This Week in SCDigest

A Supply Chain Christmas Carol 2013

It was Christmas Eve at Supply Chain Digest, but the small staff and editor Ebenezer Gilmore were still hard at work as the clock neared 5:00 p.m. A few of the crack staff members continued to look up at Gilmore from time to time - the tension growing.

"Where's that piece on automated case picking?" Gilmore barked at Cliff Holste, SCDigest's material handling editor.

"Almost done," Holste said. "I should have it by tomorrow, ...er.. soon!" Holste responded.

Finally ending the tension, Gilmore said to the group, "I supposed you will all be expecting an extra day off on Monday? Well, the supply chain will still be moving in China, you know. But I guess we can catch up with it Tuesday morning. Fine - the full day off for the lot of you!"

A cheer erupted from the small group. In fact, to Gilmore's consternation, they immediately packed up and went home with amazing alacrity.

"A merry supply chain Christmas to you Ebenezer! Try a day without supply chain for once this year!" editorial assistant Joan Nystrom yelled as she walked out the door. She, Holste, Lori Hamilton and others chuckled as they headed for the parking lot.

Ebenezer harrumphed, then called sales chief Joe Salinas in Houston just to make sure he was still on the job. "After all, Houston's an hour behind," Gilmore thought. "It's barely four o'clock there."

Salinas was in his office, and Gilmore asked for the daily call report before officially giving him the day after Christmas off too.

"I'm thinking it may be hard to get a hold of potential sponsors," Salinas wittily observed. Ebenezer noted some may be doing email or texting, so consider that approach before blowing off the whole day.

Finally, Gilmore himself gave it up for the night, headed for home, and enjoyed a pleasant Christmas Eve dinner with his wife and five children. As always, they adjourned to the living room, and around the Christmas tree they were simply riveted by his annual holiday discourse on the role of supply chain in the product economy, the special supply chain challenges of the Christmas shipping season, what happened to commodity prices during the past year, and other interesting SCM topics.

When he was finally finished, he smiled and looked around warmly at his family, knowing just how much they had enjoyed the talk. They sat quietly together, breathing in the glory.

"What's supply chain again?" one of the kids finally asked.

"How can people not know supply chain! Does no one around here listen to a word I say!" Gilmore bellowed. "It ought to be taught in the high schools! Where do you think all this stuff comes from?" he asked, pointing to a healthy pile of presents under the tree.

"The store?" one of the kids answered. "Amazon.com?" ventured another.

"Bah humbug!" Ebenzer responded. "Read Supply Chain Digest! Get educated!"

It was around midnight when Gilmore finally went to bed, after doing a last check of the news wires for any breaking supply chain stories. Not long after he drifted off to sleep, he awoke with a start at a loud noise. Next to him, his wife was still sound asleep, but there at the end of the bed was a strange ghostly presence.

"I am the ghost of supply chain past!" it said. "Come with me."

Soon, the two were soaring in the air over the countryside, and there in the heavens, the entire supply chain was visible to them both - accompanied by music.

"The Bee Gees?" Gilmore asked. Yes, it was the 1970s, and what the ghost displayed to him looked so strange. Every purchase order and invoice was being sent by US mail. He could see large mainframe computers churning out green screens of the most basic software applications, little of which had much to do with supply chain. Warehouse workers were tracking inventory with cards in a shoebox, wandering the building looking for inventory - which tended to stay there for a long time. Factories were cranking out products based almost solely on utilization and unit costs and what was best for the plants.

Ebenezer could see right inside of headquarters buildings, where he viewed departments like purchasing and marketing and manufacturing and distribution all marching largely to their own drums, occasionally sending typed memos to each other about what they were doing, or complaining about how the others were goofing them up. Vast silos seemed to emerge across the landscape.

"This is kind of scary," Gilmore said. "Why are you showing me this? We are well past this era."

"Not far enough!" the ghost answered.

The next instant, Gilmore was back in bed. He again drifted to sleep, only to be awoken by a second specter.

"I am the ghost of supply chain present." he said. "Follow me." Soon again, Ebenezer Gilmore was whisking through the sky.

"This is much better!" Gilmore said. He could see products moving very fast, not just across the US but across the entire globe. The world did indeed look flat from up here.

There was technology, lots of it, with software and powerful analytics optimizing transportation, inventory planning, factory scheduling and lots more. Products flowed rapidly through distribution centers, managed by workers scanning bar codes and even reading RFID chips [Ok, we're making that part up] while using mobile terminals, sometimes talking right into them. He could see Lean factories and S&OP meetings and even some CPFR. Most amazingly, occasionally the demand planning software was even getting close to the right forecast!

"Now this is supply chain!" Gilmore said to the ghost. "Look how far we've come."

"Look again!" said his guide.

Rubbing his eyes and looking a second time, new aspects of the supply chain were revealed that had not been visible before. He suddenly saw retail stores with lots of stock-outs, and many weeks of inventory in the pipeline, though much less was really needed. As S&OP meetings concluded, he could see the impact of those meetings dissipate as processes moved further down the supply chain to execution. There were vast quantities of information flying here and there, but just a fraction of it being captured and used to make better decisions.

Software applications still weren't communicating well, and there were still significant gaps between planning and execution in almost every area. There were opportunities for cross-company collaboration being missed all over the place. Many companies were not even taking advantage of opportunities to collaborate on their own internal freight moves. My goodness, a number of DCs were not even receiving ASNs from their own plants! And despite all this supply chain activity and technology, inventory levels did not seem to be really going down.

"This is a strange vista you show me ghost," said Gilmore. "I am not sure whether to be pleased or disappointed."

With that, he was back in bed, and soon enough, a third specter appeared.

"I assume you are the ghost of supply chain future?" Gilmore said, and the presence nodded. Off again they flew.

Below me was a truly new supply chain world.  The entire supply chain was visible to me - as it was to companies and their trading partners. The real-time supply chain was here!

Supply chain organizational structures had change significantly. The silo structures of the pat were largely gone - managers were now part of process teams, not functional reporting structures. Operational planning and execution were no longer separate processes - they were a single, integrated, highly dynamic one.

The level of automation in distribution centers was staggering - robots of various sorts were everywhere.

Wow, the level of collaboration was astounding - retailers were conducting joint S&OP processes with leading vendors, operating almost as if they were one company.

Amazon.com  had about $2 trillion in sales - the Justice Dept. was conducting an investigation into whether it was a monopoly that needed to be broken up.

There was so much more.

"This is tremendous," I told the ghost.  "The supply chain of the future has reached its promise."

"Hardly," the ghost whispered. "Wait until you see what's coming next. But we're out of time - maybe next year. Your job is to help others chart the course."

As morning dawned I was back in bed - not tired, but pleased with the mission I had been given.

(Note: This is a modified version of a piece that first appeared in 2008.)

Merry Christmas from Supply Chain Digest!

Did you like our Supply Chain Christmas Carol? Let us know your thoughts at the Feedback button below.

I think your History project is a great idea and if there's anything I can assist with from my side of the Atlantic please let me know. I have moved house in the last couple of years and in preparation for the move and since have thrown a huge amount of material out but I hope that I still have some of the more important aspects from my career working in many diverse companies and supply chains from the end of the 1960s through to recent years where I have been an educator and trainer.

It was fascinating listening to the 50 year history of CSCMP in Denver. I joined in the early 80s and attended my first conference in St. Louis in 1985. It was there that I heard Prof. LaLonde speak for the first time and I am still using one of his quotes! I also met Roger Kallock for the first time and it was good to see and hear him on the video. I now also realise that others who I worked with were immensely influential in the sector. Eric Baum in the field of engineered labor standards was just one. History gives perspective - it also shows us the complexity of real life that a great deal has to come together for new work and innovation to be successful and sustainable.

Just one case study for the archives: I was brought up in London in the 50s and 60s. My mother used to do her shopping for groceries at a local store and most days of the week would walk out and buy food for the evening meal. However on a Thursday morning she would phone the local grocer and give them the big order using as a reminder the front of the previous week's bill showing what she had purchased, and on the reverse a printed list of the main commodities the store stocked. The goods were delivered by van the next morning. No doubt middle class mums did much the same in the USA - 60 years on and the basics haven't changed and we are still discussing how to deliver economically to the home!

Keep up your good work.

David MacLeod
Learn Logistics Limited

Great effort to capture Supply Chain history Dan. I would like to recognize Jay Forrester's pioneering work on Industrial Dynamics as a clear marker in SC history. His work spanning many years under the name Industrial Dynamics was precursor to many of the current advanced SC management ideas. His vision was way bigger than an inspiration for the Beer Game and the bullwhip effect.

Quoting from his 1968 article: "The manager's task is to interrelate the separate functions of the company, to create the flows that cause the company and market mutually to support one another, and to interweave the tangible economic variables... The manager's principal problems seemed not to lie in decisions taken as isolated events, but rather in policies that deal with streams of decisions and in the structure of the managerial system that interrelates information sources, policy, and action."

Industrial Dynamics-After the First Decade, Jay W. Forrester, Management Science, Vol. 14, No. 7, Theory Series (March 1968), pp. 398-415.

Keep up the great work.

Omer Bakkalbasi

Chief Innovation Officer,