This Week on SCDigest:
CSCMP 2009 Full Written Review and Comment
Supply Chain Graphic of the Week, plus more Supply Chain News Bites
SCDigest On-Target e-Magazine
Guest Expert Insight - Effective Mitigation - Key to Survival of the Fittest!
Guest Expert Insight - Achieving Bottom-Line Sustainability with Packaging Optimization
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This Week's Supply Chain News Bites
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Supply Chain Graphic of the Week: Johnson Controls Inventory Dashboard


This Week's "CSCMP 2009 Edition" Supply Chain by the Numbers - Intel Atom Chip Supply Chain Costs, Packaging Optimization at Wal-Mart, Transportation Analytics Technology at Clorox, Traveling by Buyers at Pier 1



Our Supply Chain and Logistics stock index continued a general upward trend last week, following the same overall trend of the broader market.

In the software group, Manhattan climbed another 8.3% last week to its highest level over the past year.  In the hardware group, both Intermec and Zebra were up slightly – 1.5% and 2.1%, respectively.  In the transportation and logistics group, Yellow Roadway gained another 9% last week.  Also within the group, Prologis continued on a steady path of recovery (up 7.5% for the week).

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Effective Mitigation - Key to Survival of the Fittest

Keeping Risk at Bay with SCRM, Part 3 - Steps 5 & 6 - Mitigate & Sustain

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Achieving Bottom-Line Sustainability with Packaging Optimization

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Holste's Blog:
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Top Story: Getting Logistics Asset Lifecycle Management Right

Other News: Wood Versus Plastic Pallet Battle Increasingly Focused on Green Supply Chain, as iGPS Lawyer Aggressively Pushes Plastic to Government Agency


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CSCMP 2009 Full Written Review and Comment

Just back from Chicago and CSCMP 2009, and as always, below is my review and comment on this year’s event. Thousands of you have already watched our daily video reviews this week, which you can also find here: CSCMP 2009 Day 1, Day 2 , and Day 3 video reviews.


The crowd was down this year, at about 2500 versus the 3000 or so that CSCMP has had the last couple of years. But every event is having attendance problems, and all things considered, this year’s number is pretty good. I heard several stories of companies that used to send more people, but this year approved a much smaller contingent. That means the total number of companies coming was probably closer to the recent norm than the actual attendance numbers.


In 2008, it was hard to focus on the supply chain while the financial system was crashing all around us (Bear Sterns collapsed that very week, as the stock market cratered). Nothing like that this year of course and, in general, the overall economic mood was cautiously optimistic.


For the first time in a while, sessions were 90-minutes long this year, versus the 60 minutes of the past few years. I suspect the drivers of that change were some feedback about the conference having too many sessions lately, and expectations that attendance numbers would be down. However, I would encourage a return to shorter sessions (and fewer “tracks”), first so that you can get in one more session each day, and second because the sessions that took the whole 90 minutes really started to drag in the last third, from what I experienced.

Gilmore Says:

Kraft is now highlighting the transportation savings it can jointly achieve with customers, and its impressive technology, to drive additional volumes with its retail channels"

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Before reviewing key sessions, a quick “shout out” to all companies that gave presentations this year, but especially to Coca-Cola, Kraft, and Intel, each of which spoke at a minimum of three sessions. These industry events just don’t work without that type of practitioner contribution – we all owe them our gratitude. On the other side, The Limited Brands, which has been perhaps the most consistent public contributor of SCM insight (thank you) over the last 10 years or more at these types of events, was absent this year, unless my review of the program guide was faulty. Hope to see them again soon.


For the first time in awhile, the Day 1 key note speaker was a true supply chain professional, that being Gary Maxwell, Sr. VP of International Supply Chain for Wal-Mart. The key message – you don’t need to be and, in fact, often shouldn’t be“world class” in different markets around the globe. You instead need to be “best in market,” scaling the supply chain and automation to each market’s needs, culture, labor and land costs, etc. He implied that some Wal-Mart competitors were, in fact, investing too much in automation and developed economy supply chain practices in many markets. In my view, this “micro-logistics” concept will be a key theme for the next decade.


I loved the presentation by Jim Kellso of Intel on how it utterly re-invented its supply chain for a new, much lower cost chip (the “Atom”). A supply chain cost of $5.50 works for a chip with an ASP of $100, but not with one that is priced at $20.00 heading towards $10.00. The early insight – incremental improvement of the existing supply chain would not get SCM costs (largely inventory) down to the needed level of $1.00 or so per chip. Intel had to start from scratch, throw out all of its pre-conceived notions, and focus solely on hitting that cost target.


The result: a change from a largely make-to-stock approach with an 8-9 week cycle time to a make-to-order model with a two-week cycle time and fixed orders (versus the multiple order changes that occurred in the existing model). Inventories are down dramatically, and need for distribution processes substantially reduced. While the opportunity was there all the time, it was the new cost imperative that drove the change.


John Wooten of Clorox gave an interesting presentation on how it now rigorously compares actual lane-carrier costs versus what the results should be based on carrier bid optimization processes and resulting contracts. While there will inevitably be some “leakage,” for a variety of reasons, for many companies, that can be as high as 10% or even more. By using a transportation “Business Intelligence” system to compare actual versus expected, Clorox has reduced its leakage to just 1-3% each quarter, saving millions.


While on the topic of transportation, Michael Cole and Kelly Rae of Kraft Foods gave a presentation on the company’s adoption of new TMS and yard management system (YMS) technologies that, at one level, was nothing that new, but from another perspective, really was.  First, it highlights how much more advanced today’s Transportation Management Systems are versus those that are even 5-7 years old. Second, Kraft just may be the most aggressive and successful practitioner of “continuous moves,” which, in fact, has been something of an urban legend in transportation circles.


Kraft is now highlighting the transportation savings it can jointly achieve with customers, and its impressive technology, to drive additional volumes with its retail channels. I loved its focus (and resources) on “Collaborative Transportation Engineering.”


I am pleased to say my own presentation on “Integrated SCM Planning and Execution” had a literally full house of some 150 attendees. Key message: integrated planning and execution is now becoming critical and a “next big thing,” and in the next 3-5 years, operational and some tactical planning will start to blur with execution processes as we move to “sense and respond” networks. See SCDigest web site to download the Chief Supply Chain Officer Insights report.


Tan Miller, now at Ryder University, but until just recently at Pfizer and then Johnson & Johnson via acquisition, gave an interesting presentation on how he led development of a logistics Decision Support System (DSS) that I must say sounded quite impressive – and, in fact, is something I have proposed for years. It is part advanced planning system, part unique approach to providing decision support that few logistics managers have. Quick example: the DSS modeled receiving, storage and shipping capacities at each DC, and regularly compared those capacities with future forecasts to highlight potential DC issues well before they occurred.


There was so much more at the conference, but that’s all I have room for here. More detail is available on the daily summary videos, and we will be publishing individual articles on many of the sessions in SCDigest On-Target in the coming weeks.


As always, I am compelled to offer one suggestion for CSCMP and CEO Rick Blasgen, and that is to make the process for selection of track chairs and individual presentations more clear and transparent. I heard a number of complaints about this in the weeks leading up to and at the conference, and I think those complaints have merit. We call for transparency and process consistency in our supply chains, and we should, therefore, expect the same in the industry’s premier conference. How this really works is, frankly, something of a black hole. Let’s make it more open and consistent.


But I had a great time in Chicago, and the quality of the presentations I went to was quite high. As always, I will be in San Diego for CSCMP 2010, and hope to see you there.


Did you attend CSCMP 2009? Why or why not? If yes, what were your thoughts on this year’s conference? What sessions did you find most valuable? Let us know your thoughts at the Feedback button below.

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We received a number of nice letters on our piece on Lessons from the Greatest Supply Chain Disasters, which drew some observations from our previous list of the top supply chain disasters of all time.


That includes our Feedback of the Week from Bob Forshay of Transformance Advisors, who offers some additional thoughts on our recommendation to avoid hard deadlines on SCM software projects.


You will find that letter and several other good ones on this topic below.

Feedback of the Week - On Lessons from SCM Disasters:


Some thoughts about hard deadlines in technology implementations.


I suspect no organization can function well on its own good intentions with multiple, and often competing, business milestones, which generally requires a very firm plan for implementation deadline. The organization's own culture will ultimately dictate the tone of communication and hardness of deadline.  If a firm has a history of slippage, and more do than not I believe, then a hard date is one that is set, cast and carved to be firm - with the statement that nothing is sacred, and if the right conditions surface, is changeable for the right reasons.


All that said, the firms that plant their flag around a firm date and have not also adequately resourced and prepared are in for more than a few battle scars.  The folks in the trenches are the casualties and many do not survive even if the firm does.  We don't hear about these.  We only hear about the general pain the firm self inflicts in reaching a firm date.  Often the human capital battle is lost even if the war is won for the firm.  One of the measures of successful implementations might need to reflect the turnover of talent post-implementation for reasons other than opportunity.


My final thought is that all the above is consistently a function of executive leadership and vision.  As your article notes, it is usually not about the technology so much as execution, which comes down to leadership and choices.  I bet anyone involved with scheduling a space shuttle would agree.  The date (time/location) is firm but... when the landing site is in bad weather (too risky at that time), an alternate choice is made for the right reasons.



Vice President

Transformance Advisors

More On Lessons from SCM Disasters:


Good article - you won’t get feedback like that from a systems provider. 


I would add two items to the list of countermeasures against disaster, firstly - make sure you have goal alignment with all the internal and external players in the project.  It may take time and may lose some of the bells and whistles that were promised, but it is well worth it.  Secondly - try and make sure you work with people you trust and, again, if you don’t trust them, find someone else, and if you don’t know if you trust them, take the time to find out!


Andrew Downard

Managing Director

AD Supply Chain Group Pty Ltd

Avoiding supply chain disasters is quite a topic.


I think a fact to keep in mind is that, at its essence, supply chain measurement is essentially an alternative measurement of current and future business performance.  Thus, the capital budgeting prioritization of a supply chain project should be based on these measurements, and in the project/program management personnel well versed in business value.  Don’t allow GAAP or other manipulated accounting to fully measure benefits.    


At the roots, measurement should be based on clear and direct inventory turn increases, balance sheet reduction, cash flow improvements (order-to-cash cycles) and, in many respects, enablement of new or newly profitable business.  If there is time, and if CFO types demand it, yes - reconcile these measurements back to your company's accounting standards - but don’t base them on, or limit them to, accounting measurements.


If these concepts are the first and foremost in the selection and prioritization of projects - NOT some outside influencer trying to justify “some” effort by slapping a “supply chain” label on it  - then you and your organization will create initial, fast and sustainable value.   However, even ONE distraction from a non-value add effort labeled supply chain can blow your resources and then subsequently dilute the value of what supply chain solutions mean to you and your business success – that may take years to recover from.   This is why your supply chain project leader must be an effective cash flow-grounded business leader with direct communication to company decision makers.


Jon Kirkegaard


DCRA, Inc.

Great article and dead on!


We learned some painful lessons when we implemented our ERP system in 2007.  We did the big bang (bad); we set hard and fast deadlines (bad and delivered less functionality than we paid for); we were the beta for the software (disastrous outcome, albeit, we worked through it, but expensive and arduous repair process); we ignored the warning signs (accounting outvoted the SCM dept on software choice).  We will not make that same mistake when implementing Master Planning.


Kevin Hampton




How many Distribution Centers does Wal-Mart manage internationally?


About 140, according to Gary Maxwell, Sr. VP of International Supply Chain at Wal-Mart, in a keynote presentation at this week's CSCMP 2009 conference.