sc digest
July 21, 2016 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Highlights of the Gartner-SCDigest Supply Chain Study 2016 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 Continues bullet Trivia      bullet Feedback
bullet New Expert Insights bullet New Videocast and On Demand Videocasts

Making Spaces Smart: Automated Restock Alerts Keep Lines Up and Running


first thought


Supply Chain Graphic of the Week
Areas of Most Value from Supply Chain Digitization


Amazon Patents Drone House

Sewbots Huge Threat to Millions of Asian Apparel Jobs
Honda Says Goodbye to Rare Earth Metals
US Truckload Rates Continue to Tumble


Making Spaces Smart:
Automated Restock Alerts Keep Lines Up and Running


Week of July 11, 2016 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: When Looking To Improve Operations, Shipper Can Tap Into a Variety Of Expert Resources

Weekly On-Target Newsletter:
July 20, 2016 Edition

New Cartoon, Detention Blues, Digitization, Hot DC Market, Ford CoBots and more


Manage What Matters

Discusses the Law of the Vital Few, the Pareto Principle, ABC Analysis and How to Manage by Exception

The "-abilities" of Global Trade Management: Are Your Digital Platform Capabilities Ready to Challenge Business as Usual?

 by Nathan Pieri
Chief Product Officer
Amber Road

The Tactical View: What's Missing in Today's Supplier Integration Market

by John DiPalo
Chief Strategy Officer
Acsis Inc.


What were Walmart and Warner Lambert famously working on in 1995-96?

Answer Found at the
Bottom of the Page

Highlights of the Gartner-SCDigest Supply Chain Study 2016

For nine years now SCDigest has partnered with the analysts at Gartner on a supply chain study based on a survey of our readership.

Usually, the presentation highlighting the findings is first released at the Gartner Supply Chain Executive Conference in Phoenix, with the research led as usual by Gartner's Dwight Klappich. That didn't happen this year, and the research has instead been rather distributed across many presentations and research notes. However, I have pulled together as usual some of the highlights here.


We will be conducting the 10th annual survey some time later this year - please share your input with us at that time, we need your help.


Send us your
Feedback here

These days, a lot of what Gartner does is connected in some way to an ever-growing list of "maturity models," the first of which was a core supply chain framework, or more accurately a "Demand Driven Value Network " maturity model.

Released several years ago, the original model had four levels, but has now expanded to five. The basic concept has been spun out to similar maturity models for Sales & Operations Planning, Logistics and a few more areas.

If you aren't familiar with that DDVN model, the five levels are: Level 1 - React (business unit focused, often misaligned or siloed objectives); Level 2 - Anticipate (some supply chain functional performance improvements over Level 1); Level 3 - Integrate (integrated, cross functional supply chain decision-making); Level 4 - Collaborate (profitable demand-driven fulfillment through internal and some external collaboration); and Level 5 - Orchestrate (profitable shared value creation through innovation across internal/external networks).

Gartner will tell you very few if any companies are really at level 5.

That maturity model almost always becomes important with Gartner research and analysis because survey respondents are asked to self-rate themselves as being in one of those five levels, and then many of the responses are analyzed based on that segmentation. In this survey, 17% said they were Level 1, 40% Level 2, 36% Level 3 and 5% Level 4, and just 1% Level 5.

So, for example, is the chart you see below, which summarizes in what areas companies spend their supply chain IT dollars based on the level of maturity in the Gartner model. As can be seen, companies at lower levels of supply chain maturity tend to spend a lot more of their available IT budgets on "running the business" than they do on "transforming the business" versus more mature companies.

So why is this? Seems to me there are three possibilities: (1) lower maturity companies simply spend less on supply chain IT, and so innovation is just cut out of the dollar pool; (2) lower maturity companies are less efficient in IT spend, so they have to spend relatively more just to keep the ship moving; or (3) lower maturity companies just lack an innovation gene overall in their supply chain or even total company DNA, so it isn't a high priority.

Next, what barriers are stopping companies from reaching their supply chain goals?

The top 5 are listed below, with "inability to synchronize end-to-end processes" in total coming out on top, although perennial favorite "forecast accuracy and demand variability" actually had a higher percentage of respondents who selected it as the top barrier. Rounding out the top 5 from a long list of choices were (3) lack of cross functional collaboration, (4) leadership/corporate culture, and (5) lack of supply chain visibility.

This is really interesting when you think about it. What really - and I mean really - are the barriers to reaching supply chain goals and driving improvement? As I now think about it, I am not sure if inability to synchronize end-to-end processes is a cause or just a symptom. And to what extent is just an overall lack of modern supply chain technology a factor? (That wasn't one of the choices.)

Switching gears a bit, the results this year showed a strong interest in moving to Cloud-based supply chain solutions. In parallel with that, Gartner offered a continuum of software deployment models, which is as follows:

On-Premise: The traditional way applications have been deployed and operated for the last several decades. The customer buys and runs its own technical infrastructure and then purchases and installs and operates various applications on this infrastructure. 

Hosted: Basically the same as on-premise but the customer outsources operation and maintenance to a third party that either operates applications on the customer infrastructure or moves these to the hosting providers infrastructure. 

Private Cloud: A form of Cloud computing with closed access, a style of computing in which scalable and elastic IT-enabled capabilities are delivered as a service to internal customers using internet technologies.

Public Cloud: Externally managed computing services that multiple companies access and use. The Cloud service can range from IT infrastructure to business services and has options of dedicated public Cloud, community public Cloud, and network public Cloud.

Hybrid Cloud: A not often seen combination of on-premise and public Cloud services. For example some TMS providers operate the market-facing capabilities of their application in the Cloud but allow their customers to run their optimization engines on-premise or in the Cloud. 

Dedicated Cloud: A vendor operates multiple instances of its application software where each customer has its own instance running on shared Cloud infrastructure. 

Multi-tenant Cloud: A vendor operates a single instance of its application software for all customers.

Gartner asked survey takers what factors were driving them to the Cloud, but maybe more interesting are the reasons why companies are eschewing Cloud solutions, as shown the graphic below.

Not surprisingly - though perhaps a bit overblown versus non-Cloud risks - are issues around data security, followed by lack of general interest from the corporate IT group and then companies that are simply satisfied now with what they have.

There is a lot more from the study but I am out of room. If you would like a copy of the summary slide deck please give me a holler at here.

We will be conducting the 10th annual survey some time later this year - please share your input with us at that time, we need your help.


Any reaction to this Garter study data? What really are the barriers to improved supply chain performance? Why do more mature supply chains spend more on innovation? Let us know your thoughts at the Feedback section below.

View Web/Printable Version of this Column

NEW Videocast:

Supply Chain Software Trends and Opportunities 2016 Benchmark Report

Results from SCDigest's New Benchmark Study, Including a Special Focus on Cloud-Based Solutions

In this outstanding Videocast, we'll summarize important trends and developments on both the user and technology provider fronts, based in part on results from a new SCDigest survey on trends, opportunities, and practices in supply chain software.

Featuring  Dan GilmoreJohn Murphy, Senior Director, SCM Applications Product Marketing, Oracle and Jim Heatherington, Vice President, AVATA.

Tuesday, Aug. 2, 2016

On Demand Videocast:

Supply Chain Design as a Continuous Business Process - The Whirlpool Story

From Project to Process: Here's How to Get It Done

In this outstanding Videocast, we'll explore the changes needed to make supply chain design a continuous process, emerging new best practices in supply chain design, and how consumer products leader Whirlpool has successfully embraced this 360-degree approach.

Featuring Dan Gilmore, Editor, SCDigest, and Toby Brzoznowski, Executive Vice President, LLamasoft and Brian Streu, Manager, Supply Chain Design, Whirlpool

Now Available On Demand

On-Demand Videocast:

A Benchmark Study on Supplier Integration in an Outsourced World

Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.

A new benchmark study of practitioners reveals the priorities, expectations and challenges of achieving real-time visibility into goods as they move through third-party production cycles.

Featuring Dan Gilmore, Editor, SCDigest, and John Dipalo,Chief Strategy Officer, ACSIS, Peter Musser, IT Services Delivery Specialist, DUPONT and Bruce Stubbs, Director, Industry Marketing Honeywell Scanning & Mobility

Available On Demand


Catching up on a variety of Feedback this week, starting with an older response from Marc Wulfraat of MWPVL International on why truck trailers that we hadn't placed here yet that we thought was worth publishing, plus several others on various topics.

Feedback on Why Amazon is Acquiring Truck Trailers


Our interpretation of Amazon's acquisition of trailers is:


1) The company is seeking to improve how it moves merchandise between its internal network of distribution centers (replenishment center to fulfillment center; fulfillment center to fulfillment center; and fulfillment center to sortation center).

2) The purchase of trailers allows Amazon to stage trailers at these facilities to allow flexibility in terms of timing of loading operations similar to having a drop trailer program with a supplier. It enables Amazon to secure trailer capacity within its own network which implies a greater degree of control as opposed to relying on third party carriers. Bottom line it provides more control over transportation operations.

3) There is likely a modest cost savings associated with this move. Amazon is not buying tractors and therefore does not carry the burden of having the insurance obligations that a trucking company pays for.

4) There is a side benefit in that the trailers serve as giant moving marketing billboards so free advertising doesn't hurt the cause.

5) Perhaps the most important benefit is one that has nothing to do with transportation and everything with Amazon Prime Now. There is a possibility that some of these trailers can be used as “warehouses on wheels”. Companies who sell off the back of a truck understand how this works. The trailer is loaded up with hyper-fast SKUs that are frequently ordered from fulfillment centers. The trailers are loaded in such a way that the driver can access the goods from inside the trailer. Trailer parks in a staging location near an urban center.

Orders are picked off the truck and delivered by localized resources to consumer doorstep in under 60 minutes. Think of this as extending the Amazon Prime Now network without having the Prime Now buildings in every location that needs to be served. This could be a Trojan horse that enables 60 minute service levels to many smaller and midsize cities that make up a substantial portion of the population. Amazon is famous for thinking out of the box so call me crazy but could this be yet another way to move goods to market?

Marc Wulfraat
MWPVL International Inc.



Feedback on Understanding the Gartner Top 25 Supply Chain List


In regards to the Gartner Top 25, I think it is the gold standard that all companies desire to be aspire to. I have participated in the voting for many years and think the methodology includes many factors, some Supply chain centric, some not.

An enhancement would be to add additional Supply Chain KPIs Key Performance Indicators. There are plenty to choose from, but adding more of these critical measurements would truly indicate the real performance of a company's Supply chain expertise. And that is what the Top 25 is all about.

Tom Dadmun
Supply Chain VP, retired




The metrics used are inward facing. I suggest that Gartner should also use customer facing metrics like on time shipment or Perfect Order fulfillment (both SCOR metrics)

Blair Williams CFPIM, CSCP

Editor's Note: The challenge is Gartner gets its performance measures, such as ROA or inventory turns, through public filings. The metrics suggested in these two feedbacks, which would be great if possible, are not available in those filings and would have to be self-reported by companies.

In addition, most companies on the list have multiple divisions/SBUs, etc., so the question would be how to come up with a single number, which usually isn't calculated across these units.


Feedback on Risk Management

One of my colleagues from Cranfield University used to conclude her half-day session on the management of risk, resilience and vulnerability in the supply chain with the following conclusions:

• No system is invulnerable
Risk, a problem to resolve, but never solve
Identify what you can and take a position
Manage or mitigate as appropriate
Beware the strategic disconnect
Forewarned is forearmed
A case for the rehabilitation of ‘slack'
Creeping crises were systemic risk in action
Dialogue between industry & policy makers helps
Political and commercial aims often diverge


Bearing in mind the context that the audience was defense and military related and therefore focused on capability rather than availability I found her conclusions both pragmatic and intellectually challenging. In particular the remark concerning "slack" struck home because as a former logistics practitioner and an industrial engineer I had wavered between always having a little spare capacity up my sleeve and an almost genetic disposition to cut out waste.

As an academic she was posing the question: should we not make a case for slack (although recognizing that the term itself was not really sufficient to fully explain the concept)? Events in recent years would support this view. The question is how should one program in slack in such a way that it is not redundant.

What is the mix of physical assets, human resources, systems flexibility, etc., that is required to reduce vulnerability and ensure resilience. How does one convince a line manager, senior VP, CFO, of the merits of such a seeming heresy in these days of austerity and short termism?

I think that this is an issue worth debating and finding solutions - SCDigest would seem a possible forum.

I hope this gives you a little more background without going into it in too much depth. I happy to answer more questions as and when you have them.

David Macleod
Learn Logistics Limited



Q: What were Walmart and Warner Lambert famously working on in 1995-96?

A: This first pilot of Collaborative Forecasting and Replenishment (CFAR), later renamed Collaborative Planning, Forecasting and Replenishment (CPFR).

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