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April 21, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Readers Respond Part 2 - Finish Line's Distribution Disaster bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Winners Announced bullet Trivia      bullet Feedback
bullet New Expert Insight bullet On Demand Videocasts

Download this complimentary Aberdeen Group report

Leveraging Global Trade Management for Frictionless eCommerce


first thought


Supply Chain Graphic of the Week
What will be the Impact of Robots on Manufacturing Employment?

Major Downward Revision of Recent US Manufacturing Output
Highway Congestion Costing Truckers and Shippers Big Time
Is the New Force in eCommerce?
Truckload Rate Changes Go Negative





Week of March 22, 2016 Contest

See Who Took Home the Prize!

Holste's Blog: Will Automation Lead to Fewer Jobs?


Weekly On-Target Newsletter:
April 20, 2016 Edition

Last Chance Cartoon, Best of MODEX Day 2, Always On Supply Chains and more

ACE-ing PGA Data for Success

by Nathan Pieri
Amber Road


In the 1990s, there were two US industry trade magazine that focused specifically on “automatic identification” technologies. Can you name either one?

Answer Found at the
Bottom of the Page

Readers Respond Part 2 - Finish Line's Distribution Disaster

In early March, I published a column on the major troubles athletic shoe and apparel retailer Finish Line had starting last September with a "go live" of a new Warehouse Management System (WMS) and Distributed Order Management (DOM) system that ultimately led to a loss of $32 million in revenue that quarter.

We know that because Finish Line called out the supply chain software problems at the very start of its earnings release for the quarter in early January - very unusual - as the primary cause of its disappointing sales and profit numbers. The CEO resigned in parallel with the news, and the chief supply chain officer - among we suspect others - was let go a few weeks later.


This then leads to a vicious circle: "After a certain point [of delay], if the software vendor is not making any money, everyone starts cutting corners."


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Feedback here

You can find my original column, which goes into this story in some detail, here: Lessons from Finish Line's Distribution Disaster.

That led to a spate of reader Feedback of all sorts, including an email from one consultant who worked on the project and thought Finish Line's management of the project was less than stellar.


So we published a column the next week highlighting some of the best of that Feedback, which is here: Readers Respond - Finish Line's Distribution Disaster.

But we couldn't fit all that good initial Feedback in, and that column itself generated still more Feedback, so I am going to take advantage of that situation to let readers do the heavy lifting for this week's column again, especially as I hear from many of you that you enjoy these Feedback-based columns.


So here we go.


Tom Ryan, who has been around the WMS industry for many years, perhaps most prominently as Gartner's lead WMS analyst for several years in the mid/late 1990s, offered a number of insightful comments.


"I've been involved now in multiple expert witness situations - I call it "software implementation failure forensic pathology, why did this thing die and who killed it." Interestingly, 80% of the time it is the customer's fault and not the consultant nor the integrator nor the software vendor," Ryan observed.


Among other interesting recommendations for WMS implementations, Ryan said "overstaffing" the start-up is key.


"No one is at normal efficiency yet, they are still getting used to the new system. They will be slower, less efficient," Ryan noted. "Throughput will be done with the new system. Overstaff resources to execute the work, overstaff supervisory people to manage the work, and overstaff trainers to assist the workers and the managers. Learn for this and adjust the training to reflect what happened."


Our sources indicate Finish Line was indeed understaffed, especially in DC floor supervisors.


Tom Dadmun, former VP of supply chain for network gear maker Adtran, says companies need to do more "due diligence" on their software providers.


"Due diligence is an expertise that requires background checks on the solution provider's customers and a review of the good, the bad and the ugly. And if they say they have no ugly they are not truthful," Dadmun wrote. "Not all implementations go well. Some due to the solution provider, some due to the customer being ill prepared to take on a major project."


I have a slight adjustment to Dadmun's point - make vendors provide you contacts for all deployments in say the past year, rather than cherry pick to only provide the ones that went well.


Dadmun also noted that "with a project of this magnitude, trial runs and simulations of the full blown system should be presented to the CEO and staff before the system is green lighted!"


Jay Morris of Intralogistics believes some of the SCDigest readers were off base in their analysis.


"The problem isn't WMS testing or integration. The fact that some of these consultants quoted in the article blame it on that exacerbates the problem," Morris wrote. "Failures like this will continue as systems get more and more complex until end users figure out you can't buy the design from a consultant, the physical systems from a MHE supplier, and the software to make it work from a WMS company," arguing a fully integrated system from one provider is what is required today.


That is a big topic for another day.


But Colin Jackson of RCL Foods does think training issues likely played a role in the debacle.


"My favorite quote on training is this," he wrote. "Don't train until they do it right - train until they can't do it wrong!"

Chirag Sanghavi is a consultant in the supply chain software industry, and says that while he wasn't involved in the Finish Line project, he knows others who were and "none of them wanted to stay on it for long."


Interestingly, Sanghavi says that when a project is headed in the wrong direction, "Consulting managers typically are afraid to give bad news to the client. They keep harping on their own team of consultants to get it right, but no matter who may be wrong and how hard the consultants try, they can't get it right because of other variables on the project."


This then leads to a vicious circle: "After a certain point [of delay], if the software vendor is not making any money, everyone starts cutting corners, sending knowledgeable resources to profitable projects, putting newbies in," and the downward spiral continues.

James Nelson picked out the comments of the anonymous consultant who said he worked on the Finish Line project that there wasn't a high level of "buy-in" for the new system among Finish Line managers and executives.


"As a retired supply chain executive and consultant, I can tell you our most significant challenge every single time we were standing up a new facility and system for a client was the full buy-in of the company personnel (from CEO to order picker in the warehouse) to the new program," Nelson writes. "If we could not get that understanding with a client, we walked away."


Mike Albert observes that "While no one wants to plan for failure, Finish Line should have had an option to revert to the version of the WMS being replaced. It worked before and keeping that version "alive" and working in parallel to the new version would have allowed for a smooth transition back to "known territory" and would have stopped the bleeding."


This can be a tough call - there is certainly a cost to keeping this option open. But in Finish Line's case, that cost would have been trivial compared to the costs the company ultimately paid for the failure.


There were many more feedbacks but I am out of space.


Finish Line seems to have largely recovered. In its fourth quarter ending in February, "We worked diligently to improve digital fulfillment rates and flow new inventory to our stores," new CEO Sam Sato said in the generally strong earnings release.


GAAP earnings per share were well below non-GAAP earnings, the company said, largely due to the latter "excluding the impact from the write-off of technology assets."

Any more perspective on on the Finish Line distribution disaster? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

On Demand Videocast:

Now is Finally the Time for WMS in the Cloud

As Supply Chain Software Moves to the Cloud, Barriers to Warehouse Management Joining the Party have All Fallen Away

What has changed, and what WMS technology developments are fueling this transition. We'll cover all that and more in this detailed, fast-paced broadcast.

Featuring SCDigest editor Dan Gilmore and Dinesh Dongre, VP Product Strategy, Softeon

Available On Demand

On Demand Videocast:

Trends and Issues Global Sourcing and Trade Management

Results from SCDigest's New Benchmark Study on Practices and Technology in Global Trade

You'll learn the results of the survey, unveiled in a new report launched with this Videocast. Not to be missed by anyone interested in global sourcing, global trade management and supply chain visibility.

Featuring SCDigest editor Dan Gilmore, Gary Barraco, Senior Director of Supply Chain Solutions at Amber Road, and Dan Gardner, President of Trade Facilitators Inc.

Available On Demand

On-Demand Videocast:

Using Supply Chain Modeling to Improve Operations and Outperform the Competition

PriceSmart Builds Optimized, Aligned and Dynamic Supply Chain Network

You'll learn about key new trends in supply chain design, where companies are finding the value, and learn the powerful story of how leading retailer PriceSmart has used network design tools to craft its network of the future to support growth, optimize flow paths, and right size inventory levels.

Featuring Frank Diaz, senior vice president, distribution and logistics at PriceSmart, and Toby Brzoznowski executive vice president at LLamasoft and SCDigest's Dan Gilmore

Available On Demand


We received several excellent letters on our article on Target's decision to rewrite much of its  supply chain software, and do it in house rather than outsource and use packages. All the result of the impact of Omnichannel, which, CEO Mike McNamara said, is killing the traditional DRP/DC supply chain model in retail.

See a selection of this Feedback below.

Feedback on Target's Change in Software Direction:


In an omni-channel retail world the entire supply chain needs to be in the system because vendors can ship to the stores, DCs, depots, fulfillment centers, and so on.

So, a DC-level DRP system will not do the job.

I suspect we agree on that.

If so, then the logical solution would be a store-level DRP system which also includes the DCs, depots, fulfillment centers and so on. This way, everything is in the system and a model of the business exists from the final point of sale all the way back to the vendors, and possibly further back to raw material suppliers if the vendors have DRP/MRP systems. Forecasts, planned shipments, financial plans, transportation plans, and capacity plans exist for this fully integrated supply chain, everyone has up-to-date, clear and undistorted visibility, and everyone is working to a common set of plans.

Do we agree on this?

If so, then the next question is does it make sense for Target to create their own store-level system?

The success of these systems is mostly a function of the people side of the business - changing the process and behaviors and we have lots to share in this regard. But you also need to have software which can do the job.

There is nothing preventing a company like Target from changing their processes, and the process changes are tested and proven.

So, could a retailer as large as Target create store-level DRP software? If so, what would it cost? Would it be less than what many retailers are spending to implement a package?

Mike Doherty
Vice President
Demand Clarity


Yes, the DC/DRP model is dead.

The store-level DRP model where the extended supply chain including stores, DCs. vendors, and other locations is very much alive and is both tested and proven in retail.

All trading partners are linked together with clear visibility upstream and downstream. Changes are communicated daily or more frequently. The planning horizon extends a year into the future.

Darryl Landvater
Product Director


No question here: If an application is central to the business mission of a company, that company must own it own code. 

Did Amazon buy packaged applications?  I think NOT.


Steve Kohler



Q: In the 1990s, there were two US industry trade magazine that focused specifically on “automatic identification” technologies. Can you name either one?

A: Automatic ID News and ID Systems - both are long gone.

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