This Week on SCDigest:
Supply Chain 2015
Supply Chain Graphic of the Week, plus more Supply Chain News Bites
SCDigest On-Target e-Magazine
Guest Expert Insight - Giving a Voice of Order at Today's Best-in-Class Warehouse
Expert Insight - Supply Chain InView - A Good Foundation for Partnership
This Week on "Distribution Digest"
Reader Question - On Improving DC Labor Relations
Trivia  Supply Chain Stock Index  Feedback

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  Newsletter Archives October 22, 2009 - Supply Chain Digest Newsletter

Featured Sponsor: I.D. Systems

This Fall's Featured Videocasts

Pride, Passion & Profit:
The New Framework for Working Together in the Consumer Goods-
to-Retail Supply Chain

A Four-Part Series

Part 3: It All Comes
Down to the People

November 3, 2009

Next Generation Supply Chains: Eliminate Operator Scanning to Optimize Manufacturing and Warehouse Operations

November 5, 2009

Order Capture and Fulfillment
Best Practices - Setting the
Stage for Growth

November 12, 2009

This Week's Supply Chain News Bites
Only from SCDigest

Supply Chain Graphic of the Week: Interest in Automated Case Picking in Distribution is High


This Week's Supply Chain by the Numbers - Tesco's Carbon Footprint, Global Trade Management, Caterpillar Sales, JB Hunt Operating Revenue



Our Supply Chain and Logistics stock index had another extremely good week as the overall market continued to rebound.

In the software group, Manhattan climbed 11.2% to its highest level in over a year.   In the hardware group, Intermec gained 2.1%, while Zebra fell a very slight 0.4%.  In the transportation and logistics group, Ryder took the lead with a gain of 15.7%, followed by a train of rail carriers - Norfolk Southern (up 6.5%), Union Pacific (up 6.3%), CSX (up 5.2%), and Burlington Northern (up 5.1%).

See Full Stock Report

Each Week:

Global Supply Chain
Trends and Issues
Guest Column
by Scott Deutsch, Vocollect, Inc.

Giving a Voice of Order
at Today's Best-in-
Class Warehouse

Task Management through Voice Enablement - A Clear Voice in the Wilderness

Supply Chain InView
by Ann Drake, CEO, DSC Logistics

A Good Foundation
for Partnership

Using Solid Information and Realistic Expectations When Making Decisions


HolsteHolste's Blog: Interest in Automatic Case Picking is High Among Logistics Companies Who Are Serious About Improving DC Performance

Top Story: Groundbreaking New Report on New Automated Case Picking Technologies Released

Other News: More of the Same from Annual 3PL Study - but Will the Recession Serve as an Inflection Point?


Visit Distribution Digest



What are the seven "wastes" targeted by Lean?

Click to find the answer below
On Improving DC Labor Relations

Any recommendations or best practices regarding retaining quality labor at the lower levels?

  See our expert response.

Add your insight!

Supply Chain 2015

As some of you may remember, earlier this year I told SCDigest readers that I had signed up to do a presentation in the fall on “The Future of Supply Chain,” and at the time offered a few preliminary thoughts and asked for some help.


Didn’t get a whole lot of help, it turns out, and of course I spent the next couple of months doing precisely nothing until it started to get towards the end of summer, when I at last started to get busy on this.


I have now delivered my “Supply Chain 2015” presentation twice, once at the Materials Handling and Logistics Conference in Park City, UT, and more recently at the Georgia Tech Supply Chain Executive Forum in Atlanta. Feedback from what I can tell has been pretty good. I am delivering the presentation again in Chicago the first week of November.


I will repeat what I said in the first column, and that is that you cannot predict the supply chain of the future independent from your predictions about the world of the future. Will oil be at $50 per barrel or $250 by 2015? Your future supply chain will look at lot different depending on the ultimate answer to that question.

Gilmore Says:

"You cannot predict the supply chain of the future independent from your predictions about the world of the future."

What do you say?

Send us
your Feedback here

Ditto with global trade policies. Will “globalization” continue unabated, or will nascent protectionism and nationalism in some areas of the world gain momentum? Will a “carbon tariff” on imported goods radically change the offshoring equation?


I do not think enough companies really look at many of these key issues, and do scenario planning based on the different possibilities. You can’t change the world, but you can see how current supply chain strategies and networks might play out under different scenarios, evaluate the return from building more flexible supply chains, and develop plans in advance for how the supply chain should react depending on how things actually play out.


Another example: in my presentation, I took a simple look at what would happen if sales growth at Walmart’s US stores compounded at an annual of 6% through 2015 (it grew 6.8% in 2008, and Walmart clearly has some of its mojo back). I won’t go through the data here, but let’s just say that the cumulative growth over that period would be huge – and has to come out of someone’s else’s market share – maybe a lot of someone else’s. Will that happen? How will your supply chain change if it does? These are the questions.


As I also said earlier in the year, the first temptation is simply to predict a supply chain world that is more automated, integrated and collaborative. That’s how I started out, actually, but in the end, what does that really tell us? Clearly, this is the general direction, and I suspect will always be so. But I am not so sure that helps us out very much.


So, I forced myself to get more granular – to name 10 fairly specific things that are likely to occur by 2015. My filter was some combination of “most likely” and “most important,” though largely subjective in that regard.


With that, in very summary fashion, are the top 10:

  • A majority of companies will have reconfigured their supply chain networks: Many companies have supply chain networks developed for a different era. Fuel prices, green SCM concerns, virtualization and more will lead many to fundamentally rethink those networks over the next few years.
  • Supply chain planning and execution will start to blur: A topic we covered in detail in a major report, the need for response based on market demand and other factors is outstripping current planning cycles. Tactical and even some operational planning become completely intertwined with execution, causing changes in organizational structures, processes and technology. 
  • We see substantial drops in overall inventory levels: Inventory levels have remained flat for many years now. But the lessons of this recession - that maybe we can get by with less combined with supply chain simplification programs and new technology - really will drive step change drops in inventory levels by 2015.
  • Web-based supply chain software comes to dominate the landscape: I haven’t completely been on this bandwagon until recently, but by 2015, this is how it is going to be – which has many major implications.  More confident of this than about any other prediction on the list. Once this becomes the lead approach for almost all vendors, the shift will happen rapidly.


  • Green drives transportation collaboration: The logic of transportation collaboration and the financial benefits haven’t done it. The capacity crunch of 2005-06 almost did, but then that went away. Green will finally do the trick, and we will see much more cross company load-linking and even sharing of capacity between competitors. But does this commoditize logistics?
  • Visibility to everything, all the time: The technology is really here now to have it, and despite RFID’s current lack of direction, it will become very commonplace by 2015. Understanding what to do with this information is the real challenge. 
  • Common deployment of real-time performance management: Scorecards are rear-view looking; dashboards help you make decisions right now. A few companies have already developed these kinds of capabilities; they will be widely deployed by 2015.
  • Distribution centers will take one of two paths: Lean and un-automated (and very flexible), or automated to a level hard to imagine today. Again, something else we have written about in the past; see new Automated Case Picking (ACP) Report for more details. The robots are coming.
  • Supply chains focus turns to emerging markets: This is simply where the growth will be – perhaps explosively so. This will impact product design, pricing, logistics and much more. Those that get it right will have huge corporate advantage – as companies like Procter & Gamble smartly focus on “micro-logistics.”
  • Digitization increases impact on the physical supply chain: A tsunami wave of digitization is happening, dramatically impacting physical supply chains, often in not obvious ways. We all know that itunes is putting CD makers out of business, but that filters down to record stores and even producers of the plastic resins used to make CDs. Think the future is bright for watch and mid-level camera makers when you will have both in your cell phone? I have many more examples. Look forward on how your company – and your career – might be impacted by digitization.


That’s my list. It was fun, and as I have experienced, gets people thinking. Would welcome your comments, as always.


What do you think of Gilmore’s Supply Chain 2015 predictions? What would you add, subtract or change? Let us know your thoughts at the Feedback button below.

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Catching up on several letters this week. We received several letters on one of our supply chain graphics of the week that reviewed a new supply chain process model from the analysts at Manufacturing Insights/IDC.


That includes our Feedback of the Week from Bob Hamber, who asks a number of good questions regarding the model that we suspect even IDC hasn't fully thought through.


Former Unilever supply chain executive Bob Nardone also weighs in on the model.


We also publish a few pithy responses on our First Thoughts piece on The New Supply Chain Normal. View them all below.


Feedback of the Week - on New Supply Chain Process Model:


Excellent choice for graphic of the week.  I find it very helpful in integrating the many process/info management systems into a systems-of-systems cohesive whole.  I like your three suggestions, especially the second. 


The feedback loops are info signals like the existing black arrows are. One way to deal with the resulting busy chart would be to separate the system "blocks" and the information flow "arrows" into two drawing layers.  Either using an animated GIF that would cycle the info flow layer on and off, or having a button that would show or hide the info overlay layer, would allow the viewer to study the first level in its simplicity until ready to add the second level and its complexity.  


Having no experience with SCPM, I wonder if it might touch enough of the other systems that another drawing layer would help in representing it. Especially if you include the info signals/feeds from/to other systems.


The drawing mentions "data."  I like the "data - info - knowledge - understanding" paradigm.  Feedback is often at the information or knowledge level.  Most, if not all, of the individual system blocks are processing data into info and some into knowledge.  The diagram, even with a separate info layer, would be too busy to diagram and label the info and knowledge flowing between the blocks.  But maybe Manufacturing Insights already has, or will, make four subdiagrams focusing on each of the four super-blocks; these could then detail the info flow between each of the two to four blocks in each super block.  (If the overarching title block represents an info/mgmt system as well, then add one to the previous "two to four".)


The yellow "repositories" are interesting.  I wonder what makes these worth showing.  Are they more than databases?  Is history maintained? Any processing happening here?  Are there other "repositories" not shown,

but if shown would drive home some point I'm missing?  Again, another drawing layer (or part of the info layer) could prevent over-complexity of the basic diagram.  Or maybe only show them in the subdiagrams I propose above.


Three of the four superblocks have at least one system (block) integrating the two primary process/system blocks.  Is they're not scheduling software that spans and integrates factory scheduling and logistics scheduling that could/should be included here?  If I had more time, I'd look thru my references for some product or module that seems to fit.  But I'm at a disadvantage as I'm not clear on the scope of "logistics."  With only a military background (and a rather academic vice operational bent to boot), my concept of "logistics" is too broad to fit into a little box under scheduling.  I sense it has to do with transportation.  I would have thought by now, scheduling functionality would be common in TMS products, but apparently they still just focus on execution.  (But how do you get much value of managing transportation without smart scheduling?)  Where could I go to understand this diagram's connotation of logistics?  It is not one of Manufacturing Insights' Domain Focuses (Foci?).


Bob Hamber

One time modeler of warzone demand and supply cycles. The TLoaDS guy.

More on New Supply Chain Process Model:

I agree with your comments for improvements to the model.  I'm surprised though that the information flow from the Manufacturer to the Supplier and from the Manufacturer to the Customer is in one direction.


In a Demand Driven Supply Network, the Supplier Network should be responding to Market place information.  The information flow back to the manufacturer should be related to both the supplier's ability to respond and product flow (i.e., quantity and timing).  Manufacturers should be responding back to their customers with the same information.  This collaboration regarding Supply and Demand and the response to demand (supply execution) are at the core of a successful Sales and Operations Planning process.

Robert Nardone
Supply Chain Guidance LLC

On The New Supply Chain Normal:


A couple of additional observations based on my discussions with mid-size manufacturing and distribution companies:

Even more emphasis on total cost, the commodity price run up, then crash, then run up again has mid-sized firms looking at the cost equation.

A review of some of the LCCS decisions.  Transportation rate increases hurt a lot of these decisions, firms are re-looking at North America.  Mexico, in particular, may be the winner versus Asia.

Herb Shields
HCS Consulting

The pace of change continues to escalate and the variables are exploding. The supply chain world's new normal is rapid adaption to new norms in everything from raw materials and energy pricing, to transportation costs, to changing customer demands in an over-consumed populous. It is interesting to see this play out in other related functions. I recently saw an article in finance that said budgeting is dead and continuous planning takes its place. Clearly, continuous planning is now almost a must-have trait in the new normal supply chain arena.  

Tom Dadmun
Vice President

Great article!  We have been touting for some time that today’s economy has established a new norm: One that is defined by the expectation of fast deliveries in small, frequent, and unpredictable quantities. 


Backlogs will remain small, cash flows will continue to be tight, and planning will stretch already limited resources and ERP systems.  Long and complex supply chains will become an albatross that require significant change on both the strategic and tactical fronts. 


To be successful, companies must plan more frequently, collaborate extensively, and must find ways to simplify, consolidate, and drive speed throughout their supply chain. To complicate things, we are also seeing that suppliers in the Far East are starting to focus their attention on supplying their own markets and are becoming less concerned about the US.

Ara Surenian
DemandCaster Lean Demand Planning and Supply Chain Optimization

What are the seven "wastes" targeted by Lean?


(1)  Overproduction; (2) Waiting; (3) Transporting; (4) Inappropriate Processing; (5) Unnecessary Inventory; (6) Unnecessary/Excess Motion; (7) Defects