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Stephen Covey and the Supply Chain
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Expert Insight - Managing SCM Performance: Inventory Metrics, Part 3: Shrinkage - - Into Thin Air
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April 9, 2009 - Supply Chain Digest Newsletter

FEATURED SPONSOR: Wright State University - Raj Soin College of Business


Stephen Covey and the Supply Chain

As I have written before, I actually believe now is a fantastic time to rethink and rebuild your supply chain strategy.

Obviously, there are some companies (e.g., automotive OEMs and their long suffering suppliers, some retailers, and others) for which it is, or has been, just a game of survival. We can put them in a separate category.

Most others, understandably, have been in cost-cutting mode, sometimes in the extreme, even if the overall survival of the company is not really in doubt. There are a lot of distribution center consolidation projects going on right now, as one of just many examples of the kinds of things companies are doing. In fact, I recently spoke to one book publisher that was cramming three former DCs into one building and, for now, was going to operate them all independently, with their own footprint in the DC, warehouse management systems, etc., I think because they had immediate opportunities to get out of the other two leases.

Gilmore Says:  

Whether it’s in our personal lives or the business, the “urgent” tends to crowd out the “important.” "

What do you say?

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Amidst all that though, I really believe it is also a time to really think through your “supply chain of the future.” Or maybe just your “distribution center of the future,” or whatever your neck of the woods happens to be.

Another view of the same thing: I recently heard legendary strategy guru Michael Porter of Harvard say “Now is the time to do the really hard things that you just haven’t been able to get done before.”

In other words, a lot of the things that seemed like barriers to making something happen in the past may not loom so large right now. Just as importantly, the “change management” issues that are key to the success of any initiative, and which have killed or weakened many of them, may be a lot more manageable in the current environment as well.

I believe it was in the early 1990s that Stephen Covey wrote his famous book on “The Seven Habits of Highly Effective People.” I was early in my career then, and for those that started out later than that, let me just say that the book and Covey himself were everywhere for a few years. Many companies bought related training materials, etc. We got “Seven Habits of Highly Effective Corporations, and many other permutations of the first book.

It is a good work. Though, I must say that I don’t specifically remember a single one of the seven habits; I hope I am following at least a few of them.

But what almost everyone exposed to the book remembers is this: the urgent drives out the important.

Covey had a famous quadrant with two dimensions: urgency and importance, each high and low. As you can imagine, at whatever level you are, things that are both “urgent and important” get high attention and action, as they should. The exact opposite is true for “unimportant and not urgent.” If you are working there, something is wrong. Or, if it has to be done, that effort is obviously a candidate for process re-engineering and outsourcing.

It’s the other quadrants that cause the problems. Whether it’s in our personal lives or the business, the “urgent” tends to crowd out the “important.” The “urgency” makes us devote time and resources, even if the issue itself is really not that impactful.

The real key, Covey said, was disciplining yourself to focus on the things that are important but not urgent. In both our business and personal lives, and the “lives” of companies themselves, we tend to simply put off items in this quadrant.  

It is not hard in either personal or business situations to think of many examples of important, but not urgent, needs that don’t get addressed in a timely fashion – or maybe at all. In the supply chain: SKU rationalization, network redesign, activity profiling in the DC, routing guide compliance, etc.

What I haven’t seen much written about in this context, however, is the role of your boss. Often (usually?) what is “urgent” for you is what is at the top of your boss’ current agenda, whether that’s the CEO, the VP of Supply Chain, or the distribution center manager.

So, whereas in our personal lives we might have more direct control over putting a focus on what is important but not urgent, in our business lives, often it is someone else who largely dictates our current focus. Often, we in fact believe that what is urgent to the boss is in fact not really that important at all in the bigger picture. Not that that is going to change anything. Been there, done that. I am sure I have had at times a similar effect on the people who reported to me.

Given conditions now, we probably have an increase in things that are both urgent and important. Sony, for example, citing not only overall slowdown in consumer spending, but also the “commoditization” of consumer electronics, is at last taking real action to spur its “sluggish” supply chain.

"We have a weak supply chain, we don't have common procurement, and we need to get that done. The factory organizations need to be rationalized,” CEO Howard Stringer recently said.

Regardless, I would just argue you should be using this time in part to tackle the tough things you know should be done, but you haven’t made happen yet, and to look at how what changes you can make that will not only reduce costs now, but give you a better platform and increased performance in the future.

“Urgency” right now is down with lower volumes and companies playing everything safe. Use that to focus on the important. Recovery is really not that far away.

Let us know your thoughts.

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April 14 , 2009

Part 3: Transportation
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Global Order Management
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April 29, 2009

Why Leading Firms are
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***Transportunities 2009***
On-Line Expo & Conference

April 21st & 22nd, 2009
10:00 a.m. - 4:00 p.m. CST
(Both Days)

This Week's Supply Chain News Bites Only from SCDigest

Supply Chain Graphic of the Week: Growing Sophistication of Supply Chain Dashboards

This Week's Supply Chain by the Numbers - Rail Shipping, Toyota, Goodyear, Unilever


Overall, it was another good week on Wall Street with our Supply Chain and Logistics stock index still on the road to recovery.

In the software group, JDA was up 8%; however, Manhattan and Ariba were both down (9.1% and 6.2%, respectively).  In the hardware group, Intermec climbed a very respectable 9.7%, and Zebra was up 2.4%.  In the transportation and logistics group, Prologis soared 35.3%, Yellow Roadway continued its rebound (up 19.9%), and Ryder was up 11%.    

See full stock report.

Each Week:

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

Weekly On-Target Newsletter
April 7, 2009 Edition

Guest Column by
Mike Gregory,
Kurt Salmon Associates

Creating a Performance Culture in Supply Chain and Logistics

Companies Need to Continually look Beyond Costs to the Multiple Factors that Drive a Dynamic Work Environment

Managing SCM Performance
by Kate Vitasek, Supply Chain Visions

Inventory Metrics, Part 3: Shrinkage -- Into Thin Air

Just where does that Missing Inventory Go? Here is the List of Most Common Culprits

THIS WEEK ON Distribution Digest


HolsteHolste's Blog: What is the Relationship between Material Handling System Performance and Actual ROI?

>> Top Stories!: The 10 Indicators You May Need a Multi-Carrier Shipping System
>> Shippers Dodge a Bullet, for Now, as Fire Marshals Group Tables Wood Pallet Classification Changes

Gilmore: Fred Berkheimer of Unilever Hangs 'Em Up


What is noteworthy about the Code 39 bar code symbology?

A. Click to find the answer below

Have supply chain or logistics-related questions you need answered?
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How to Calculate Discount for Customer Freight Pick-Up?

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We received a number of really great letters on our piece on Do Companies Often Limit Goals When Implementing On-Demand Transportation Management Systems?, which asked if on-demand implementations are really inherently less expensive, or is the scope often just less ambitious than traditional TMS projects.

That includes our Feedback of the Week from Lori Kesten of UTI, who says on-demand is probably a little less expensive, but not by that much. Stan Hirschman of Sterling Commerce disagrees, saying there are a number of implementation benefits to on-demand, while Jess Porter of NALC Corp. says you need to focus on value, not cost.

You can read all these and more below.

If you are interested in this topic, be sure to join us at the Transportunities 2009 On-Line show and conference April 21-22, where speakers and exhibitors will be covering TMS and much more.

Feedback of the Week - On "Are On-Demand TMS Implementations Really Less Expensive?"

I would be willing to bet if we compared the cost and time to benefit of 10 on Demand TMS implementations to 10 similar in scope, apple to apple - Traditional TMS implementation, On Demand would come out ahead - but not by much.

My experience indicates the real reason companies move forward with an On Demand TMS is related to how a company wants to buy the system and IT support. Treating the system like an expense (vs. Capital) and getting on the IT team's 'list of things to do' is just easier.

David Schneider is correct: all the work related to getting the TMS up and running for your environment still has to occur, regardless. I also agree with Greg: it is hard to compare one company's implementation experience with another unless you really understand the variability in scope.

The differences in these tools still remain, regardless of deployment options, significant in my opinion. It is hard to know what the outcome of a traditional implementation would have been for someone like Pep Boys, given they won't go through that process.

As for the consultants comment about 'waking away' because there are just too few dollars: I suspect that is true about all system implementations. Those big $$$ days are over across the board.

An organization's willingness to make change and transform the way they do business seems like a smaller mountain to climb if they do not have to commit to reaching the summit. Paying as you go feels less painful.

As a rule, I think On Demand is less costly and a little easier to get up and running.

On the other hand:  On Demand is less flexible by nature and people don't tend to commit to really getting the most out of something they are not heavily invested in.

So there is your trade off.

Lori A. Kesten

More On "Are On-Demand TMS Implementations Really Less Expensive?"

Having worked with both conventional and on demand TMS applications, I can attest to the very substantial implementation speed and cost advantages offered by on demand.

Managers of on premise TMS installations often underestimate the difficulty of establishing trading partner relationships with carriers and suppliers. Even smaller shippers typically work with over a hundred carriers, particularly if they use multiple shipping modes.

Larger on demand TMS providers bring collaborative networks containing thousands of trading partners already enrolled and trained on the system. Since only limited internal IT resources are required to connect and maintain the system, transportation managers can control their own fate without having to vie for priority from their IT departments.

Single instance, multi-tenant architecture requires that full featured, on demand applications be highly configurable. Determining the optimum configurations for your organization is critical to any successful on demand enrollment. Setting these configurations, uploading carrier contract information and establishing routing guide rules are typically the most time consuming tasks. Consignee location information can be dynamically built as orders begin flowing through the system.

Multi-billion dollar companies have successfully enrolled on demand TMS systems within months, some even converting their entire company at once in a 'big bang' mode. Consultants generally 'run the other way' because high-caliber, on demand TMS applications and skilled enrollment teams render expensive consulting services unnecessary.

Additionally, frequent and automatic system updates keep users equipped with latest technologies and informed of industry best practices. Upgrades are incremental; they occur without the major disruption and expense typically associated with on-premise version upgrades required every few years. Because on demand applications can be disconnected as easily as they are can be implemented, on demand providers are compelled to constantly maintain and continually develop their products.

Stan Hirshman
Sterling Commerce

The main reason implementation of on demand TMS can become time and finance consuming is that larger companies tend to demand enterprise-wide, fully-customizable solutions.  A wiser, quicker and less costly solution would be to implement site-by-site or limited functionality, learn from that implementation and keep moving up.  Granted, enterprise-wide functionality would take time for a large organization, but the exercise would be much more value-added, and the ultimate cost would be much less – from the perspectives of cash flow, total cost of ownership and time to completion. 

And the true value of TMS – more efficient transportation management – would much more likely be actually realized.  Big companies think and act big.   Real value comes from effective utilization by the front-line users.

Jess Porter
NALC Corp.


Q. What is noteworthy about the Code 39 bar code symbology?

A. It was the first "alpha-numeric" bar code (versus, for example, the all-numeric UPC and earlier symbologies). It was developed by Intermec founder Dr. David Allais in 1974, and remains popular in many manufacturing applications, such as the AIAG label.

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