This Week on SCDigest:
Trip Report: St. Louis CSCMP Roundtable Seminar
Supply Chain Graphic of the Week and Supply Chain by the Numbers
New Cartoon Caption Contest for March 15, 2010
SCDigest On-Target e-Magazine
Expert Insight: Churchill Leadership Series Part 1
Expert Insight: Your Control Tower -- On Demand
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Supply Chain Graphic of the Week: Trucking Failures Continue - Which Could Raise Rates

This Week’s Supply Chain by the Numbers for March 19, 2010:
Procter & Gambles goes for a Billion More; US Exports Stymied by Logistics; Frito-Lay Planograms for Success; How Many Different Supply Chains do you Have?


New Cartoon Caption Contest

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Each Week:

Global Supply Chain
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BSI Supply Chain Security Solutions

What Are The Next Steps For Your Program?

Expert Insight:

Behavior 1 -- Build a Strong Organization of Capable People

by David K. Schneider


Churchill Leadership Series:

Behavior 1 -- Build a Strong Organization of Capable People

Expert Insight:

Your Control Tower -- On Demand

by Greg Johnsen

Your Control Tower -- On Demand

HolsteHolste's Blog: Maximizing Your Trade Show Experience

Top Story: New Distribution Complexity Calculator Beta Version Released
Top Story: When Building a New DC or Leasing an Existing One, Many Factors to Consider in Terms of Physical Design

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Reader Question: Does a detailed count of every carton received from suppliers to our manufacturing plant make sense? Can we implement an auditing plan?

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About how many licensed freight brokers are there in the US?

Click to find the answer below
Trip Report: St. Louis CSCMP Roundtable Seminar

Just back from a day at the Council of Supply Chain Management Professionals (CSCMP) St. Louis roundtable meeting, again courtesy of Mark Baxa of Monsanto; it was their annual full day seminar and exposition, and I was joined by a number of excellent speakers throughout the event, the highlights of which I thought were worth sharing with you.


Roger Woody, CSCMP chairman and supply chain exec and university teacher, kicked the day off with a short talk that offered one sobering observation: based on his travels, Woody said that right now, developing economies in Asia, Africa and elsewhere are no longer looking to the US and Europe as the models for their path forward, but rather India and China. To an extent, that is inevitable and not surprising, but it is also reflective of the efforts India and China are making to court those countries and do business there.  The US and Europe better understand these dynamics and get back in the game.


He also reported that fellow CSCMP board member Rick Jackson of The Limited Brands noted at a recent meeting that when it came time for the retailer to costs last year, as virtually every company had to do, the executive team recognized this involved strategic decisions that would affect the future of the company for years.


It wound up with a plan that encouraged staff members to take some unpaid personal time off at various periods, rather than resorting to talent-depleting and morale-killing mass layoffs. It has worked out well, Jackson said, and better positions The Limited Brands for the future versus the alternative approach. Woody also noted that in running, bicycling and other sports, the time when the leaders are often overtaken is “on the uphills,” and apt analogy for thinking about SCM strategies in these economic times.

Gilmore Says:

"Ralston has largely eliminated the freight bid process. While it uses a variety of data points to ensure it is getting competitive rates, it hopes to operate in a “one bid and done” mode with its carrier partners."

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Jim Butts, Sr. VP of Transportation at CH Robinson, offered a number of interesting comments, especially with regard to supply chain innovation. First, however, he stated that from his perspective the companies that have survived the recession best generally had four attributes: highly variable cost structures; cultures that focused on being very close to customers; strong, active supply chain leadership; and the ability to embrace change more so than competitors.


Butts stressed that innovation in both products and a company’s supply chain is simply beyond essential for success today. I really liked his point that while continuous improvement programs are all well and good, if you are not a supply chain leader than a focus primarily on continuous improvement will likely keep you mired in that laggard position. Only innovation and transformation can change a company’s place in the pecking order.


However, supply chain innovation is a concept that is often difficult to define or grasp, and Butts said that “many companies struggle to get there” in terms of building an innovation culture. He said he often sees supply chain leaders that preach innovation themselves, only to see the concept wither in practice as mid-level managers strongly discourage innovation for a variety of reasons.


A supply chain organization needs to be willing to accept some risk and understand that there will be some early failures with some innovations – if the innovators are sanctioned/fired over this, the innovation culture will never be built. Companies also need to measure how much time they really spend on innovation and set some specific targets for what that level should be. Failure to innovate will inevitably lead to a loss of competitive supply chain position over time.


Ken Lehman is VP of Logistics at Ralston Foods, a spin-off of Ralston Purina (after it was acquired by Nestle) that was primarily a private label manufacturer of cereals, but saw its world change dramatically with the purchase of the larger Post cereals brand from Kraft. The logistics organization is one of just a few “shared services” between the very independent business units (five in all), which is especially interesting because the private label division and Post are in most respects market competitors. Yet, they are usually delivered on the same trucks from Ralston distribution centers, and the company pursues a strategy that says deliver the lowest total supply chain cost – even if that penalizes one division for the sake of the whole. Lehman said that is often a tough but necessary sell.


Ralston has specifically decided to go a more collaborative route with its carriers. It cut its carrier base by some 50% awhile back, partly under the theory that the company “wanted to know its carriers a lot better,” Lehman said, “and to do that, there can’t be too many of them.”


In this mode, Ralston has largely eliminated the freight bid process. While it uses a variety of data points to ensure it is getting competitive rates, it hopes to operate in a “one bid and done” mode with its carrier partners.


“We are certainly taking a bit of a risk,” Lehman said. “When rates go back up, we’re hoping our carriers remember us, so that when everyone else goes up 20%, our rates only go up 5%. We’ll see.”


Lehman also stressed that the company really focuses on achieving sustainable and consistent supply chain costs, rather than being subject to large swings. So, it eschews reducing short term transportation costs by ruthless bidding to reach levels that cannot be sustained when the environment changes; it hedges against fuel price swings for the same reason.


But, Lehman points out, Ralston is getting very competitive rates with this program that have enabled it to reduce its logistics costs per unit to all time lows.


Boeing’s Tm Mirnan, who works on the Defense side of the aerospace giant, gave a very interesting presentation on a new ‘business process management” tool that the company recently implemented. In short, it is a new piece of software, based on Service Oriented Architecture, that sits above some 16 existing supply chain business applications for procurement, forecasting, etc.


The tool is used to model and then rapidly execute new business processes that cross these functional silos – and to highlight opportunities for improvement.


Mirnan noted that while in manufacturing it is easy to see build-up in work queues, “It’s almost impossible to see a white collar employee’s work queue.” The barriers are both technical and cultural – it is just not normal currently to have one’s work plate visible to management and peers.


But the tool enables that visibility, and can show managers where long or short-term process bottle necks are. More on this soon – it is supply chain innovation.


Finally, Jane Barrett of Gartner/AMR Research covered a lot of interesting ground, and I will note a few of the highlights. First, I confess to have missed it, but AMR has recently changed its “Demand-Driven Supply Chain Networks” framework to a new and expanded term: “Demand-Driven Value Networks.” The summary catalyst for this change: a belief that traditional supply chain thinking is too supply-centric; rather, the value change should be build from the customer perspective back, and be more focused on value rather supply.


She made the point that to have an agile supply chain means not just being able to respond quickly to changes and events, but having the ability to sense those changes faster than the competition. We often don’t think about that part of it. She also noted some examples of companies that have developed detailed models of their sales and operations planning (S&OP) processes, and therefore exactly where what data needs to come in, what the linkages are to execution, etc. Many companies haven’t advanced that far.


There’s more, but we’re out of room. Hope to do some individual stories in On-Target soon.

Finally, many of you have seen our new Distribution Center Complexity Calculator beta version, which you can find on Distribution Digest. We are looking for reader feedback in a kind of "open source" way to lead to a final version 1.0.

We think we did a good job in putting the calculator together, but are seeing from early results that some factors may be leading pretty compex DCs to get what look like low scores on a scale of 1-100, meaning in the mid-40s to mid 60s. Part of that is, we now realize, that no one today would probably reach a score above 85 or so; therefore, everyone is starting, if you will, with a 15 point deficit.

We are going to correct that in some way, but would love some additional input. Please take a look.


Any of the points made by these CSCMP event speakers resonate with you? Do you have any additional points to make on these themes? Is a "trip report" like this of value to you? Let us know your thoughts at the Feedback button below.


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A few more letters this week on our First Thoughts piece on Why Bad Supply Chain Processes? That includes our Feedback of the Week from Conagra's Anurag Jaiswal, who says there are complex interactions in business that can lead to bad processes.

You will find his letter plus more on this topic below.

Feedback of the Week: On Why Bad Supply Chain Processes?

Excellent job in capturing key drivers of bad processes.

Key drivers of process complexity include changes in the business and evolution of process and technology;the rest is the outcome of these interactions managed by people.

In an efficient organization decision-making is placed most of the time at right level, i.e., the decision is made at the level where knowledge is or knowledge is transferred to the decision maker. The trade-off is based on business decision to be made and the cost of making this decision.

I would say most managers do have the knowledge, they understand the trade-off and select the options that benefit the organization most at that point of time ( I don’t discount that they are rational humans driven by incentives).

However, these decision can be perceived right or wrong based on how future unfold. Another question to ask would be are managers engaging the right people to make both process and technology decisions? In my personal opinion  decisions can be very expensive if it is made in isolation than having cross-functional groups engaged at right level at right time.   

Anurag Jaiswal
Conagra Foods

More on Why Bad Supply Chain Processes?:


I guess you did not want to be repetitive, but one of the main causes of bad supply chain processes is the 50% problem.  Companies don't think it is broke (in fact they think they are doing  great)  -- so there is no reason to fix it.  We see this every day.  Most companies think their full-truckload shipments are, well, "full."  In reality most have  5-10% capacity wasted.
Thomas A.  Moore

Warehouse Optimization LLC

Another brilliant article.

In my experience, it is really difficult to implement changes if people involved are resisting the change and if change involves IT investment. However, these must not impede implementing continuous improvement projects in any processes, whether under supply chain or not.

Top Management should make it a must to create a continuous improvement in their organization as this will not just benefit the business short term but long term as well.  It can be a success factor in surviving the crisis we are in today.

Eugene A. Sison
Supply Chain Head

Supply Chain & Logistics Group
Rustan Supercenters Inc.

You have an excellent point and the tone of your article reminds me of an article I wrote a couple of years back making a similar point.  You listed some good barriers - in my experience I would add corporate culture as another one that impedes forward thinking and implementing change. 

Thanks for the great article and sharing the view.

Robert Bruce

VCC Associates, Inc.

Great and to the point on deficits in the supply chain cycle.  Too often we fail to see and improve on things because of the path of least resistance.  Perseverance can overcome most of the barriers but support has to come at the top and be part of the culture.

Kevin Hampton



Excellent summary of the barriers that our company has struggled with over our 12 years as a warehouse center logistics provider in the supply chain. We offer proven solutions to supply chain issues and run head on into these barriers to change and engage on a regular basis.

One that is not included which we see as well as that no one has quantified many of the internal processes of the company so you are not able to provide cost justification as you can with many "make-buy" decisions.

Your summary was excellent.

Kathleen Krueger
Kenakore Solutions


About how many licensed freight brokers are there in the US?


Some 16,000.