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May 17, 2012 - Supply Chain Newsletter

This Week In SCDigest

bullet Results from Annual Gartner-SCDigest Supply Chain Survey
bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic of the Week and Supply Chain by the Numbers bullet This Week In "Distribution Digest"
bullet New Cartoon Caption Contest Begins This Week! bullet Trivia
bullet New Expert Contributor bullet Feedback


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Results from Annual Gartner-SCDigest Supply Chain Survey

In December, more than 300 SCDigest readers participated in our annual supply chain study in partnership with the analysts at Gartner.

There were some very interesting results this year. I can’t make the entire result set available (that’s reserved for Garter clients), but I am able do a pretty good job of summarizing several of the key points. That will include some comments on the survey results from Gartner’s Dwight Klappich, who along with fellow analyst Charles Eschinger led the analysis of the data. The main theme this year: supply chain is switching from defense to offense.

In the last couple of years, there has been a subtle but important change in terms of how companies rate their supply chain priorities. Specifically, in 2010 and 2011, “improving productivity” swapped places with “reduce costs” as the most important supply chain objective. The thesis was that companies were focused on getting back on a growth mode, after having cut costs to the bone during the financial crises, with the goal of getting back to where they were but with needing fewer people.



"Klappich also called out that the survey showed that companies realize they need to improve in terms of their supply chain innovation performance."


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Well, even that change has been turned on its head in 2012, as shown in the graphic below. Amazingly, a series of more growth oriented priorities dominated the list. Improving customer service, using the supply chain to drive the top line, and increasing supply chain innovation came in ranked 1, 2 and 3 respectively, (to the somewhat surprise of all of us) in 2012.

Klappich was especially intrigued with the high place innovation reached in this year’s results.

“I think most companies realize that they have cut about as much as they can from supply chain staff and operations,” Klappich told me this week. “Supply chain innovation has been out there for a while but frankly it has been kind of an empty concept. But now, companies are looking for innovation that drives new routes to market to increase sales.”

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That in fact is exactly what Procter & Gamble’s supply chain exec Jake Barr said at the CSCMP conference I believe in 2010, where he said P&G supply chain organization had specific targets (something like $2 billion annually) for driving revenue growth through enabling the company to open new markets.

Klappich added that “Companies realize that it really isn’t business as usual. Companies and their supply chains need to change the way they do business,” citing as the obvious key example what retailers and some consumer goods companies are doing in the area of multi-channel commerce. Macy’s major supply chain focus right now, for instance, doesn’t appear to be about reducing costs, but rather making major investments in changing stores, processes, and technology to significantly change its capabilities to fulfill multi-channel orders flexibly and accurately across its network (including using stores themselves as fulfillment centers).

Klappich also called out that the survey showed that companies realize they need to improve in terms of their supply chain innovation performance.

The chart below shows how companies rate themselves in terms of a number of supply chain attributes versus how they thing others are doing. Note that 60% believe they are below average in terms of supply chain innovation, versus 40% that believe they are above average in innovation.

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Another important change from the results in previous years of the study was that the trend of companies blaming their supply chain woes on a lack of forecast accuracy and related demand volatility seems to be fading a bit versus other factors.

Forecast accuracy was still rated as the top obstacle to supply chain success, but the percent citing that was down from 2011 and even more from earlier years of the study. Meanwhile factors such as the challenges of synchronizing end to end processes, lack of visibility, and supply chain complexity continued to see higher scores in terms of supply chain success obstacles versus previous years.

I am glad to see that. To blame supply chain woes on forecast accuracy has always seemed to me a cheap way out (“let’s blame the demand planners”), especially given that it is almost an axiom that all forecasts will be wrong.

Klappich said he sees attitudes changing relative to challenges especially as related to supply chain complexity.

“The leaders are recognizing that it is very difficult to reduce complexity, that you need to change your mind set to better managing the inherent supply chain complexity today,” he told me.

He also said that companies really are focused on cutting down the siloes across function groups in the supply chain to better align end to end processes.

“I have described how many companies are still disconnected in their supply chains as resembling a rugby team in which no one speaks the same language,” Klappich said. “Individual team members can be very aggressive, but there is a noticeable lack of coordination on the field.”

Finally, as I have been predicted for some time now, this year’s results show growing interest in on-demand/cloud-based solutions. As shown in the graphic below, interest in cloud solutions jumped substantially in this survey versus 2011. And Klappich pointed out to me that the key observation is that this isn’t just for conservative or smaller firms that might look to the cloud to get software at a lower investment level, but just as much if not more for “aggressive” adopters of supply chain technology and larger companies (the orange bar).

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Ok, that’s all I have room for. If you are a Gartner client, this research will be released across a variety of vehicles in coming weeks. If not, well...if you send me an email I might be able to help.

Please consider participating in the 2013 survey towards the end of the year.

Any reactions to this year's Gartner study? Are you surprised growth related priorities rose to the top of the list? Let us know your thoughts at the Feedback button below.


Supply Chain Graphic of the Week:

What to Expect from Peak Oil

This Week's Supply Chain by the Numbers for May 18, 2012:

  • Macy's Bulking Up Distribution from Stores
  • Cargo Scanning Finally Almost Here
  • Leading Factors for a 3PL Divorce
  • Is Walmart Losing US Share?


May 15 , 2012 Contest

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Weekly On-Target Newsletter:
May 16, 2012 Edition

New Cartoon, WERC and RedPrairie Reviews,
TL Q1 Results and more


This Toolkit Provides Information Needed to Turn your
Supply Chain into a Competitive Differentiator and Stay Two Steps Ahead of the Market

Holste's Blog: Packaging Changes Require that Special Attention be Paid to Automated Carton Handling Equipment


Top Stories: Warehouse Education and Research Council (WERC) 2012 Conference Video Review and Comment

Top Story: While The Trend Towards Automation in the DC is Undeniable - Still 70% of DCs Are Not Automated

Top Story : Getting Scripted Demos Right for Warehouse Management Systems and More

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In 1956, Shell Oil M. King Hubbert predicted US oil output would max out in what year, given rise to the concept of Peak Oil?
Answer Found at the Bottom of the Page

Tuesday's Videocast:

Accelerating Voice Adoption: The Story at Giant Eagle

How new Vocollect VoiceExpress speeds the transition to voice with no WMS changes and minimal IT staffing demands

Chapter 4 of Vocollect's new
ebook, The Talking Warehouse,
will also be discussed.

Featuring Ray Hindman, Supply Chain Business Process Consultant, Giant Eagle; John (JP) Pecorari, Senior Product Manager, Vocollect

New Upcoming Videocast:

On the Trail to Traceability

Successfully Executing Recalls
in an Era of New Legislation, New Complexity, New Challenges

Featuring Simon Ellis, Practice Director,
Supply Chain Strategies for IDC Manufacturing Insights, and Dave Bruno, Editor of Commerce in Motion


Supply Chain Execution 2012

Research Questions: What is current state of Logistics/Supply Chain Execution Technology (WMS, TMS, Visibility, etc.)? What are the Key Trends in Adoption? How Prevalent is new SCE "Platform" Thinking?

Can you please help by taking this quick 10 minute survey? All respondents will receive a summary of the data in just a few weeks.

Tuesday, May 22, 2012

Tuesday, June 5, 2012



We received a goodhandful of letters based on our recent piece on on an article in the Wall Street Journal by Princeton's Willam Happer, who says temperatures haven't risen for a decade. See More Controversy Over Global Temperatures, as No Warming for a Decade.

That includes our Feedback of the Week from Rick Merritt of American TV, a long time reader, who basically says Happer and by extention us are nuts. You will find that letter and a few others below.


Feedback of the Week: On Happer and Global Warming:


This item contains hardly a single legitimate debating point. Everybody familiar with this issue knows that short-term variations make 10 years too short a period to judge global temperatures. Professor William Happer is an expert on optics and spectroscopy without publications on climate. His political sniping is of no relevance. His statement that the computer models used by the IPCC assume positive feedback to arrive at more warming than comes directly from CO2 is simply wrong, though he surely knows better. The models start with physical properties of radiation, atmosphere, ocean, and so forth, and arrive at net warming as a result, not an assumption.

Please don't start an item on an important topic by saying you have no dog in the fight, then continue with a one-sided and poorly supported argument.

Rick Merritt
American TV


More On Happer and Global Warming:


We all now know that the global warming scare was an international hoax. In the US it was largely promoted by Al Gore for his own self-enrichment, not a concern about the planet. He had plenty of co-conspirators on the international stage particularly in Europe. Within the U.S. the push for more control over carbon emissions was largely a function of a power grab by the Democrat party particularly its extreme left wing. Since the debunking of their computer modeling where the data was purposely falsified, people understand what all the uproar was and is about, and that is control of the population and how it lives and works.

Monitoring the predictions made by the models, assuming they are not rigged for political purposes, is worthwhile. But, as your article points out, one must match the model outcomes with what is actually happening on the ground. Reality will trump the model every time.

As far as I am concerned, the global warming scare is nothing more than a gigantic hoax and should be tucked away as another failed attempt by the left wing fringe element to take control of our economy, government and our lives. Continue to rely on facts, not fiction that was and is contrived for less than honorable goals.

Bob Worrell


I feel like the X-files; "the truth is out there", but where? How do you reply when scientists are showing you pictures from NASA and the amount of ice melt from various glaciers or shrinking of ice on the poles? What about Dr. Henry Pollack and his works? What about the photos from ? What about the fact that March had 6,000 temperature records broken and the highs out did the lows by a ratio of 24 to 1?

Thanks for your reply. I am always looking for ways to get more educated.

Xavier Noblat
R3 Seattle

comma What part of the global warming hoax do people not understand?

Kevin Clark


Thank you for your continue fair and balanced approach to the Global Warming debate. Your Green Supply Chain page is presenting all sides and by doing so providing some nice balance to the warming lobby that wants to dominate discussion and distort the data for their own benefits.

I am a skeptic but my mind is far from made up.

Keep up the good work.

Aaron Michaels

Kansas City, MO




Q: In 1956, Shell Oil M. King Hubbert predicted US oil output would max out in what year, given rise to the concept of Peak Oil?

A: 1970 – and he was right.

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