This week in SCDigest:
Trip Report: JDA User Conference 2011
Supply Chain Graphic of the Week and Supply Chain by the Numbers
Cartoon Caption Contest Continues This Week!
SC Digest On-Target e-Magazine
New Expert Contributor: Understanding Lean Implementation in the Supply Chain
This Week In "Distribution Digest"
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  Newsletter Archives                  Can't View In E-mail? May 5, 2011 - Supply Chain Newsletter

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Enterprise Inventory Management

Visibility across your entire network...In Stores, DC's, Docks & In Transit


How Smarter Inventory Analytics Solve the "Out-of-Stock" Scenario for CPG Supply Chains

Fulfilling the Three A's:
Adaptability, Agility and Alignment

Featuring Dr. Michael S. Watson, Ph.D., WW Optimization & Supply Chain Lead at IBM and Remzi Ural, Global Supply Chain Management Solutions Lead, Consumer Products Industry at IBM

Tuesday, May 17, 2011


Supply Chain Risk Management: Separating Meaningful Indicators from Background Noise

Using a New Information Tool From
Dow Jones to Increase its Visibility to Sources Of Supply Chain and Supplier Risk

Featuring Dr. William Killingsworth of MIT,
Ezra Duong-Van of Dow Jones
and Dirk Martin of Safety-Kleen

Tuesday, May 24, 2011


Vendor Compliance 101: It's about Supply Chain Excellence, not Chargebacks

Part 2: Best Practices in
Vendor Compliance Optimization

Featuring Gough Grubbs, SVP of Distribution & Logistics for Stage Stores,
Tim Divic, DC Manager for Stage Stores,
Greg Holder, CEO of Compliance Networks

Wednesday, May 25, 2011


Vendor Compliance 101 - It's about Supply Chain Excellence, not Chargebacks, Part 1

This Week's Supply Chain News Bites
Supply Chain Graphic of the Week: US Manufacturers have Tough Time Hiring Factory Workers

This Week's Supply Chain by the Numbers for May 5, 2011:

  • Lowes Builds Great Software Deployment Process
  • Harry and David will have Busy DC Weekend in 2012
  • Japanese Auto Makers Take Supply Chain Hit
  • Inventory Bin Challenges at Frito-Lay

Enterprise Inventory Management
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April 26, 2011 Contest

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Weekly On-Target Newsletter
May 4, 2010 Edition

Carriers Getting Upper Hand, S&OP Bias,
Annual 3PL Study and more


By John Mazock
Vice President of Manufacturing


Understanding Lean Implementation
in the Supply Chain


What are the three A’s in Dr. Hau Lee of Stanford’s famous 2004 Harvard Business Review article on “The Triple A Supply Chain?”

A: Found at the Bottom of the Page

Trip Report: JDA User Conference 2011


I am just back from the annual JDA Software Focus user conference in Orlando, and it was an interesting  few days, generating news and insights that I thought were worth sharing.

To see the Video review released earlier, go here: JDA Conference Video Review and Comment.


Before I summarize a handful of very interesting JDA customer presentations, a few notes first on key themes from a JDA perspective. As most of you may know, the formerly retail-focused  JDA acquired consumer goods-oriented provider Manugistics in 2006, and then high tech and retail focused i2 Technologies early last year. The strategy has been highly successful, with JDA enjoying strong levels of profit and revenue growth for a number of years, as highlighted in the opening presentation from CEO Hamish Brewer. This frankly is a company that appears very confident in its market position right now.


Brewer also reconfirmed JDA's product roadmap, which importantly includes plans for "convergence" releases that combine the capabilities of existing JDA/Manugistics products with those of i2. That product overlap occurs in supply chain areas such as demand planning or transportation management between the former i2 and "Manu" solutions, but also in several areas in core retail management, the legacy of i2's acquisition of a portfolio of retail software from IBM a number of years back.


These convergence releases are starting this year, and the first such solution - in the transportation procurement/bid optimization area - has been released. This initial target makes sense, as this category of software really just does one main thing, and differences in needs across industries are small.


"PepsiCo's Animesh Ukidwe did a great job of explaining a new tool it has built to front-end its existing TMS solution that I can only call "wave management for the transportation planning.""


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The planned roll-out of the new products continues each year through completion in 2014. Brewer says these will be "supersets" that combine most of the functionality of both say i2 and Manugistics products. How this plays out will be interesting - just as an example, demand planners at cereal makers don't care much about "attach rates" and bill of materials explosion that high tech and discrete manufacturers using the i2 products do. So, JDA will be challenged to not make the converged solutions overly complex when providing the ability to  handle the needs of virtually every industry, and to make the eventual upgrade process smooth for customers on both sides of the history.


Noteworthy, however, Brewer said there will be no pressure for customers to upgrade to the new products, and that some functional enhancements to existing solutions will be continue (though inevitably, I'll note, these will diminish over time for basic business reasons).

JDA is also pushing two mirrored concepts/visions for more integrated supply chains. In retail, this is called Integrated Planning and Execution (IPE). In consumer goods, the vision is one of the "shelf-connected supply chain."


We did a major report on integrated planning and execution two years ago, so I buy very much into the concept. and believe this in fact will be perhaps the most dominant supply chain theme over the next 5 years. The basic vision: there is no loss of fidelity as plans move from the highest strategy levels to sales and operations planning  and then lower levels of planning, ultimately down to execution (see Fairchild Semiconductor presentation summary below). That in turn requires high levels of visibility and integration, combined with minimal latency in pushing actual results back up through decision processes. "Alignment" on steroids.


Brewer listed six or seven retailers, including Publix, The Sports Authority, OfficeMax and others that have in some way bought into the vision. I'll assume that means they have adopted this concept as a clear corporate strategy, and committed to some set of JDA solutions (and as importantly, integrated "workflows")  to make it happen.


I have more I could summarize overall from the conference, but am likely to run out of space, so I am going to get right now to some of the noteworthy customer presentations.


For the third year, I participated in JDA's "demand optimization council" (DOC) meeting the day before the main conference started, which involves a dozen or so of JDA's most advanced users in the retail and consumer goods industries discussing issues and initiatives, largely but not only relative to forecasting, supply management, and replenishment.


I go to the meeting as a participant, and am very limited in what I can report back, but a clear theme this year was around advanced modeling of the supply chain. The concept of "flow path optimization" - frequently re-evaluating the lowest total cost route for each SKU from supplier to shelf - has been around for awhile but not much used. That is starting to change, and one retailer presented its very advanced model that after several years of development and experience has produced simply astounding results in terms of improvements in inventory, service and logistics costs.


Another has developed a "transload" model that helps it optimally transfer huge volumes of inbound 40-ft containers imported from Asia to 53-footers for shipment to DCs. It's a combinatorial problem - what SKUs coming in should go in what trailers going out? The solution is very cool, and the system has had a significant impact on reducing freight and handling costs.


One CPG company at the DOC meeting noted how rising transport costs and more importantly increasingly tight capacity has driven it to change its production scheduling. The goal is now to smooth loadings from production to distribution points, so it can consistently hit the capacity commitments it has from carriers. In 2009, capacity was abundant; if the company had 5 loads on Tuesday one week, and 12 the next, it was no problem. Now, those extra loads have a hard time finding a carrier, and the company was sometimes spending as much as 300% more than normal to get them moved. Now, some production efficiencies or inventory plans are being be sacrificed to improve logistics costs, to reduce total supply chain costs.


Fairchild Semiconductor's supply chain chief Kevin Chynoweth gave a great presentation on how to think about managing a supply chain in periods of demand constraints versus supply constraints, but what really struck me were the changes Fairchild has made to connect "top floor to shop floor." Unlike a few years ago, there is simply absolute alignment there now between S&OP forecasts and other high level plans and what happens in the downstream fabs and assembly operations, to the point where customer priorities and service policy segmentations at higher levels of the company's planning are exactly reflected in Fairchild's detailed manufacturing planning. Excellent.

Pepsico's Animesh Ukidwe did a great job of explaining a new tool it has built to front-end its existing TMS solution that I can only call "wave management for the transportation planning," with my comparison being to the wave process used by many companies to release customer orders to the DC floor. (You heard it here first.) PepsiCo has a number of divisions, with many different transportation models/requirements across its incredible $2.2 billion+ freight spend annually.


The traditional TMS process of planners manually grabbing orders and building optimization runs is too variable, subject to errors and delays, and just too labor intensive, according to Ukidwe. So, PepsiCo built an "Optimization Cockpit" as a front end, featuring a sophisticated rules engine that allows automatic or semi-automatic selection of orders to pooled for system-generated optimization runs, followed by equally rules-based system decisions about whether to move a given load over to execution or keep it longer (if feasible) for another optimization run tomorrow.


The benefits: much better planner productivity, and reduced freight spend due to smarter optimization runs and more orders in the optimization pools. This is true innovation, and I am convinced will become the way most large shippers will do this over the next five years.


Finally, Eric Robinson of Lowes gave a "tour de force" presentation on how Lowes is implementing a new set of demand planning and replenishment software. Unlike almost anyone, Lowes has "over invested" in upfront conceptualization phase, from wide ranging interviews to development of a full prototype system for analyzing the fit with business needs.


Clearly, more money and time at the beginning, but for the reward of clarity of purpose, needs, benefits, change management requirements, and more. You hear it, and say "this is how it should be done." Why not everyone?


More detail on some of these case studies soon.


Any reaction to Gilmore's JDA conference trip report? Did you attend? What takeaway did you have? Should companies spend more time as Lowes is on the upfront planning for software projects? Let us know your thoughts at the Feedback button below.


Dan Gilmore


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Holste's Blog:
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Question: Are there guidelines for when a company should move from plant shipments to a consolidation DC?

See our Expert answers here.

Add your input  - we could use some  more!


We had decent Feedback on Gilmore's column on whether the Trucking Tsunami was Coming Again, and publish a few of those letters below.

That includes our Feedback of the week from David Schneider, who says shippers really need to stay on these issues, especially around Hours of Service changes, and that safety is an important facotr here, despite the critics, in a very thoughtful letter.

Feedback of the Week - on New Trucking Tsunami?


A quick word on the hours of service rules.

Everybody in Supply Chain Management MUST stop demonizing FMCSA on this issue.  Trucking accidents along with all of the general highway accidents were getting out of control. While there is a clear majority of safe  professional truck drivers operating on our highways today there is a population that should be removed. The old hours of service rules that existed before 2003 had far too much complexity and opportunity for mischief. There is a reason why logbooks are sometimes called comic books by the driver community.  Congress mandated action in 1995 and the rule changes in 2003 answered that mandate.

Since then different organizations that represented independent truck drivers and safety advocacy groups have dragged the law into the District of Columbia Circuit Court because they did not want to accept the changes. The rules took three trips through the DC circuit, and each time the court through the rules out because of technicalities. These rules are being revised again as part of the political settlement of a pending court case.

On February 17 the FM CSA posted a listing sessions on the proposed rules. This was an unprecedented event, I don't remember a time where it a listing sessions has happened after the posting of proposed rules. There is a reason why they did this. When the rules get dragged into court the attorneys that represent the plaintiffs and the defendants are allowed 15 min. to orally present their arguments. The only additional material allowed to be presented is the research used to create the rules and the comments that are legally entered into the docket during the 60 day comment phase after the rule is posted in the Federal Register. The deadline for comment is February 28, 2011.  The FMCSA is actually begging for comments from the shipper community. They need data to illustrate what the cost impact is going to be.

This is an opportunity for shippers to stand up and provide information about how these proposed rule changes will affect the costs and operations of their companies. Failure to provide the data and information that the FM CSA is asking for is a mistake. If the shipper community wishes to make the change they need to stand up and be heard. Just posting it in your articles is not enough.

We have not been silent on the subject. I personally attended the listening session in Arlington yesterday. Except for some week and feeble opinions presented by the Grocery Retail Association and the Commercial Bakers Association nobody else from the shipper community bothered to speak (except for my loud mouth). In this session the shipper community was painted as the culprit for all of the safety ills – it's the evil shippers and how they keep the truck drivers waiting on their docs that create tired drivers.  I addressed how some of my clients are going to feel a significant financial pinch from the lost productivity and the lost opportunity to backhaul freight.

If you would like to learn more about the history behind the rule and what you can do to have your voice heard I recommend that you take a look at . I challenge you to go understand the history of why we're going through this rule setting process a fourth time. I assure you that if the shipper community does not sound off that we will be revisiting this rule again in two years.

David K. Schneider

 David K Schneider & Company, LLC

More on Trucking Tsunami:


As usual, you a very timely article. Based on our executive interviews for the 2011 State of the Retail Supply Chain study, retailers are closely monitoring the CRISES issues. Fuel prices and the impact of CSA 2010 seem to be the most immediate concerns but the others are not being ignored. Also, the level of angst regarding regulatory intervention is running high.

Brian Gibson
Auburn University

To lessen the height of the Tsunami wave, shippers need to effectively use trucking.

Carriers indicate they are weeding out the "bad actors" — shippers that, for example, keep equipment waiting, order a truck and then don't use it, or have a higher percentage of loads rejected at the scale.

Shippers must effectively use the capability of the equipment. Analysis of 850,000 5 axle trucks crossing a weigh-in-motion scale shows:
• Of the loaded vehicles, 4,000 pounds could be added to 92% of them
• 44% of trucks could haul more than 48,000 pounds

Orders need to be optimized to fully cube-out or weigh-out shipments.

Thomas A. Moore
Transportation | Warehouse Optimization

Q: What are the three A’s in Dr. Hau Lee of Stanford’s famous 2004 Harvard Business Review article on “The Triple A Supply Chain?”
A: Alignment, Adaptability, and Agility.
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