sc digest
November 29, 2012 - Supply Chain Newsletter

This Week in SCDigest

bullet Dr. John Langley of Penn State: Unplugged
bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic of the Week and Supply Chain by the Numbers bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Winners! bullet Trivia
bullet New Supply Chain By Design and Expert Insights bullet Feedback


At the Forefront of Business Intelligence –
A Program for Leaders

  first thought


Supply Chain Graphic of the Week:

A Control Tower for the Supply Base?

Supply Chain by the Numbers for Week of November 16, 2012:

  • Will Consumers Pay More for Made in USA?
  • Stock Up on Twinkies
  • Ryder Rides on with Natural Gas Trucks
  • Looking for Two Pallets of Apple iPad Minis


At the Forefront of Business Intelligence –
A Program for Leaders


October 30, 2012 Contest

See Which Readers Won the Prize

New Cartoon on Monday at


Weekly On-Target Newsletter:
November 28, 2012 Edition
Last Chance Cartoon, US Manufacturing Data, LTL-Rail Q3, Port Strike and more
Holste's Blog: Flexible Processes are Key to Managing Volume Fluctuations in the DC
Inventory Optimization 2012

Research Questions: How advanced are companies in key areas such as visibility, demand classification, demand planning and others that impact inventory management effectiveness? What are the current levels of technology support for inventory management?

Can you please help by taking this quick 8 minute survey? All respondents will receive a summary of the data in just a few weeks.



Political Supply Chain and Network Design
By Dr. Michael Watson

Why S&OP Belongs in the Cloud
by Glen Margolis
Founder and Chief Executive Officer

Labor Unrest in the Global Supply Chain: Major Risk or Untapped Opportunity?
by David Linich
Deloitte Consulting LLC


How many cars on average does a class 1 US train carry?
Answer Found at the Bottom of the Page

Dr. John Langley of Penn State: Unplugged

Dr. John Langley of Penn State is certainly one of most well-known and most respected figures in the supply chain and logistics arena today. That was earned after academic stops at three of the industry’s most prominent university supply chain programs, winning CSCMP’s distinguished service award back in 1993, authoring three best-selling text books used by thousands of students, serving as leader for 17 years of the popular Third Party Logistics Study released each year at the annual CSCMP conference, board seats, numerous consulting engagements, and a lot more.

I have enjoyed working with John in a couple of capacities over the last half dozen years or so, especially helping him to put together twice each year the Georgia Tech Supply Chain Executive Forum until he left Atlanta for his alma mater, Penn State, in late 2010.


"Langley says it is critical to define and measure supply chain effectiveness through the eyes of the customer, and not just your own internal perspectives and measures."


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With all that, John seemed like a great candidate for one of our “unplugged” series of interviews, in which I cover a lot of territory with leading supply chain industry thinkers. In truth, with all we have going on here, it is been too long since I did one of these, but I promise to ramp the pace back up in 2013.

I had a great hour-long conversation with John earlier this week, which I am confident you will find interesting. As usual I will provide highlights here and a complete transcript a week or two down the road.

I knew John had undergraduate, master’s and doctoral degrees all from Penn State, but I did not know the undergrad was in mathematics and the master’s an MBA with a finance concentration. After that, he tells me he wanted to do a PhD program, and decided that the logistics field looked quite promising, and presented an opportunity to well use some of the quantitative skills he had gained in his earlier education. He says even then, he could sense that logistics effectiveness was going to be a growing component of overall business success, and that he could therefore be involved in a lot of practical applications as well.

That PhD led to a prominent, almost 30-year career at the University of Tennessee, a high profile change to Georgia Tech for nine years, and now the move back home to PSU.

So what are the most prominent changes Langley sees from what was still really the formative days of the discipline of logistics when he started his career through to today’s full supply chain era?

He started by noting that of course the capabilities and role of technology in supply chain today has changed dramatically, but added that while we all know that, too often companies today tend don’t focus heavily enough on how well they are actually leveraging and managing that technology versus their competitors.

That comment made me wonder whether we need some kind of better gauge or metric for how well companies are in fact managing their supply chain technology. I am not aware of any. I am going to think about that.

He also noted that perhaps the best change over the last couple of decades is that supply chain now provides a more clear path to senior leadership in a company, and in some cases (such as Walmart’s Lee Scott) a route to the CEO job itself.

“It wasn’t that long ago that if you were in a functional logistics area such as distribution or transportation, you weren’t really likely to be tapped for higher level corporate responsibility,” Langley said. “Now, many are putting their best and brightest employees into supply chain roles.”

Relatedly, he noted that today “business strategies and supply chain strategies are often thought of in the same sentence. This is a huge change from not long ago.”

I was curious whether - given all the progress that has been made in supply chain practice and technology – does Langley think we are anywhere near a sort of performance plateau, where the opportunities for improvement will be harder and harder to find?

“I don’t think so – and the reason is growing supply chain complexity,” Langley says. “That is the biggest challenge most companies are facing today.”

Langley observes that most of this complexity is coming from the external environment, but that in other cases the level of complexity is self-inflicted, but in mostly a good way, as companies master a certain set of capabilities and skills, but then reach for the next challenge, which turns the complexity dial up yet again.

“We still don’t have a really a robust way to really measure supply chain complexity though,” he noted.

On a similar vein, given all the companies Langley has and continues to work with on supply chain issues, I wanted his thoughts on whether he sees a sort of convergence of supply chain effectiveness across enterprises, or if there are still big gaps between companies, as I believe.

First, he observed, it is critical to define and measure supply chain effectiveness through the eyes of the customer, and not just your own internal perspectives and measures. And there, of course, price plays a critical role, with supply chain effectiveness of course impacting price and/or margins.

“The big change today I think is that customers in the past would often pay a higher price for superior levels of service, but that is mostly gone today,” Langley said. “What I find today is that supply chain leaders are moving the entire curve and thus being able to deliver superior service at a lower cost and thus lower price or higher margin.”

He also says there are important differences in the level of innovation and value-added services companies offer, and that many supply chain leaders today that have nearly mastered the “effectiveness” aspects of the supply chain (subject to on-going changes in the environment) have been turning their attention to these areas. Laggard supply chains still struggling with the blocking and tackling are less likely to innovate, Langley says. That innovation will of necessity usually involve higher levels of collaboration, which is what many leaders see as the source of the next round of supply chain improvements.

He also noted that “today, given what Supply Chain Digest and others are doing, what it takes to have an effective supply chain isn’t such a deep secret anymore. Yet, many companies still can’t make it happen. Why is that?”

Before I run out of room here, I wanted to get to some comments from Langley on 3Pls and shippers, given his long history on this topic, including heading the annual 3PL study mentioned above, slots on a couple of 3PL boards, and more.

Let’s start with a fundamental question: should most companies do more logistics outsourcing? Not necessarily, Langley says, but too often companies may not be really ask or answer the question effectively.

Companies should do the right (i.e., objective) analysis and come up with the path that is best for them, but Langley says that in annual study, when companies are asked why they don’t outsource or don’t outsource more, “they will often say that logistics is a core competency, or it is too important for them to outsource – I have to wonder those answers are more excuses than the results of careful analysis studying the opportunities and benefits from outsourcing.”

He adds that when doing the analysis, it is critical that companies clearly determine the decision criteria upfront to avoid having bias enter into the process.

Is there a risk of creating a slippery slope, where companies outsource so much for so long they lose the internal expertise almost entirely, and could never bring it back again if they wanted?

That is a “legitimate concern,” Langley says, and should be factored into the risk analysis, but notes that “if you talk to a number of organizations, they will tell you they have actually gained more control of logistics via outsourcing, not the opposite.”

I covered just a fraction of our discussion – look for the full transcript soon, which will include more discussion around outsourcing, why academic research in supply chain too often isn’t very practical, and more.

John Langley has been a great asset to the supply chain for a long time, and we hope for a long time to come.

What's your reaction to Gilmore's interview with John Langley? Anywhere you especially agree or disagree with his perspective? Let us know your thoughts at the Feedback button below.

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New Videocast Series:

Supply Chain Execution - The Path Forward

Part 2: Five Key Trends in Supply Chain Execution Technology

Featuring Ganesh Iyer, IT Director (Americas), Rexam, Rajeev Das, Program Manager, ERP, Cognizant Technology Solutions and Gagan Deep, Program Manager, ERP, Cognizant Technology Solutions

Tuesday, December 11, 2012


Major Research Findings Released:

The Shelf Connected Supply Chain 2012

What are manufacturers and retailers thinking and doing to connect their supply chains to the store shelf and true consumer demand? What are the barriers to getting there?

You Will Find the Benchmarks for those Questions and a Lot More in this Outstanding New Report



Cross Enterprise Supply Chain Collaboration and Visibility

Research Questions: What progress have companies made connecting with supply chain partners? What levels of visibility are being achieved with 3PLs and contract manufacturers?

Please help by taking this quick 7 minute survey. All respondents will receive a summary of the data in the near future.



Trying to catch up on the many feedbacks we received. This week, our Feedback of the week goes to Arun Kumar Ojha of Schlumberger, who says that the growing use of temporary labor in US factories is not surprising, given US manufacturers haven't worked smart enough to keep themselves competitive globally.

We also have several letters relative to Dan Gilmore's First Thoughts column on Taming the Long Tail.

Feedback of the Week: On Increased Use of Temp Labor


With increase in temporary labour in manufacturing system, it brings more flexibility in scalability but at the same time it brings in lower accountability to individuals.

One need to look at the business requirements in detail and deploy temporary labors in the system. US manufacturing organizations have been traditionally bulkier without performance based incentives, which has resulted in becoming less cost competitive.

On top of that, the US kept believing on buying of low cost country like China, instead of focussing on bringing in efficiency, lowering cost structure, improving productivity, and bringing flexibility in supply chain in manufacturing sectors.

It is too late to revive the manufacturing sector now in US. The organizations need to think all corners to bring overall cost down to be more competitive in today's economic scenario. Temporary labour is just fragment of this process.


Arun Kumar Ojha

Asia Global Sourcing


  Feedback on Taming the Long Tail  

Thanks for covering this topic. I look forward to hearing more details on your approach to this issue. While your article was around retail inventory, I feel that the approach you use to model will probably be ok for my spare parts inventory. We segment our inventory in many layers but I'm always looking for better approaches for the "quantity and frequency of demand".

Ron Whitlock
Sr. Project Manager



The long tail can be divided into two pieces:

• Low volume /low variability (the "Steady Eddies")
• Low volume /high variability

Each can and should be treated differently. High variability leads itself to producing to demand while the low variability can easily be forecast. Many CPG companies have taken this one step further... adding production capacity, they have utilized produce-to-demand in both high volume / low variability products and high volume/high variability products.

One of our clients has pushed their "A" item inventory to 3 days supply - and their biggest clients are this you would identify as ultimately demanding.

Thomas A. Moore


Amazon is doing a pretty good job with their long tail strategy - but, they have vulnerabilities.

Richard J Sherman, president & CEO
Gold & Domas Research



Q: How many cars on average does a class 1 US train carry?

A: Well, this is only from Union Pacific, but in Q3 its trains carried an average of 87 regular rail cars and 176 intermodal containers.

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