Phase 2 Medical Manufacturing Puts a Lean Front End to Co-Exist with ERP

The following column comes through special arrangement with the Lean Enterprise Institute. It was authored by Chet Marchwinski, Director of Communications.

As the continuing Lean transformation at Phase 2 Medical Manufacturing, Inc., freed up capacity, the volume of work from customer Medtronic tripled with minimal growth in operating costs, just as planned. But as overall sales continued to grow, the company faced the costly prospect of having to expand the on-site warehouse.

Instead, Phase 2 eliminated the need for additional warehouse space by expanding its pull system and finding a way to mesh two unlikely pieces of technology - the plan-for-every-part database (PFEP) that underpins one-piece flow production - with an existing enterprise resource planning (ERP) system, typically associated with big batch production.

Supply Chain Digest Says... "We didn't use ERP as originally intended or designed, but we didn't shut it off either," says Phase 2 Medical Manufacturing. What do you say? Click here to send us your comments Click here to see reader feedback

"People struggle with the role of ERP in Lean because ERP wants to run the shop floor over the pull system," said Phase 2 President Adam Prime. "Finding the balance of the two is difficult." For example, a major conflict is ERP's traditional dependence on ship dates to drive production, while Lean management uses pull systems to produce and replenish products in small lots based on actual consumption.

An on-going Lean management effort had transformed Phase 2's clean room production lines from kitted batch production to leveled one-piece flow in cells, fed by a two-bin point-of-use pull system. A material handler picked up empty inventory bins and brought new parts to the line hourly from a redesigned warehouse, where min-max levels of parts on flow racks had been calculated in a PFEP spreadsheet.

"Now we wanted to take that same philosophy and expand it to the supply base," Prime said. The overall goal was to obviate the need for a new or larger warehouse by increasing the velocity of parts through the existing facility. The supply chain team had to extend the existing pull system out to suppliers while integrating separate kanban arrangements for individual inventory items into one unified pull system that was easy to maintain and monitor.

To start, Phase 2 asked suppliers of high-volume parts to join the pull system, which would use kanban cards circulating between the company and suppliers to place frequent orders based on leveled demand, not ERP forecasts. The ERP system's MRP function would continue to generate orders for low-volume, rarely used parts. The pull system between the warehouse and production lines didn't change.

Phase 2 approached suppliers as partners, according to Prime. "We weren't trying to get something for nothing. We were trying to make the system easier for everybody, and we were willing to own the liability for the finished goods sitting at their facility. That's only fair."

A big challenge and a big reason why kanban often fails is because the underlying PFEP database is not updated. "Companies will put together a PFEP for a point in time when starting a pull system," said Dave Errico, Lean deployment program manager at Medtronic, who helped Phase 2 plan and launch its Lean management system. "But few companies maintain it very well. Business conditions change, but it's not updated. It really has to be owned by the supply chain element of the organization."

That means regularly reviewing and updating - at least quarterly -- all variables in the PFEP database. Typically, a PFEP holds data about where every part comes from, where it goes in the warehouse, and how it is used. For example, a PFEP database contains such categories as part description, point-of-use location, standard container quantity, order frequency, carrier, container type, length, width, weight, daily usage, supplier name, supplier city, supplier state, delivery frequency, transit time, and other data.

Phase 2's supply chain team also would have to update the database when demand, lead time, storage locations, etc., changed. With no off-the-shelf software exactly suited to automate the updating and other functions, Phase 2 faced a lot of manual work to keep the data fresh for thousands of parts.

Working with Qlik dynamic reporting software, the Phase 2 development team created a new PFEP database that would support the new pull system while being tightly integrated into the traditional ERP software. The PFEP would no longer be a separate database but rather a front end to the ERP system in order to use the system's data to automatically performs the updating calculations.

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The supply chain team populated the ERP with PFEP data. "It was quite a project," Prime said. "We didn't use ERP as originally intended or designed, but we didn't shut it off either."

Work began in September of 2014; the system went live in March 2015. Key features of the hybrid system included a built-in PFEP dashboard that is tied to variables in the ERP system. As such, the system allowed supply chain staff to easily view and access the proposed kanban system for any part in the ERP system, as well as its expected output (inventory turns, incoming inspection costs, carrying costs, frequency of receipts, etc.). Toggles on input variables (safety stock, addition of days between receipts, etc.) allowed the users to run "what if" scenarios to optimize the system performance.

Tying the PFEP to the ERP also enables the system to update kanban recommendations as variables change and to notify supply chain staff in real time about potential problems. Say demand as entered in the ERP doubles for a component. The PFEP system identifies the change, assesses the capability of the existing kanban system and sends a warning to the responsible buyer to check inventory levels because a variable has changed.

Normally, when a container in the warehouse is consumed, a supply chain associate scans it into the ERP system. At a set trigger point, the ERP system will write a line item to a purchase order and notify the responsible buyer, who, as part of his or her daily standardized work, reviews it before sending it to a supplier. But, if for some reason, a card is triggered on the floor but not in the ERP system, a buyer won't get a signal to buy more, potentially causing a stock-out.

To make sure that doesn't happen the dashboard displays key data showing what the ERP/kanban system thinks is the warehouse. Every day before a morning team huddle, a supply chain associate prints out copies of the dashboard for posting at the ends of aisles in a section of the warehouse.

Later that day, as part of a kamishabai, another associate checks what is actually on the racks against the dashboard printout. Every 30 days all warehouse locations are checked. Low-risk abnormalities are identified on a countermeasure sheet and reviewed weekly. High-risk abnormalities are immediately brought to the attention of the buyer.

So far, the system has been "quite effective" for our warehouse, suppliers and buyers, Prime said. After initial resistance, more and more suppliers are joining the expanded pull system, although there still are a couple holdouts, he said In fact, some suppliers are extending the system to their suppliers.

"When I talk to the buyers, they're very happy with the systems," Prime said. "They have more time to accommodate growth and to develop stronger relationships with suppliers. We haven't run out of any kanban parts. We have run out of solder that was on MRP."

Best of all, there are no plans for expanding the warehouse. The new pull system has reduced required inventory space by a third and Phase 2 is well on its way to increasing inventory turns by a third.

Does this story sync with your views on Lean and ERP? Why or why not? Let us know your thoughts at the Feedback section below.

Your Comments/Feedback

Srihari Senior Consultant, Infosys Posted on: May, 22 2016 Great article. I am a little suprised not to see BNSF in the mix while I understand their financial mode/operation is a little different.  That would only give a complete perspective with all the players in the pool.

Mike O'Brien Senior editor, Access Intelligence Posted on: May, 26 2016 Surprised to see Home Depot fall off the list; thought they were winning with Sync?

Julie Leonard Marketing Director, Inovity Posted on: Jun, 27 2016 Using the right tool for the right job has always been a best practice and one of the reasons, we feel, that RFID has never taken off in the DC as exponentially as pundits have been forecasting since 2006. While these results may seem surprising to those solely focused on barcode scanning, the adoption of multi-modal technologies in the DC makes perfect sense for greater worker efficiency and productivity.

Carsten Baumann Strategic Alliance Manager, Schneider Electric Posted on: Aug, 19 2016 The IoT Platform in this year's (2016) Hype Cycle is on the ascending side, entering the "Peak of Inflated Expectation" area. How does this compare to the IoT positions of the previous years, which have already peaked in 2015? Isn't this contradicting in itself? Editor's Note:  You are right, Internet of Things (IoT) was at the top of the Garter new technology hype curve not long ago. As you noted, however, this time the placement was for “IoT Platforms,” a category of software tools from a good number of vendors to manage connectivity, data communications and more with IoT-enabled devices in the field. So, this is different fro IoT generally, though a company deploying connected things obviously needs some kind of platform – hoe grown or acquired – to manage those functions. Why IoT generically is not on the curve this year I wondered myself.

Jo Ann Tudtud-Navalta Materials Management Manager, Chong Hua Hospital, Cebu City, Philippines Posted on: Aug, 21 2016 I agree totally with Mr. Schneider. I have always lived by "put it in writing" all my work life.  I am a firm believer of the many benefits of putting everything in writing and I try to teach it to as many people as I can. This "putting in writing" can also be used for almost anything else.  Here are some general benefits (only some) of "putting in writing": 1. Everything is better understood between parties involved.  There are lots of people types who need something visual to improve their understanding. 2. Everyone can read to review and correct anything misunderstood.  This will ensure that all parties concerned confirm the details of the agreements as correct.  This is further enhanced by having all parties involved sign off on a hard copy or confirm via reply email. 3. Everything has a proof.  Not to belittle the element of trust among parties involved, it is always safest to have tangible proof of what was agreed on. 4. There will be a document to refer to at any time by any one who needs clarification. 5. The documentation can be useful historical data for any future endeavor.  It provides inputs for better decisions on related situations in the future. 6. This can also be compiled and used to teach future new team members.  "Learn from the past" it is said. There are many more benefits.  Mr. Schneider is very correct about his call to "put it in writing".

Sandy Montalbano Consultant, Reshoring Initiative Posted on: Aug, 24 2016 U.S. companies are reshoring and foreign companies are investing in U.S. locations to be in close proximity to the U.S. market for customer responsiveness, flexibility, quality control, and for the positive branding of "Made in USA". Reshoring including FDI balanced offshoring in 2015 as it did in 2014. In comparison, in 2000-2007 the U.S. lost net about 200,000 manufacturing jobs per year to offshoring. That is huge progress to celebrate! The Reshoring Initiative Can Help. In order to help companies decide objectively to reshore manufacturing back to the U.S. or offshore, the nonprofit Reshoring Initiative's free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring. http://www.reshorenow.org/TCO_Estimator.cfm

Robert Transportation Manager, N/A Posted on: Aug, 30 2016  Good article!  I am sending this to my colleagues who work with me.  We have to keep this in mind.  Thanks!

Ian Jansen Mr, NHLS Posted on: Sep, 14 2016 SCM is all about getting the order delivered to the Customer on date/ time requested because happy Customers = Revenue. Using the right tools to do the right job is important and SCM is heavily dependent on sophisticated ERP systems to get right real data info ASP. I've worked in a DC with more than 400,000 line items and measured the Productivity of Pickers by how many "picks" per day. I've learned that one doesn't have to remind Germany about your EDI orders.

Don Benson Partner, Warehouse Coach Posted on: Sep, 15 2016 Challenge - to build and sustain effective relationships at the level of the organizations that are responsible for effectively coordinating and colaborating in an otherwise highly competitive environment

Jade Admin, Fulfillment Logistics UK Ltd Posted on: Oct, 02 2016 Of course we all need to up our game. We need to move with the times, and always be one step ahead of what the future will bring.

Mike Dargis President of asset-based carrier based in the Midwest, Zip Xpress Inc. (at ZipXpress.net) Posted on: Oct, 03 2016 Thanks for the article, but I know there's a lot more to this issue than just the pay rates. Please check out my blogs on the subject at www.zipxpress.net.

Blaine Inventory Specialist, Syncron Posted on: Nov, 16 2016 Lora, great article! I agree that companies choose the 'safe' solution more often than not. My solution is a bolt-on for legacy ERP's and we even face challeneges of customer adoption. Most like to play it safe and choose an ERP upgrade, which is more costly, time consuming, and has lower ROI across the board. Would love to learn more about your company, we are always looking for partnerships. Blaine blaine.schultz@syncron.com

Bob McIntyre National Account Executive, DBK Concepts LLC Posted on: Nov, 21 2016 This is a game changer in GE's production and prototyping.  It also has huge implications across the GE global supply chain with regard to the management of their support and spare parts network.

Kai Furmans Professor, KIT Posted on: May, 22 2017 I am referencing to the comment that leasing of warehousing equipment (beyond forklift trucks) is a vision for 2030. Just recently in Europe, such a business model has started, see here: https://next-intralogistics.de/ I am following with a lot of interest, how the business develops.

Stuart Rosenberg Supply Chain Consultant, First Choice Supply Chain Posted on: Jun, 05 2017 If we limit the standard on judging or determining the best supply chain to just three calculations it does not tell the entire picture.  Financial performance metrics are valuable as they capture the economic consequences of business decisions.  But supply chain managers make decsions and use organizational resources that impact a company's financial well being.  Where is a firm's earnings over a period of time determined by sales less product costs and general/adminsitrative costs?  Where is the metric for determining the sources and uses of cash from three perspectives - operational, investment and financial?  Where are these supply chain metrics: on-time delivery, lead time, response time to customers, product returns, procurement costs, network distance, inventory carrying costs, forecasting accuracy, sourcing time, etc,.  Without knowing the results of all these supply chain calculations the there must be a question as to the accuracy of the 25 top supply chains.

Dustin Calitz Project Commercialization Manager, Mondelez Posted on: Jun, 06 2017 I feel this ranking misses the mark in SC. It does not seem to consider a key indicator in days inventory on hand, which is key to determining a SC company's ability to forecast, manage inventory costs and reduce aged stock. In additiion I realize it's difficult to understand what goes into the customer survey, but would I assume specific metrics are being asked. For examples customer's opinion on service level differentiation and the ability to deliver the right product on time, which should then be allocated a bigger weighting than 10%. It would also be interesting to take a view of the above list's SKU portfolio complexity, seasonality and launches/promotions. I would again assume some companies on the list above have a far more complex SC to manage and lead, ultimately requiring a lot more innovation within a SC to stay ahead of competitors, and ultimately satisfy their customers demands.  I understand above metrics are difficult to measure, as mentioned in the article, but they somehow need to be considered to give a true reflection.

Michael Hurd Lean Consultant, Unemployed Posted on: Jun, 10 2017 A Very Good Article... While some feel that lean is a scam that pushes for more out of the personnel and out of the companies through reduction of waste and adding value for the customer, there are several things to remember: 1) Lean methodologies are designed and implemented to reduce time wasting, so this may seem that you are working harder as an employee. 2) Lean methdoligies only work when everyone from the janitor to the owner of the company get involved and back the program. 3) Lean methods are there to make you work smarter not harder, although it may feel you are working harder. 4) YES... Sometimes lean methodologies fail! This is due to project overun or taking on too large a problem and trying to fix it all in one go and not taking the smaller problems that are associated with the large problem and fixing them first. Sometimes fixing the small problems leads to resolution of the larger problem.

Akhil Director Supply Chain , skuchain Posted on: Jul, 31 2017 The Supply Chain technology is not considered a problem because traditionally supply chains are thought to be cost centres unlike sales functions. The tendency, in general, to limit expenses and cost cutting on upgrades for technology and for talent have been hindering progress for the businesses. Supply chains lack real time visbility and above all trust across the value chain (not that the participants are dishonest) rather it's about the cascading effects referred to as the bull-whip effect which causes higher magnitudes of disruptions.  Supply chain real time information should top the list . Another problem is that of multi homing as so much data is available across several feeds of IOT/Email/Internet /Mobility/ERP that organisations tend to have issues around finding a single platform to collate them for meaning analysis.  Blockchain (if deployed appropriately) can be a great solution for solving the issues around the supply chain.

Mike Ledyard Vested Program Faculty, Vested Way / University ofTennessee Posted on: Aug, 04 2017 Excellent article.  It very much points to the need for Shared Risk / Shared Reward as we teach at Vested.  Suppliers will respond when they are made part of the team, and they have a lot to bring to the game.  The service provider is the subject matter expert in the services provided, and in an excellent position to enhance the capabilities and services offered by the shipper.

Andrew Downard Managing Director, AD Supply Chain Group Pty Ltd Posted on: Aug, 05 2017 As the article points out it is not a lack of technology that is holding back performance but rather a failure to form the right sort of relationships.  As well as the length of such relatiohships, practitioners should consider employing arrangements that incentivise both parties to innovate and deliver levels of performance and profit that neither thought possible.  By far the best model I have come across to achieve this is the Vested Outsourcing model developed by researchers from the University of Tennessee.  See www.vestedway.com for information on the model and case studies that show how others have benefited from creating a Vested deal.

Najma logistics, threelineshipping Posted on: Aug, 23 2017 Very informational article. The major focus of logistics is on e-commerce. There is a need to optimize every component of logistics by following the latest trends and technologies. Thanks for uploading this article.

Sameer Shukkla Consulting Partner, Wipro Inc. Posted on: Sep, 17 2017 I have recently co-authored a white paper with my colleague wherein we have looked at 2 fundamental guiding principles  - 1. Always have enough to Sell / Produce 2. Do not have excess to Sell / Produce These 2 Golden Rules can be the foundation of keeping optimal inventory levels and for organizations to achieve the same. We have looked at a framework which tries to reduce the phase mismatch between Demand & Supply, and tries to bring the shape of the supply curve closer to shape of the demand curve. We have classified symptoms and underlying root causes for the above "Phase mismatch" and "Curve Mismatch" between Demand and Supply, and then talked about addresssing those individual root causes to strive towards Leaner Inventory levels while maintaining or improving service levels. So to answer your question, we feel the Companies which have addresed these causes have been able to keep DIO horizontal or even going down, while others have not been able to control rising DIO because of not addressing the root causes.

Simon Eagle SCM Consultant, Camelot MC Posted on: Sep, 17 2017 You ask why turns are flat or declining despite lots of attention and technology. The answer is, I think, 2 fold: the supply chain environments VUCA (Volatliity, Uncertainty, Complexity, Ambiguity) is on a continuous upward curve and this means that forecast accuracy inevitably declines in parallel - and much of that inaccuracy is hidden by the statistics. For instance a company with, seemingy good, 80% mix accuracy will find that figure is skewed so high by the few high volume / low variability items. 80% of the items will be achieving considerably less than 60% error. So most item level forecasts used for driving replenishment through an MPS (be it ERP or APS) are simply leading to unbalanced stocks, service threats and continuous expediting / fire-fighting. These schedule interrutions are "variability" that is disrupting flow and, thereby, increasing lead-times, using unplanned capacity and generating excessive (and still unbalanced) inventories. The replacement in ex-stock supply chains is "enterprise(s)-wide" pull which also uses "push" for extreme/exceptional events. Its other key characteristics are that the supply chain is decoupled and is demand-driven. And now it can be implemented using SAP since they announced they they have co-developed an enhancement for IBP that supports this transformational way of working - up to 50% inventory reduction, requiring less capacity and shorter lead-times all while achieving planned service levels. See https://www.camelot-itlab.com/en/camelot-demand-driven-lean-planning-suite-for-sap/ and https://www.linkedin.com/pulse/supply-chain-flow-what-why-how-simon-eagle/

John Smith Research & Development, Octopus Tech Solutions Posted on: Sep, 18 2017 IoT is without a doubt starting to become a major factor in the profitability of various companies. In the manufacturing sector, we will see it come into the front by the end of 2020 completely. Various sectors have already adapted IoT solutions like the security industry or companies offering BPO Services India. Contact centers not just in India and China but across the world have adapted technology following the principles of IoT. The manufacturing sector is soon going to follow.

Girish Maniyar Chief Manager Development Initiatives, Asian Paints Posted on: Sep, 28 2017 I  can speak with some context. While efficiency and tools can reduce inventory, we also see the number of SKUs and new products increasing, and also the number of sales/depot points. This means the inventory in such cases, can start with very high number and with more customization and choices available to the consumer, so there is no end to the long tail of products available within a category. It is unlikely that the slow/dead goods are written off so easily to be not included here. A larger question, would it be purely an IO problem or also a Demand Planning (Forecast Error) problem? A higher cycle time of service but a better fill rate can improve inventory performance, by aggregation. But a bad forecast can do away all the good work you do in inventory planning. Do you have numbers for decorative coatings in the list? I did not see something there only for decorative coatings.

Reo B Hatfield Chief Operating Executive , BestTransport Posted on: Oct, 20 2017 My opinion is that peaks and valley are just nice graphics to explain.  Smooth responses save the day.   3PLs  just adjust to the climate and the areas of movement of Logistics.    One purpose of the 3PL movement was to adjust to an always changing market.   They will never be fixed and will flex as the logistics changes.   3PL companies have vast knowledge of their business.  Their success is their ability to move up and down as the market flows.  They bring a level playing field to the transportation world that in the past was rigid but looked good on spreadsheets.  Industry graphic personnel like to be able to answer all the changes because they can only see documents.  3PLs see the needs, the issues, the positive changes and the knowledge to know why and when to adjust.   They (3PLs) have smoothed the waves of the past and everybody likes to see the spikes so they know something is there to clearly report on. Smooth sailing is boring but sure gets you where you want to go.

Catherine Dennis Supply Chain Manager, Indak Mfg Corp Posted on: Oct, 26 2017 So the horrific and severe worldwide allocation of electronic components is not an issue?  Don't tell that to the automotive buyers.  It's HORRIBLE.  Lead times out to up to 76 weeks.  Why not write about that?  It's killing us, our customers and the big automakers.

Huub Logistics Manager, Shell Posted on: Nov, 11 2017 I suggest McKinsey to do a bit more research in Prof Gattorna’s dynamic alignment. This article only scratches the surface a tiny bit. Much more to be found reading about the alignment concept.

Joseph George Farmer, Field Vista Posted on: Dec, 07 2017 Primarily Vision is required followed by Assigned Focus on objectives.  Or maybe just love for USA.  The market will not find its way unless it's for organic vegetables and RRR.  Two to three years later will take two to three years longer to the end of the decade, and this is viable today.  God bless america from its present distraction.

Gary Buchs Owner Operator , Self, Landstar Business Capacity Owner Posted on: Dec, 17 2017 In My Opinion, the fact that capacity will tighten should be obvious to everyone engaged in the transportation.  Capacity to move freight isn’t how many trucks or trailers are in the system or what a computer  program says, it still is truck driver based and poorly-managed companies won’t be able to imporove this fact.  Investing in people is still most important! Get ready to pay higher prices for goods and services. I think we could lose 10% of Capacity in many areas.

Dan Pres., Bioptechs Posted on: Dec, 20 2017 After all the ground we have lost in the productive sector and the additional burden that loss of our productive momentum has placed on our society, somebody tell me why so many people are against the actions necessary to restore our vital productive infrastructure! It is like the left enjoys shooting itself in the foot!

Jayaram Business Development, Raghava Logistics Posted on: Mar, 04 2018 Great article and thank you for summerizing the predications.  What does it mean to country like India where the labour is still cheap? Where the logistics cost is still on the higher side compared to some of the developed nations?

Herb Shields President , HCS Consulting Posted on: Mar, 06 2018  I agree that robots can replace some amount of manual labor in logistics centers.  However as you mention, the labor pool is shrinking.  We need more training programs such as the one provided by the Greater West Town organization in Chicago.   Www.gwtp.org.  (It is a program that your readers should find interesting.)

Billy Associate, BJO Posted on: Mar, 13 2018 Thanks for this very informative article.

Doug Murless Country Manager, krunchbox (www.krunchbox.com) Posted on: Mar, 18 2018 Gone are the days when consumers will wait for a retailer to have the product back in stock, those days are done. We live in the "I want it now" society and with Amazon in their pocket consumers can easily "now" it to themself the next day right from their phone. The importance of product availability is under the microscope at all retailers as an empty shelf equals lost customers, a poor customer experience and entirely abandoned purchases. We are on a mission at krunchbox to help suppliers fix their product availability and sell thru and improve their buyer relationships, hopefully before their retail partner fines start rolling in and or we see more retailers close.

NikhilSingh Executive, Carmatec INC Posted on: Mar, 21 2018 You are correct There are government programs to encourage investment at small and mid-size manufacturers, but McKinsey says these programs generally have smaller budgets, less certainty of ongoing funding, and more constraints on their mandates than comparable programs in other countries. Policy makers should examine which existing initiatives are producing the most promising results, then scale up those efforts and commit to them for the long term.

Mike Mortson CEO, Supply Chain Game Changer Posted on: Jun, 15 2018 I wrote a similar article on supplychaingamechanger.com about the same topic:  Gartner's 2018 Top 25 Supply Chain List!  Is it Still Relevant?  at https://supplychaingamechanger.com/gartners-2018-to…t-still-relevant/

Chuck Nemer Trainer, The Guru of Biz Posted on: Aug, 16 2019 Nice metaphor and nice picture.  I'd like to see a bit more meat on the bones if you're going to completely sell me on the concept.

Charles Quail CLO, Belair Posted on: Jan, 20 2020 The truth from the road is that rates were so good, that 2018 was the best year we had since 1997.  So as we saw this happening, we saw carriers increased their fleets to capitalize on this gravy train, thus depressing the rates for 2019 from overcapacity.  They also flooded the used truck market, and sales dropped 70%. We know because we also were thinking of retiring, but cannot sell our lightly used 2019 Mack Anthem because of this.  So we claim it was not the high cost structure, it was the greed.

Tom Miralia CEO, Distribution Technology Posted on: Feb, 26 2020 Multistory Bronx DC  $700 million and 1.2 million sqft- what's the rent going to be- $3.50 per sqft per month?  $40+ per sqft annually.  In many metros, thats higher than the best Class A office rent and about 9-10 times a going rate in the suburbs?  Well, space cost is the least cost in supply chain typically- still, must be a compelling business model to drive this? Let's pretend that a product is valued at $50 a case, 60 cases per pallet, maybe stored in rack at 8 sqft per pallet in a narrow aisle single-select layout of some form- if total logistics expense ranges 8% maybe, then there's $240 in budget to flow goods from sourcing to customer.  Now the retail customer may spend more to get it to the end purchaser which is beyond my scope (and may folks ability to truly model I suspect).  if that pallet occupies that rack spot for 2 months that rent expense might range about $56?  That takes almost the whole budget for warehousing portion of logistics costs before labor, equipment, admin, materials and so on? I dunno if I'm seeing this right?  Likely I'm off base?

Peter Sales, Freight sales Posted on: May, 08 2020 From a sales prospective:  Our company only uses small trucking companies and gives them the business directly. We sell right to the manufacturer.   The companies we sell for have no sales force and are good hardworking companies who would usually have to rely on only brokers. We help them with appointments billing bids when needed. This year despite our companies doing an excellent job and not raising there rates we lost many accounts or were reduced significantly to brokers.

Harry Moser President, Reshoring Initiative Posted on: Sep, 24 2020 Mr. Meidinger is correct that high healthcare costs have hurt U.S. mfg. He overstates his case by describing healthcare as the primary cause: U.S. healthcare costs % of GDP are about 7 points higher. Our mfg. costs are 20 to 40% higher. The costs paid by taxes in the other countries require highrer salaries and selling prices to obtain the same after tax benefit. His graph shows correlation, not causation. For a clear comparison of the impact of various factors, see the Competitiveness Toolkit https://reshorenow.org/search/. We include lower healthcare costs as one of several important factors in driving further increases in reshoring.

Chris Imamura Executive in Residence, University of Colordao Posted on: Oct, 10 2020 You note that 28% of Amazon's operating income came from its AWS web services unit.  However, from their 2019 Annual Report, Amazon reported $9.2B of the total $14.5B operating income came from AWS = 63%.  What am I missing?

Robert Simoneau Consultant, PolyEd Posted on: Oct, 13 2020 This is an excellent article but a few more details would help. As a lecturer for the Society of Manufacturing Engineers spent a lot of time working with and teaching Tier suppliers. The stories they told were grim from two perspectives. First US automaker are slow to pay their bills, net whenever. The second is the timeline to pay for tooling, some claimed it took one year to get paid. As one group said we spend most of our time hiding money. I consulted for one of the big three and when I asked a group of managers and engineers, when do you pay your bills, they all laughed in unison ... big joke. I was furious and tried to explain to them how this affected their supply chain. It took a lot of effort for GM to go from 50% market share in the 50s, to less  than 20%. When doing thier financial analysis they forgot about quality related issues and the eventual loss of market share. Interesting Boeing is doing the same thing with pretty much the same result ... sad.

Jerry Saltzman Professor, Zicklin Business School, Baruch College Posted on: Jan, 24 2021 After all the rhetoric and  bluster, it's great to see a data driven the year in review analysis.   it was certainly a wild year but the data shows the resilience of the global and domestic supply chain despite political interference and Policy by tweet.

Dave Individual, NA Posted on: Mar, 15 2021 How come SPSC, SPS Commerce isn't included in supply chain software?

Steve Murray Senior Analyst, Warehousing Education and Research Council Posted on: Apr, 07 2021 From 1967 to 1972 I worked as a business systems analyst and developer for Safeway Stores, Inc.  At that time Safeway was the largest grocery retailer in the U.S. based on revenue.  It was also highly unionized.  While Safeway supported the efforts to develop a machine readable code for retail checkout, it's relationship with the union kept it from doing so openly as it might reduce the need for price ticketers, and checkers.  Quite frustrating for those of us who were developing solutions.  But back then we had plenty to do working on accounting systems, procurement, warehouse inventory control, retail store replenishment and labor planning - after all this was the dawn of the retail supply chain.  Eventually Safeway signed on to the UPC movement and the rest is, as you say, history.

AL WEISS CHAIRMAN, WEISS SUPPLY CHAIN CONSULTANTS Posted on: Apr, 09 2021  GREAT ARTICLE!

Rick supply chain manager, Fresh Mark Posted on: May, 28 2021 Do you have any information about Hormel's supply chain?

Daniel Druwe Araujo CPIM, CSCP, T2People Posted on: Jun, 04 2021 Very appropriate article, explaining the non-qualitative ranking, at least from a Supply Chain Management perspective.  Once understood what it is not, the ranking is very interesting in terms of identifying the most successful companies in absolute terms. The question that remains for the professionals interested in learning from the best supply chain designers and managers is exactly which are the most useful ideas and practices that can be learned from the best companies.

Terry Haider Owner, TC Haider Group Posted on: Aug, 18 2022 We were one of those contractors who failed in year 1 due to inflation in costs & FedEx not being willing to renegotiate our contract.  There was absolutely nothing we could do to be cash flow positive with paying acquisition debt so we ceased operations on June 30.  I know of another contractor in our smaller terminal who also has been in business several years who doubted he'd make it to peak.  This is a serious problem & if FedEx doesn't get a handle on it soon, their Ground network is very vulnerable & the reputation damage to the business model will stop anyone with a brain from buying in (I obviously didn't and I have an MBA in finance but could not cover the impact from fuel cost & labor cost escalation from my original forecast - mostly fuel cost).  Sorry I ever got involved.  I won't recover financially from this loss over what is left of a potential finance career from my experience.  I counsel colleagues to stay the hell away.  FEdEx is not a real partner in this with their contractors.

Asher Rapp None, None Posted on: Aug, 24 2022 I find it interesting that the company making all these assumptions and graphs is one of the leading underwriters in alternative investments Carbon related funds.

Rosemary Coates Host, The Frictionless Supply Chain Podcast Posted on: Sep, 28 2022  I would love to interview someone from Schneider about this initiative. My podcast highlights women in supply chain management and is hosted by Supply Chain Management Review.  Please contact me at rcoates@ReshoringInstitiute.org

Mike Loughrin CEO, Transformance Advisors Posted on: Oct, 13 2022 The dramatic fall in ocean container shipping rates is just another sign we are seeing a massive bullwhip effect coming. Other indications are early sales for Christmas items as retailers have too much inventory. Sales on new cars because the dealer lots are full. Sales on bicycles after a period of severe shortages. We are going to see how many supply chian people over-reacted to the constraints during Covid and now need to deal with excess inventory and capacity.

Mike Albert VP Business Development, N/A Posted on: Mar, 15 2023 I'd suggest that Adrian Dalsey, Larry Hillblom, and Robert Lynn should be considered for induction.  They revolutionized the international trade business by devising a process of fly Trade / Clearance documents to speed clearance of international shipments.  They also happen to be the founders of DHL.

Nick Seiersen Title, Company Posted on: Mar, 17 2023 AI and ML are indeed intruiging developments of information technology. My understanding is that Machine Learning happens when the system weeds through reams of information and identifies high probability correlations, and infers a relationship of causation. This is extremely dangerous. Think back a century. Men who wore top hats rarely died in poverty. Would a policy of giving out top hats to the poor have been effective? Yet the data would have recommended it. The case of the chips you give is one of supervised learning. The situations are scored by an expert. When the system encounters another situation, it assesses the characteristics, and makes a determination. This is all brute force computation, hashing through massive amounts of data and scoring correlations (or data matches), and that is the basis for this "new" technology. So if you have a solid base of massive amounts of high quality data that has been or could be scored, AI tools (i.e. correlation) are a real option. Such as item level forecast/actual sales, associated with external causation factors. The breakthrough of ChatGPT is associating a text generating capability as a front end to an inference engine (the massive language model GPT2 or 3). But it is still brute force correlation, hence the propensity for nonsense or what they call "hallucination." Plain text makes the interface with the artificial intelligence system much easier - everyone knows how to ask a question. The quality of the question will impact the quality of the response, so solid systems understanding will still be a real asset.