This Week in SCDigest

Twas the Night Before a Supply Chain Christmas 2012

Long-time readers know we do something special each year for Christmas, and this year we are offering a new edition of "Twas the Night before a Supply Chain Christmas."

I actually wrote a version of this our first year in operation, and have used it every few years after that, and while I am quite happy with it, decided to try my hand at a new version for 2012. You will find it below.

Twas the Night Before a

Supply Chain Christmas 2012

Twas the night before Christmas, and throughout the supply chain section,
My team was all gone - a unanimous election.

As VP of supply chain, I was winding my day down too;
And I knew once again it was a tough year we'd been through.

Demand planners, global sourcing, distribution, transportation,
Production schedulers, network planning - my team sure earned some vacation.

All of us in supply chain understand the pressures we face;

It's tough, and we know it - yet it's a challenge we embrace.

Drive out cost, increase service, and oh, while you're at it,

We'd like a lot fewer risks - so when can we have it?

Our work is vitally important - yet so few understand it;

I wish my family, at least, knew some more, to be candid.

As I pondered these thoughts about a supply chain career,

I heard a loud clank and clatter that first caused me some fear.

I move quietly over in the great noise's direction.

And realized I had nothing to fear, upon inspection.

It was none other than Santa, outside the elevator door,

And he looked right back at me while sitting flat on the floor.

"Sorry to startle you," Santa said, with a smile;

"I'm used to chimneys; haven't used these lift things for a while."

"What are doing you here good Santa?" I asked from the heart.

"Isn't your gift giving tour soon ready to start?"

"That's correct," Santa said, "but I must first tell you it's true

Supply Chain now is key to everything that we do.

"But with my work with the children, I can't get to business,

Yet my gift bag is available, for those desiring supply chain fitness.

"I picked you out because you run a good supply chain thing.

Please pass the word on about the supply chain gifts I can bring.

"First is S&OP excellence - it's far from universally here,

Though at the North Pole we advanced to Integrated Business Planning this year.

"Next in my supply chain sack you will find

Inventory Optimization software - the multi-echelon kind.

"To help in multi-channel fulfillment you will also see too

Distributed Order Management software; it's used by too few!

"I have all kinds of software, and I am really quite proud,

To note all of it is now available on-demand, in the Cloud!

"In our Arctic DC, we've had great success with Voice,

So that's another gift I have - an excellent choice!

"We use labor management software too, and you should certainly know,

We have discrete engineered standards available to go.

"Also key at the Pole is great visibility to demand,

Reach deep and you'll find "demand sensing" tools there on hand.

"Oh, let me add, we have a great overstock situation

On RFID tags from that old Walmart "mandate" creation.

"There is quite a bit more, this stuff companies need to succeed;

The tools are available - but not all companies will proceed.

"We know the challenges first hand, me and my elves.

We now must compete with Amazon.com ourselves.

"And what's worse is that while our interest is keen

That Bezos guy won't sell us a single Kiva machine.

"But that's OK because for years we've been plotting

A breakthrough advance in our software for slotting.

"The point is," said Santa, "practices and technology are available to all,

Yet there are really great differences in how companies answer that call.

"There are SCM leaders and laggards, and it's easy to get lost;

The laggards are too cautious, and think it's only about cost.

"I can provide the tools, but I can't lead the way.

And that's what really matters, at the end of the day.

He laughed loud and merry and into the elevator he hopped,

Put his finger to his nose, then reached for the button to the top.

"Oh... there's one other path to supply chain greatness, by the way -

Keep yourself well-informed - read Supply Chain Digest every day!"

And I heard him say, as he at last rose off with a jerk

"Supply Chain plays a great role - be proud of your work!"

Hope you enjoyed it.

I usually manage to get myself two weeks off this time of year, but the calendar tells my we may just be off with this newsletter for next week only. See you the first week of the year, though stories on our web site as always will be update frequently.

We have big plans for 2013. You will soon see a modest new look to our home page and story pages, for example. Hope to launch an exciting new supply chain data source site in early 2013. A lot more planned.

Have a Merry Christmas and Happy New Year from all of us here at SCDigest.

Did you enjoy Gilmore poem? Let us know your thoughts at the Feedback button below.

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Thanks for another thought provoking set of questions about an evolving environment.

It is well known that the shortest distance between 2 points is a straight line, and the simplest logistics process has 2 steps - 1 at the beginning and 1 at the end.

If we think about retail sales with the consumer at one end and the manufacturer at the other, the shortest and simplest approach would appear to be B2C direct from the end of the manufacturing line. However, appearances can be deceiving, particularly when long distances are involved. This is why we have distribution networks. And manufacturers are far more capable of building pallets to ship in full truckloads than they are to send single retail units of multiple SKUs to a consumer address.

The driving force is the consumer, and today the consumer wants and expects extremely rapid delivery. Even same day delivery. And, they expect discounted pricing on-line and free shipping to boot.

If that wasn't enough they want to be able to go to a brick and mortar store to examine the product prior to purchase, then after making on on-line purchase take the product back to a fixed location for credit if they decide they don't want it. How in the world does the B&M retailer get compensated for their part in this deal?

Lots to think about. Not only how the dot-com channel can make money, but how the traditional stores can as well. Somebody certainly needs to come up with an tenable solution.

Steve Murray
Principal Consultant and Chief Researcher
Supply Chain Visions

Some of the comments in the article from"experts' reflect the failure to recognize that there is still some difference between e- or m-commerce buyers and brick-and-mortar buyers. Of course the best buyers move between these categories, but they between them because of different expectations of each channel. For example, most buyers who want same-day access to a product are willing to go to the store themselves ... I expect demand for same day delivery of online orders to remain limited both overall and limited to very high density cities, such as NYC.

But further, the staff which operates B2B and B2C warehouses continue to need help recognizing the differences between serving these two market segments. Sharing inventory is potentially valuable, but after that the functions between to differ widely. Operators need to both recognize and understand those differences. Many, if not most, still don't.

It's important to provide a very low cost shipping method - low cost and slow. Customer should pay for speed.

It's important to learn to delivery inventory to the demand ... the area where we still have the most to learn. But it's also sufficiently dynamic, as products move into and out of the market, that it may be impossible to master ... except for companies such as Apple who are managing very high demand for a relatively small set of SKUs.

David P Himes

Direct Commercial Advisors

The buzzword in today's retail space is Omnichannel. Check out Retailigence.com for online search to offline purchase (O2O) capabilities that retailers and mobile apps developers are subscribing to their "data as a service" and location based marketing.

Amazon does real time order and inventory optimization throughout the day and treats their shipping lanes as almost a fixed cost. The more volume per lane the greater the "margin per box." Wal*Mart is the sleeping giant in Internet sales and is about to wake up. They are the only "long tail" bricks and mortar retailer that can compete with Amazon on a global basis.

Meijer has been very successful with its omnichannel strategy; but, they are still pretty regional on the bricks and mortar side. They still have the most optimal cost structure in the industry. The rumor is that Amazon is going to open some retail outlets; buy, they won't be physical long tail stores. They will be more trendy in all likelihood; but, they will have difficulty competing in the omnichannel space. In the more traditional space, Macy's and Nordstrom's are competing quite well in omnichannel.

It will be interesting to see if Wal*mart will go into more upscale categories as it beefs up its Internet presence. Traditionally, those shoppers don't shop at Wal*Mart because they can afford not to. Amazon, Nordstrom, Macy's, and others show upscale shoppers go online. With Walmart.com, the shopper doesn't physically have to go into the store. And, don't count out BestBuy... some innovative O2O and same day delivery strategies are forthcoming.

Rich Sherman
Gold & Domas Research

Nice final thoughts and I agree that analytics "is the ability to use data to make better decisions."

Another interesting aspect that we can draw from this (apart from what the data is telling us) is what the data is not telling us.

In fact, it is the "not-telling" that contributes to a greater degree of complexity.

Koh Niak Wu, Ph.D.
Global Supply Chain and Logistics
Dell Singapore

For the people buying such software and services this is a crucial thing to understand - just because it says analytics on the box does not mean you will get anything more than simple reporting when you use it. In fact, if my experience is at all representative, if its says "analytics" there is an excellent chance you will find nothing beyond reporting and perhaps visualization/alerting tools. If what you need is a predictive model, you had better understand what constitutes "predictive analytics".

Personally I tend to use the "What happened?", "What if?" and What's Best" categories to explain different sorts of analytics but perhaps it's time for me to make a change.

Andrew Gibson
Partner
Crabtree Analytics