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 new 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? 

Igor Zax, Managing Director of Tenzor Ltd., wrote an interesting piece on the subject of increased M&A focus on vertical integration last spring. Proponents of vertical integration say it makes perfect sense in the midst of an economic downturn because it delivers more control, greater visibility, improved communication and fewer risks. 

Having read the Wall Street Journal article titled, "Companies More Prone to Go Vertical," as well as Logipi's follow-up blog, Bill Leber, a business development manager with Swisslog, shared his thoughts on the topic. According to Bill, companies haven't done a lot of aggressive expansion, which has left many with cash on their balance sheets. If you marry that with the Wall Street Journal's supposition that companies hope to gain more control over materials, manufacturing and distribution through vertical integration, you're talking Bill Leber's language.

In Bill's opinion, companies who choose to outsource distribution and logistics are giving up more than they think, including control. Relying on third party performance, he warns, can put companies at a strategic disadvantage to their competitors. Click Here to Read Full Article...

I recently read an article from the McKinsey Quarterly titled 'Using knowledge brokering to improve business processes'. The article discusses how leaders are looking outside the 4 walls of their companies and outside their industries for ideas on process innovation. The ideas may not be new to the business or industry where the knowledge broker exists. However, the ideas can be very valuable to a company in a different industry, discipline or context. As the design consultancy IDEO puts it, the best source of new ideas is old ideas.

1. As a supply chain manager, are you cultivating relationships with external networks (outside your own company and industry)?

2. Are you prepared to use your networks to get help?

3. Have you used this type of 'knowledge brokering' technique to help re-design an internal business process? 

Nearly 60 companies, representing 17 countries from every continent and more than 20 industry sectors, have begun testing two new tools for measuring greenhouse gas emissions of their products and supply chains.

On January 20th, nearly 60 companies began "road testing" two new standards designed to measure the greenhouse gas emissions of their products and supply chains.

Developed by the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD), the two new GHG Protocol standards – the Product Life Cycle Accounting and Reporting Standard and the Scope 3 (Corporate Value Chain) Accounting and Reporting Standard – provide methods to account for emissions associated with individual products across their life-cycles and of corporations across their value chains.

Companies participating in the road testing represent 17 countries from every continent and more than 20 industry sectors. If accepted, the new standards would allow companies to monitor outsourced activities, supplier manufacturing, and the use of the products they sell.

Notebook makers are considering the establishment of a common component supply chain platform.

According to an article at DigiTimes, Taiwan-based notebook makers Quanta, Compal, Wistron and Inventec are mulling over the possibility of "establishing a common component supply chain platform" as a means of lowering purchasing costs and improving competitiveness against manufacturers in China and Japan.

Compal, Inventec and Wistron currently use eASP, Trade-Van and E2Open, respectively, while Quanta uses a supply chain management platform of its own design.

Has your company considered this type of collaboration? Does it make sense in terms of more purchasing power and gaining a competitive edge? What do you see as the pros, cons and risks, and do you think we will see more of this in the future?

The recession killed the five-year strategic plan and severely wounded the three-year plan, leaving many companies scrambling for cover and looking for ways to fight back. The weapon of choice for many CEOs is a shorter strategic planning cycle supported by monthly reviews that allow companies to spot changes in demand and seize opportunities.

In a recent Wall Street Journal article, focused on the seemingly impossible task of business forecasting and strategic planning in the midst of a global economic downturn, Walt Shill, head of the North American management consulting practice for Accenture Ltd., was quoted as saying, "Strategy, as we knew it, is dead, corporate clients decided that increased flexibility and accelerated decision making are much more important than simply predicting the future."

The recession killed the five-year strategic plan and severely wounded the three-year plan, leaving many companies scrambling for cover and looking for ways to fight back.

According to the article, Office Depot's CEO nursed his three-year plan through the worst of 2009 by exchanging quarterly budget reviews for monthly reviews to improve the company's reaction times. Spartan Motors, a specialty vehicle manufacturer, blames his company's "relatively inflexible" one-year strategic plan and three-year financial plan with quarterly reviews for a steep drop in sales and profits precipitated by firm's inability to react to shifts in demand. Spartan's CEO has since gone with a one-year plan, updated monthly, and says it already paid off in terms of opportunities that the company might otherwise have missed.

CEOs are adopting what Lowell Bryan, a senior partner with McKinsey & Co., calls "just-in time decision making," something most experts agree will remain in every company's business forecasting and strategic planning arsenal long after the recession retreats.

What do you think?

Do top-down driven business strategies focused on shorter planning cycles and "just-in-time decision making" consider the impact on supply chain? Does it all add up to increased risk and increased cost, or do you feel there is adequate communication between senior management and supply chain planners to prevent risks and control costs?

We would like to take this opportunity to thank Jeannie Christensen at Coupa for inviting Logipi's Dustin Mattison to write a guest blog focused our community's top five trending topics in supply chain management, and to thank all members of the Logipi community for their contributions.

1. THE RECESSION AND ITS IMPACT ON THE SUPPLY CHAIN

The recession topped the list of industry-changing challenges. As difficult as it has been to navigate, overall, the Logipi community views the recession as a catalyst for positive change, and we concur. It forced us to streamline processes by doing more with less, and as we move forward in the year 2010, we are better prepared to weather the storm. The recession also brought supply chain from the back room to the board room, where, in our opinion, it should have been all along.

2. THE PROS AND CONS OF OUTSOURCING

Many of the themes that floated to the surface overlapped to one degree or another. The recession, for example, forced us to re-examine the practice of outsourcing. What made sound financial sense in the previous decade doesn’t necessarily make sense today. Now, more than ever, we need improved supply chain visibility, and while some see outsourcing as a practice that tends to block the view, many others see it as an opportunity to improve collaboration and communication with their partners. The purpose of outsourcing is to hire experts in areas outside our key competencies. The challenge, of course, lies in making those connections — something we are already seeing as a hot topic for discussion 2010.

3. (and 4.) VERTICAL INTEGRATION AND THIRD-PARTY LOGISTICS

In late 2009, the outsourcing debate evolved into discussions about vertical integration, based on a blog we posted covering a Wall Street Journal article that highlighted companies, like Oracle, Pepsi, Apple, General Motors and others who are reviving the vertical integration concept to provide more visibility and control.”

Throughout 2009, and already in 2010, the topic of third-party logistics (3PLs) is a recurring theme. Most recently, the discussion has revolved around the industry’s evolution from small mom and pop companies to regional businesses that proved attractive to foreign investors. The overarching concern surrounds the industry’s ability to survive as more manufacturers are pulling inventory back to their source plants.

5. THE DAYS OF LEAN MANAGEMENT AND SIX SIGMA AREN’T OVER

And finally, the topic that drew the most responses was an article we posted in response to a Q & A session with Gallup CEO Jim Clifton, at Gallup Management Journal, in which Clifton said, “Businesses have maximized every possible benefit from practices based on neoclassical economics, such as Six Sigma, reengineering, and total quality management.” As you might imagine, the Logipi community had much to say on the topic, and as a group, are not buying into Clifton’s line of thinking.

We are anticipating a fascinating 2010, and already have dozens of interviews in the pipeline, so we hope you’ll stop by and get involved. If you have something you would like to say, post a comment, or better yet, get in touch with us for a one-on-one interview.

In 2000, MIT quietly launched OpenCourseWare with the simple, yet revolutionary idea of making its course materials available to the public, free of charge. Today, the site offers 1900 courses, including a multitude of supply chain courses from MIT's Sloan School of Management.

eLearning in the supply chain realm is catching on and a quick Google search (using keywords "elearning supply chain") proved it by returning 998,000 results in 0.16 seconds.

We'd like to hear from you. Have you taken an eLearning course related to supply chain or business, and if so, what did you think of the experience? Are there any courses you would personally recommend?

Situation: To understand the challenges of supply chain in Pakistan, and the current the security situation, one needs to understand Pakistan's background -- sound advice from Atif Moin, Head of Purchase for Syngenta Crop Protection.

The Details: Just a few years ago, no one in Pakistan had ever heard of a suicide bomber, or even imagined a bombing in the middle of the street, and now it has become a very common event. In a small country like Pakistan, when these things happen, all the economic cycles are affected. In a similar manner, the supply chain of Pakistan has been affected as well.

What it Means: The terrorist situation began causing supply chain disruptions in Pakistan in 2007, and since that time, the average cost of transportation has risen 56%. The crux of the problem is that goods cannot be delivered every day on a consistent basis. Click Here to Read Full Article...

PRO OUTSOURCING

Do you agree with the following? "[Outsourcing] fosters rational allocation of capital and growing global trade. That is certainly preferable to vertical integration driven by fear of supply shortages," the Wall Street Journal says (subscription required http://tinyurl.com/ylcwgxf). "This not only feeds on itself, as more supplies get 'locked up,' but leads to inefficiencies as the competitive dynamic is removed from the supplier-customer relationship." (http://tinyurl.com/ygodjrt)

PRO VERTICAL INTEGRATION

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 post Vertical Integration: Oracle, Pepsi, Apple, GM and others are going back to the future: http://logipi.com/public/item/246897

Achieving distribution levels of 85 to 90% in stores in Latin America is relatively easy because Latin American consumers expect variety and quality, which also makes it easier to establish good relationships with retail customers. In general, Latin American customers are more flexible in terms of their limits, and shelves are less crowded, so achieving that 80 to 90% in three to four months, or less, is not uncommon.

However, Latin America's supply chain processes lag as many as 10 years behind well-developed areas, like Europe and the United States. Companies managing procurement in Latin America need to consider the following:

1. Dependence on imports in Andean countries

2. Financing and letters of credit

3. Location of factory 

Click Here to Read Full Article...

Maria Teresa Martinez served Kellogg Venezuela and Kellogg Iberia/Spain as a supply chain professional, specializing procurement and logistics, for 18 years. Having just left Kellogg Company in May 2009, Teresa speaks fondly of her time there, and shares valuable insights into the challenges and opportunities she experienced while working in Venezuela.

Situation: The recession caused many manufacturers to pull their inventories back to the source plant -- minimizing the throughput, if not totally eliminating the need for a regional 3PL warehouse or 3PL truck line.

The Details: With a decrease in demand, manufacturers are having to do whatever it takes to cut costs and survive, but for 3PLs there isn't much room for cost cutting. 3PLs base their rate structure and quotes on the cost of the building from the landlord, the cost of utilities and the cost of payroll. If they're lucky they see a 7 to 9% profit, so they are already running on very thin margins.

What it Means: The vacancy rate for industrial space is sky high, and the industry is hanging on by a thread -- from the mom-and-pops all the way up to much larger 3PLs it is going to be hard to survive, but interesting to see what will happen to the industrial real estate market. Click Here to Read Full Article...

"Shopper Marketing," as the University of Tennessee calls it, captures consumer behavior at a number of touch points, and then leverages the intelligence across the supply chain to benefit the company, its brand, its retail outlets and its shoppers. And... 86% of retailers rank "Shopper Marketing" as the number one activity for delivering a meaningful return on investment. If you're not familiar with the term, "Shopper Marketing," academicians and company executives advise you to get up to speed.

According to an IndustryWeek article by Marcel M. Zondag, a Ph.D. Student at University of Tennessee, "The economic downturn, coupled with changes in shoppers' behavior and attitudes, has forced companies to rethink ways to entice customers to buy, particularly since 70% of the time, shoppers choose what to buy while they are shopping, 8% of buying decisions are unplanned, and only five percent of customers are loyal to the brand of one product group."

Also according to the article, "86% of retailers rank "Shopper Marketing" as the number one activity for delivering a meaningful return on investment." If you're not familiar with the term, "Shopper Marketing," academicians at the University of Tennessee and executives from leading corporations advise you to get up to speed.

In short, "Shopper Marketing," as the University of Tennessee calls it, captures consumer behavior at a number of touch points, and then leverages the intelligence across the supply chain to benefit the company, its brand, its retail outlets and its shoppers. The strategy involves grinding consumer shopping behaviors down to the finest grains of information for the purpose of making adjustments designed to influence consumer buying decisions while they're in "shopping mode."

The concept isn't new. In fact, the IndustryWeek article says Shopper Marketing debuted in the early 2000s. So why the sudden renewed interest? New intelligence technologies, a depressed economy and retailers desperate to capture the hearts, minds and dollars of cash-strapped consumers tells the tale.

Dan Flint, an associate professor of marketing at the University of Tennessee calls Shopper Marketing "the hottest issue in retail and consumer package goods,” which is why he and a group of top executives from some of the world's leading companies — including PepsiCo Americas Foods, Walmart, Nestlé, Kimberly-Clark and The Walt Disney Co. — gathered at the University of Tennessee, Knoxville, in November, to launch the UTK College of Business Administration Shopper Marketing Forum.

Some of the issues explored at the inaugural forum included collaboration among supply chain partners in retail; improved metrics and return on investment (ROI) for marketing initiatives; gaining deeper insights into shopper thinking, behavior and value perceptions; and enhancing shopper experiences through state-of-the-art technology such as social networking and virtual simulations and displays.

An unnamed CEO from a Fortune 500 consumer goods company, was quoted in the IndustryWeek article as saying, "We are convinced that Shopper Marketing is the way in which we will achieve our growth objectives in a depressed market. We are equally convinced that we will have to dramatically overhaul our business model to activate shopper marketing."

What do you think? Will the fact that companies plan on digging even deeper into the psychology of shopping be the catalyst for new business models and revamped supply chains? As supply chain professionals, where would you apply this level of intelligence to improve your supply chain?

Situation: Patricio Alveal calls Chile a "hidden gem," because Chile offers a free market economy and virtually no barriers to international commerce.

The Details: As a manufacturing base, Chile is still in its infancy, but Patricio Alveal is big believer in the future of Chile as a country where manufacturers will soon thrive. Beyond its open economy, Patricio says taxes are low, and because Chile hold free trade agreements with nearly 50 countries, including China, Japan, the United States, Mexico, and the entire European Union, products are exempt from duty in what amounts to half the world.

What it Means: Patricio fully expects Chile to become a leader in worldwide commerce, and as companies begin to recognize the benefits of manufacturing in the region, there are many opportunities to advance the concepts of modern supply chain, and to facilitate supply chain best practices in a country that is eager to strengthen its global trade position. Click Here to Read Full Article...

Situation: Mexico's transportation and logistics industries are still in their infancies. Railroad infrastructure hasn't improved in 100 years and its highway system, which utilizes toll booths, adds extra expense to the supply chain.

The Details: Mexico is in the midst of a strategic logistics project, known as LOGYT, which was developed for the purpose of improving and expanding railroads, investing in highways, and developing intermodal terminals, but the financial crisis has slowed its progress, and with two years left on the project, Jorge doesn't believe its goals will be met.

What it Means: Mexico is just beginning to "professionalize" its logistics services, although the country still lacks the basic necessities, including a database of reliable suppliers and rate structures. Companies are beginning to share knowledge, and professionals are learning, but many companies still don't understand the financial benefits that strategical and tactical planning could bring to the country's supply chain process. Click Here to Read Full Article...

Situation: As the title implies, The Book on Improving Productivity by Fair Means or Foul, is about using almost any method you can to achieve productivity, even if it isn't fair.

The Details: Most books on the topic of productivity cover traditional efficiency tools from an operational view, while Daniel Feiman and Dr. Miller examine the issue from the human perspective. Inside the pages of their book, you'll meet the "problem children," the "time-bandits," the "steamrollers," the "sticklers" and many other people you will recognize.

What it Means: Daniel says the book was written for one reason -- to put a tool in the hands of managers that would help them better deal with their employees, because "when the organization does better, the individual operating unit does better, and everyone does better." Click Here to Read Full Article...

In the immediate aftermath of the worst earthquake recorded in the region in 250 years, the people of Haiti need medicine, food, water, and personal care and comfort items. In the weeks, months and years to come, rebuilding the country's infrastructure will require goods and service from every sector. Supply chain is what we do best, and the supply chain community is already beginning to mobilize.

As firsthand accounts began trickling out of Haiti in the aftermath of the devastating earthquake that hit on January 12 at 4:53 p.m., it became painfully clear that the road to recovery for the already impoverished nation will be long and arduous.

According to DC Velocity, the supply chain community has already begun to organize relief efforts. A spokesperson for the American Logistics Aid Network (ALAN) said it has contacted the National Voluntary Organizations Active in Disaster, to offer its services and support. ALAN is a web portal designed to help providers and relief groups connect online. ALAN's technology partner, the Aidmatrix Foundation, has long-established relationships in Haiti, as well as a Web portal presence.

John T. (Jock) Menzies III, ALAN's president, told DC Velocity it would take "a couple of days" for the supply chain community to assess the need in Haiti and to determine how best to support agencies like the Red Cross and other "first responders," who typically deliver the first wave of goods and services. ALAN, Menzies said, tends "to engage as surge and unanticipated needs arise—and they always do."

As of this post, there is no new information posted at http://www.alanaid.org/, but we encourage all members of the supply chain community to check in as updates will be posted very soon, and in the days and weeks to come.

DC Velocity is also reporting that Florida-based Crowley Maritime Corporation has temporarily suspended cargo services in and out of Haiti until port infrastructure damage can be assessed. Earlier this week, Crowley issued a statement saying it is working with US government agencies and NGOs, and is prepared to ship emergency supplies into Haiti "as soon as port conditions allow."

Supply chain is what we do best, and there are no doubt other efforts underway. If your organization is mobilizing, or you are looking to connect with other supply chain organizations to assist with relief efforts in Haiti, we encourage you to post any information you would like to share here at Logipi. We will do our best to help you make connections by keeping the flow of information moving on our site and others, including LinkedIn.

Meet Hector Medina

Hector's experience in supply chain and operations spans more than 20 years. Over the course of that time he has worked in a variety of sectors, including healthcare, pharmaceutical and food products in four different countries. Hector specializes in the optimizing and innovating of end-to-end global and regional supply chains -- always with an eye toward increasing profit, enhancing productivity and reducing cost.

Passion

Hector Medina says he is passionate about supply chain planning, more specifically, about minimizing the cost of importing and exporting through precise forecasting and planning.

Preparation

In Latin America, Hector says, supply chain planning is critical due to the lead times that must be taken into consideration between countries. It's very similar to Europe in terms of the number of companies participating in the supply chain. The only difference and disadvantage is that communication of customs requirements between the countries is not advanced as it is in Europe, so communicating all the customs requirements, for example, can be challenging. You have to anticipate and prepare for anything and everything that could go wrong -- preparation, prevention and project management are critical to the success of entire supply chain process.

Innovation

Hector showed his skill as an innovator when he led a team that implemented a new concept designed to centralize demand planning operations. Normally companies have small planning operations in each country, where they plan their own supply autonomously, or within a silo, which as you might imagine is not particularly efficient. Hector's team developed a regional demand planning operation wherein one person had responsibility for all inventory in the supply chain. The idea was to optimize the supply chain across all of the regions, which is exactly what it did.

Based on a post he read at Harvard Business Review, which purportedly explains "why most CEOs are bad at strategy," Arc Advisory Group analyst, Adrian Gonzalez, started thinking about his experiences with 3PL CEOs.

Adrian Gonzalez, an analyst with Arc Advisory Group, recently posted a blog titled, "Are 3PL CEOs Bad at Strategy?" What started his brain down that path was another blog posted at Harvard Business Review by Roger Martin, Dean of the University of Toronto's Rotman School of Management, where Martin explains "why most CEOs are bad at strategy."

According to Martin, "Strategy is a creative act and the way to produce good strategy is go beyond basic analysis to creatively integrate your choices concerning where you play and how you propose to win." CEOs, he maintains, are too analytical to be creative.

After reading Martin's commentary, Adrian Gonzalez started thinking about his experiences with 3PL leadership. "Over the years," Gonzalez wrote, "I have asked 3PL leaders how they plan to grow their business moving forward, their answers usually include one or more of the following strategies:

Expand globally

Introduce new services

Target new industries

Penetrate the small and midsize business market

In Gonzalez opinion, those strategies have more to do with "where you play" than "how you propose to win."

While he says he will have to give the whole issue further thought, he ended his post with, "Are 3PLs CEOs bad at strategy? Maybe some are, but certainly not most of them. Perhaps the better question to ask is this: Are they worse at it than CEOs in other industries and what can they do about it?"

Okay, we'll take a stab at answering the last question... it comes down to whether the CEO in question is left-brain dominant or right-brain dominant, and in all likelihood, most CEOs are left-brain dominant -- in other words, they tend think analytically, and typically rely on hard data to solve problems. That also explains why most CEOs choose business school over art school.

Of course there are exceptions to every rule. Netflix CEO, Reed Hastings, who came in at #4 on Fast Company's "100 Most Creative People in Business" list for 2009. Reed says he likes to throw a mix of innovations out there and let the customer decide. A risky, yet, a very creative strategy.

What do you think? Are CEOs just too left-brain dominant to develop creative strategies? Does the supply chain industry have room for creative strategies, or is it strictly a time, space and numbers game?

If you could design a brand new supply chain for your company from scratch -- what would it look like? Would you use an existing supply chain model, create a hybrid or go all out and design something completely revolutionary?

Last week, we came a cross an interesting article which we featured in our newsletter. It was written by Andrew K. Reese, Editor of Supply & Demand Chain Executive, and it was about a Texas-based business called Commercial Metals Company that built a shared supply chain group from the ground up.

That's exactly what Commercial Metals Company did in 2008 when they decided to move to a centralized supply chain organization model, and according to Reese, "In less than a year it already saw tens of millions of dollars of cost savings."

Reese began the article with, "If you had the chance to build your company's supply chain function from the ground up, what would that organization look like? And more importantly, how would you go about designing the function, where would you find your staff, and how would you roll the organization out to the rest of the company?"

We thought that was a fascinating topic for a Logipi blog...

If you had an unlimited budget and could tear your supply chain model down and then build it back up from scratch, what would this new beast look like? Is there a particular business model you would use as a guide, or would you build something truly innovative? How would your new supply chain benefit your company? And what, if any barriers, do you see to "buy-in" from your organization?

You've just been handed the keys to the supply chain Kingdom, now start building.

As supply chain professionals, are we to blame for the distribution of dangerous products? Cadmium found in children's jewelry brings supply chain visibility into question. 

According to the Associated Press, it seems some Chinese manufacturers thought they could get away with using another toxic metal, known as cadmium, as a replacement for lead in children's jewelry after the US Congress brought the use of lead to a screeching halt in 2008.

Cadmium is a malleable metal often used in pigments, plastics and electroplating -- which is how it found its way into a line of children's charm bracelets and pendants. Like lead, Cadmium has been shown to cause delayed brain development in very young children, and has been linked to cancer.

Many manufacturers are fans of cadmium because it is cheap and easy to work with. Unfortunately, cadmium's affordability also attracted companies like Walmart, Claire's and Dollar N More to purchase the line of potentially toxic children's jewelry in question, including some Disney-themed pieces.

Everyone is outraged, but beyond the Chinese manufacturers alleged to be using cadmium in products intended for children, who is to blame?

In an article written by Stephen Singer, who broke the news for the Associated Press, Dr. Jeffrey Weidenhamer, a professor of chemistry at Ashland University in Ohio, and the individual who analyzed the jewelry for Singer's article, said, "Clearly it seems like for a metal as toxic as cadmium, somebody ought to be watching out to make sure there aren't high levels in items that could end up in the hands of kids."

As supply chain professionals, we have to ask ourselves, who is that "somebody?"

Is it the responsibility of industry associations, like the Fashion Jewelry Trade Association, who fought to achieve a national standard for the lead and phthalate content in children’s jewelry?

It should be noted that there are currently no government restrictions on the use of cadmium in jewelry, but is this really a government issue?

Considering this isn't the first tainted product incident to come out of Asia, are we partially to blame for a lack of visibility in our supply chains, and for not having more open relationships with suppliers? Walmart has already pulled the jewelry line off store shelves, but what does this incident say about their supply chain -- especially considering the compliance hoops it makes its suppliers jump through.

The question remains, are we doing enough to safeguard the supply chain, and if not, what more can we do?

Companies want and need end-to-end supply chain visibility in real time, but even if you had it, would you know what to do with the mountains of data?

As part the company's Supply Chain Thought Leadership Series, Supply Chain Digest's Dan Gilmore continued his interview with Krishnan Parasuraman, a lead architect and principal with Infosys Technologies.

In December, the pair began a discussion on the subject of supply chain visibility and performance management, including goals, objectives and barriers, This month, they discussed why supply chain visibility is becoming increasingly important, and once a company has visibility processes in place, what they should be measuring.

For most companies, risk management, product quality, fewer and more predictable supply chain disruptions, demand management, and an improved view of inventory across different channels are key drivers, although end-to-end supply chain visibility is the ultimate goal.

Companies can get as granular as you need to be, but Krishnan suggests high-level performance metrics for executives and operational-level metrics for line managers and operational personnel. For example, a chief procurement officer would need a company-wide view of spend, while a category manager or buyer might only need to see spend for a specific category, or product, from a specific supplier.

Most companies, Krishnan said, already have some sort of "event management" system in place, and progressive companies are setting up alerts and exceptions that notify them whenever there is a disruption. If the proper level of data sharing and collaboration is in place, they are able to "close the loop" on performance management.

Dan Gilmore believes supply chain visibility is moving from a "rear view or scorecard approach" toward dashboard management in real-time -- something he sees as "hyper-critical," and a lesson many companies learned the hard way in the midst of the financial crisis.

Krishnan says companies want end-to-end "actionable visibility," which provides the ability to be both reactive and proactive. In a perfect world, that sounds like a perfect solution, but is it possible?

What do you think? What do you see as the biggest barriers to end-to-end actionable visibility? The data flow could be overwhelming, which begs the question, how do you manage it once you have it?

Situation: Brian Wietharn, says companies have come to realize that they need a better grasp, not just on their total corporate spend, but also optimizing their supply chain to drive cost reduction and better manage their costs across their operating models.

The Details: With respect to marketing, Brian Wietharn says the recent economic downturn has resulted in more focus on marketing spend by chief financial officers (CFOs). Historically, chief marketing officers (CMOs) have managed their own budgets, which as Brian points out, are normally quite sizable, and operating in a silo can result in lost opportunities to manage and reduce marketing spend.

What it Means: In today's business environment, Brian says, "There is a need for company executives to pull together and speak in one voice," and he is seeing a definite trend toward chief marketing officers communicating with chief financial officers, chief operating officers and chief executive officers on matters of executing corporate strategy. Click Here to Read Full Article...

In terms of supply chain visibility performance, your company can be labeled in one of three ways -- "laggard," "industry average" or "best-in-class", according to a recent benchmarking report from the Aberdeen Group. Discover which pressures are driving companies to improve supply chain visibility, and what steps you can take to move your company's supply chain visibility performance to the next level.

In a recent Aberdeen Group study titled, Supply Chain Visibility Excellence: Reduce Pipeline Inventory and Landed Cost, its authors cited the top five pressures to improve supply chain visibility based on the largest percentage of respondents to an earlier study.

1. Need to improve supply chain operational performance

2. Need to reduce inventory held at various stages in the supply chain

3. Business mandate to reduce supply chain execution costs

4. Increased stakeholder demand for accuracy and timeliness of shipment event information

5. Longer lead time and lead-time variability.

While the results are taken from a survey of only 209 respondents, we feel it paints a pretty accurate picture of global supply chain visibility drivers, especially in light of the economic downturn.

The report also provides an overview of actions required to move your company's supply chain visibility performance from "Laggard to Industry Average" or "Industry Average to Best-in-Class."

Laggards, the report says, should prioritize initiatives and focus on the highest impact areas. They should also build a business case for visibility.

Companies looking to move from industry average to best-in-class are advised not to reinvent the wheel in terms of software systems -- instead leverage off-the-shelf solutions -- and leverage the technology they already have on all levels.

Best-in-class companies are advised to invest in organizational excellence and to take supply chain execution responsiveness to the next level by sharing information with other departments, including finance, sales, and manufacturing, as well as with suppliers, 3PL providers and customers.

Again, while only a high-level view, we think this report represents sound advice.

What do you think?

Did Aberdeen's top five pressures to improve supply chain visibility capture one or more of the drivers in your company?

And, could Aberdeen's advice to companies that fall into the "laggard," "industry average" or "best-in-class" categories really be applied to move your company's supply chain visibility performance to the next level?

Situation: In 2003, when four divisions of Bayer MaterialScience combined to become one division, Rodrigo Dutra was tasked with developing a web-based planning tool focused on global sales and operations planning.

The Details: Asking management to make the transition from their old tools and proving the benefits of the new tool was difficult. After six months, however, the tool was functioning well and everyone could clearly see the benefits.

What it Means: "If people don't buy what you're selling," Rodrigo says, "it is difficult to achieve success independent of the tool you choose. You need to convince people, and in this regard Latin American colleagues are very open to changes, and this is an advantage worldwide to be open for new things.” Click Here to Read Full Article...

Global market intelligence and advisory firm, IDC Manufacturing Insights, has released its top 10 supply chain predictions for the 2010 season. From "dynamic optimization" and intelligent supply chains, to more outsourcing and increased risk, this is your chance to get a glimpse of the future.

2009 was a rough year for many of us, but on the bright side, we gained an incredible amount of knowledge and insight. Now that we're a full week into the new year it is time to file the past under "lessons learned" and move forward.

This week, Sean Murphy at Supply Chain Management Review spoke with IDC Manufacturing Insights' Supply Chain Strategies Practice Director, Simon Ellis, who recapped IDC's Manufacturing Insights' top 10 supply chain predictions for 2010.

Here's the list:

1. "Dynamic optimization" will dominate capability investment to support redefining of the supply chain.

2. S&OP will reemerge as the synchronizing process for reconciling supply and demand.

3. Balancing supply and demand across the value chain will prompt a strategic redesign of the supply network.

4. Supply chain and product life-cycle management applications will increasingly converge as manufacturing companies focus on innovation delivery.

5. Intelligent supply chains will put broader visibility burden on supply chain organizations, both owned and outsourced.

6. Supply chain organizations will invest in capabilities that facilitate global operations.

7. Transportation capacity will tighten, causing supply chain organizations to rethink fulfillment strategies.

8. The increasing pace of supply chain outsourcing/offshoring will keep risk management high on the strategic agenda, but investment will remain focused on building risk awareness.

9. Smart services and the need for persistent assets will create the inflection point for RFID, sensors, and M2M.

10. Armed with metrics, manufacturers will move from sustainability reporting to intelligence.

What do you think? Are IDC's predictions in line with your supply chain strategies for 2010?

Situation: Carlos Irving Rojas has seen a lot of changes in Mexico's supply chain and logistics industry -- especially after the North American Free Trade Agreement took effect 15 years ago.

The Details: Today, Carlos says, companies are investing in industrial parks, and you'll find many offers of free premium-quality warehousing and distribution facilities in Mexico.

What it Means: Carlos Irving Rojas believes one of the key challenges for Mexico is the lack of truly integrated logistics services. Companies willing to create an IT platform that delivers information, tracking and visibility could level the playing field between large and small transportation companies and provide the seamless operation needed in Mexico's supply chain.  Click Here to Read Full Article...

Situation: Galtronics is a wireless antenna company specializing in the design, development, production, testing and verification of customized and semi-customized radio frequency antennas for the global communications industry. Like most successful companies, Galtronics responded to the financial crisis by being proactive, adaptive and flexible.

The Details: Galtronics' strategies include, reconstructing the supply base by reducing the number of suppliers and identifying long term partners; opening the lines of communication for the purpose of negotiating partnerships; cost optimization by redesigning products and approving alternative materials that wiil reduce costs without sacrificing performance; and focusing on its localization programs.

What it Means: Galtronics is adapting to the economic downturn, and Head of Sourcing, Ori Nachmani, is leading the charge on a number of initiatives designed to streamline processes and lower costs. Click Here to Read Full Article...

Situation: Junaid Tahir works for a United Arab Emirates-based business house, which manufactures and markets a broad range of mass market consumer products.

The Details: As an Associate Supply Chain Manager, Junaid Tahir has his finger on the pulse of everything from fluctuating commodity prices and measuring total cost of ownership, to the state of the supply chain industry in Pakistan, and the rise of 3PLs in the region.

What it Means: Junaid Tahir provides a bird's eye view of the Pakistan's supply chain industry, and offers suggestions for maintaining an agile supply chain in a volatile economic environment. Click Here to Read Full Article...

Situation: In today's economy, we are seeing more collaboration than ever before. For Capgemini Consulting and TRANSPOREON collaborating on a new market monitoring tool made perfect sense.

The Details: TRANSPOREON's e-logistics platforms naturally pull a wealth of information about transport lanes, capacity, pricing, tariffs and other market intelligence together on a daily basis -- information and intelligence that could be very useful to logistics and supply chain executives if it could be complied into a quarterly report. But, because TRANSPOREON is not a consulting firm, the company felt it needed strong partner with experience in the area logistics sourcing strategy. Capgemini Consulting, a company with a proven track record of delivering sustainable advantages to its customers was the perfect choice.

What it Means: On December 7, 2009, Capgemini Consulting and TRANSPOREON announced the joint launch of the first edition of the ‘Transport Market Monitor’ report created to provide supply chain and logistics professionals in Europe with insights into the development of transport prices, and other transport market dynamics. Click Here to Download Full Article...

Situation: EyeDPro's AgnoSix is a highly configurable software-as-a-service solution that offers powerful tracking and tracing capabilities.

The Details: For asset tracking, AgnoSix can locate people and objects within a facility, on map displays or by location search, in real time. It can also provide a history of where people and objects have been.

What it Means: As you might imagine, real-time locationing capability is applicable to nearly every market segment, but can be particularly useful for manufacturing, construction, aviation, aerospace, transportation, logistics, medical and pharmaceutical industries. EyeDPro's Jan Boen says his company has an affordable system that delivers end-to-end visibility in any environment. Click Here to Read Full Article...

If world demand for oil outpaces production, and oil prices skyrocket, what will the supply chain of the future look like, and what should we be focusing on to prepare for it?

According to a contributor at Before It's News, Faith Birol, the chief economist of the International Energy Agency (IEA), believes that if no new discoveries are made, “the output of conventional oil will peak in 2020 if oil demand grows on a business-as-usual basis.”

Of course that doesn't mean we will run out of oil any time soon, or that is no more oil to be extracted from the earth. What is does mean is that oil will likely become more expensive -- assuming Faith Birol's belief is on the mark -- which to be fair, many other experts say is not even close.

For the sake of argument, however, let's assume world demand significantly outpaces world production, which would cause prices to skyrocket, putting oil dependent economies at risk of failure. Let's also assume that people in developed countries will be unwilling to take a step backwards in terms of lifestyle.

As supply chain professionals, how will we keep goods moving through the supply chain, without pricing them out of the market? Are we ignoring the obvious? Is now the time to address the future?

Where do you think the answers lie? Should we focus on alternative energy sources? Should we get serious about localizing the supply chain? Are there opportunities for companies to conserve through collaboration? Should we begin conditioning consumers to accept fewer choices?