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April 5, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet MIT's Sheffi on Supply Chain Sustainability 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 Extended bullet Trivia      bullet Feedback
bullet New Gilmore's Jab and Expert Insight Column bullet New Videocast and On Demand Videocasts



Unifying and Digitizing the Processes Surrounding Order Management

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

Featuring SCDigest's editor Dan Gilmore
and Esker's Sarah Joiner.


first thought


Supply Chain Graphic of the Week
US Manufacturing Growth Finally Accelerating


ISM Reports Input Costs Rising Quickly

Is Amazon Getting USPS Subsidy?
US Spot and Contract Truckload Rates Continue Sharp Rise
Former Walmart Executive Says Amazon Needs to be Broken Up

Learn More About our Complimentary, No-Obligation Online Opportunity Self-Assessment or On-Site Opportunity Assessment


February 27, 2018 Contest

See Who Took Home the Prize!

Holste's Blog: Good Business Security is All About Paying Attention to Details


Weekly On-Target Newsletter:
April 4, 2018 Edition

Last Chance Cartoon, Advanced Analytics, Maersk's Bad Month, and more


Learn How Blockchain Technology Can be Applied to International Trade

Expanding My Career Horizons

By Dan Gilmore

Building the Business Case for Digital Transformation of Supply Chain Planning

by Henry Canitz
Product Marketing & Business Development Director


Using Multi-echelon Inventory Optimization to Achieve Measurable Operational Improvements


What is manufacturing's share of nominal US GDP?

Answer Found at the
Bottom of the Page

MIT's Sheffi on Supply Chain Sustainability

Dr. Yossi Sheffi of MIT is certainly one of the most influential and I would add interesting figures in supply chain today.

Of late, about every three years he produces a new supply chain-related book, the last two being complementary takes on supply chain resilience and risk management. Now, a new book on sustainability, titled "Balancing Green," and I will say though I didn't agree with everything inside, it is a comprehensive and insightful look into what is actually a very complex and multi-layered subject.


In a great example of the balance in this book, Sheffi notes the actual evidence of consumer preference for Green products is tenuous at best.


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As with previous works, it is impeccably researched, with interviews with some 250 mostly CEOs forming the foundation of the work. And there are all types of CEO views on sustainability, such as beyond true-believer Paul Polman, CEO OF Unilever, to many others whose words are often far ahead of their actions and true internal compass.

The book (with supporting writer Edgar Blaco), for example, quotes an executive at one company saying that "If it reduces costs we will do it; otherwise we will not" with regard to sustainability initiatives. That is a stance certainly shared by many other companies, if not most, and a view I think Sheffi himself would say is perfectly logical.

A couple of notes: first, the book is focused on environmental sustainability (CO2, water, etc.), not other forms of corporate social responsibility, even though many companies referenced in the book, such as the aforementioned Unilever, Walmart and a number of others, are embracing full blown CSR, vowing to change the world, not just the just the environment.

Second, while in the end Sheffi is clearly a strong sustainability advocate, the book is extremely well balanced and describes very well the challenges and issues CEOs face in crafting their sustainability strategies, with often conflicting goals. In the end, the top priority has to remain being able to survive and prospers as a business. Most sustainability books in my view do not present the full 360 view.

Let's start with a basic but critical fact: for physical product companies, "sustainability is intimately connected with supply chains, the complex economic structures formed by companies that are using the global supply of natural resources to meet worldwide demand," Sheffi notes.

"Sustainability R Us" we might say. And it is this supply chain complexity (more on that in a moment) that in part makes crafting sustainability strategies such a challenge in practice.

Early on, Sheffi describes the multiple sources of pressure - sometimes rather ruthlessly executed - pushing companies towards sustainability. In fact, after reading Sheffi's examples, I'm surprised more companies haven't been forced to be zealous advocates.

Sheffi starts, for example, with the extreme pressures coming from non-governmental organizations (NGOs), notably Greenpeace, about which one environmentalist says "When Greenpeace reaches for its toolbox, it tends to find only one tool, and that's a mallet."

I had not heard the story of how Greenpeace went after Nestle's KitKat brand in 2010 over its palm oil sourcing, though each candy bar contains just a minute amount of the oil.

Greenpeace produced a parody of KitKat's long-time and very success TV ads with the "Gimme a Break" jingle that in the dark parody version involved a consumer opening the candy, where inside was not a chocolate finger but an orangutan finger, complete with some orange hair, which then spurts blood after the human takes a bite.

The fake commercial then had the jingle around giving the orangutan a break. Wow. The damage to the brand was heavy as Greenpeace leveraged social media to get the ad out.

Nestle was surprised because it though it had a very responsible palm oil sourcing policy, including not sourcing from areas cleared of natural forests, the big issue in the palm oil debate. But it turned out that one of KitKat's suppliers had in fact used deforestation practices. Within 8 weeks, Nestle had acceded to Greenpeace's demands.

Which brings up a critical point well covered in Sheffi's book. Today, global supply chains are incredibly complex, with myriad suppliers both direct and indirect, lots of outsourcing and many companies touching just a piece of the process, many middlemen and more.

Who can really get control of that is the question. And of course most can't. And though it was more of a social issue than environmental one, Sheffi cites the 2013 collapse of an apparel factory building in Bangladesh that killed more than 100, after which a number of brand companies and retailers such as Walmart and JC Penny initially touted that the factories weren't producing any of their products. But later it was found they in fact were, as major suppliers and middlemen subcontracted to those factories without the buying company having any knowledge of it.

Of course, consumer brand companies are especially at risk from being tarred with an anti-sustainability brush. I had not seen this factoid, but Sheffi cited research from BusinessWeek that found about 50% of the market capitalization of companies such as Coca-Cola, McDonald's, Disney and others was the result of their brand equity.

In other words, if the stock prices of these companies were based on traditional financial metrics alone they would have been about half of their actual levels. No wonder CEOs of consumer facing companies feel the pressure to go Green and social. One only has to look at the huge beating Nike took over several years in the 1990s after bungled handling of reports of child labor in its supplier factories.

"Brands are vulnerable, and NGOs know it," Sheffi says.

But in a great example of the balance in this book, Sheffi notes the actual evidence of consumer preference for Green products is tenuous at best.

"Although a number of surveys show consumers say they want sustainable products, only a small percentage of them are actually willing to pay more to buy sustainable products," Sheffi notes.

And circling back around to my comments above about how complex an issue this really is, the realities of consumer behavior put CEOs in a real bind, Sheffi says. How much should they invest in initiatives consumers apparently don't want to pay for? Well, the easy answer might be you only invest in Green efforts that also reduce costs, per the quote from one company cited above.

Sheffi does note there is some evidence that so-called millennials may be more willing to pay for Green, but the data is preliminary at best.

Which is a nice segue to a simple framework Sheffi uses to describe three types of sustainability strategies. First are what he calls eco-efficiency initiatives, which have to do with actions that will reduce operating costs and provide an acceptable return on investment.

Next are eco-risk initiatives, which involve actions that reduce threats from NGOs, regulatory agencies, in some cases the investment community and more. In other words, Nestle had to change its palm oil sourcing practices whether cost justifiable or not due to brand risk. These need to be considered similar to investing in any type of insurance, Sheffi says.

Third, and interestingly, is eco-segmentation, in which investments are made to drive revenue growth by attracting with Green products some portion on the market, even if it is relatively small for now. And this segment may indeed pay more for such products.

There is so much more but I am out of space. I think a part 2 review in a few weeks is called for.

The really is one of the best supply chain books I've read in recent years, notable for the depth of the research, quality of the writing and as mentioned above commendable balance.

I recommend it.

Any reaction to this review of Sheffi's new book? Let us know your thought at the Feedback button below.


New Videocast:

Digitizing the Order Management Process

Orders Still come in Many Different Forms and Systems - Here's How to Get them Under Digital Control

This videocast discusses breaks down all the ways in which orders can arrive, the downstream challenges associated with each, and the benefits of digitization.

Featuring Dan Gilmore, Editor along with Esker's Sarah Joiner.

Thursday, April 19, 2018

On Demand Videocast:

Reducing Costs through Automated Inventory Replenishment & Analytics

How Motor City Industrial Taps into Data Visualization to Help Customers Identify Waste, Reduce Inventory

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor along with Joseph Stephens, CEO, Motor City Industrial, Jay Fielder, Supply Chain Technology Manager, Motor City Industrial and Mike Wills, Chief Revenue Officer, Apex Supply Chain Technologies.

Now Available On Demand

On Demand Videocast:

Yes, Retailers and Distributors Can Survive and Thrive by Unifying Commerce and Supply Chain

Integrated Approach will Improve Customer Experience as Smart Retailers Move Beyond Omnichannel

This videocast discusses how to connect people, processes and technology across commerce and supply chain operations to achieve unified commerce.

Featuring Dan Gilmore, Editor and enVista CEO Jim Barnes, a highly recognized industry expert on retail and distribution.

Now Available On Demand


More emails this week from our story on a panel of manufacturers talking about doing drop shipping for retailers, many from our friends at RetailWire. A selection can be found below.

Feedback on Vendor Drop Shipping for Retail


In the race to get the last mile to be 24 hours or less, drop shipments become essential. This requires managing inventory in "real time" across multiple links of the supply chain that are not necessarily owned by just the vendor or retailer.

One of the huge missing links in this discussion is the role of the distributor. In order to carry the quantity of inventory required for drop shipments in proximity to the customers, distributors become a critical strategic partner for both vendors and retailers.

As drop shipments accelerate, data is the new currency. Last-mile fulfillment at increasing speed requires real-time inventory across the interactive supply chains of vendors, distributors and retailers. The critical success factors will be inventory visibility, accuracy and speed.

Chris Petersen, PhD.
Integrated Marketing Solutions


All discussions around the "new" retail landscape (omnichannel) being transformed by the digitally-empowered shopper inevitably (and very quickly) lead to and include supply chain challenges. Successful digital transformation mandates that manufacturers of non-commodity goods must have 100 percent accuracy and visibility to the location of their inventory.


This requires not only integrating new technologies but redefining the existing business models and workflows that are outdated in a digital world. Simply trying to digitize the status quo analog world will not, and has not, worked. I've been preaching this for several years now and hope the new year will enlighten a manufacturer and/or retailer to listen and implement a change!


Adrian Weidmann

StoreStream Metrics






The unique logistical challenge is the requirement for collaboration, transparency and cross-company operations. This would solve the problem but very few companies are willing to take the steps to make it happen.


Camille P. Schuster, PhD.
Global Collaborations



Q: What is manufacturing's share of nominal US GDP?

A: About 12%, down from 20% in 1980 and 28% in 1960. Whether that is good or bad is a matter of debate.

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