sc digest
June 29, 2017 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Highlights of the Gartner-SCDigest Supply Chain Study 2017 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet New Cartoon Caption Contest Begins bullet Trivia      bullet Feedback
bullet Expert Columns and Supply Chain by Design bullet On Demand Videocasts
  The Retail Vendor Performance Management Bulletin


June 2017 Issue:

• Second SCDigest Retail-Vendor Benchmark Study Coming in July

• Decisions, Assumptions, and Retail Vendor Performance

• Three Retailers Make Gartner's Top 25 Supply Chain List for 2017

• Will We Really See "Ultrafast" Fashion?


TJ Maxx Sourcing Practices Questioned

first thought


Supply Chain Graphic of the Week
Which US States are Best for Manufacturing?


A Week of Supply Chain Cyber Attacks

New Study Seattle Minimum Wage Hike Reducing Total Worker Pay
Fracking Driving Petrochemical Factory Boom in US
Tax on Freight Bills to Fund Infrastructure?


June 26, 2017 Contest

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

Holste's Blog: Keeping Older DC Systems Up-to-Date is an Ongoing Challenge

Supply Chain Executive Brief: How Distributed Order Management (DOM)  and WMS Work Together to Power Omnichannel Supply Chains

Satish Kumar from Softeon and Kevin Hume from Tompkins International
Answer Key Questions on DOM and WMS


Weekly On-Target Newsletter:
June 28, 2017 Edition

New Caption Cartoon, Canal 1st B-Day, Procurement Value, SOL 2017 Video and more

WMS Vendors - the Walking Dead

by Mark Fralick

Four Supply Chain Lessons from the Amazon book The Everything Store

by Dr. Michael Watson


In the 1980s, there were some 80,000 hardware stores in the US, most “mom and pop” type operations. How many today?

Answer Found at the
Bottom of the Page

Highlights of the Gartner-SCDigest Supply Chain Study 2017

I am just back from a "Megatrends" presentation for hardware store chain/co-op True Value during its core carrier meeting, led by John Bowersox, son of legendary supply chain academic Dr. John Bowersox of Michigan State.

It was a good time, and while I obviously can't report what I heard there, the chain is getting supply chain religion in a number of areas, and making rapid and quantifiable strides. Hope to tell the True Value story some day. For 10 years now SCDigest has partnered with the analysts at Gartner on a supply chain study based on a survey of our readership.

While the research was conducted earlier in the year, it was again sort of unveiled in a big way in May at the Gartner Supply Chain Executive Conference in Phoenix, with the research led as usual by Gartner's Dwight Klappich


The fourth point comes in part from data from the survey showing big differences the state of the relationships and level of collaboration between the supply chain and the IT functions across companies.


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As important context, a lot of what Gartner does these days 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 " (DDVN) 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, though some companies certainly rate themselves there.

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, 13% said they were Level 1, 31% Level 2, 37% Level 3 and 15% Level 4, and just 4% Level 5, but that was up from 1% last year.

As is almost an iron rule, companies tend to overrate their supply chain prowess, as indicated in the chart below,which is primarily meant to show the self-ratings have been consistent over time.

So why did I make the comment about overrating supply chain performance? Because again this year, a combined 45% rated their performance as above average, versus just 18% below average. While I suppose it's possible that the SCDigest reader responses that drive this survey are in fact from above average performers, my guess is the obvious rule that just 50% can really be above average and the other 50% below applies here too. The "50% problem," I have called it in the past.


So returning to the use of the maturity model to analyze other responses, the chart below looks at how respondents say companies spend their supply chain IT budgets by level of Gartner maturity.

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 "growing the business" or "transforming the business" versus more mature companies. The implication of course is that this will eventually put the lower maturity companies at a competitive disadvantage.


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. I would be interested in your take on this.

Finally for this column, at the end of the day, what are Gartner's recommendations for improving supply chain performance? 

As seen in the slide below, top of the list is to first recognize that technology really can deliver competitive advantage in supply chain - and that company's doubt that proposition to their peril.

The second point has to do first with getting serious above assessing and then improving your company's level of supply chain maturity, and next adopting what Gartner calls a "bi-modal" supply chain strategy - pursuing both costs savings/efficiency and innovation/growth at the same time. That's not easy, but I agree essential.

The fourth point comes in part from data from the survey showing big differences in the state of the relationships and the level of collaboration between the supply chain and the IT functions across companies. No surprise there. 

There is a ton 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 11th annual survey some time later this year - please share your input with us at that time, we need your help as always.


Any reaction to this Garter study data? Why do more mature supply chains spend more on innovation or do you disagree? Let us know your thoughts at the Feedback button below.

View Web/Printable Version of this Column

On Demand Videocast:

How DOM and WMS Work Together to Power Omnichannel Supply Chains

Experts from Tompkins International and Softeon Set the Record Straight in Fast Paced, Q&A Format

This discussion will be based on an outstanding new "Executive Brief" on this same topic, developed jointly by Kevin Hume of Tompkins International and Satish Kumar, a vice president at Softeon.

Featuring SCDigest editor Dan Gilmore, Kevin Hume of well-known consulting firm Tompkins International and Satish Kumar, a vice president at Softeon.

Available On Demand

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:

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.


Available On Demand


Some of the many emails we received on SCDigest Editor Dan Gilmore's column on Irrational Shipping Prices and the Demise of Brick and Mortar Retail and Reader Respond - Irrational Shipping Prices and the Demise of Brick and Mortar Retail.

More soon.

Feedback on Irrational Shipping Prices and the Demise of Brick and Mortar Retail Parts 1 and 2


Great article by Dan Gilmore, I think he's spot on with his commentary. The state of brick & mortar retailers is hard to watch from a consumer's standpoint versus and investor standpoint. When it comes to apparel, for the most part I personally I have to feel it, touch it, and try it on. Certain on-line purchases make sense and are extremely convenient. I guess it comes down to comfort level and how tech savvy the consumer tends to be with technology.

It will interesting to see how things play out with Amazon and their quest to dominate the world's global supply chain. When does it stop or does it ever stop? Will the success/failure continue to be investor driven, consumer driven or both?

I look forward to reading Dan's future columns and appreciate the opportunity to provide feedback. Wishing SC Digest much continued success in 2017 and beyond.

John L. Antonucci
VP Corporate Accounts
721 Logistics LLC


While I see the truth in what you are saying generally, I think you are being a bit too broad. Retail is surely suffering in some places, and some malls are having tough times. But I think it is tied more to the geo and the forward thinking of retailers. Most should have joined the on-line bandwagon sooner rather than worrying about B&M operations losing out. Most should have figured out how to incorporate the stores (kiosks, store pickup, etc.). I love that I can order from Walmart (and others) online and pick my order up at the store 1 mile away in 2 hours or less. Most should have figured out the Gen X and Millennials a long time ago.

On the subject of malls and geo. Consumers like the trick, new thing. Upgrade your mall (and your thinking) and you may find a real winner.

I live in the Salt Lake City area - a pretty tech savvy place (Ogden, Salt Lake, Provo). Recently the LDS church opened a new downtown (City Creek) mall to rave reviews and lots of business. There is a suburban mall (Fashion Place) which is almost too busy to visit with a soon to open, very large Macy's plus Nordstrom, Dillard's (replaced Sears), Crate & Barrel and many other high end stores. Fashion Place has been around for 50 years and has recently been revitalized to focus on a more selective (high income, young) market.

Another recent success is the Valley Fair Mall - which has been revitalized. Another downtown mall that was extremely popular until City Creek opened was the Gateway. Gateway (an open outdoor type mall) is going through modernization (although it is less than 20 years old) to better compete with City Creek.

A common feature of the successful locations seems to be the Apple Store. Hip, young (or young at heart) shoppers seem to enjoy good shopping, good food and features that appeal to them. Apple was at Gateway until City Creek opened.

Older malls and retail need to take notice.

Steven R. Murray
Supply Chain Visions

Editor's Note:

I think you are missing a few critical few points:

What would happen to ecommerce sales if appropriate pick pack and ship costs were charged?

Items in store should actually be priced lower than online products, because the costs are way lower - but they are not.

Because these things, brick and mortar woes, and the unbelievable change ecommerce is bringing, is happening much faster than it should.

Someday, these costs will have o be charged. They simply must be.

Dan Gilmore





Great article, really interesting perspective on how Amazon may be accelerating the penetration of ecommerce.

I would contest one statement you make about the price of typical goods, and that in most cases they should be priced cheaper than ecommerce. I understand the point you are making, that shipping costs are built into the in-store price but are not being built into the ecommerce prices yet; however, there are other brick and mortar costs (facilities, rent, equipment, labour, etc) that need to be built into an in-store price - many of these represent costs that ecommerce avoid completely. To me, these costs are material, and comprise the basic essence of why ecommerce is winning.

Mark Johnston



I do agree with Gilmore!

On this track, I read not so long ago that about 90% of new business strategies fail. Further, that it is typical to find that there's something that will work arising out of the failure, thus it is wise to maintain resources in reserve to apply in support of that successful element going forward. There are many stories of massive all-in, bet-the-farm commercial disasters. The other salient observation offered was that long term success was more often achieved by strategies that started small and achieved profitability early and then leveraged to gain share vs. those that stressed rapidly building market share at a loss from the start while striving to cross some far off break-even tipping point.

By appearances, Amazon's journey seems like it falls prey to the considerations above. Maybe they made some money early on when they only sold books. Since then, my sense is that it's been 2% or less profit or losses, and should revenue growth sputter- look out?

Meanwhile Mass Merchants and other retail leaders are dealing with the disruption, and from what I can tell, are mighty worried and not just a little grumpy about dealing with all the challenges associated with Omni channel.

Meanwhile, the ‘music continues to play'.

Tom Miralia
Distribution Technology



Q: In the 1980s, there were some 80,000 hardware stores in the US, most “mom and pop” type operations. How many today?

A: 35,000-40,000, according to data this week from the True Value chain, down by at least half from the assault by big box stores since then – but now stabilized, True Value says.

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