sc digest
June 8, 2018 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Interview with MIT's Yossi Sheffi on "Balancing Green" 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 Column bullet On Demand Videocasts



This Issue Includes:


• Highlights from the 2018 Retail Deductions Study

• The Foundations of Successful ASN Programs

• Retail Vendor Performance Management News Round Up for May

• Target Piloting New Flow Distribution Center

• Four Retailers Make the 2018 Gartner 25 Supply Chains

• Kroger Bets Big on Ocado


first thought


Supply Chain Graphic of the Week
When It Comes to Transport Costs, One Chart Says It All


Logistics Jobs Keep Coming and Coming

Major Cargo Theft Gang Headed to Prison
Last Gasp for Apparel Manufacturing in Manhattan
Hyundai Merchant Marine Stuns with New Megaship Orders


May 29, 2018 Contest

See The Full Cartoon and Send in Your Entry Today!

Holste's Blog: Shippers Looking To Increase System Capacity Are Surprised To Find It May Already Exist!


Weekly On-Target Newsletter:
June 6, 2018 Edition

New Cartoon, CSCMP+NASSTRAC? Lean and Industry 4.0, and more

The Retail Vendor Performance
Management Bulletin

There's Money in the Material
by Gary M. Barraco
Global Product Marketing
Amber Road

How to Stop Inaccurate ASNs from Stealing Sales and Eating Profits
by Kevin Harris
Director of Freight Audit
Compliance Networks


Five Tips for Improving Demand Planner Effectiveness

by Henry Canitz
Product Marketing & Business Development Director


What year was NASSTRAC - the shipper education and advocacy group that just announced a new "partnership" with CSCMP - founded?

Answer Found at the
Bottom of the Page

Interview with MIT's Yossi Sheffi on "Balancing Green"

"Balancing Green," the new book by well-known supply chain thought leader Dr. Yossi Sheffi of MIT, is fast becoming one of my favorite books.

That is for several reasons. First, it is very well written, a good thing for book. Second, it is highly researched - interviews were conducted with some 250 companies, an unusually high number of direct sources.

And third - and more importantly - it is indeed very balanced, with some strong nods to sustainability, but with recognition of the often competing goals, making the point for investing for sustainability's sake alone is not a winning strategy.

Sheffi carves a middle path that is refreshing for its frankness and balance in the shrill debate on this and seemingly every issue in current times.


Sheffi says that "maybe as millenials age and they have more purchasing power the market will change. Maybe, maybe not. So you hedge a bit."


Send us your
Feedback here

I did a review of the book a number of weeks back, and really just covered some of the introductory chapters, promising a part 2 before long. But the sheer amount of information in the book a real challenge to summarize in 1300 words, so I have decided on another approach - an interview with Sheffi. Not surprising to me, it was very interesting.

As evidence of that, early on in the interview, Sheffi led with this: "The sustainability movement has recently become a mantra that people just repeat without thinking, without data, without systemic analysis."

That's a provocative way to kick things off for sure.

As a result of this, Sheffi says, there is pressure on corporations to do things that sometimes just don't make sense, financially or otherwise. And at the same time, other people are frustrated that the government is not doing enough to mandate sustainability, notably in the area of requiring reductions in CO2 emissions. That drives investors, some consumers, NGOs, the media and others to put pressure on corporations to act, given slow government response.

And it is corporations that are the target for this book, "Because a lot of this just doesn't make any sense," Sheffi told me.

He noted that "Corporations cannot take deep sustainability actions - which take money and investments - unless customers are will to pay for it. And it appears in many cases they are not."

He cited the example of Ford, which just recently announced it is getting out of the business of selling small cars and most of the sedans. It will soon just make trucks and SUVs.

It's not that Ford is anti-Green, Sheffi said, noting that a few years ago it was named the top sustainable brand in the world.

Ford was "making a lot of statements, a lot of commitments - but it found the customers don't buy the small cars that are fuel efficient. So they are changing, because of what the customer wants," Sheffi said.

However, Sheffi said, "To be clear, I am not advocating companies should do nothing - far from it."

In this climate, there are three reasons for companies to do something, "whether the CEO believes this is the challenge of our times or a Chinese hoax - it doesn't matter." You have to love that line.

The top reason to pursue sustainability is for what Sheffi calls "eco-efficiency" - to cut costs. This is what most companies are doing when they reduce energy consumption, put regulators on trucks so they can't go too fast, and take many other similar actions.

Here, Sheffi says, "There are many low hanging fruits, because they not only enhance sustainability, they reduce supply chain costs, so why not do it? Of course! It's a "two-fer."

The second reason to pursue sustainability is to reduce risk, Sheffi says.

"You don't want to be the company being attacked by some NGO, the media, etc. There are many examples of this," as we'll discuss below with regard to Nestle.

And the last reason to take sustainability actions is hedging - in case market dynamics change.

He notes that "All the surveys show that millennials are more sensitive to sustainability arguments than older people, so maybe as they age and they have more purchasing power the market will change. Maybe, maybe not." So you hedge a bit.

"But at this point, the truth is that even though most consumers are saying they will pay more for a sustainable product, they don't. When they go to the supermarket, they choose the one that is 10 cents or 10% cheaper rather than the one that is sustainable. So it's hard for companies to invest in this."

On the risk avoidance side, he cites the example of what food giant Nestle went through with its KitKat bar brand and use of palm oil, perhaps sourced at the time from farmers slashing rain forests in Malaysia to plant palm trees. Greenpeace went on the attack.

"If you want to see a really gory video and, you should look at Youtube," Sheffi noted. Of course, he says, Greenpeace chose "to talk about the impact on the orangutan, rather than you know on all kind of snakes."

The video shows someone snacking on a KitKat bar, and then the camera zooms in and you discover that person is actually chewing on the finger of an orangutan, with blood coming out of his mouth. Nestle soon changed its palm oil sourcing policies.

In the book, Sheffi writes that ""Brands are vulnerable, and NGOs know it."

"So the moral here is that one has to make sure that they are not target of attack, to take some meaningful sustainability actions to reduce the risk of being targeted," Sheffi said.

Next I noted that the title says it's about "balance" - is it truly a balance?

"Absolutely" Sheffi told me. "People use slogans like "planet versus profit" or "people versus profit." I think all of this is wrong. The way companies should think about it is that it's really not people versus profit or planet versus profit. It's actual people versus people."

That, he says, is because it's people who are alarmed by the chance of global warming and are worried about a sustainable future. But on the other side are people who are worried about jobs, and being able to afford necessities.

"My point is that both are right," said. "And companies are doing actually both. Companies are supplying necessities all over the world doing it in relatively low cost today as compared to years ago. And at the same time, they are providing jobs to millions of people."

He added: "The point is, there's no right or wrong here. That's my point in the book. It's two rights. And as long as people understand this and don't talk past each other like Republican and Democrats in Congress, and try to find out common grounds, we can get some solutions."

Sheffi also noted how fundamentally sustainability is a supply chain issue. It's easy to be Green, he said, if you outsource most of your production and logistics and let those companies emit all the CO2. I will note that in the book there are examples of how to do complete analysis and calculate the carbon footprint of the entire supply chain.

The sub-title of the book is "When to Embrace Sustainability in a Business (and When Not To)." Delivering on that promise comprehensively is a tough one, and there is no clear path for companies to balance the competing objectives and pressure, but Sheffi does about as good a job as possible to lay out a framework for charting a course.

As I said in part 1, I highly recommend it.

What's your take on Sheffi's views on sustainability? What would you add? Let us know your thought at the Feedback button below.


On Demand 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.

Now Available On Demand

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


We received a number of emails on our column on our recent study of retail-vendor supply chain relationships, especially around the always controversial subject of chargebacks. Below are a few of those emails, some from our partner RetailWire.

Feedback on Use of Retail Chargebacks and Collaboration


Chargebacks are the symptom, not the problem. The problem is compliance, and it has to be fixed at the root. Chargebacks should be used exclusively to drive home the need for vendors to comply with agreed-upon requirements. The financial hit has impact on compliance. Conversely, collaboration can be achieved only between highly ethical, disciplined businesses. If either side of the transaction lacks those qualities, there will be chargebacks.


Bob Amster
Retail Technology Group


There are two types of chargebacks. One type is very legitimate and the other is simply robbery that retailers institute for themselves doing a poor job.

Three examples: My company sold to Walmart, Target and Walgreens among others. We never had a chargeback from Walmart. They gave us specific instructions of how to service them as a customer and we met their needs. Target was another story. They, of course, priced our product higher than Walmart. Every so often they would claim we were selling our products to Walmart for something less than Target so they would deduct what they thought we were charging Walmart. We were not a huge CPG company. We would fight and often lose.

Then there was Walgreens. They ran a huge nationwide promotion on our product. Bought more than we recommended. When it didn't meet their expectations, they didn't pay us.

Chargebacks to a vendor are OK and deserved when a vendor doesn't comply. But chargebacks to a vendor when the retailer makes the mistake is as bad as robbery.

Gene Detroyer
European School of Economics






This study shows that both parties feel the other party doesn't have the skill needed to collaborate, both parties feel there is a need for better tools and data visibility and they also both feel there's little interest in collaboration in general. Hmmm. So, we don't think our trading partners have the skills required, we need better data & tools, but aww, heck, we're not really all that interested in this collaboration thing, anyway.

LOL. Seriously?! These barriers are not all that new. I can remember at least back to the '90s when we also had little overall interest in collaboration. Everyone has talked about it for years. But talk is cheap. Investing in the right tools available today to capture that "dark data" and reap real-time supply chain insights must require significant skills and budget on both parties' parts, right? Not necessarily. I think this is more of an awareness issue, than a level of interest issue.

Chargebacks are probably necessary as long as we continue to operate in the way we have been for years. There will take some key disruptors in the industry to step up and take on this challenge.

Ralph Jacobson
Global Retail and CPG Sales Strategist



Q: What year was NASSTRAC - the shipper education and advocacy group that just announced a new "partnership" with CSCMP - founded?

A: 1952.

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