sc digest
January 26, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet The Gurus Are Back! 2017 Supply Chain Predictions 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 Supply Chain by Design and Expert Columns bullet Videocast and On Demand Videocasts


Earn your Master's Degree Online with Northwestern  


first thought


Supply Chain Graphic of the Week
Global Trade Share of World GDP Dropping After Decades of Growth


Is a Giant Foxconn Factory Coming to the US?

Other Retailers have Far More Employees Per Sales Dollar than Does Amazon
Alibaba Sees Very Rapid Sales Growth Last Quarter
US DC Space Almost Completely Taken in Q4



January 17, 2017 Contest

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


Day 1

Day 2

Holste's Blog: Laser & Camera Based Scanning Solutions

Weekly On-Target Newsletter:
January 25, 2017 Edition

New Cartoon, Cool Product, WMS Tasking, Supplier Audits Don't Work and more

Why Driverless Trucks May Create the Need for More Drivers
by Dr. Michael Watson

e-Commerce is Just Commerce
by Gary M. Barraco
Global Product Marketing
Amber Road

WMS in the Cloud will Go Mainstream in 2017
by Dinesh Dongre
Vice President of Product Strategy


Some say this supply chain software company was never the same after its "conscience," co-founder Ken Sharma, died in 1999.

Answer Found at the
Bottom of the Page

The Gurus Are Back! 2017 Supply Chain Predictions

We're back as we have done for many years running with predictions for the year 2017 in supply from a virtual panel of supply chain gurus.

In fact, most of our prognosticators are back from 2016, selected again for this great honor - well, something of an honor - because in the past they have made insightful predictions and (very importantly) are able to get them emailed in before the deadline, which was last night at 7:00 pm. Most thankfully arrived much earlier.

As I say every year, given how difficult it is to make predictions in this crazy world of supply chain, these prognostications are part prediction, part a discussion of trends, part some things to look out for - but it is all good, and I much enjoy these pieces every year. As always, I'll publish two First Thoughts columns summarizing those predictions and/or highlighting key points, followed by full text versions of the predictions in our OnTarget newsletter starting next week.


We are on the verge of solving much of the store out-of-stock problem.


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Let's begin with Mike Regan of TranzAct Technologies, who always has something interesting to say, usually related to freight transportation, whether it is at the NASSTRAC annual conference, his own weekly "two-minute warning" videos, or here on SCDigest, where he is a frequent contributor.

"In 2016, we predicted that shippers would take advantage of a soft transportation market and adopt a more aggressive posture in their rate negotiations with carriers," Regan says, adding that in "2017, the proverbial shoe will be on the other foot, and carriers will be taking advantage of tight capacity and looking for higher rates."

Regan believes the impact on transportation budgets will be determined by just how quickly these new contracts and rates go in to effect. Consequently, shippers should expect increases of as much 5% to 7% from truckload carriers, though that may not be immediately reflected early in 2017, depending on the timing of negotiations.

However, "monthly trend numbers could result in transportation and logistics executives having to explain significant budget variances to their C-Level executive," Regan says.

Regan also notes that as retailers and others tighten their delivery requirements (e.g. Walmart's "On Time/In Full" program), companies will be looking for real time data on their shipments to help them avoid chargebacks.  Regan predicts that there will be "continued interest in development/advancement of communication technologies that provide information to carriers and shippers about the location of their trucks and freight."

It's an increasingly real-time supply chain, that's for sure.

My friend Gene Tyndall from Tompkins International, whom I believe has contributed predictions every year since I started doing these columns a number of years ago, is one of the most broadly knowledgeable supply chain experts we have today.

One of Tyndall's observations is that "Customer-centricity is finally prevailing as fundamental to demand-driven supply chains, which by their nature are more amenable to cost management and predictability than supply-driven long lead times with demand uncertainty." 

Nike, Adidas and others, we will note, are in fact transforming their supply chains as we speak to make them more responsive, rethinking very long supply chains based on cheap Asian labor. But that will also take some manufacturing robots to pull off, from what I have read.

Tyndall also bemoans (1) the slow progress in companies adopting true Chief Supply Chain Officer roles; (2) the view of execs that supply chains are still overwhelmingly to be considered as cost centers; and (3) the inability of companies to let go of a functional view of supply chain for one more focused on cross-functional processes.

He predicts that "We will see gradual progress in this area, but not widespread gains. Neither ERP systems, nor advanced business planning tools, nor granular analytics, will change management structures, company cultures, behaviors, or processes themselves, until business executives learn to appreciate the contributions of supply chains as business value drivers. "

Very well said.

Dr. Michael Watson of Northwestern University and his company OpEx Analytics (also an SCDigest columnist) is one of the best there is when it comes to supply chain analytics, and I asked him to offer some thoughts on where supply chain network design and advanced analytics in supply chain were heading in 2017.

He obliged, predicting that "data engineering" will be viewed as an increasingly important skill.

What is "data engineering"? Watson says it is "the art and science of blending data from multiple (and different) sources, automatically cleaning and filtering the data, and transforming the data to be useful for analysis."

Watson cites as a simple examples combining customer data and geocoding information, or transforming a table with monthly demand as column headers and normalizing it.

He adds that "On the harder side, this is combining different demand files and automatically converting to the correct units and currency based on the source file, automatically cleaning out data that meets certain criteria."

Watson observes that this is work that has always been done, but that "It was originally all done in Excel and then Access, But now with tools like LLamasoft's Data Guru or Alteryx you can do it much better and faster."

Most companies of course have only scratched the surface here. The promise is much faster modeling - and thus more modeling projects completed in a given period of time.

Watson also predicts that that supply chain network design modelers will start to use more open source tools, such as R and Python.

He cites, as an example, a company doing some statistical tests on the data prior to running a network model with all its complexity, saying "You may run a regression to predict transportation prices, a forecast to project demand out the next 5 years, or do some data mining to look for bad data," meaning several tools may be needed.

He adds that the growth in the use of open source tools will come from two directions: (1) a career development perspective, as network design modelers will want to learn these new open source tools to increase their market value; and (2) as businesses ask more of their modeling teams, they will need all the horsepower they can get to keep up.

I have not done much in this area (open source analytic tools) but I deeply trust Mike's judgment, so will try to look into this in more detail soon.

Finally for this week, I asked my friend Jim Barnes, CEO of consulting and software firm enVista, to offer some predictions for the retail supply chain. As usual, Barnes had some provocative things to say.

"Omnichannel as a strategy is dead," Barnes says. "The term served a purpose to get traditional (brick-and-mortar) retailers to start thinking about how to break down organizational silos. The reality is that omnichannel is an inward-facing focus versus a customer-centric approach, which is where retailers actually want and need to focus. Customers do not care about, nor speak in terms of, channels."

I agree with that. Barnes follows up by saying "What matters the most in retail commerce is the ability to source inventory closest to the demand point, regardless of order capture form factor, and the ability to delight the customer."

He adds that "Traditional ecommerce will die over time and will be replaced with only a handful of marketplaces, such as Amazon, Ebay, Jet (Walmart), Groupon, Wayfair, Etsy, etc. Brands will have a hard time competing with marketplaces that have an integrated, enabling, unified commerce technology platform and fulfillment distribution networks to deliver in hours versus days, and this includes physical stores."

So how do other retailers compete with these marketplace giants?

Barnes says the answer is merging digital and brick-and-mortar, saying for example that "Sales associates can and should be leveraged as taste makers, empowered to create unique webstores for their in-store clients within minutes."

He also says that "Retail winners are going to be those that focus on inventory flow and compressing cycle times. We need to borrow from manufacturing-centric supply chains that have historically been focused on decreasing lead times and eliminating waste (Lean thinking). The future of retail supply chain will be focusing on increments of one - one customer and one unit as the batch size."

Very interesting - what does Lean thinking in retail really mean? Few know today.

I wish I had more room. Look for full text predictions from the gurus cited above in next week's OnTarget newsletter, and then in my column here next week we'll have highlights from the rest of our panel, which includes the sharp thinking consultant David Schneider, CSCMP Distinguished Service Award Winner Art Mesher, long time supply chain observer Rich Sherman, now of Tata Consulting, deep supply chain thinker Dr. Chris Gopal, and the insightful David MacLeod of the UK's Lean Logistics Limited.

Any reaction to the guru predictions? What resonates with you? What are some of your 2017 supply chain predictions? Let us know your thought at the Feedback section below.

View Web/Printable Version of this Column

February Videocast:

Innovation in Shipper-3PL Relationships Benchmark Study Results

New Research will be Unveiled from SCDigest and JDA On This Increasingly Important Topic

In this outstanding broadcast, SCDigest and JDA recently completed new research study on innovation in shipper-3PL relationships, with the goal of obtaining the perspectives of both shippers and service providers on this increasingly important topic. All registrants will be sent a copy of the report will all the data shortly after the Videocast.

Featuring SCDigest editor Dan Gilmore and Danny Halim and Lori Harner of JDA.

Tuesday, February 7, 2017

On Demand Videocast:

New Cloud WMS Solution is Game Changer for Warehouse Management Deployment and Flexibility

New Technology and Deployment Approach Offer a Simply Better Way to WMS Implementations - Learn How

In this outstanding Videocast, we will cover the latest in each-picking robotics, co-bots, artificial intelligence, autonomous vehicles, sensors, drones and droids.

Featuring  Dan Gilmore, Editor, along with Mark Hawksley and Bruno Dubreuil of TECSYS, a leading provider of WMS solutions.

Available On Demand

On Demand Videocast:

Successful Supply Chain Vendor Compliance - for Retailers and Beyond

Author Norm Katz on Vendor Compliance "By the Book"

In this outstanding Videocast, Katz will summarize key elements of book, to include: Compliance program guiding principles; What is permissible under the law relative to vendor chargebacks; Common mistakes companies make in rolling out and maintaining vendor compliance programs; The many "E's" of successful vendor compliance, from "Envision" to "Ethics."

Featuring  Dan Gilmore, Editor, Norman Katz, consultant and author of "Successful Supply Chain Vendor Compliance," and Greg Holder, CEO, Compliance Networks

Available On Demand


More the great Feedback we received on from Dan Gilmore's First Thoughts column on The Trump Supply Chain?, with his analysis of what we can likely expect in terms of supply chain impact from the Trumpster. First Feedback below from Jon Kirkegaard of DCRA Inc. is outstanding.

Feedback on The Trump Supply Chain:


Great job bringing this up. lets help the policy create real value from the talk!

Supply chain design and strategy should be used to enable business and government policy goals. As one who has volunteered significant time to use supply chain and advanced manufacturing to promote US jobs I have witnessed the dysfunction. We believed strongly in the concept of using supply chain to create jobs and donated nearly 3 years of time to Texas Governor's office to develop an Industry Cluster Initiative that justified the Texas Emerging Technology fund. Our efforts were key in raising a half billion dollars to fund Texas businesses that would use supply chain strategy and advanced manufacturing to promote jobs.

I considered it a huge win until I saw how the funds were allocated. They all got used to fund any old initiative. Last I checked they were mostly funding business largely importing goods or some politician's friend's supposed cure for cancer. You can only imagine my reaction . We developed a knowledge base as part of this effort and have kept it running since on own

So I am obviously refreshed by Mr. Trump's instincts that something has been horribly wrong with our government policy goals and as it relates to cutting the right global deals that support our treasured manufacturing talent.

However, based on my experience, I am very supportive of what we see evolving but am skeptical that the execution can adroitly align with the goals. As has been said many times, the devil is in the details and to say it politely there are many devils in government.

Here are two concepts we believe hold up in the details and are quite simple to understand vs. global supply chain design is not "easy" to understand for the average business person as not very physical, tangible and to them appears far removed from quarterly profits.

First, Promote Postponed Manufacturing in US:

1. Government policy should support and help US companies create a postponed manufacturing or what we describe as an assembly coordination product supply chain. This means the planning bill of materials (components) could be made and purchased in any part of the world but the final assembly is done in US facilities with US personnel. Bottom line benefits it greatly reduces shipping costs, it protects intellectual capital as we are not shipping full designs off shore, it dramatically lowers working capital as the components can be used to make 1000s of times more product variety then just a single SKU wrapped in Styrofoam, stuffed in a shipping container essentially half full of air.

It also helps on US infrastructure side as logically if you are more efficient in shipping it cuts down on port congestion, transportation cube and even assists in clearance as products are simpler to examine.

Most importantly it creates JOBS and jobs if not into every piece of the engineering design they are at least heavily involved in the planning bill of materials of design. For you supply chain planning experts, you know the difference between a design bill of material and planning bill of material. It is this planning bill of material that essentially needs to become inculcated into government policy thus creating jobs. Once you involve personal at all levels more deeply into the product you create millions of paths for PEOPLE to expand career growth, education, innovation, engineering, and production skills. When you buy finished goods wrapped in Styrofoam and set them on a big warehouse shelf you only create jobs for material handlers of which most are being automated.

I have done this analysis for hundreds of US products and have rarely found that the costs are not less for a finished good when you consider customer choice, total supply chain holding and transport costs and in particular when you consider IP protection and balance sheet losses from IP theft.

We even created two businesses that we own and have operated over the past 10 years that use this postponed US assembly model that does create US jobs in manufacturing.

An example of what government could do to support is create a virtual transportation hub to allow the manufacturers to get transport costs down and precisely coordinate arrival based on lead time to their assembly centers. This is the type of 21st century INFRASTRUCTURE we need. A manufacturing nationwide "air traffic control of sorts."

2. Second Key Initiative  - Incent Promote Develop Manufacturing in the Inner City

There has been much talk of lack of opportunity in the inner city during this election cycle. Why not use our human resources in the inner city to be involved in the initiative described above (assembly) or in pure manufacturing? Of course this is not without effort - as we can all imagine - but the benefit and rewards could be staggering. If you take a top down initiative such as Mr. Trump has indicated he will do it can happen. Imagine what could happen with the right incentives from government to the private sector to "make things" in the inner city - you could provide the biggest opportunity ladder ever imagined.

Having created two businesses that use this model, I can safely say personnel is a challenge but maybe with the right top down perspective, cheer leading, support it can improve. Lets give fame to value creation in manufacturing vs. pure consumerism.

For those of you who have studied the Chinese model in essence by promoting manufacturing of good for foreign export it is what they have done. They have a coordinated effort including blasting US CFOs with information on cheap labor to the point CFOs don't look at total cost.

Bonus 3rd Initiative - Green “Supply Chain Coordination”:

Lastly, as an overriding theme and as what I personally see as the most GREEN initiative the world could take on is top down support for global supply chain coordination. The amount of resources saved, energy saved, unused product eliminated by even tiny percentage increases in coordination is insanely large then all the "green" initiatives ever proposed. In essence the first initiative above Assembly coordination / postponed manufacturing is just a tiny physical example of a larger scale effort to coordinate global supply chain coordination.

Average business reader is going to get this last topic but readers of your site I think do - and many I think would logically agree that government policy that would support supply chain coordination could really cut out immense pollution, waste and improve lives globally not just in US. It has to start somewhere but the strategy used can and will make a huge difference in realization of benefit.


Jon Kirkegaard



Let's keep this simple.

Unemployment is at 4.9%.

The overall US trade deficit has been largely stable since 2008.

Coal is noncompetitive to gas which currently is plentiful.

For the first time in at least a decade, there is a small decrease in income inequality. (not so meaningful until one considers if tires made in the US that are more expensive, someone will need to be able to buy them.)

Advancement and innovation in supply chain principles made globalization a reality. So why do we want to return to high tariff and protectionism? Those Cuban cars are pretty special, I suppose.

Jerry Saltzman
Director, Global Supply Chain Processes



I remember a chart of the U.S. trade deficit with China, where the share of the deficit due to Walmart alone was clearly visible (somewhere in the single digit %). Consumers need to understand that the factories have left the U.S. because consumers want to buy T-shirts for $9 and DVD players for $39.

Vice President, Product Marketing




Q: Some say this supply chain software company was never the same after its “conscience,” co-founder Ken Sharma, died in 1999.

A: i2 Technologies, later acquired by JDA.

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