Situation: In an interview with Logipi's Dustin Mattison, Professor Richard Wilding from the Centre for Logistics and Supply Chain Management at Cranfield School of Management, shared his thoughts on traditional silo-based organizational architecture and its impact on a company's ability to innovate.

The Details: Traditional silo-based organizations, he says, are very good at supporting innovation within the individual silo, because in theory, you have a group of experts, in very specific disciplines, sharing and developing ideas together. Where traditional silo-based organizations fall short is in the area of collaboration.

What it Means: When you look at structuring an organization, you have to put procedures and processes in place to ensure that innovation is occurring across all silos. "We need new ways of working that allow for broader views of our processes," Richard Wilding says. "It's okay to work within an individual silo as long as there are mechanisms in place to give people a view of what is going on outside of their silos." Click Here to Read Full Article...

Supply chain is in the midst of yet another evolution. All companies recognize the need for end-to-end visibility, yet very few, if any, have achieved it. At present, we are trying to link disparate systems with varying degrees of success... and failure. Slowly, but surely, we are progressing toward "supply chain social networks" that will one day integrate people, processes and information. The question is, how long will it take and what will it finally look like?

Everybody is talking about the need for improved supply chain visibility, but is it really possible? After all, many companies have yet to effectively solve visibility issues within their own organizations, let alone with multiple tiers of suppliers and third-party logistics providers.

Many of us, myself included, believe the answer will eventually be found in supply chain social networks. The Internet is not only the most cost effective vehicle for driving supply chain integration, it is also a "technology" that everyone understands.

Still, the biggest challenge is integration. How can disparate systems, including ERP, WMS, SCM, and all the rest, "talk" each other without dropping critical information?

Ken Lyon, Managing Director Virtual Partners Ltd., weighed in on a discussion we started at the Third Party Logistics Group on LinkedIn. Ken wrote, "One of the biggest challenges facing anybody seeking information across a multi-party, multi-tier supply chain, is maintaining context. In other words, being able to identify items, orders, consignments and parties precisely. This is harder than it seems, as each organisation references items in their own context."

"As more parties and additional systems are included in the mix," Ken continued, "the problem increases. This is further compounded by ERP implementations which enforce specific processes, consequently defining rigid EDI interfaces. Attempting to impose common references across the entire chain is usually impossible and why there are very few examples of true end-to-end visibility."

Steven Christensen, President of Babbleware Inc., agreed with Ken. "Distortion," Steven wrote, "occurs when the existing business systems, which I refer to as Enterprise 1.0 systems, fall out of tune with the business requirements. While already in place and consolidating financials with a solid command and control, these E1.0 systems rapidly loose resonance with the actual business: new customers, new competitors, ever-increasing data required, updated processes, new technology, compliance, regulation, M&A, etc."

Steven went on to say, "By failing to remain concurrent with this changing environment the ability to properly tune operations within a company, let alone outside of a company (read collaboration), will forever be just out of tune. As Ken Lyon commented, the distortion a network of out of tune signals creates is deafening."

Steven also believes that Enterprise 2.0 could very well be the solution, although he says it does not necessarily require social tools that literally track conversations across a network. Babbleware, whose tagline is, "Achieving Change Without Changing Systems," offers enterprise add-on solutions. Unlike other methods that require communication between systems, such middleware, translators and software integration, Babbleware, which is 100% bowser-based, listens to systems and applications, and works with them o give employees, vendors, and customers immediate, cost effective, and highly scalable web access according to your established security practices and policies.

Jeannie Christensen, Inbound Marketing Manager at Coupa Software, recently chimed in our LinkedIn discussion with this, "There are now systems out there in the Cloud that do all of the inline reporting and visibility directly into the platform, instead of costly or custom integrations between many different systems -- e-procurement, ERP, data warehouse, contracts, etc. -- In the cloud you can leverage things like multi-tenancy and gathering benchmarks across customers on the same platform. In the cloud you can build platforms that can report in real time against the rich data being captured by your eprocurement tool and even more importantly allow you to be more proactive in being notified when certain analytic thresholds are hit."

In my opinion, the future of supply chain visibility will be sophisticated, yet user-friendly, social supply chain networks that will seamlessly blend human interaction with robust systems that can "talk" to one another, most likely in an open and standardized cloud interface.

What do you think the future hold? Tell us what you think here at Logipi or join our discussion at LinkedIn.

As journalists begin to peel the layers of Toyota’s recall issues back; new insights from former insiders and current experts are being revealed. Did Toyota become overly comfortable with its past successes, and has it gotten too big to effectively identify and communicate potential issues before they become costly mistakes? It is beginning to look like Toyota’s current corporate structure is inherently flawed.

I have been scanning the news coming out of Toyota’s congressional hearings, and have come across several articles that include insights from former Toyota insiders that shed new light on the company’s problems.

In a Logistics Magazine article, Joel Sutherland, Managing Director of the Center for Value Chain Research, who was, at one time, the highest-ranking American at Denso, Toyota’s largest supplier, made two comments that seem to reflect a “we can’t fail” attitude.

First, Sutherland said, “You can't take your eye off the ball when it comes to quality. You can't blink. And, unfortunately, I think that's what happened here." Followed by, “In this case, it looks like somebody failed to ensure the quality was there throughout the process. They assumed it was there. They assumed that, because it was a Toyota-engineered product, the specs were right, and nothing would go wrong."

If accurate, those comments indicate a blind belief in the brand based on past performance, and perhaps a tendency toward resting on one’s laurels – dangerous attitudes to be sure.

Yesterday, the Los Angeles Times ran an article with more disturbing information from past Toyota insiders. John Jula, a former Engineering Manager at Toyota’s technical center in Ann Arbor, Michigan, said, "You know the joke that every bank branch has a president -- well, every Toyota facility has a president, and one can't tell another what to do."

Ralph Vartabedian and Ken Bensinger, who authored the Los Angeles Times article, referred to Toyota’s overall corporate structure as “fractured” and its business units as “fiefdoms,” and Robert Bea, a UC Berkeley professor who is studying the Toyota situation in a graduate-level engineering class, said, “The cultural and organizational problems affecting Toyota are similar to those that allowed NASA and the Army Corps of Engineers to ignore structural issues leading to the Columbia space shuttle and Hurricane Katrina disasters.” Bea went on to say, "It's what I call arrogance, indolence and ignorance. With those three, you have an explosive combination."

And finally, the article also referenced Diane Vaughan, a Columbia University professor who has studied the “normalization of deviance,” and found some startling results – specifically, “that NASA had slowly come to believe that safety anomalies in the shuttle were ‘normal,’ because they had not caused an accident in the past.”

Toyota’s executive management, it seems, got a little too comfortable with the company’s success and consequently came to believe that it could not fail.

In a recent interview with Peggy Daniels Lee, who left corporate America to teach operations and supply chain, first at Penn State University and now at Indiana University's Kelley School of Business, Peggy mentioned working with her students in the virtual space -- specifically Second Life.

Intrigued, I created an avatar and went about exploring the Second Life landscape. Peggy Lee referred to the learning curve as "steep," but worth it. "Steep" doesn't begin to describe the learning curve. It's more like climbing a ladder to the moon without rungs. Still, Second Life residents logged more than 400 million hours in 2008, and according to the Second Life website, owned 1.76 billion square meters of land, so there must be something to this.

Back in October, Aliza Sherman wrote an interesting article for WebWorkerDaily.com about using Second Life as a business tool. She admits that Second Life has "limitations and downsides," but also sees its benefits and details "nine skills that we can all learn from regular engagement in Second Life that can be applied to any business use of 3D virtual world environments," including presenting, teaching, collaborating, branding and building 3D models. (See link below)

Both Peggy Daniels Lee and Aliza Sherman agree that 3D virtual worlds will become increasingly important, and I will admit, after spending about an hour roaming around, I could see the potential for people with the time and patience to learn the ropes.

Are you a resident of Second Life? If so, let us know what you think and how you're using it?

Do virtual worlds have the power to help us connect and communicate?

Have you thought about how Second Life could be applied to supply chain?

Situation: Having worked in both corporate and academic worlds, Peggy D. Lee brings a unique blend of practical and theoretical experience to the topic of networking.

The Details: Peggy has been working with and studying Social Network Analysis, which is the mapping and measuring of relationships and flows between people, groups, organizations, computers, websites and other knowledge-based entities, and a means of improving supply chain integration.

What it Means: The way to accomplish supply chain integration, Peggy Lee believes, is to leverage technology, but lower the unit of analysis down to individuals, or at the very least, down to departments, because it isn't companies or organizations talking to one another, it is people talking to one another.Click Here to Read Full Article...

Situation: After gaining ten years of practical experience as a global procurement manager with Intel Corporation, including two two-year Intel international expatriate assignments in Asia and Latin America, Damon De La Pena struck out on his own. Today, Damon owns BDM Consulting with fellow former Intel colleague Richard Brady.

The Details: In this interview with Logipi's Dustin Mattison, Damon shares what he credits with putting his small consulting firm on the global map, as well as invaluable insights into strategic sourcing Latin America.

What it Means: Leveraging what the technology world has to offer and forming strong partnerships with like-minded companies, Damon says, has given him the opportunity to go global in a very short period of time. Click Here to Read Full Article...

Situation: Ken Lyon has worked in logistics, freight forwarding and supply chain management since 1978. He began his career in operations, but his keen interest in the practical benefits of technology, and its impact on the industry, eventually led him to the supply chain solutions side of the business.

The Details: Today, Ken Lyon is CEO of BitLogistics Limited, a company he says is very keen on collaboration because supply chain operations are always conducted in partnerships with other parties. He understands that many companies are suspicious of collaboration, and his goal is to change the way companies view collaboration by helping them understand the value, benefits and innovations that can be realized by partnering with like-minded organizations.

What it Means: "We designed VisibleLogistics as a means of connecting all parties in a supply chain quickly and easily," Ken explained. The company's primary objective is to focus on the two areas that have the most impact on supply chain operating costs -- the inventory, which is where all the money is invested, and the orders that drive the inventory between participants. Click Here to Read Full Article...

Situation: Rohit Talwar, a UK-based futurist, strategist and change agent, was kind enough to carve several minutes out of his busy schedule for an interview with Logipi's Dustin Mattison.

The Details: As a veteran trend-watcher, Rohit has watched communication evolve to the point where we are all more aware of global trends, and more aware of how we can use trends for fueling innovation.

What it Means: Innovation, Talwar Rohit says, requires a 360 degree perspective. You want to generate ideas within your organization, but you also want to bring your supply chain partners and customers into the mix -- really look across the entire supply chain to see who can provide ideas to help you address specific challenges. Click Here to Read Full Article...

Situation: Enrique Carrillo is the newly appointed Director of Information Technology for Baxter International in Latin America, a role he says has become more of a value chain role in most companies across the region.

The Details: According to Enrique, Latin America is at the perfect stage to be an incubator of thought leadership.

What it Means: Enrique Carrillo advises companies to stay tuned, because there is a lot of work to do in the region and there is much more to come -- the infrastructure in falling into place; there are new ports, new railroads and new roads being built -- and security is improving from a transportation perspective. Centers of Excellence for manufacturing and distribution are being created, and shared services are being established in major Latin American countries as well. "Latin America," Enrique Carrillo says, "is moving in the right direction."  Click Here to Read Full Article...

Situation: David Serafine has spent the last 12 years designing supply chain security solutions in over 30 countries.

The Details: As CEO of Clareo, Inc., a premium security solutions provider, David Serafine doesn't believe in cookie cutter approaches to supply chain security. Instead, he employs a suit of suite of services and experience that consider the unique risk variables, geographies and circumstances of each company.

What it Means: Supply chain security, David says, needs to be a value in an organization and not a priority… priorities change daily. Values are inherent and stay constant. Click Here to Read Full Article...

Multiplayer online role-playing games have captured the attention of millions of people across the world. Could the psychology behind gaming be applied to the workplace, and would the development of a highly competitive virtual world depicting your company and its employees keep you more engaged? The co-authors of "Total Engagement: Using Games and Virtual Worlds to Change the Way People Work and Businesses Compete," believe it can and would.

Millions of people are seriously into multiplayer online role-playing games (MMORPGs), and game designers know exactly what it takes to engage players in the elaborate virtual worlds they create.

Can the psychology behind gaming be used to increase employee engagement and productivity in the workplace? Co-authors, Byron Reeves and J. Leighton Read, think it can. In their book, titled, "Total Engagement: Using Games and Virtual Worlds to Change the Way People Work and Businesses Compete," Reeves and Read ask (and answer) the intriguing question, "what if you could transfer the excitement and focus found in great games to the office?"

This isn't just a grand analogy, this is something the authors believe is inevitable, and it makes sense. Virtual gaming worlds offer interesting story lines and characters, clear paths to advancement, complete transparency into skills and performance, social interaction, and the ability to try new tactics and roles requiring greater skill.

Now, apply those attributes to a virtual world built around the unique dynamics and goals of your company, provide a place for employees to immerse themselves in a competitive, yet collaborative, online environment with their co-workers across the office and across the world, and you've captured the psychology behind the popularity of MMORPGs -- more importantly, you have increased employee engagement and, ideally, productivity.

What do you think? Could this concept be applied to supply chain? Just imagine the complex virtual worlds that could be created and conquered -- from sourcing to getting you products in the hands of your customers -- the possibilities are endless.

Mexico, Argentina, Brazil, Chile, Colombia, Costa Rica, Panama and Uruguay all want a piece of outsourcing services expected to have a value of $450,000 million in Latin America by 2012. Do these countries have the muscle to topple the world's top three outsourcing hubs? A new study says it is a distinct possibility.

The opening line of a new KMPG study reads, "India, China and Malaysia may still be the top three global outsourcing hubs, but they are being challenged by new destinations in Latin America, North Africa and the Middle East." The study, titled, "Nearshore Attraction: Latin America Beckons as a Global Outsourcing Destination," indicates that Mexico, Argentina, Brazil, Chile, Colombia, Costa Rica, Panama and Uruguay are building momentum in the outsourcing industry and do have the potential to compete with, or at the very least, complement outsourcing services available in India, China and Malaysia.

Why the sudden interest in Latin America? The outsourcing industry was born when the global economy was flying high and securing lower costs in countries like India and China far outweighed the investments and risks associated with doing business a half a world away. Today, however, in the aftermath of recession, cash-strapped companies are looking for low risk solutions closer to home, and many are placing quality ahead of price.

According to the report, there are several distinct advantages to working with outsourcing partners in Latin America. In addition to Latin America's close physical proximity to the United States, and its similar time zone, the region shares a cultural affinity with the United States -- not to mention the fact that Spanish, after English, is the most widely spoken language in the US. Latin America also offers a modern telecommunications infrastructure, tax incentives in many countries, and a favorable business environment.

The downside, according to the KMPG study is, "Despite its qualified human capital and proximity to the US, Mexico is ranked 60 of 144 countries in the Competitiveness Report 2009-2010, World Economic Forum. Part of the problem is that Mexico is still a very bureaucratic country. In addition, significant labor and energy reforms are stalled due to political wrangling in Congress and the unions are very powerful, which may cause problems for companies."

Over the past 15 years, Melvis Furtado has worked in supply chain and logistics roles for several multinational corporations. In this article, he shares invaluable insights into evaluating, selecting and working with third-party logistics providers.

It can take months for a third-party logistics provider (3PL) to win a contract. But, according to Melvis Furtado, it only takes "a few sparks" to lose a contract. That's why Melvis, a supply chain and logistics professional with 15 years of experience working for multinational corporations, including Kraft Foods, Unilever ME, Philips ME and EMI Music/Virgin Records, says it is essential to choose the best possible partner right from the start.

In this article, Melvis Furtado explains why he views the relationship between 3PLs and their customers as a two-street, and provides 11 tips surrounding the people, processes and technologies 3PLs bring to the table, and how to get the most out of what they offer.

As with any vendor, he advises, it is vitally important that companies don't set their expectations so high that they doom their partners to failure.

Download Full PDF Here

Innovation thought leader Stefan Lindegaard says, "The future of innovation is open and it's global." Learn how to position yourself as a preferred partner, where to find the best opportunities, and whether your company is really ready for open innovation.

According to Wikipedia, “Open innovation is a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology”. Companies focused on open innovation quickly become preferred partners, and as such, have access to the best opportunities. To get started, open innovation consultant and strategic advisor, Stefan Lindegaard says, corporations need to put a strategy in place, train their employees to network, and then find pockets of open innovation -- people, places or business functions where it seems natural to create new relationships or build on existing relationships. But, he cautions, if you're not already successful at internal innovation, you should not expect to succeed with open innovation.

Is open innovation being attempted across your supply chain?  

Situation: Raja Adeel Khalid managed production, planning and materials for Toyota Pakistan, and is now Head of Sales and Supply Chain with Dawlance, Pakistan's leading household appliance manufacturer, which gives him unique perspectives on the country's manufacturing challenges.

The Details: Raja believes manufacturers in Pakistan are challenged in four areas, managing working capital, forecasting, the volatility of the country's currency, and the need for improved infrastructure.

What it Means: There are no simple solutions, but Raja believes challenges are meant to be tackled. In this interview, he presents his thoughts and ideas for meeting Pakistan's manufacturing challenges head on, including "a complete tear-down of the supply chain." Click Here to Read Full Article...

Situation: In order to compete with Asia and the United States, it is essential for the European electronics industry to capitalize on opportunities for streamlining the supply chain through shared knowledge, collaborative decision making and cultural understanding.

The Details: To address the issue, the industry has already formed a number of non-hierarchical networks that inherently require greater collaboration at the tactical and strategic management level, which in turn requires a new level of data and information sharing between network partners. ERP systems provide an adequate view of operations and can be used to build links to other companies -- where they fall short is in providing transparency at the strategic and tactical planning levels -- and that is exactly what Fortunato Cartolano and other electronics industry experts are addressing with a research and development project dubbed "CONVERGE."

What it Means: The CONVERGE project brings a consortium of experts, representing the European electronics industry, academia and technology providers, together as part of a research effort aimed at closing the gap by providing a framework and tools for exchanging tactical and strategic information necessary to make informed decisions. Click Here to Read Full Article...

A lively discussion currently taking place on Logipi.com centers around the issue of outsourcing. As a continuation of our discussions on the issues of outsourcing and the recession, I would like to include Dan Gilmore's post from Supply Chain Digest where he recently wrote about supply chain core versus context. He discusses how the economic recession helped to spur increased interest by companies to outsource in order to move towards variable cost structures.

However, the traditional framework for insource versus outsource analysis does not take into consideration continuous innovation. Dan points out a newer model by Geoffrey Moore. In this outsourcing model corporate resources must be focused on innovation and non "core" activities should be outsourced. "Core" activities are parts of the company's operations that create differentiation that ultimately influence customer purchases.

Will outsourcing non "core" supply chain activities help companies innovate? Is there more to innovation that just the issue of outsourcing? Does it also depend on how the outsourcing is done and how you define 'outsourcing'?

1. David Schneider says "you can innovate with the tools you have or take those same activities and hand them off to a 3PL, and let them do the innovating."

2. Or do you believe that companies who choose to outsource distribution and logistics are giving up more than they think, including control? Does relying on third party performance put companies at a strategic disadvantage to their competitors? 

See recent posts:

1. "Re-thinking outsourcing to 3pls in light of the recession" (http://logipi.com/public/item/244463)

2. "After years of specialization and outsourcing, why are companies suddenly shifting to vertical integration?" (http://logipi.com/public/item/246897)

3. "Vertical Integration - Trend moving away from 3PLs?" (http://logipi.com/public/item/248976)

4. "Outsourcing distribution and logistics preferable to vertical integration?" (http://logipi.com/public/item/249086)

Situation: Narasimha Karunakar is a supply chain consultant and solutions visionary whose work with Fortune 500 companies in Latin America involves matching business problems with business applications.

The Details: In Narasimha's experience, supply chain visibility is one of the biggest challenges facing the industry.

What it Means: The key to finding the supply and demand balance, he says, is getting the right information from the right source. Click Here to Read Full Article...

Situation: Kate Vitasek is a name you might already know. If not, you should probably make a point of remembering it, because Kate Vitasek and a team of researchers from the University of Tennessee may have uncovered a model that will transform the economics of outsourcing.

The Details: The model is called "vested outsourcing," and it has garnered quite a bit of media attention over the past few months. In short, vested outsourcing is a methodology that encourages companies and service providers to work collaboratively, and become "vested" in each other's success.

What it Means: Under the direction of Kate Vitasek, University of Tennessee researchers studied outsourcing relationships and agreements, and have identified five rules that can help companies develop a sound outsourcing strategy and facilitate true vested, or performance-based, partnerships.  Click Here to Read Full Article...

Civil, mechanical and structural engineers, architects, game developers, filmmakers, educators and students are using Google SketchUp to create accurate 3D models -- and the general consensus is it's easier to use than traditional 3D CAD programs.

Browse the Google SketchUp site and see what you think. What are the potential supply chain modeling uses for SketchUp?