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...

International

Bamboo Bicycles on a Roll in Ghana

California-based Calfee Design has been manufacturing and selling bamboo bikes since 2005, but when Craig Calfee visited West Africa the wheels started to turn. Calfee, a bicycle designer and entrepreneur at heart, saw the potential for setting up micro-manufacturing facilities in Ghana using local locally sourced bamboo and local talent. By 2008, working through an initiative he launched called Bamboosero, Calfee had set up two bike-building shops in Ghana. The bamboo bike builders in Ghana earn $150 for every frame they build, which, when completed, are shipped back to the United States where teams in Calfee's shop finish the assembly before sending the bikes to distributors. Calfee plans to extend the program both in Ghana and in other developing countries. Springwise.com (3/9)

United States

The New Strategically Aligned Wireless Supply Chain

Operators, manufacturers and retailers in the wireless space are putting new emphasis on their supply chains, and really starting to recognize the benefits of supply chain integration for reducing risk and strengthening their competitive positions. In an article for RCR Wireless, Marcelo Claure, CEO of Brightstar Corporation, wrote, "The more transparent and more strategically aligned the supply chain, the more efficient, predictable and profitable all of the partners' operations become." Operators that work closely with manufacturers and retailers improve forecast accuracy, retailers that collaborate with operators and manufacturers see increased customer satisfaction and higher stock turns, while distribution and logistics providers are evolving into information management companies. RCR Wireless (3/9)

From the Wires

United States

North American Marine Highways Buoyed by Interest

Sonney Jones, the Division Director for Transportation at Dallas-based Dal Tile Corporation, called his supply chain "a tangle of trucks, trains and ocean carriers" until Dal Tile partnered with SeaBridge Freight, one of the pioneers of America's marine highways and a company that operates vessels between the ports of Brownsville, Texas and Tampa, Florida. Seabridge founder Hank Hoffman, who brought his trucking background to the maritime environment and worked closely with Dal Tile to streamline its logistics, will join Sonney Jones and more than twenty experts in the field of maritime intermodal logistics as speakers at the Seventh Annual Journal of Commerce North American Marine Highways and Logistics Conference, April 6-7, 2010, at the Maritime Institute near Baltimore. PR Newswire (3/9)

From the Blogs

United States

Ten Things John Westerveld Likes About S&OP – Part 1

The 21st Century Supply Chain's John Westerveld delivers a scenario familiar to many... A good product isn't selling as well as forecasted, creating excess inventory. Feedback says the price is too high, so marketing develops a sale and it works. The product sells out and now supply doesn't match demand. Manufacturing is still busy making a similar product at a lower price point based on the fact that it was outselling the higher priced model. Suddenly demand for the product at the lower price point drops off as consumers look to buy the higher priced model at the sale price -- now inventories are too high on the lower priced model, so manufacturing halts production to begin producing the higher priced model -- now finance is upset because cash flow has been impacted by the production shift. In part one of two installments, Westerveld outlines the five of ten ways S&OP could help to prevent the above scenario. The 21st Century Supply Chain (3/9)

Going Green

International

Website Helps Suppliers Meet Retailer's Green Demands

Five Winds International, a sustainability management consulting firm, has launched a new website designed to help companies meet supplier sustainability requirements imposed by Walmart, Marks and Spencer, Tesco and others. In addition to an online calculator for determining how products and packaging score on Walmart's Supplier Sustainability Assessment, the site will also publish three white papers to help consumer goods suppliers respond to retailers' supply chain requirements and programs. Commenting on the evolution of the green movement, Jim Fava, Five Winds' Managing Director, said, “Ten years ago, we were working mostly with top consumer brands and niche 'green' companies to understand sustainability issues, improve product performance and help them grow their business and succeed in the marketplace. Now retailers are asking everyone to measure up to a much higher standard, and many companies are finding they need to catch up.” GreenBiz.com (3/9)

India

Citibank's Mobile Phone Payment Pilot Flies

A recent pilot involving 3,141 Citibank credit cardholders who purchased Near Field Communication-enabled phones that allowed them to pay for goods at 250 merchant locations in Bangalore, India has been deemed a success, but rollout could be a long way off. According to Citibank, "Nearly 50,000 payments were completed throughout the 26-week span, which began in July 2009, and participants made purchases more frequently, spending a greater amount with each transaction while using the mobile phones than they did using ordinary credit cards." That's the good news, the bad news is, the Nokia 6212 phone utilized in the Bangalore pilot was considered outdated, compared with non-NFC mobile phones available on the market, which means a big commitment will be needed from device providers before mobile phone payments become commonplace at retail. RFID Journal (3/8)

United States

Nearly Half Outsource Regulatory Compliance

Global logistics firm BDP International is reporting that nearly half of the supply chain professionals who took part in a recent survey indicated that they are supplementing their internal regulatory compliance departments by outsourcing, especially those doing business in emerging markets and those with annual revenues under $1 billion. "It was not surprising to find that the larger companies with more resources were more inclined to handle compliance matters themselves, particularly on their home turf," said BDP Vice President of Regulatory Compliance, Michael Ford. "Nor was it surprising to see even these companies relying on local expertise in places like Africa and Asia. What is notable, however, is the degree to which they all recognize the need to proactively manage the function to minimize often highly punitive penalties and maintain desk-level productivity." Logistics Management (3/8)

United States

Measuring Metrics That Matter

According to an IndustryWeek article, Toyota's recent rash of recalls illustrates a problem common to many large companies -- lack of visibility in across their supply chains, which makes performance monitoring, measuring and management nearly impossible. Disconnects between business units and geographic areas only serve to compound the problem, because even if you are establishing performance metrics at the department level, improvements are typically made in isolation. To solve the problem, align cross departmental goals to ensure that operational KPIs map to strategic KPIs and leverage all relevant supply chain data, not just what is in the department data mart. In other words, look at the big picture, then extract and share meaningful data where ever it's found. IndustryWeek (3/8)

United States

AMR Researcher Calls SAP Co-Chiefs Out

A new report from AMR Research' Vice President of Supply Chain Research, Noha Tohamy, is questioning SAP's commitment to its supply chain management portfolio, and it doesn't point to a rosy future for new co-CEOs Bill McDermott and Jim Hagemann Snabe. According to Tohamy, SAP's "large and loyal customer base is becoming more vocal in demanding innovative SCM products that can support their strategies of standardizing on SAP." "Overall," she wrote in her report, "the software giant has been sluggish in bringing to market an SCM offering that makes SAP not just the largest SCM vendor in revenue, but an innovator and leader in meeting increasingly complex supply chain needs." The report, titled, "A Call to Action for SAP's New Leadership: Shine a Light on Supply Chain Management," doesn't mince words intended for the dynamic CEO duo -- put innovation at the top of your to do list or get ready for a revolt. CIO (3/8)

Water Cooler Worthy

United States

Telling Young Supply Chain Pros Where to Go

If a young person asked you which cities offer the best job opportunities in supply chain, where would you tell them to go? Steve Banker of Logistics Viewpoints believes he has the answer -- Bentonville, Arkansas and Geneva, Switzerland. Bentonville is an obvious choice for its affiliation with Walmart, not to mention the multifaceted supply chain city that quickly grew up around the company's corporate headquarters to serve the massive retailer. But Geneva, Switzerland? Yes, and it makes perfect sense, because multibillion-dollar multinational corporations in search of a "tax efficient supply chain" are naturally drawn to Switzerland, and more specifically Geneva. Logistics Viewpoints (3/8)

United States

The 'Herman Miller' Production System

With regard to Toyota, you could say the mighty have fallen, but they will likely get up and move on one day, because the principles of "The Toyota Production System" are still held in the highest regard and still in play. Long before the recent Toyota recall, furniture maker Herman Miller was struggling with its supply chain -- from sourcing raw materials to shipping. In this five-minute video, you'll get a top line view of how Herman Miller turned it around using lessons learned from a Toyota supplier. Fast Company (3/5)

United States

Beware the Narcissistic Procurement Pro

Kraft, Frito-Lay, Safeway and B&G made headlines this month as several employees entered guilty pleas in a procurement fraud case involving bribes paid to foist sub-standard ingredients on supply chains. In last week's installment of Spend Matters' "Friday Rant,' William Busch offers "a pragmatic approach to combating procurement fraud." According to Busch, perpetrators of fraud are a largely narcissistic group, and in his words, "Since procurement professionals wield tremendous power over their vendors, it's a realm to which narcissist's are likely to be attracted -- or at least see tremendous opportunity in, once involved." To thwart the plans of anyone who might be tempted to go to the dark side, he recommends that CPOs conduct regular seminars to clarify the standards to which everyone will be held personally accountable. Spend Matters (3/5)

Denmark

Maersk's Sinking Profits and Rising Rates

It wasn't exactly unexpected, but it was disheartening for shareholders to hear Eivind Kolding, CEO of the Container Business of the A.P. Moller Maersk Group, present a rather bleak forecast for 2010. And while he did not provide specifics on 2009, a company spokesman did... Maersk recorded a net loss of $1.29 billion in the full year ended Dec. 31. To compensate for its losses, Maersk, like many other liners that are struggling to stay afloat in the midst of a recession, is telling its shippers to expect rate hikes in order to reestablish sustainable operations in all of its trade lanes. Logistics Management (3/5)

From the Blogs

United States

SAP Cites Five SCM Software Trends

In an interview with Bob Trebilcock at Modern Materials Handling, Krish Mantripragada, SAP’s Vice President of Suite Solution Management, said, “From the conversations we’re having with our customers, we believe that boom and bust cycles are becoming more frequent and steeper. The leading companies are trying to use this opportunity as an opportunity to leap frog ahead of their competition in technologies that will allow them to manage that volatility.” Mantripragada also cited five SCM software trends that point to recovery, including companies investing in real-time consumer and channel demand solutions, multi-echelon inventory management, and more focus on visibility and collaboration among companies that outsource. Modern Materials Handling (3/5)

Social Media and Supply Chain

United States

18 Use Cases for Social CRM

Social media can be applied to virtually every business unit, including supply chain, and Altimeter Group's Ray Wang and Jeremiah Owyang provide the proof in a new report featuring 18 use cases for Social CRM. A portion of the report's executive summary says, "Social CRM does not replace existing CRM efforts – instead it adds more value. In fact, Social CRM augments social networking to serve as a new channel within existing end-to-end CRM processes and investments. Social CRM enhances the relationship aspect of CRM and builds on improving the relationships with more meaningful interactions." You can cycle through the complete presentation, titled 'Social CRM: The New Rules of Relationship Management' in slideshow form at the link provided here. SlideShare.com (3/4)

United States

Look Who's Leveraging TMS

Companies across all sectors are reaping the rewards of Transportation Management System (TMS) implementations, but it is far from a one-size-fits-all proposition. Kimberly-Clark leveraged TMS to get its freight spend moving the right direction, CONTECH Construction Products left manual transportation management behind in favor of an on-demand system, and Kraft Foods recently hopped onboard with a solution that offers traditional TMS benefits, plus "load-linking" capabilities. The solutions are as different as the companies that invest in them, and this article puts the spotlight on six very different use cases. Supply Chain Digest (3/3)

United States

Hold the Tomato... Until April

After a brutal winter in Florida, some fast food restaurants and fine dining establishments have had to make tomato-related menu changes due to severe shortages of the fruit. Yes, botanically speaking, a tomato is a fruit, and it is currently a fruit in short supply. While some restaurants source tomatoes from locations other than Florida, including Mexico, tomato purists, like Burger King, source almost exclusively from The Sunshine State because their burgers require a very specific round tomato. A new crop is currently being harvested in Florida, so tomato production is anticipated to ramp back up by April. But, because nasty weather reduced the supply by approximately 70%, the cost of fresh tomatoes has risen dramatically. QSR Web (3/4)

From the Wires

United States

Ryder Ranks Number One in Supply Chain Security

The 2009 Security Benchmarking Survey, published in Security Magazine, has ranked Ryder number one for security practices in the transportation, logistics, supply chain, and warehousing industry sector. According to a press release, the survey tracked 16 vertical market sectors, using a combination of available public and private resources and interviews to identify the most intense industries and organizations facing significant risk and requiring aggressive risk mitigation strategies. Commenting on the ranking, Greg Swienton, Ryder Chairman and Chief Executive Officer, said, "Ryder's number one ranking validates our efforts to implement world-class security processes and standards that ensure the safety and security of our own and our customers' people, products, and assets. We commend Security Magazine for continuing to track emerging trends, benchmark enterprise security performance, and share best practices that improve business results." MarketWire (3/4)

China

Construction Begins on Hong Kong's Interlink

Ground was broken this week for Interlink, a high-tech and environmentally sound warehouse and distribution development in Hong Kong's Tsing Yi port district. Said to be valued at more than $600 million, Interlink represents one of the largest industrial development projects currently being undertaken anywhere in the world, and is one of the first major new Hong Kong warehouse projects in nearly a decade. When construction wraps in January 2012, the 2.4 million square foot development will stand as the fourth largest warehouse in Hong Kong. Over half of Interlink's total gross lettable area has been preleased and optioned to two leading global logistics operators - DHL Supply Chain and Yusen Air & Sea Services. PRNewswire (3/4)

Going Green

United States

Home Depot's Green Plans Are Paying Off

In a statement issued on Thursday, The Home Depot announced that it has cut its US store energy use by 2.6 billion kilowatt-hours since 2004, and now has its sights set on a 20% reduction in kWh per square foot usage in its US stores by 2015. The home improvement retailer also plans to reduce greenhouse gas emissions in its domestic supply chain by 20% within the next five years. The company cut energy consumption in it stores by upgrading HVAC systems, aligning stock hours with store hours, using CFL bulbs and switching to T5 lighting. To reduce its domestic supply chain greenhouse gas emissions, Home Depot will move from supplier-to-store shipments toward a centralized distribution network, which it hopes will drive transportation efficiencies. Atlanta Business Chronicle (3/4)

United States

Presidential Directives Include Securing the Supply Chain

White House Cybersecurity Coordinator Howard Schmidt has released a summary description of the extensively classified National Security Presidential Directive 54 and Homeland Security Presidential Directive 23. The directives, originally introduced by the Bush administration in 2008, include new information surrounding plans for tightening security within the global supply chain. According to the document, "risks must be managed in a strategic and comprehensive way over the entire life-cycle of products, systems and services," something that will require heightened awareness of threats, vulnerabilities and consequences associated with acquisition decisions. NextGov (3/3)

United States

Emerging From Recession on the Road Less Traveled

This week's 'Supply Chain Graphic of the Week' feature at SCDigest deals with emerging from recession and points to some interesting information taken from a team of researchers at Harvard Business Review who found that "Only a small number of companies—approximately 9% of our sample— flourished after a slowdown, doing better on key financial parameters than they had before it and outperforming rivals in their industry by at least 10% in terms of sales and profit growth." What did those who flourished do differently? In some ways they bucked logic. They didn't combine layoffs with lean unless it was done in concert, and most went lean without the layoffs. Also, instead of shedding assets, which would seem logical, some took advantage of recession fueled fire sales to buy property, plants and equipment. Supply Chain Digest (3/3)

United States

'Deja Vu All Over Again' for Toyota

While many say Toyota's rabid pursuit of lean cannot be blamed for the company's quality issues, others believe there is a connection. Akio Toyoda, the company's CEO, is pushing the blame off on growth that occurred faster than Toyota's quality systems could evolve. Speaking before a congressional committee last week, he said, "Toyota has, for the past few years, been expanding its business rapidly. Quite frankly, I fear the pace at which we have grown may have been too quick." SCDigest's editorial staff did some digging on the subject and found that Toyota used a similar line of defense during a less publicized recall in 2004 -- nearly six years ago. Also, during that same timeframe, according to SCDigest staff, JD Powers wrote, “There has been a watering down in both knowledge and belief in the famed Toyota Production System.” Supply Chain Digest (3/3)

United States

IBM Declares Itself a Winner in the Hardware Game

In an interview with Bob Evans and Alex Wolfe at InformationWeek, IBM Systems and Technology Senior Vice President, Rod Adkins, didn't mince words when it came to discussing the competition, and had a few choice words for HP CEO, Mark Hurd, who recently called IBM "a role player in the hardware space." Adkins believes "Dell won't be able to compete at the higher ends of the enterprise business," calls what Oracle and Sun bring to the table "a bag of parts," and says Cisco will have to do more than just extend their core competence to make it in the server space. For Mark Hurd at HP, Adkins said, there is nothing unique about HP's supply chain, and added, "What will make leaders stand above all others is not just running a traditional PC game but instead it's the innovation you wrap around those parts that attacks some of the pain points enterprises are seeing and their need for lower costs and better management and automation and integration and predictive analytics to take their business in a new direction. So I like our lineup compared to HP's lineup." InformationWeek (3/3)

From the Wires

United Kingdom

Unite and ASDA Join Forces to End Abusive of Power

Unite the Union, the UK's Largest Trade Union, has joined force with ASDA grocery chain to end discrimination and unfair treatment across the supermarket's 29 meat and poultry suppliers. Working collaboratively, the two groups plan to meet with all 29 suppliers to the chain, which include multi-national supplier, local suppliers and everything in between. The goal is to advance a new model of supply chain management that is not only cost effective and efficient, but fair to workers. According to a press release, Unite the Union has been very vocal on the subject of supermarkets "abusing their market power to drive costs down along the supply chain." That structural discrimination is also the subject of the first inquiry by the Equality and Human Rights Commission (EHRC) which is due to report this month on the UK's multi-billion pound meat industry in England and Wales. PRNewswire (3/3)

United States

Missing Links -- Tying Demand to Transportation

In an article posted at Logistics Viewpoints, Greg Brady, Founder, CEO, and Head of R&D at One Network Enterprises, wrote, "While some traditionally silo-based groups are doing better at sharing information and connecting their supply chain, most organizations are not planning and executing across functional domains to create a truly interconnected and collaborative supply chain." The disconnect between demand planning, transportation planning, and execution, he believes, is a perfect example. Optimizing these areas independently is a good start, but connecting them for the purpose of data sharing will better match supply with demand -- because stale demand information leads to inaccurate transportation plans, which in turn, leads to sending product to destinations other than where it is most needed. Learn what Brady thinks every company needs to support the end-to end process of tying demand to transportation Logistics Viewpoints (3/2)

United States

Giving US Manufacturers Home Field Advantage

The National Tooling and Machining Association, the Precision Metalforming Association and the Association for Manufacturing Technology are going to bat for American manufacturers with a "re-shoring" initiative designed to connect them with competitive domestic suppliers. According to the group, "Going local can reduce a company's total costs and offer a host of other benefits, while bringing US manufacturing jobs back home." The push to re-shore production is being driven by rising transportation and fuel costs, higher wage rates, and increasing reject rates in developing countries. The kick-off event for the re-shoring initiative is slated for May 12 at the Hyatt Regency Irvine Hotel, Irvine, California, and organizers say it will focus on providing OEMs with a "one-stop-shop" for connecting with qualified and competitive US job shops to manufacture parts and tooling. Supply & Demand Chain Executive (3/1)

From the Wires

United States

Safeway Joins The Sustainability Consortium

A press release issued by Safeway, one of the largest food and drug retailers in North America, based on sales, says the company has become the first US-based retail grocery chain and manufacturer of private label merchandise to join The Sustainability Consortium in support of the organization's science-based work toward a more sustainable global supply chain. The Sustainability Consortium is an independent group of scientists and engineers from leading academic research institutions around the world who engage with other researchers from the NGO, Governmental, and industrial sectors to build a scientific foundation that drives innovation to improve consumer product sustainability. Commenting on Safeway's decision to join the organization, Larree Renda, Safeway Executive Vice President, Chief Strategist and Administrative Officer, said, "We applaud the Consortium's work and believe its mission is a good fit with Safeway's efforts to provide its customers with a larger selection of sustainable products and services." BusinessWire (3/1)

From the Blogs

United States

Is Apple Peddling Conflict Computers?

Spend Matters Jason Busch compares Apple's recent child labor issues to the diamond industry's ongoing conflict diamond problems, because as he wrote, "Just as it's impossible to tell conflict diamonds sourced from war torn regions in Africa versus those untainted by suffering, it's also impossible to know if my Macbooks -- and iPhones for that matter -- came from a factory employing child labor (or a facility that trampled on the free speech rights of journalists researching a story)." The latter half of the sentence refers to a recent altercation between workers, security personnel and a freelance reporter at Foxconn, an Apple supplier. Busch has been riding Apple over recent child labor and other supplier performance infractions that have taken the shine off Apple's rep, and he has a few suggestions for the company in the area of supplier performance management, supply risk management, and supply chain CSR programs. Spend Matters (3/2)

Going Green

United States

Product-specifc EH&S Programs Can Reduce Risk

New research from AMR suggests that developing and implementing product-specific environmental health and safety (EH&S) programs can help shed light on potential risk management issues within your supply chain. Take regulatory noncompliance, for example. According to Simon Jacobson, a Research Director at AMR, "It is critical to make sure that all material safety data sheets get handed down from supplier to customer. Not only will this keep your company out of trouble in the short term, but it will prevent problems down the road, as the constant flux and change of environmental law is a perennial problem. Once again, collaboration is at the heart of the issue. "Without exchange of data," Jacobson said, "you do not have the information available if there's a change." The research also suggests a lack of standardized processes for data management, access to working capital, and executive commitment as potential barriers to EH&S programs and compliance. Supply Chain Management Review ( 3/2)

Chile

Chilean Fruit Industry Not Shaken by Quake

While it is still too early to determine the full extent of the damage caused by last week's earthquake in Chile, news from the country's fruit industry is encouraging. In a press release issued by the Association of Chilean Exporters (ASOEX), Chairman Ronald Bown said, “A number of the key packing facilities escaped with minimal damage and where roads and bridges are impassible, alternate routes are available.” Also, because Chile is in the peak of its harvest season, much of the region's fruit is already on the water, and Bown says he is not anticipating major disruptions in fruit supplies. Industry insiders did acknowledge that restoring supply chain logistics will be a challenge and that supply and demand will likely drive prices higher. One in particular said, “There is going to be fruit, but it is a question of how much." The Packer (3/1)

From the Blogs

United States

Throwing Tomatoes at Procurement Fraudsters

On Wednesday, The New York Times reported that four purchasing managers at Kraft Foods, Frito-Lay, Safeway and B&G Foods, respectively, answered charges of taking part in a bribery scheme with guilty pleas. Five others tied to SK Foods, a company that at one time was among the largest tomato processors in the United States, also admitted to playing roles in the plot. The larger concern is that tainted and possibly moldy tomato-based product not only entered the supply chain, but was actually sold to consumers. In this week's Supply Chain Matters, Bob Ferrari looks at the issue and wonders how the incident will impact "supplier collaboration, trust and self-inspection?" Supply Chain Matters (3/1)

Going Green

United States

Green Jobs Myth Buster

Dave Johnson, a freelance researcher and writer, and a Fellow with Campaign for America's Future, the Commonweal Institute, and the Institute for the Renewal of the California Dream, isn't too happy with an op-ed that ran in last week's Washington Post. In Johnson's opinion the headline, which read, "The Green Jobs Myth," fuels the fire of people who believe green initiatives cost, rather than create, jobs. Of course there are two sides to every argument and Johnson believes jobs will be created by "retrofitting every building and home in America to be energy efficient, and the management, supply chain, transportation, tools, etc.," not to mention jobs being created by the wind turbine industry -- and where there are jobs there are strong economies. The Huffington Post (3/1)

China

Chinese Suppliers After Walmart's Ultimatum

In 2008, Walmart hosted 1000 of its biggest Chinese supply firms at a conference in Beijing, during which, the company's Chief Executive Scott Lee said, "For those who may still be on the sidelines, I want to be direct, meeting social and environmental standards is not optional. I firmly believe that a company that cheats on overtime and on the age of its labor, that dumps its scraps and its chemicals in our rivers, that does not pay its taxes or honor its contracts will ultimately cheat on the quality of its products. And cheating on the quality of products is the same as cheating on customers. We will not tolerate that at Walmart." Benny Fung, head of a Hong Kong-manufacturing company took the message seriously, as have many others, but will it win customers? This article in The Washington Post details the positive changes and what the company hopes to accomplish. The Washington Post (2/28)

Water Cooler Worthy

United States

The Walls Have Ears and Eyes

Are you familiar with "The Internet of Things?" As a supply chain professional, whether you know it or not, you are more than just familiar with it -- you're living it. McKinsey Quarterly defines the Internet of Things as "sensors and actuators embedded in physical objects —from roadways to pacemakers — linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet. From tracking the movement of products through the supply chain, to monitoring interactions with them, the Internet of Things is all around us, and this article will open your eyes to even more possibilities. McKinsey Quarterly (3/1)

United States

Why Kindle Spells Doom for US Manufacturing

Cambridge, Massachusetts-based E Ink Corporation, the electronic paper display company behind the "ink" inside Amazon's Kindle e-reader, is unable to manufacture the rest of unit, and that, according to the Harvard Business School's Willy Shih, may signal big problems for the future of American manufacturing. The Kindle costs approximately $185 to manufacturer, yet only $40 to $50 stays in the United States, the balance of manufacturing goes to Asian companies with capabilities yet to be achieved in the States. Willy Shih sums his concerns up as follows, “Sometimes when you let your capabilities get away, you give up not only one industry, but all its progeny.” The Big Money (2/26)

From the Blogs

United States

Who Will End Up Holding the Supply Chain Assets Bag?

Many companies are shedding supply chain assets and outsourcing everything they can. It is a strategy that has been widely applied since the start of the recession. Why? Because reducing your fixed cost structure and moving to a variable cost model makes it easier to weather the ebb and flow of virtually any economic environment. That level of flexibility is often referred to as "accordion logistics." In other words, your network expands and contracts with supply and demand. But, all this shedding of assets, has Supply Chain Digest's Dan Gilmore wondering, "As manufacturers, shippers, and even 3PLs look to similar strategies, who are going to be the stupid SOBs that get stuck with the assets in the end?" Supply Chain Digest (2/26)

International

Will Vaporware and Cloud Computing Evaporate?

Cloud computing sounds mysterious, but as this blogger points out, it's really very simple. The cloud is just another word for the Internet, and vaporware, or virtual applications as they are sometimes called, are basically an Internet-based applications that can be accessed through browsers. In Friday's blog post at The Strategic Sourceror, Jen Street delivers a high-level view of the advantages and disadvantages of cloud computing. On the upside, Jen points to less on-site infrastructure, more room, less capital expenditure, lower management overhead and no more worries about crashes. On the downside, fewer features, security concerns and often no backup. The Strategic Sourceror (2/26)

Going Green

United States

Wringing Water Out of the Supply Chain

A recent study by researchers at Carnegie Mellon University says it takes 200 gallons of water to make $1 worth of pet food, and producing dog or cat food involves more than ten industries, including grain farming, power generation and supply and chemical manufacturing -- all of which use water. Commenting the need for water conservation in the supply chain, the study's lead author, Chris T. Hendrickson, said, "We want to get people thinking about how better to manage water resources over the long term." Companies like H.J Heinz are already on board -- "From recycling water and installing new technologies to fostering the use of drip irrigation in tomato fields and upgrading water treatment plants, Heinz is well on its way to meeting the company's goal to reduce water consumption by 20% by 2015," said Michael Mullen, a Heinz spokesman. Waterworld.com (2/27)

Water Cooler Worthy

United States

Supply Chain Educator and Author Passes Away

Sad news for the supply chain community on Friday as DC Velocity and many other supply chain publications and websites reported the death of Dr. John Mentzer after a lengthy illness. Dr. Mentzer was the Harry J. and Vivienne R. Bruce Chair of Excellence in Business in the Department of Marketing and Logistics at the University of Tennessee. Over the years, he has authored eight books and nearly 200 papers and articles. According to Mark Solomon who writes for DC Velocity, "Dr. Mentzer's research focused on the contribution of marketing and logistics to customer satisfaction and strategic advantage in supply chains; the application of computer decision models to marketing, logistics, and forecasting; and the management of the sales forecasting function." DC Velocity (2/26)

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.

United States

Coca-Cola Swallows North American Bottler

Word on the street this week is that Coca-Cola Company has purchased Coca-Cola Enterprises, the largest Coca-Cola bottler in North America. The acquisition will give Coca-Cola direct control over 90% of the total North American bottling and distribution volume of its products, and help to cut supply chain costs. The move comes right on the heels of a similar move by PepsiCo last year. The consolidations are likely tied to a slump in soft drink sales as consumers switch to other types of beverages to save money. BusinessWeek (2/25)

International

Toyota CEO Admits Company Went Too Lean

According to this article in The Economist, "In his testimony to the House oversight committee on February 24th, Mr Toyoda acknowledged that in its pursuit of growth his firm stretched its lean philosophy close to breaking point and in so doing became 'confused' about some of the principles that first made it great." What Toyota-watchers also find interesting is that rival carmakers are not "gloating," because having modeled their own manufacturing and supply chain management after Toyota's "lean production" system, they know they could be next. The Economist (2/25)

Going Green

United States

Walmart Vows Massive Greenhouse Gas Emissions Cuts

In a webcast presentation from the company's Arkansas corporate headquarters on Thursday, Walmart Chief Executive Mike Duke said Walmart Stores Inc., will cut 20 million metric tons of greenhouse gas emissions from its supply chain by January 2015. According to Duke, that number is equal to the emissions generated by 3.8 million cars over one year. In addition to its ultimate goal of relying on renewable energy to power its operations, the company will begin its quest by focusing on product categories most associated with carbon. Clear Carbon Inc. will monitor Walmart and its suppliers to ensure proper methodologies and calculations, and PwC will validate the procedures. Los Angeles Times (2/25)

United Kingdom

Mitsubishi Commits UK's Green Manufacturing Hub

The government's goal of turning Britain into a green manufacturing hub moved one step closer to reality on Thursday as Mitsubishi, one of the worlds largest wind turbine manufacturers, announced plans to build a new £100m factory in the north-east. According to Business Secretary, Lord Mandelson, the Mitsubishi factory, which will created hundreds of clean-tech jobs, is only part of the story. US-based Clipper Windpower recently made a similar investment in the region, Siemens just purchased a stake in UK-based tidal energy firm, Marine Current Turbines, and FCC, a Spanish-owned company, has committed £100m to building wind turbines in several of the waste recycling plants it controls in Britain through a local subsidiary. guardian.co.uk (2/25)

Social Media and Supply Chain

United States

Are Blogs Falling From Favor?

Jon Hanson has been lead writer for PI Social Media Network’s Procurement Insights and PI Window on Business blogs, since their respective launches in 2007 and 2009. He is also hosts the PI Window on Business Show on Blog Talk Radio (BTR), so he has reason to be concerned over an article that ran on the Music Industry News Network this week, which quotes facts and figures from two Pew Internet Project surveys -- both indicating a decline in blogging among young Internet users. Amanda Lenart, lead author of the study, said, "We often look to younger generations to see where technology use might be headed in the future. People under 30 have often been in the vanguard of Internet and cell phone use, and it will be interesting to see how much of their enthusiasm for new gadgets is a time-of-life issue, and how much will ripple through the broader culture in the coming years." Jon Hanson gives a quick rundown of stats in the supply chain blogoshere, and says he hopes "that today’s blogs do not end up being a footnote in the annals of social media." Procurement Insights (2/25)

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.