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May 31, 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 Cartoon Caption Contest Winners Announced This Week! bullet Trivia
bullet 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 HereLeading Factors for a 3PL Divorce
  • Is Walmart Losing US Share?


May 15 , 2012 Contest

See This Week's Winners!

New Cartoon Monday on


Weekly On-Target Newsletter:
May 23, 2012 Edition

Major New VICS Guideline,
Macy's Multi-Channel,
SAP Buys Ariba and more


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Holste's Blog: Electronic Commerce - Understanding Impact on DC Environment


Top Stories: Logistics Savvy May Determine Multi-Channel Success, as Macys Revamps Fulfillment Network by Empowering Stores

Top Story: 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

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June 13, 2012 9:00 am - 4:00 pm ET
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ERP and Best of Breed Supply Chain – It's About the Architecture

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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:

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

Upcoming Videocast:

Operations Rules for Driving Business Value & Growth

Part 3: Complexity Reduction: Long Tail Analysis

Benefit from Clear Actionable Insight
into your Product Market Performance

Featuring Dr. David Simchi-Levi of MIT


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, June 5, 2012

Tuesday, June 19, 2012


Just catching up on a few of the many emails we get each week. Our feedback of the week comes from Doug Naal at Kraft Foods, who says our trivia question a few weeks ago on the GS1-128 bar code wasn't quite right - and we agree with him. His letter is certainly worth reading.
We received a handful of letters on our recent First Thoughts piece on Listening to Chuck Taylor, relative to the looming issues with Peak Oil, and publish a few of them below.

Finally, the owners of a small trucking firm say that the move to include accidents in drivers records relative to CSA rules even for which they were not responsible is really bad policy - and we agree.

Feedback of the Week - On the GS1-128 Label:


I was excited to see your trivia question because there is a lot of confusion on the use of GS1 bar codes. I am constantly receiving these types of questions.

Unfortunately your reply was a little misleading. Although the GS1-128 symbol does require the use of Application Identifiers, the GS1-128 bar code is identified by an embedded Function Code 1. A bar code scanner should recognize the GS1 symbol with the Function Code 1 and trigger the application to parse the string of bar code data accordingly.

The reference to a serialize case code is also misleading. The proper term should be the SSCC (Serial Shipping Container Code).
This helped me realize you could provide a great benefit to the supply chain industry by offering your readers education on GS1 standards and guidelines. There is a lot of confusion on the use of GS1 keys such as GTIN, SSCC, GLN, GRAI, etc. and how they should be bar coded. Using GS1 keys and bar code standards is a path to greater supply chain efficiency. I am sure GS1 would be excited to provide more visibility to their services and standards.
Doug Naal
Kraft Foods

Editor's Note: I of course agree with Doug that we should have referenced the Function Code 1 component of the GS1 symbols. Thanks for the note.

Dan Gilmore


On Listening to Chuck Taylor:


Yes, I too am concerned about Peak Oil. I met Chuck Taylor at a Peak Oil event in Denver a couple years ago. We both lamented how we were the only supply chain people at the conference. Things are getting better in our profession, but we still have a long way to go.

I include Peak Oil in my presentations on lean supply chains and encourage all professionals to get current and seek out the opportunities that will be provided as all supply chains are forced to adjust to the changing dynamics of energy.

Mike Loughrin, CLM, CSCM
Chief Executive Officer
Transformance Advisors Inc.



Chuck Taylor is doing a great service for the industry with his recent educational efforts on Peak Oil.
I have listened to him several times now, and have really come to accept what he is saying as true.
The question for many businesses though will be when -- when does the really big impact on prices come? From a planning and investment perspective, whether that is in 3 years or so or 12-15 years makes a huge difference.

His point that this will soon not impact just our supply chains but our society is especially noteworthy and somewhat scary.

I do believe that natural gas powered vehicles generally and trucks specifically can have a quite an impact on ths situation very soon.

Evan Moeller
Cedar Rapids, IA


comma Great piece.

How many companies are thinking about and doing strategic energy purchasing?

Jeffrey L Holmes
Managing Director

Editor's Note: I do not know the answer to that question. Maybe someone in our audience does.


On CSA Regulations:  

would be very interesting to know where the FMCSA got this burr in their saddle to improve highway safety at the expense of a critical piece of the US economy.

While we agree that reckless, unsafe truckers should be off the roads, we know from personal experience the difficulties that have come from the new point system that goes against America's foundation of "innocent until proven guilty."

This decision to count crashes that are not the driver's fault is more unreasonable than any of the other regulations. It would be great to have every truck driver that was in a crash caused by another reckless driver send a letter or e-mail in response. Unfortunately, many of them could not because they were killed as a result.

It is apparent that no one associated with FMCSA has ever driven a truck weighing 80,000 pounds and had a 4-wheeler pull out in front of them without time to stop without causing danger to the driver of the other vehicle, the driver of the truck, the truck and the load.

There has to be a way to distinguish between truly reckless drivers/employers and those who are doing their best to keep the roadways safe while helping our economy recover.

Ellis and Beth Ipock
Ipock Trucking LLC



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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