jon Kirkegaard of DCRA Inc. took the column in the right spirit, as a metaphor more than a specific recommendation.

“Your enthusiasm for connecting the supply chain participants is phenomenal, and the Xbox metaphor is good and fun,” he wrote, but added that the financial aspects of the supply chain need to be better considered. “Inter-enterprise commitments of dollars just cannot happen in real time. Communication can, but the important part is, after the communication, what is the commitment?”

Finally, we got a late email from Microsoft’s Paul Manikas, who says that much of what I saw in Xbox Live for the supply chain exists right now in other Microsoft business solutions.

“Microsoft offers the real-time communication capabilities that you highlighted (web conferencing, instant messaging, “presence”) at the enterprise level with our Office Communications Server (OCS),” he wrote. “We have combined OCS with Sharepoint and our Business Intelligence and database management tools to create a solution that specifically addresses supply chain collaboration and visibility.”

Hope you enjoyed these comments. Would welcome some more. What in the end I would just encourage is that if you are an Xbox Live player already, consider the general potential in a supply chain light. If you are not, find the nearest teenager you can to explain the system to you (it may take a couple of passes), and see if it triggers some excitement in you as it did me.

What’s your reaction to our reader Feedback on Xbox Live and the future of supply chain? Do we already have these tools, as some suggest, or is this really a potential leap forward? How could or should it work in practice? Let us know your thoughts at the Feedback button below.

Let us know your thoughts.

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A long overdue rebound on Wall Street from a 3-day rally brought some respite to investors last week.  Our Supply Chain and Logistics stock index was the recipient of some of that relief.

In the software group, Descartes climbed 19.8%, followed by i2, JDA, and Manhattan (up 13.6%, 12.5%, and 10.1%, respectively).  In the hardware group, Intermec gained 16.4% and Zebra was up 10.7%.  In the transportation and logistics group, Yellow Roadway closed out the week up 85.3%; unfortunately, the stock is, remarkably, still down 29.5% for the month.  Other double-digit gainers within the group were Prologis (up 25.7%), Ryder (up 21.8%), and J.B. Hunt (up 16.7%).   

See full stock report.

Each Week:

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-Distribution/Material Handling
-Trends and Issues

Weekly On-Target Newsletter
March 17, 2009 Edition

Thinking Outside the Box
by David Schneider

Supply Chain Perspective: Out of Stocks You Can't Handle the Truth! (Part 2)

Should Retailers Charge Suppliers Based on Fill Rate Performance?

THIS WEEK ON Distribution Digest


HolsteHolste's Blog: Are Automated Case Picking Systems Coming to a DC Near You?

>> Top Story: Consolidation is Coming - Very Soon - in the Materials Handling Supplier Market

What two companies were initially behind development of the SCOR model, which is now maintained by the Supply Chain Council, a non-profit industry assocation?

A. Click to find the answer below


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Catching up on a variety of Feedback this week. We received several nice letters on our annual No Blah, Blah, Blah column, which identified the best presentations we saw in 2008, and also repeats our "Audience Bill of Rights."

Our Feedback of the Week is on this topic from Manuel Acero of Columbia, who says SCM Blah, Blah, Blah is a big problem in Latin and South America, and that he plans to use our Bill of Rights for a 2009 conference! Nick Turner also weighs in on the subject with some addition recommendations.

We also print a couple of letters on our piece on using recessions as a time for supply chain transformation, and several short letters supporting our Materials Handling Editor Cliff Holste's concept for a "Poor Man's Sorter" in distribution.

Keep the letters coming! Comment on this week's articles.

Feedback of the Week - On No Blah, Blah, Blah:

Completely in accordance with Dan. And this is very bad in countries where we are still in the stage of beginning adopting SCM practices, really this is very dangerous. In Colombia and Latin American America, there is very much Blah, Blah, Blah too close to the topic in the conferences and the results are very dangerous to knowledge.

Most of presenters of SCM are theoretical or they are the people who have read the topic, but they have not lived through it. They want to gain prestige, often copying off books or magazines that they have translated from English for the Spanish. Here regrettably, any person who has been employed at logistics and who is withdrawn, turns magically into an expert in SCM.

For an uncoming event, we will have a SCM event here in Bogotá (Colombia) and we are going to apply the list of rights that you with many knowledge have shared with us.

Manuel Acero
Focus Chain
Integrated Supply Chain Management Advisor

More on No Blah, Blah, Blah

I love the "Audience Bill Of Rights." 

I would add to it a reminder that the slides are not the speaker's notes.

I also like point number 3. It reminded me of a manager I had who mentored many of my presentations and always used the following principles:

( 1) The title of the slide should be the point the slide is being used to make. If you want to say "RFID adoption rates are much lower than the hype suggests," then make that the title of the slide. This does ensure that the purpose of the slide is kept in mind all the time.

(2) The body of the slide should be evidence to illustrate or support the assertion being made.

(3) Bullet points and text-based slides are not allowed. (Or when being generous: If you must use them, then they should be fewer than 25% of the slides).

Nick Turner

Feedback on Recessions and SCM Transformation:

We are in this business of supply chain transformation. We see what you are seeing. We see that the business types are feeling the pressure to launch their initiatives instead of IT in the SAP world. We help companies look inside to take advantages of integrated best practices. Nice article. Good holistic sense of what is going on out there. Just like the football coach said every year when they started training…..this is a football…..We need to go back to the basics again in SCM.

John D. McMahon
The Q Data Group of Companies

I believe your article shows what is highly possible in the supply chain transformation.  Often during "good times," companies and individuals do not focus on how supply chain business can improve, but it takes "wake-up calls" like a recession to make companies make decisions and move forward with them. 

Also, it broadens the thought process of individuals and teams to think "out of the box" to really bring about improvements that are effective in multiple ways and areas.

Shelley Jordan
Synergy Solutions Group Partner

On The Poor Man’s Sorter:

We've been using this system for years in one of our facilities. We have two "loops" as we call them, each serving approximately 6 loading doors. Our bar coded label placed on the tote or case is read and directs the parcel to the proper loop. Besides the economical aspect, it also works well for those who have significant non-conveyable product to load as well.

Brian Etzler
Logistics Operations Manager
Do it Best Corp

FedEx uses this form of sortation every day in smaller down line stations. Except they use a straight line reversible belt and push the freight on slides into containers (cans). The freight that gets missed gets loaded into a large container or stacked at the end of the belt. They reverse the belt when they are done to capture all freight.

Bill Gilman

The semi-automation approach has long been championed as non-case picking even at large fulfillment centers at The driver is not just cost, but also performance, allowing orders to be picked and batched and packed in a steady work stream, so that the throughput time for order processing is shorter than that in a fully automated system that processes orders in batch.

Also, in China’s B2C fulfillment centers, even the conveyor belt system cannot be cost justified because of the relative low labor cost when compared to the capital investment cost. An efficient system can be set up similar to the graph in the article, with conveyor belts replaced by human porters and push carts.

Long Wong
Ex-Amazonian and China B2C Supply Chain and Fulfillment Expert


Q. What two companies were initially behind development of the SCOR model, which is now maintained by the Supply Chain Council, a non-profit industry assocation?

A. Consultant firm Pittiglio Rabin Todd & McGrath (PRTM) and AMR Research, in the mid-1990s.

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