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How Many Supply Chains Do You Need?
Supply Chain Graphic of the Week and Supply Chain by the Numbers
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  Newsletter Archives                Can't View In E-mail? October 13, 2011 - Supply Chain Newsletter

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Vendor Scorecards --
Vendor Compliance and Collaboration --
Leaner and Greener Supply Chains


Supply Chains in Motion: Driving Adaptability, Flexibility and Visibility

Part 2: 2020 Future Value Chain -- Strategies for a New Decade

Featuring Bob Fassett , Vice President - Consumer Products, Retail, and Distribution Capgemini North America, Dawn Andre , Director, Industry Marketing & Strategy for CPG, Life Science and Chemicals RedPrairie

Tuesday, October 18, 2011


Improving Inventory Management Across Complex Supply Chain Networks

5 Strategies for Reducing Network Inventory Levels

Based on the Recent Report from Chief Supply Chain Officer Insights
Features an interactive dialog between SCDigest editor Dan Gilmore and Cognizant's Ramji Mani

Wednesday, Oct. 19, 2011


The Fast-Response Food & Beverage Supply Chain

Accelerating Response-Time and Visibility of Supply Chain Processes with Rugged Mobile Computing

All attendees will be entered into a drawing for one of two Motorola Rugged Enterprise Digital Assistants (EDA)!

Tuesday, October 25, 2011


Building Next Generation Supply Chains for Discrete Manufacturers

Part 3 -- Driving Costs Out of Discrete Manufacturing Supply Chain Execution

SCDigest Editor Dan Gilmore Shares his Views, as He Switches Roles, and is Interviewed by RedPrairie's Tom Kozenski in the Unique Videocast

Wednesday, October 26, 2011

This Week's Supply Chain News Bites
Supply Chain Graphic of the Week: 3PL IT Getting Better, but Satisfaction Gap Still Persists

This Week's Supply Chain by the Numbers for Oct. 14, 2011:

  • Chinese Imports into US set Record
  • Manufacturing Activity Stays Strong
  • Terrible Toll of Cantalope Contamination
  • Many Companies Sent a 10-Pack to CSCMP

Who was Where in Supply Chain this Week - CSCMP 2011 Edition
Who We Saw In Philadelphia at the CSCMP Annual Conference


CSCMP 2011 Conference
Video Review and Comment

Video Review and Comment

Day 1 Day 2 Day 3


Vendor Scorecards -
Vendor Compliance and Collaboration - Leaner and Greener Supply Chains



September 20, 2011 Contest

See This Week's Winner!

New Cartoon Monday on


Weekly On-Target Newsletter
October 12, 2011 Edition

Last Chance Cartoon, Walmart on Inbound, Annual 3PL Report and more

By Arnold Mark Wells, CPIM
Principal, End-to-End Analytics, LLC
Michael W. Okey
Manager, Global Supply Chain

How Many Supply Chains Do You Need?

Is it time to start chopping your supply chain up? Perhaps so.

If you have been paying much attention to the latest supply chain thinking, you may have noticed that there is a lot of emphasis lately on "segmenting supply chains," or some related concept.


"There is clearly common sense in all this: one size very rarely fits all; different customers or products clearly do have different supply chain success requirements."


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What does that mean? Pretty simply, it means that a company rarely has just a single supply chain - even though it may think it does. Rather, a company has multiple supply chains based on a variety of mostly customer-driven factors, and that supply chain organizations must define and execute those different supply chains in different ways, logically enough. I will explain that more in a few paragraphs.


"Segmenting supply chains" is currently a major area of research and analysis from Gartner. Dr. David Simchi-Levi of MIT focused a good portion of his excellent book Operations Rules on the subject. As we detailed in a ground-breaking Videocast earlier this year, a key element of Dell's supply chain transformation over the past two years was segmenting its supply chain to meet the different market needs of its traditional make-to-order supply chain and its much newer retail store channel market. Dell in fact was helped in its new strategy by Simchi-Levi.

This is hardly a new concept. In 1997, Marshall Fisher of the Wharton Business School wrote an article for Harvard Business Review on What is the Right Supply Chain for Your Product?

He said that "The first step in devising an effective supply-chain strategy is therefore to consider the nature of the demand for the products one’s company supplies... I have found that if one classifies products on the basis of their demand patterns, they fall into one of two categories: they are either primarily functional or primarily innovative. And each category requires a distinctly different kind of supply chain. The root cause of the problems plaguing many supply chains is a mismatch between the type of product and the type of supply chain."

In the early 2000s, the consultants at AT Kearney wrote a white paper called How Many Supply Chains do You Need? which I believe was also turned into an article for Supply Chain Management Review, but we couldn't find it after a medium amount of effort (white paper is here).

In that white paper, Kearney noted that while most recognize the different supply chain needs of different industry sectors (say grocery versus apparel), many individual companies fail to recognize they have such differences within the different products and markets they have within their own enterprises.

Kearney added that "choosing the right chain for the right business requires strategically thinking about how your business operates and what your company needs, which includes how many supply chains it takes to serve your customers."

But from that point until fairly recently, the subject seems to have somewhat disappeared from the overall supply chain dialog, only to resurface more recently.

Why? Maybe the thinking was too early for its time, which happens often in this discipline. Or from the different side of the coin, while the concept was valid, technology just wasn't ready to well support its execution.

I would also say that growing supply chain complexity has made the concept more pressing than before. That would include globalization (emerging versus developed versus in-between markets), multi-channel strategies, the increased size of many companies from mergers and acquisitions (resulting in new products, markets and channels to the company), and other changes.

The bottom line is that there is a growing consensus from the pundits that a "one size fits all" supply chain won't cut it anymore. And I agree.

In Operations Rules, Simchi-Levi noted that common segmentation attributes include customer value proposition (e.g., value versus innovation, similar in a sense to Fisher's perspective), market channels, product characteristics such a demand uncertainty and logistics costs, and more. Among many other considerations, Simchi-Levi observed that perhaps the key decision that needs to be made based on those attributes is whether to construct an individual supply chain using a "push" strategy, a "pull" strategy," or hybrid push-pull approach.

Gartner's Matt Davis, who worked at Dell before moving to Gartner, said during another Videocast we produced within the past month or so that different market segments tend to value either cost, responsiveness/speed, or level of service/agility, and that supply chains should often be segmented accordingly.

Key there he said is differentiating performance metrics: if you build a supply chain focused on agility for one group of customers, you can't expect the same type of cost performance for a supply chain that is built primarily to minimize cost. An iron law of supply chain is that such trade-offs can't be eliminated. I will agree many companies forget this.

He used the chart below to illustrate this, which is worth considering.

Then there is the perspective of Dr. John Gattorna, based in both Australia and the UK, who also argued in his book Dynamic Supply Chains that customers and hence supply chains should be segmented based on what they value from you as a supplier, but with a unique twist.

He identified four "metatypes" for such a segmentation based on a customer's buying behaviors. That includes some notion of how much different segments are interested in collaborating:

(1) Continuous Replenishment: Predictable demand, a lot of collaboration

(2) Lean: Focus on supply chain efficiency

(3) Agile: Pull-oriented supply chains to meet unpredictable demand

(4) Fully Flexible: Sort of an agile supply chain on steroids; some maintenance and repair operations come to mind

What somewhat differentiates Gattorna's view is that he notes that a given customer may have several of these buying behaviors operating at once, complicating matters for suppliers, and that a customer's needs for a given product may change over time - in fact likely will. Simchi-Levi says similar things, though from a somewhat different framework.

There is clearly common sense in all this: one size very rarely fits all; different customers or products clearly do have different supply chain success requirements.

One question I have had though is how far can you/should you really take this. Can't you wind up with too many "supply chains", and tremendous complexity that overwhelms the potential benefits?

Simchi-Levi says the key is to find synergies across these multiple supply chains. For example, Dell shared much (but not all) of its physical logistics infrastructure between its make-to-order and retail supply chains even as they differed in many other respects, reducing overall complexity and costs.

Davis says that while that if you think you have just one supply chain you are most certainly wrong, if you think you have more than 4-5 you are over complicating the analysis.

I have to say that a recent video interview we did with Kelly Thomas of JDA Software on this subject just a few weeks ago helped me think this through quite a bit.

He made a couple of key points. (1) The reason the subject of segmenting supply chains is on the rise now is because when the topic was first promoted more than a decade ago, it often meant different physical supply chains, which were too expensive. Now, software advances can enable differentiated supply chains in a "virtual" way so that such segmentation is affordable.

(2) A high percentage - maybe 30-40% - of a company's products and customers are not profitable. What supply chain segmentation can do is make many of those customers and products profitable.

This gets into the area of Service Policy Optimization, which I have been meaning to write about literally for years. I also believe all of this is in the end related to Procter & Gamble CSCMP announcement that it is now measuring its supply chain performance by how its customers measurer P&G.

How's that for an ending tease? More on both those topics, and really sorting all this out, very soon.

Do you well understand the concept of supply chain segmentation? Is it real? Is anyone actually doing it yet? What would you add to Gilmore's analysis? Let us know your thoughts at the Feedback button below.


Dan Gilmore


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Q: What was noteworthy about a software company named Aspect Development Corp. in 2000?
A: Found at the Bottom of the Page


As always, we received dozens of short emails thankiing us for our daily video recaps of CSCMP 2011 last week, especially for those who couldn't make it. Thank you for watching.

Our Feedback of the Week is from Sandy Vosk of ATS Inc., who notonly did that, but also sent to us and our readers a detailed summary of a session we missed, on supply chain and social media. Excellent!

We publish that letter, plus just a couple of the short ones we received, including one calling for the return next year of Gene Tyndall as part of our video summary team, and Tyndall himself saying he will back back after a 3-year absence.

Feedback of the Week: CSCMP 2011 :


I was just listening and reading your reviews of the CSCMP conference and definitely agree with your recommendations for improvement. The biggest thing that always amazes me is that there is always something good going on and whatever you're attending, you're missing so much more. One of my wishes and recommendations is that each session was filmed. This should be available for free to conference attendees and on an opt-in charge for members and non-members afterwards to more than cover any costs to CSCMP.


The real impact of this and the reason for this note is that you missed what I thought was one of the best sessions overall, Wednesday morning’s Mega Session on "...Texting, Tweeting and Friending the Next Wave of Supply Chain Innovation”. First of all the moderator, Adrian Gonzalez, as well as I was amazed that it was an SRO crowd, at 8am ...on Wednesday . The outstanding panel gave clear examples of how they are using social media in their companies today and the business benefits in doing so. Here are a couple of nuggets from my notes that I thought you’d find interesting:

Social media today is focused predominantly on:


    Branding & marketing

    Young people

    External communication & collaboration with customers

The focus in the future will be


    End-to-end SCM processes

    Boardroom to Shop Floor

    Internal and External communication & collaboration


Great comment from Terri Griffith, Prof. of Mgm’t, Santa Clara Univ.; SCM is a game of real-time information. The key question Is how good is it.

Social media is much more than Facebook & Twitter. People are willing to help. You need to determine how it can help you “connect the dots”. For Wal*Mart, they use social media to help predict demand and determine which products/enhancements customers desire

***Here’s a keeper

    Almost everyone in the audience had seen the VW award winning commercial with the boy dressed as Darth Vader. This commercial aired on last year’s Super Bowl, bit because of their social media campaign, over 10M people saw the commercial on the web, 5 days before the Super Bowl.

Tricia Mims of Home Depot said the company uses social media for “...visibility, planning and everything in between”. Home Depot has developed an internal Facebook-like application called “The Warehouse” to share key information and supply chain best practices.

An important comment was that the full supply chain needs to be aligned and the recent problem Target faced, losing orders when their web site crashed.

Tom Nightingale of Con-way, a “traditional, old line company” gave concrete examples of how Con-way is using social media today

    Commercially - to generate business


    Internal communication and collaboration.

Tom shared that Con-way has created a Social Media Policy, so people know what’s expected and management can take appropriate action when required. They also have a Governance Committee that meets regularly to review policies and address issues. In terms of best practices, get help from experts and  Focus on the Work

    What’s the best way to get it done

    What’s the best form to communicate

    Go where the audience is and interact in a way they do

As you can see, this was a very unique and relevant session. I’d be happy to share more with you if you’re interested, especially around some of the tools that were mentioned, but I’ll leave you with this, which pretty much summed it up. Regardless of whether it’s internal or external communications, the world is changing and the lines between social and mobile are blurring. As Fernando Aguirre, CEO of Chiquita shared, companies need to accept change and get on board. I know that I intend to help my clients do so.


Sandy Vosk, President & CEO
ATS, Inc.

More on CSCMP 2011:


I wasn't able to make CSCMP this year as I wasn't speaking and I had teaching commitments. So I viewed all 3 of your Video Reviews summarizing it, for the first time ever.

I just wanted to thank you for bringing some useful information to folks like me that could not attend. While I definitely miss the 'networking' aspects of the show, I feel that I at least now know some of the more important trends that were discussed there.

Thanks and keep up the good work.

Larry Lapide, Ph.D.
Research Affiliate, MIT Center for Transportation & Logistics

Thanks for the updates.

As indicated by Larry Lipide, I also was unable to attend this year due to the economy and travel/conference restrictions. This was the first time in 7 years that I have not attended, so your video updates were looked forward to even more so then if I had been there.

I did like it when you had a co-host (Gene Tyndall), because you as one person, can only cover so many tracks. The co-host gave you double the coverage and thus more information presented on the video updates.

Again, thanks for the updates and the good work.

Mark R. Sauber, C.P.M.
Corporate Director of Global Logistics and Sourcing
SPX Corporation


Well done on the 3 videos!

You have really improved the quality and "TV-like" themes and reports.

I will be in ATL next year.

Thanks for all you do...

Gene Tyndall
Tompkins Associates

Q: What was noteworthy about a software company named Aspect Development Corp. in 2000?
A: It was acquired by then high flying i2 Technologies for $9.3 billion -- at the time a software industry record. That deal turned out to be a key part of i2's subsequent downfall. Aspect provided component sourcing software, and was viewed as a key element of i2 e-commerce strategy. It was spun back out of i2 not too many years later.
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