BONUS PULLOUT: Global Enabled Supply & Demand Chain Map, Version 35.0 Global Supply Chain Solutions Covering Procurement, Risk, the IoT and More
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Driven by demand. Delivered faster by digital. Modernize supply chains with a customer-first approach.
Faster service at lower costs. That’s what the future supply chain must deliver. KPMG can help you develop agile, transparent, demanddriven supply chain operations that embrace digital technologies, automate networks, streamline processes and enhance decision making. All at market speed. Learn more at read.kpmg.us/futuresupplychain
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September 2019 | Volume 19 | Issue 3
CONTENTS FEATURES
16
16
08
24
20
32
COVER STORY A Partnership Built for Success
SPECIAL REPORTS
26
McLane Company, Inc. is preparing for its customers’ future needs with automation from SSI SCHAEFER.
FEATURE Managing the 21st Century Supply Chain
An efficient and effective supply chain is an integral and required capability that organizations need to build a competitive advantage in the coming decades.
FEATURE Maximize Predictive Analytics
30
led Enab ap lobal The G d Chain Mthat can ices Deman tions and servpetitive edge. ly andmap provides ther supsoluply chains a com
Supp
Following Page 22 Global Supply Chain Map 35.0
SDCEXEC.COM
This
give you
Versio
n 35.0
TRANSPORTATION Changing Over Your 3PL?
WAREHOUSING A Different Approach to Inventory Optimization
SOFTWARE & TECH E-commerce Drives Mobile Tech Adoption E-commerce fulfillment and delivery are requiring investments in technologies to empower frontline workers.
40
BLOCKCHAIN Make Blockchain a Priority
Make people, process and technology the focal point for a smooth transition to a new 3PL.
34
SPECIAL INSERT
A well-presented and implemented procurement strategy builds credibility and respect within your organization.
EXECUTIVE FOCUS
Look beyond the factory’s four walls to use predictive analytics to the fullest potential.
NEWLY UPDATED!
PROCUREMENT Evaluate Your Procurement Strategy
Companies need to move from proof of concept to reality and capitalize on the potential.
32
40
36
PROFESSIONAL DEVELOPMENT Frontline Learning Impacts Bottom-Line Results In a competitive economy, success and failure ride on the decisions your employees make every day.
COLUMNS 04 06 24 42
EXECUTIVE MEMO CHAIN REACTIONS MADE IN AMERICA WORK HARD, PLAY HARD
Move away from the mathematical formulas, and then start ‘thinking’ like a human.
Exclusive online features and solutions for successful supply chain operations
Truckers’ Greatest Ally: The Trump Administration www.sdcexec.com/21080541
Insource or Outsource Your Distribution Network: Key Considerations www.sdcexec.com/21082313
Returns Need to be CustomerFirst in Era of Social Commerce www.sdcexec.com/21082336
www.SDCExec.com | September 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE
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EXECUTIVE MEMO By John R. Yuva, Editor jyuva@ACBusinessMedia.com
BUILDING DIGITAL CAPABILITIES The traditional supply chain is no longer strategically viable in today’s digitally connected world.
C
ompanies are in a transitional phase as they move toward supply chain digitization. In his Insight report Creating a Digital Supply Chain, Ehap Sabri, managing director, advisory for KPMG (US), says, “As every industry and organization is grasping the importance and necessity of making their digital transformation, retailers and manufacturers are jumping onboard. “The supply chain management of the past won’t work anymore; companies are looking for a digital supply chain that can provide more agile, efficient, and transparent service delivery. An intelligent end-to-end supply chain that streamlines processes and improves realtime decision-making,” says Sabri. That need for greater agility and visibility are driving digital supply chain initiatives. We’re seeing this through blockchain pilots, Internet of Things (IoT) integration and machine learning for valuable predictive analytics. However, the transition doesn’t occur overnight nor does the technology itself lead to results. It requires organizational commitment across the enterprise for successful implementation and execution. As Sabri explains in his report, there are several areas critical to the execution of a digital strategy. 4
❯ As global markets change, companies require a flexible strategy where objectives can be prioritized and executed. For example, new tariffs may require a shift in sourcing strategies. ❯ Companies need to envision what’s on the horizon and beyond. Thus, a three- to five-year roadmap of the supply and demand landscape is essential. A digital transformation often occurs in stages and companies need the foresight to plan accordingly to reach next-level capabilities. ❯ An investment of this magnitude must lead to a ROI over the long term. What strategic objectives will the digital supply chain solve? Is the company more competitive as a result? And it’s not just long-term returns, but quick wins as well. Where can a digital transformation quickly impact operational efficiencies? ❯ Overall business objectives and roles and responsibilities must be reevaluated. As digital technologies are implemented, how the company functions will change. Technology brings the need for new skill sets and new ways of evaluating and responding to data. In this month’s issue, we explore several evolving areas of the digital supply chain: managing the 21st supply chain for competitive advantage; using predictive analytics beyond the company’s four walls; and moving from proof of concepts in blockchain to reality. Happy reading!
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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Published by AC Business Media 201 N. Main Street, 5th Floor, Fort Atkinson, WI 53538 (800) 538-5544 • www.ACBusinessMedia.com
www.SDCExec.com
PRINT AND DIGITAL STAFF GROUP PUBLISHER Jason DeSarle ASSOCIATE PUBLISHER Judy Welp EDITORIAL DIRECTOR Lara L. Sowinski EDITOR John R. Yuva WEB EDITOR Mackenna Moralez CONTRIBUTING EDITOR Barry Hochfelder SENIOR PRODUCTION MANAGER Cindy Rusch ART DIRECTOR Kayla Brown AUDIENCE DEVELOPMENT DIRECTOR Wendy Chady AUDIENCE DEVELOPMENT MANAGER Angela Franks ADVERTISING SALES (800) 538-5544 JASON DeSARLE, jdesarle@ACBusinessMedia.com CARRIE KONOPACKI, ckonopacki@ACBusinessMedia.com JUDY WELP, jwelp@ACBusinessMedia.com EDITORIAL ADVISORY BOARD LORA CECERE, Founder and CEO, Supply Chain Insights TIM FEEMSTER, President, Foremost Quality Logistics JOHN M. HILL, Director, St. Onge Company, and Board of Governors, Material Handling Industry of America RORY KING, Analytic and Big Data Advisor, SAS Institute KAREN MASTER, Vice President of Communications, SAP Ariba WILLIAM L. MICHELS, CEO, Aripart Consulting JULIE MURPHREE, Founding Editor, Supply & Demand Chain Executive ANDREW K. REESE, Senior Portfolio Marketing Manager, IHS, and Former Editor, Supply & Demand Chain Executive CHRIS SAWCHUK, Global Managing Director and Procurement Advisory Practice Leader, The Hackett Group RAJ SHARMA, CEO, Censeo Consulting Group KATE VITASEK, Founder, Supply Chain Visions CIRCULATION & SUBSCRIPTIONS P.O. Box 3605, Northbrook, IL 60065-3605 (877) 201-3915, Fax: (847) 291-4816 Email: circ.sdcexec@omeda.com LIST RENTAL Jeff Moriarty, Infogroup (518) 339-4511 Email: jeff.moriarty@infogroup.com REPRINT SERVICES CARRIE KONOPACKI, ckonopacki@ACBusinessMedia.com AC BUSINESS MEDIA CHIEF EXECUTIVE OFFICER Barry Lovette CHIEF FINANCIAL OFFICER JoAnn Breuchel CHIEF DIGITAL OFFICER Kris Heineman CHIEF CONTENT OFFICER Christoph Trappe VICE PRESIDENT, SALES & MARKETING Amy Schwandt DIRECTOR OF DIGITAL OPERATIONS & IT Nick Raether DIRECTOR OF DIGITAL STRATEGY Joel Franke Published and copyrighted 2019 by AC Business Media All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording or any information storage or retrieval system, without written permission from the publisher. Supply & Demand Chain Executive [USPS #024-012 and ISSN 1548-3142 (print) and ISSN 1948-5654 (online)] is published four times a year: March, June, September and December by AC Business Media, 201 N. Main Street, 5th Floor, Fort Atkinson, WI 53538. POSTMASTER: Please send all changes of address to Supply & Demand Chain Executive, P.O. Box 3605, Northbrook, IL 60065-3605. Printed in the USA. SUBSCRIPTION POLICY: Individual subscriptions are available without charge in the United States, Canada and Mexico to qualified individuals. Publisher reserves right to reject nonqualified subscribers. One-year subscription to nonqualified individuals: U.S., $30; Canada and Mexico, $50; and $75 for all other countries (payable in U.S. funds, drawn from U.S. bank). Single copies available (prepaid only) for $10 each. The information presented in this edition of Supply & Demand Chain Executive is believed to be accurate. The publisher cannot assume responsibility for the validity of claims or performances of items appearing in editorial presentations or advertisements in the publication. September 2019 / Volume 20 / Issue 3
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CHAIN REACTIONS
NEWS FROM ACROSS THE DIGITAL SUPPLY CHAIN
DESIGN INTERACTIVE INTRODUCES VIRTUAL EQUIPMENT TRAINING Design Interactive Inc., a provider of augmented and virtual reality training solutions for fleet maintenance personnel, vendors and OEMs, has announced its Virtual Equipment Training program. This new capability used in conjunction with its AUGMENTOR transportationfocused augmented reality software allows for the creation and deployment of training materials on virtual vehicles and equipment. “Virtual Equipment Training gives technicians the ability train even when a vehicle or piece of equipment is not available,” says Matt Johnston, division head of commercial solutions for Design Interactive. “This new capability improves shop productivity because technicians no longer have to waste valuable time waiting for equipment to be available or for suppliers to schedule classroom training. Technicians can train using augmented reality anywhere, anytime using nothing more than the phone already in their pocket.” Virtual Equipment Training and Design Interactive’s AUGMENTOR software enables training to include actual and virtual parts, systems and vehicles in one solution. Additionally, training content can be supplied quickly and easily to technicians on mobile devices and HoloLens headsets.
ISA ANNOUNCES FIRST FOUNDING MEMBERS OF
GLOBAL CYBERSECURITY ALLIANCE
The International Society of Automation (ISA) announced the first founding members of its new Global Cybersecurity Alliance (GCA): Schneider Electric, Rockwell Automation, Honeywell, Johnson Controls, Claroty and Nozomi Networks. The Global Cybersecurity Alliance was created to advance cybersecurity readiness and awareness in manufacturing and critical infrastructure facilities and processes. The Alliance brings end-user companies, automation and control systems providers, IT infrastructure providers, system integrators and other cybersecurity stakeholder organizations together to proactively address growing threats.
NFI & IBM LAUNCH
SEAFOOD BLOCKCHAIN PILOT
The National Fisheries Institute (NFI) has teamed up with IBM’s Food Trust, a blockchain-enabled system that comprehensively tracks the seafood supply chain. “We are excited that NFI and the real seafood value chain will test IBM’s technology,” says NFI President John Connelly. “NFI members’ supply chains are dynamic and wide reaching, a fertile ground for this type of pilot.” Financial support will also come from the Seafood Industry Research to help increase transparency, optimize supply chain processes and combat fraud. “Traceability is nothing new to the seafood community but blockchain is,” says SIRF Chairman and Fortune Fish & Gourmet CEO Sean O’Scannlain. “Whether it’s farmed or wild, we will test how IBM’s Food Trust can help seafood businesses generate revenue and reduce costs, from harvest to distribution to our customers.” IBM’s system ensures companies can set rules about who can see the data they upload and for how long, and that they maintain control of their data after it has been uploaded to Food Trust.
UNSPLASH
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FEATURE
By Joshua Nelson
MANAGING THE 21 CENTURY SUPPLY CHAIN ST
2
An efficient and effective supply chain is an integral and required capability that organizations need to build a competitive advantage in the coming decades.
O
rganizations today face external factors of increased competition and greater demands from a global marketplace. With improved logistics and rapid information dissemination, customers now have access to products worldwide and expect specialized products to fit their specific needs. As a result, organizations have shortened their product life cycles and expanded customized product offerings to remain competitive. Business environments will have increasing amounts of uncertainty, volatility and complexity. Thus, a company’s supply chain must become more agile to remain competitive in this changing environment. In other words: better able to quickly identify trends and react with changes in operational tactics. At the same time, it must
be efficient and cost-conscious to ensure that competitiveness doesn’t erode. These goals present a dichotomy for supply chain leaders; recent research by The Hackett Group identifies supply chain agility as a top priority. However, it is also an area where supply chain leaders have the least confidence in their ability to drive improvements. Achieving these goals will require digital technologies that enable the organization to integrate siloed processes and systems, coordinate and communicate globally, capture and utilize all internal and external data for decision-making, and invest in flexible production and distribution assets. A digitally-enabled supply chain uses new technologies to transform the linear nature of the supply chain to a more connected flow (see figure 1).
FIGURE 1
THE DIGITAL SUPPLY CHAIN END-TO-END PLAN
Suppliers
Source: The Hackett Group
8
Procure
Make
Deliver
Customers/ Consumers
Information Exchange
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1
Y
FIGURE 2
DIGITAL TRANSFORMATION COMPONENTS FOR THE SUPPLY CHAIN DIGITAL SUPPLY CHAIN CAPABILITIES 2
Digital Customer Engagement
WWOmni-channel access WWEngagement from anywhere (corporate, field, home, and mobile)
d a .
Digitally Enabled Workforce
3
1
Digital Service Optimization
WWCross-functional,
WWAutomated
WWIterative and
WWPervasive, real-time
end-to-end process collaboration networked collaboration among teams
WWReal-time
information and status on all requests and transactions
4
WWEasy access to
processes based on business rules flow of information
WWWorkflow and information sharing tools
5
Digital Ecosystem
WWOmni-channel order and distribution networks WWDirect to consumer
and B2B commerce
WWConnected
information and analysis to identify/ mitigate supply risks
unified information
Insight Driven Enterprise
WWBig data technologies and predictive / prescriptive analytics to uncover hidden values from diverse, complex, and large scale datasets
ENABLING TECHNOLOGIES IoT — Cloud Collaboration — Big Data — Predictive Analytics — Prescriptive Analytics — Geospatial Analytics — Visualization — Mobility Source: The Hackett Group
Building a digital supply chain requires technology investments in five major pillars (see figure 2): 1) Insight-driven enterprise 2) Digital customer engagement 3) Digitally enabled workforce 4) Digital service optimization 5) Digital ecosystem
CREATING AN INSIGHTDRIVEN ENTERPRISE Creating an insight-driven enterprise will require the deployment of big-data technology that provides ubiquitous access to internal and external data along with the use of advanced and forward-looking supply chain analytics that can predict future outcomes, model scenarios and optimize decision-making. Supply chain analytics use metrics, tools, and analysis models to extract knowledge and insights from data, enabling improved visibility and decision-making capabilities. As figure 3 depicts on page 10, supply chain analytics range from rear-view ad-hoc,
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descriptive and diagnostic analysis to forwardlooking, predictive and prescriptive analytics. An organization that builds forward-looking analytics achieves transformation by predicting future occurrences and developing responses that enable them to seize opportunities or avoid pitfalls. The achievement of this transformation has several key barriers that companies need to overcome. First, with access to vast data sets and sophisticated models, companies can easily reach a state of analysis paralysis. They can try to measure everything and use analytics randomly in search of causal relationships, resulting in vast amounts of analysis that becomes meaningless to the achievement of business strategy. Other firms will focus on functional siloes and optimize subprocesses, often at the expense of optimizing the end-to-end process. To overcome these challenges, it is important for companies to segment their customers and products. This enables them to identify how a company competes in each segment, allowing them to define operational requirements for www.SDCExec.com | September 2019 | SUPPLY & DEMAND CHAIN EXECUTIVE
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FEATURE FIGURE 3
SUPPLY CHAIN ANALYTICS MATURITY CURVE WWAdvanced
ADVANCED (MODELING)
WWEnterprise-
LEVEL OF SOPHISTICATION
WWNon-routine,
ad-hoc, often unconsolidated, transactional reporting
WWDisparate data
repositories at individual function level of detail
AD HOC
BASIC (TRANSACTIONAL)
What am I doing?
wide dataset integration and visibility for basic analytics
WWIntegrated,
more crossfunctional datasets and reporting capabilities
DIAGNOSTIC
DESCRIPTIVE
How are we doing?
What are we doing?
Standard KPIs established across the enterprise to drive performance standards and improvement
No standard measures across the value chain
REAR-VIEW ANALYTICS
DESCRIPTIVE Why are we performing this way? Pursuit and identification of primary drivers of business performance and data driven improvement initiatives
DIAGNOSTIC What can we do to drive our performance? Advanced simulation and modeling capabilities outlining performance scenarios given multiple internal constraints / parameters and external economic environment
FORWARD-VIEW ANALYTICS
Source: The Hackett Group
each, including suppliers, transportation and performance thresholds. Once segments are understood, alignment enables multiple processes to be integrated, facilitating coordination across functions. Examples include the use of analytics to align supply and demand, integrated forecasting and business planning, and identification of optimal product configurations. Once segments are defined and alignment is achieved, measurements, performance indicators and analysis can be undertaken based on the strategically-aligned priorities. A focused set of measurements will enable companies to determine strategy, focus the organization, drive performance and provide a cross-functional basis for communication.
BUILDING DIGITAL CUSTOMER ENGAGEMENT Digital customer engagement, the second component, allows businesses to engage on a 10
analytics capabilities
much deeper level with their customers and consumers by focusing on the two-way capture and sharing of data to improve service and availability of information. Customer expectations have changed dramatically in the past decade as advances in technology have enabled them to access product and order information from virtually any device. It is imperative for an organization to provide a consistent omnichannel experience to the customer—the same information should be accessible whether through mobile devices, portal, phone or direct ERP integration. In building a digital engagement solution, an organization should present a single personality to the customer, enabled through effective management of a multi-channel marketing campaign that offers consistent branding and messaging across channels. An organization should also maintain a consistent cross-channel experience by allowing the customer to transact
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FEATURE on their preferred channel and allowing all transactions to seamlessly span across the different channels. The achievement of a successful omnichannel experience depends on integration. CRM systems, order management, fulfillment, and accounting systems need to seamlessly exchange information without disruption or time delay. Further, business rules should be defined and applied to enable as much process automation as possible (e.g., pricing rules and configuration), enabling customers to access consistent information via websites, phone and emails—both passively and actively. Furthermore, an organization should understand the total value of each customer by tracking and analyzing all customer interactions. This can be accomplished with marketing analytics and CRM tools. Through these tools, an organization can develop insights about the customer and create personalized and tailored sales and marketing actions. The information can further be used to improve business rules and the level of automation for order management and fulfillment.
CREATING A DIGITALLYENABLED WORKFORCE Enabling an organization’s workforce is equally vital to providing value to customers. The employees of an organization run the enterprise that addresses customer needs. As such, the third component of a digital solution is a digitallyenabled workforce which utilizes collaboration and mobile technologies to ensure that employees have easy access to information regardless of their location. Collaboration technologies will foster a cross-functional collaborative environment where employees share information across functions. Information sharing enables an organization to react quickly and accurately to changes in the supply chain and ultimately bring more value to the customer. This collaborative environment will also improve an organization by allowing best practices and lessons to be shared. At the same time, mobile technologies will enable the workforce to access and react to the information regardless of geography, allowing the organization’s workforce to be closer to the customer. 12
Employees run an organization by conducting specific tasks of different processes. It is natural that the fourth component of a digital solution is digital service optimization, which focuses on optimizing an organization’s operations.
INITIATING A DIGITAL SERVICE OPTIMIZATION Digital service optimization is the ability to optimize processes and decisions based on real-time information. Current workflow and information-sharing tools can be used to expedite the process handoffs and decision-making. However, many of the processes within the supply chain are still manual, which inhibits the ability to be agile. Manual processes slow down hand-offs and increase the likelihood of delays caused by human error. One method of alleviating manual processes is through smart automation, enabled with the use of robotic process automation (RPA) technology. RPA allows organizations to automate their current processes based on business rules and guidelines. The tasks most suitable for RPA are high volume, stable, standardized, repetitive, and rule-based processes. Common areas of initial deployment include procure-to-pay, financial close and consolidation, and accounting processes. Furthermore, the combination of a digitally-enabled workforce and digital service optimization will allow an organization to automate processes while having employees on the “front line” get closer to the customer. In the past, many companies have built centers of excellence to optimize their workforce by standardizing processes and leveraging economies of scale. Although this centralization brought benefits by reducing operational costs, it created a constraint, because key employees were further from the customer. With a digitally enabled workforce, employees can leverage mobile technologies to be closer to the customer while still collaborating with their peers in the organization. A digital service optimization solution will ensure standard processes are followed, while automation will alleviate the employee’s time spent on operations and instead allow them to focus on bringing more value to the customer.
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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BUILDING A DIGITAL ECOSYSTEM The final component of the digital solution is the digital ecosystem. A digital ecosystem is a group of people, processes and organizations that are interconnected using shared systems. This means a group of people and processes can work toward a common goal, using shared systems and like data. Frequently, we find organizations driving toward the same purpose or destination but taking different routes to get there. As a result, they can have conflicting data and insights, making it difficult to coalesce around one shared data point, resulting in decision-making delays and potential conflicts within the organization. This issue seems most apparent in the sales and operations planning process. Finance, sales and operations seem to consistently be driving toward different targets which leads to inefficiency across the organization. One way in which organizations can leverage the digital ecosystem is to get multiple players engaged and on the same page in the sales and operations planning process through an integrated business planning (IBP) tool. These tools allow the sales, finance and operations departments to all work from a shared data set which can be updated in real time to reflect changing business conditions. By working from a shared tool, an organization’s operations team has better visibility into its shifting forecasts, targets and operating plan, allowing the team to be more proactive and less reactive. When organizations have better visibility into what they can expect in the medium term, they can better manage their facility and supply chain, which in turn gives the organization more agility and a better ability to scale as required. An integrated business planning tool with the associated processes changes will provide bottom-line benefits to an organization.
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FEATURE competitive while ensuring the change is At The Hackett Group, we have seen clients accepted internally by employees. achieve 2 percent to 4 percent improvement ❯❯ 3. PROCEED WITH CAUTION; THIS IS in sales growth accompanied by 5 percent to NOT JUST TECHNOLOGY. It is important 10 percent cost reduction and 20 percent to to remember that other factors such as 30 percent working capital improvement after processes, human capital and governance are utilizing an IBP tool. equally as crucial. Blockchain, another enabling technology ❯❯ 4. EXPECT OBSTACLES BUT KEEP YOUR for the digital ecosystem, can provide and store EYE ON THE PRIZE. Expect a few failures information throughout an organization’s supply along the way; the key is to learn from them chain, both downstream (from its suppliers to its and improve on the next iteration. suppliers’ vendors) and upstream to the customer. ❯❯ 5. EXPAND YOUR VIEW OF THE SUPPLY This information provides a real-time and holistic CHAIN BUT STAY FOCUSED ON THE perspective that is also transparent. With the CUSTOMER/ downstream data, an organization can ...SELECTING THE RIGHT TECHNOLOGY CONSUMER. In the age of the customer, track its second-tier tools from the vast number of organizations are suppliers. This would encouraged to allow the organization options and implementing develop “outside-in” to proactively change in an organization processes and break manage its supply down functional chain efficiently and is easier said than done. silos to deliver mitigate any potential superior quality of constraints or risks service with the that arise. It can also customer in mind. help the organization An organization authenticate its can become more products to the end agile and effective customer. than ever before if it With the plethora follows these guidelines as it implements a digital of technology options today, organizations have solution which incorporates the five components: the tools at their disposal to manage their supply insight-driven enterprise, digital customer chain for the 21st century and stay competitive. engagement, digitally enabled workforce, digital However, at the same time, selecting the right service optimization and digital ecosystem. technology tools from the vast number of options The organization will have access to data that and implementing change in an organization is incorporate a holistic supply chain perspective easier said than done. Based on our experiences that enables better analyses and decisions. at The Hackett Group, organizations which have Employees in the organization will be able to succeeded and gained the most benefit from their work from a common system and collaborate digital supply chain transformation follow the seamlessly. The organization’s processes will be guidelines below: automated resulting in fewer errors and faster ❯❯ 1. GROUND YOURSELF IN THE hand-offs. These benefits will ultimately keep an STRATEGY. It is essential to start with organization’s supply chain competitive in the defining the strategic objectives before 21st century. identifying the desired capabilities and technology enablers. ABOUT THE AUTHOR ❯❯ 2. MANAGE THE PACE FOR YOURSELF AND YOUR CUSTOMER. Find the right JOSHUA NELSON is the associate principal of Supply Chain rhythm that enables organizations to remain Strategy and Transformation for The Hackett Group. 14
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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FEATURE
By John R. Yuva
A PARTNERSHIP BUILT FOR SU McLane Company, Inc. is preparing for its customers’ future needs with automation from SSI SCHAEFER.
W
hen it comes to supply chain services, McLane Company, Inc. is in a league of its own. With its humble beginnings as a small retail grocer in the 1890s to its growth as a global logistics leader, McLane brings a plethora of innovative supply chain solutions to its customers. Many of us have a convenience store we frequent and chances are good it’s a McLane customer. What makes the company unique in the marketplace? Shawn Coots, division president for McLane, says the company is one of the largest supply chain service leaders for convenience stores, mass merchants, drug stores and chain restaurants throughout the United States. Stacking of combined pieces picks, which are prepared for shipping. (Below L-R) An SSI SCHAEFER depalletizing robot removes case layers at McLane. An SSI SCHAEFER palletizer prepares mixed case product for McLane customers. Goods in receiving from numerous CPG manufacturers.
SSI SCHAEFER North America CEO, Christoph Schenk (left), and McLane Company, Inc. Division President, Shawn Coots, celebrate continued success with the help of cutting-edge robotic and software technology. 16
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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R SUCCESS “We service approximately 110,000 retail locations with the ability to deliver to every zip code in the continental U.S.,” says Coots. “McLane offers a diverse SKU mix, allowing our customers to purchase in pallet, case and single-sell quantities. Our technology and years of expertise offer bestin-class service to all McLane customers.”
HAND-IN-GLOVE PARTNERSHIP Because McLane offers such a diverse mix of products to its customers, it must be capable of picking, loading and delivering efficiently. Hence, a unique partnership exists with SSI SCHAEFER to execute effectively for its customers. McLane has collaborated with SSI SCHAEFER on two DC projects—a DC in Republic, Missouri, and a new, fully automated DC in Findlay, Ohio. “As with any customer of SSI SCHAEFER, our clients become our partners in automation,” says Christoph Schenk, CEO for North America, Schaefer Systems International, Inc. “We’re there to ensure that our clients can supply their customers on time while exceeding expectations. We strive to help our customers achieve an advantage in their industry with superior logistics value.” With its DC in Missouri reaching capacity, McLane had specific requirements for its greenfield facility in Ohio. McLane needed a DC that could accommodate various storage
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requirements for both case and individual storage, provide multi-temperature zones, enable case pick validation and accomplish automation throughout the entire system. McLane has been an industry leader for 125 years and is consistently pushing the envelope to utilize best-in-class warehouse, delivery and customer technologies, says Coots. “When McLane Ozark was opened in 2012 utilizing SSI SCHAEFER technology, we quickly realized that full automated warehouses could provide long-term benefit for the organization for many years to come,” he says. “McLane Ohio took additional leaps forward in technological advancement for McLane by adding robotic palletizing for full case products and mini-load cranes for additional storage flexibility. The ability for product verification throughout the warehouse provided an additional rationale when making the decision to build McLane Ohio.”
AUTOMATION AT ITS BEST How does the Ohio facility meet McLane’s wholesale and distribution objectives? Coots says that the SSI SCHAEFER system allows McLane to select and automatically palletize full case products of pallets for expedited loading ability. This is critical to delivering efficiently to multiple customer locations on a route. The heart of the McLane system is WAMAS®, the WMS solution from SSI SCHAEFER. The WMS keeps goods flowing in a sequenced manner, explains Schenk. An array of goods is picked in a methodological order. This enables
“WE STRIVE TO HELP OUR CUSTOMERS ACHIEVE AN ADVANTAGE IN THEIR INDUSTRY WITH SUPERIOR LOGISTICS VALUE.” — CHRISTOPH SCHENK
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FEATURE
“THE FLEXIBILITY OF THE SYSTEM ALLOWS FOR A CONTROLLED OPERATION REGARDLESS OF SPIKES IN SEASONAL ORDERING OR INVENTORY STORAGE FLUCTUATIONS.” — SHAWN COOTS
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SCHAEFER proprietary goods to flow just in time vision technology validates for picking so that they are the order by length, width, automatically palletized height, GTIN and SKU.” and placed in reverse stop Schenk says once the sequence for McLane pallets are completely deliveries. loaded and verified, each “WAMAS orchestrates pallet is placed in a staging all of this and understands area in front of the correct the order processing, loading bay. “Again, whether it is a mixed pallet WAMAS indicates the or full pallet—it takes correct truck and in what the data for the delivery order. From there, each routing and sequences truck is loaded and the everything based on this forklift driver confirms key input,” says Schenk. each pallet in the WMS “It even knows where to while loading.” section the goods based on frozen, perishables and ambient products inside BUILT FOR THE the truck.” FUTURE The Ohio facility also Coots says the Ohio includes nine SSI EXYZ facility innovates and pallet storage and retrieval enhances McLane’s cranes. These cranes business operations and manage received goods into services for today’s and the facility as well as stock tomorrow’s customers. A balance between full pallets key component of best-inand deliverable goods. class service is the ability Schenk says pallets are to deliver customer orders moved from the SSI EXYZ on time and with virtually cranes to replenishment error-free order quality. areas and to the shipping “The SSI SCHAEFER area for full pallet case automated system provides picking. The cranes achieve state-of-the-art vision A close-up of the SSI SCHAEFER EXYZ maximum efficiency for technology, advanced storage and retrieval machine at the McLane Findlay facility. (Bottom) An inside view of the McLane by making these robotics and an integrated McLane case picking area. efficient pallet movements user interface that helps at the correct moment as directed by WAMAS. assure order quality and departure times are maintained,” says Coots. “The flexibility of the “WAMAS plays the role of orchestra director system allows for a controlled operation regardless for all data inputs (orders, inventory and the like) of spikes in seasonal ordering or inventory storage and system movements (automation). The best fluctuations. “The McLane Ohio facility was sequencing is only possible when the automation built for expansion of the automated systems. and software systems work together in a dynamic Today, we have the flexibility to scale for customer way,” explains Schenk. “The WMS receives the demand; but if we get close to capacity, we’ll order history and picks products for the following look at expanding the automation systems in the three or four days. The system then balances future,” says Coots. “Until then, McLane Ohio all system areas based on the correct timing for will continue to service our customers quickly and deliveries. Cases are delivered by the case picking accurately.” area to the palletizing robots. This is where SSI
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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FEATURE
By Rich Wagner
MAXIMIZE
Predictive Analytics Look beyond the factory’s four walls to use predictive analytics to the fullest potential.
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any manufacturers are turning to predictive analytics to enhance performance inside their factory walls. Uses of advancing analytics include improving production line productivity and quality control, as well as predicting machine failure. Many, however, are not leveraging predictive analytics for what could potentially impact their business on an even larger scale where enacting strategic, data-informed decisions is paramount. Manufacturers are often in the precarious position of investing in capital expenses, such as machinery, technology and facilities. There is the added pressure of deciding whether to enter or exit new markets, without having direct visibility into all of the external factors outside their proverbial “four walls.” This lack of transparency affects performance. Unknown market performance factors pose a significant planning challenge where last-minute adjustments are extremely costly, if not virtually impossible. Despite the critical nature of accurate forecasting in manufacturing, the global economy is increasingly volatile with supply chains more technologically driven and complex. Understanding how external factors impact a company’s performance is what offers manufacturers the greatest command on ROI. The ability to accurately predict demand is often more beneficial in the long run than simply
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analyzing processes inside the factory. When organizations combine their own internal data with external data it offers a myriad of benefits, including making improved strategic decisions (e.g., knowing where to best invest marketing dollars), planning better for market disruptions, and gaining advantageous visibility into their supply chains.
ACCURATE DEMAND FORECASTS EQUAL BETTER BUSINESS OUTCOMES Generally speaking, most companies forecast demand by looking at historical data and making assumptions based on past purchasing trends. When relying on trend analysis of historical data, traditional forecasting methods often fall short and don’t provide an accurate picture of future demand. Why? Because they do not consider the external factors—changes in global markets or shifts in consumer behavior or differences in regional economic and demographic trends—all of which can have a profound impact on a company’s future performance. In short, most companies have a significant blind spot when it comes to predicting future demand. However, this blind spot can be made visible by combining external data from around the world with predictive analytics to gain insights to how these factors will impact a company’s business. Having this insight enables companies to identify upcoming headwinds and tailwinds and gain more accurate visibility to future demand. This insight is what many leading business thinkers are calling Economic Intelligence. As just one example, corporate profits and hourly wages impact plastic component manufacturers. An increase in corporate profits for six months, due to favorable exchange rates, leads to an increase of real average hourly income over nine months for top electronics consumer
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How much do you believe having the right external data integrated within your planning process could improve your overall financial forecast? segments. This, in turn, leads to an increase in discretionary Much spending, which we’ve found to favorably impact demand for TVs and electronics. Insights such as these can help manufacturers predict their products’ demand Somewhat 18 to 24 months in advance. In a recent Prevedere survey, over 60 percent of executives feel that incorporating external data into their planning Little Not process will result in significant at all
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26.3
5.7 3.8
improvement to financial forecasting. In fact, 90 percent of respondents feel that external data will provide at least somewhat improvement to their forecast. A At the end of Great Deal the day, if demand estimates are inaccurate, leadership doesn’t have the information they need to drive the business forward. Essentially, they are navigating without a map.
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FEATURE ACTIONABLE PREDICTIVE ANALYTICS EQUAL BETTER BUSINESS PLANNING In any industry, defining outlooks and plans for future business performance can be extremely laborious and time-consuming. The manufacturing industry brings special caveats with different product lines or products that serve multiple, diverse industries. Data teams may take months compiling estimates, only to find that they didn’t account for some factor that had a larger impact than originally thought. Leveraging massive amounts of data with machine learning drives predictive analytics, which can greatly improve the speed of market analysis and identify leading indicators that were previously unknown to affect demand. The time it would normally take to analyze data can be trimmed from months down to weeks, or even days, by using predictive analytics software. Additionally, the ability to foresee changes in demand is invaluable, allowing manufacturers the opportunity to pivot proactively before the changes impact the business. Whether it is identifying a downturn and pulling back on production, or recognizing an opportunity for growth, predictive analytics fuel data-informed decisions. Through the use of predictive analytics software, companies can analyze data faster and with more accuracy and gain Economic Intelligence. Machine learning rapidly analyzes millions of global data series and identifies the specific external leading indicators such as crude oil prices, total U.S. employment level, or job openings in manufacturing, that will impact their sales, costs or profitability. Using predictive analytics software, what would take teams months to analyze can often be cut down to weeks or days. Some manufacturers that have adopted predictive analytics into their forecasting processes have reduced their planning times by more than 20 percent. Today’s machine learning solutions can support human intelligence by identifying the best external data to use. By reducing the possible choices from millions to a few dozen, data scientists can spend more time leveraging their experience and skills to refine, test and deliver timely insights. This is critical to arming business
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decision-makers with the information they need to make decisions. Every industry has its own set of external drivers that drive growth. While the measurable impact of these demand drivers will vary by sector and individual company, determining industrylevel drivers is a good start to understanding the health of your industry. Predictive analytics can also be used to map “what-if ” scenarios and identify operational issues. The global economy can throw unexpected curveballs to manufacturers and cause disruptions to the supply chain, and any volatility can throw off estimates.
THIRD-PARTY SOLUTIONS EQUAL UNBIASED, ON-DEMAND INSIGHTS Change is often the biggest hurdle to companies that want to make use of predictive analytics. To use predictive analytics through all facets of the business, manufacturers need to change their long-held processes. Oftentimes, they think current forecasting methods are “as good as they are going to get.” Implementing predictive analytics into their planning process can be a difficult task requiring resources and manpower. Third-party predictive analytics solutions are particularly helpful because they can provide a reliable, unbiased baseline that all departments can reference. Now finance, marketing, sales and operations managers can all work for the same numbers and, most importantly, trust their accuracy when making decisions. Another finding from Prevedere’s recent survey is that over 40 percent of executives believe having a third-party partner is very/extremely important to their planning needs. Finding trusted and experienced data analytic partners can help implement the latest technologies, augment existing data teams and provide accurate and ondemand insights. When considering how to use predictive analytics to the fullest potential, business leaders must now look beyond the factory floor. They should identify how to incorporate them into their planning processes, enabling them to reduce costs and streamline operations. When manufacturers think outside their four walls, they will see the true value of predictive analytics.
…THE ABILITY TO FORESEE CHANGES IN DEMAND IS INVALUABLE, ALLOWING MANUFACTURERS THE OPPORTUNITY TO PIVOT PROACTIVELY BEFORE THE CHANGES IMPACT THE BUSINESS.
ABOUT THE AUTHOR RICH WAGNER is the president and chief executive officer of Prevedere. He helps industry-leading executives look beyond their own walls for key external drivers of financial performance.
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MADE IN AMERICA By Mackenna Moralez
TAKING A BITE OUT OF GRACIE’S DOGGIE DELIGHTS Grace Jagler runs a rewarding dog treat business despite her disability.
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roadway veteran Harvey Fierstein took to Twitter one morning sharing a link to Gracie Doggie Delight’s, a dog-treat company that makes 100 percent of its products in the United States. His message was simple but strong: “Where we shop can change the world.” The woman behind Gracie Doggie Delight’s, Grace Jagler, is only 22 years old, but started a successful business out of the basement of her home in Watertown, Wisconsin. Each month sees sales growth, with nearly 1,500 orders placed throughout the United States. Starting a new business is challenging for most people, but she does this all successfully while having Down syndrome.
FINDING GRACE’S PASSION
Photo Credit: Gracie’s Doggie Delights
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When Grace was in high school, she showed an affinity toward dogs. John Jagler, her father, says that she loved giving her rescue dogs treats and enjoyed spending time with her pets. He explains that the city’s high school requires special needs students to enroll in school until age 21, with the last few years focused on vocational training. “We were looking at the options in the community [where Grace could work] and there wasn’t anything that matched her interests,” John says. “We thought about what she’s passionate about and knew that dog treats were always a point of interest.” The Jagler’s thought that Grace
would work at Glenn’s Market & Catering, a meat market in their city, labeling products. However, it occurred to John that they could produce and market dog treats on their own. He contacted Glenn Roberts, the market’s owner, about using the store’s weight scale and negotiating a wholesale price for the dog treats. “After we got a deal [the Jagler family and Glenn’s Market & Catering], we built the website and we were off and running,” John says.
BUILDING THE BUSINESS Gracie’s Doggie Delights debuted in February 2016, when she was just 19 years old. “It’s been great watching her grow over these last three years,” John says. She has a lot of confidence and knows that she’s the boss.” The treats are no easy feat to make, though. John explains that the meat is freeze dried raw at Glenn’s. Batches take 30 hours to prepare. Grace’s treats are made to coincide with a raw feeding diet, so there are no additional chemicals added. John credits the success of the business to producing the type of food dogs would crave if they were in the wild. Grace plays a major role in the business, restocking products every day and labeling orders for delivery. John explains that the family’s phones are linked to their website to monitor online orders. Once an order is placed, it’s packaged and shipped same
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or next day—exceeding customer delivery expectations. “A lot of people are shocked that we can keep up with demand. Nothing gets shipped later than the next day and if a customer is a Watertown local, we will personally deliver the product,” John says. Most of their business comes from the online store; however, treats are stocked in stores across the Midwest. The business received a boost from Watertown’s Piggly Wiggly after the store’s owner saw how fast product was flying off the shelves. Packaging for the treats varies depending on where the order is placed. “If we are delivering in person or through the mail, we’ll use Ziplock bags to package the treats. It’s what our customers like for ease of use and storage,” John explains. “Our retail packaging, however, uses a heat seal for freshness and durability.” While their e-commerce presence remains steady, Gracie’s Doggie Delights is also sold in various dog grooming and veterinary offices as well. John stresses how important it is to have industry professionals validate their products.
KEEPING IT LOCAL Still, Gracie’s Doggie Delights is a startup. And like any new business, there are challenges that the Jagler family has had to face. However, John
credits Grace and the rest of his family (his wife, Heidi; daughter, Sarah; and son, John) for willing to try anything and not being afraid to fail. Grace’s customers, knwon as “G-Dogs,” can find dog treats and accessories in a variety of locations including its online store and veterinary offices.
“A major reason we started this business was the lack of local companies hiring people with disabilities,” says John. “It’s almost bittersweet. While Grace is extremely successful, we had to create an environment for that success rather than a company opening that opportunity,” John says. “There’s a little bit of reluctance to hiring someone with a disability. There’s a ripple effect to the benefits that [disabled] people bring to customers, the employees, and their jobs. We couldn’t find a good match, so we made one. Most of the business is conducted from the basement of our home, with the goal of establishing a location where we can hire more employees with disabilities.”
The main reason for Gracie’s Doggie Delights’ success is the quality of the product—not because of Grace’s disability. John says first-time customers often buy the treats to support Grace. However, they become repeat customers after seeing their dogs enjoy the product. John says no matter how many emails the business receives from manufacturers outside the U.S., their products will always be made in the United States. As a local politician, he sees the benefits of American-made products and the impact it has on the economy. “I can’t tell you how many times we get an email that offers to make our product at a lower price,” John says. “We often hear that as long as the product is packaged in the U.S., it’s still a U.S-made product—and that’s just not true. It scares me that some companies may fall into that model. “It’s vital we continue to source and make our products in the United States. It’s good for our economy and it’s good for people,” says John. “When it comes to something as important as the health of your pet— or even yourself—you want to ensure the quality. We are able to do that by making the treats here.” Fierstein took to Twitter once again a week after his initial post, retweeting a video about Grace and continued to sing her praises. “My dogs are loving every one of these. We bought the big sampler and I’m thrilled with it all,” Fierstein said via Twitter.
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SPECIAL REPORT PROCUREMENT
By Bill Michels
EVALUATE YOUR PROCUREMENT STRATEGY A well-presented, approved and implemented procurement strategy builds credibility, respect and advancement within your organization.
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he world’s two largest economies, which had seemed on the brink of resolving all their disputes, collapsed as both the U.S. and China continue to raise tariffs in an all-out trade war. While both sides are continuing to work on trade, the impact is devastating to many companies that were chasing lower labor cost Asiabased supply chains that now represent a significant threat to their business. The astute procurement professional should have been keenly aware that the supply chains were at extreme risk when President Trump withdrew the United States from the Trans-Pacific Partnership (TPP) in 2017. The TPP was set to become the world’s largest free trade deal, covering 40 percent of the global economy. The organization driven by the chief procurement officer must continuously monitor the economy, global supply markets and the political environments where they operate. Many industries are facing disruptive innovation like ride-share firms Uber and Lyft, Dollar Shave Club, electric cars and self-driving cars from competition outside the industry. While many of the examples represent macroeconomic shifts and major disruptions, everyone has opportunities to build a strategic procurement plan aligned to the strategic business plan,
bizvector/iStock/Getty Images Plus
and strategic category management that aligns with the procurement and strategic plan. The strategies must be flexible, and the leaders of purchasing must assure business agility when executing the strategic direction.
BUILDING A PROCUREMENT STRATEGY The procurement strategy is the plan that identifies how to maximize value for the company in both the short- and long-term perspective. The approach allows the organization to consider longerterm goals, such as achieving and maintaining highly competitive supply chains which are architected through effective supplier selections and managed through leading supplier relationship management processes. The documentation of the procurement strategy also aligns all of the organization’s stakeholders around value for money, continuous improvement and drive for innovation. To build and implement a procurement strategy it is helpful if the procurement team develops
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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SPECIAL REPORT PROCUREMENT
Strategy considerations driving value for employees, customers, shareholders & Suppliers... RS
S
Operational
EM
P LO Y
EES
RS
CU
LIE
ST
OM
U E the basis for Efficiency Products building effective & Process strategies. The challenge for the CPO is moving from Innovation Supplier impact areas Relationships to actionable INFORMATION & TECHNOLOGY strategies to deploy the strategy. Supply Chain The box Integration Speed to below includes Market examples to demonstrate Cost & the conversion of SH Value AR goals to implementable EH OL strategies. DER S By developing action-oriented goals that are measurable and achievable, the strategy can be implemented STOP PUSHING CARTS AND FOLLOW THE LEADER moving the PP
a structured analysis around benchmarks, baselines, market analysis and the business plan to determine a future context and internal and external challenges that the organization is facing over the next three to five years. Once the analysis is complete, the team must determine a direction, mission and vision to drive the direction of procurement. It is also necessary to consider corporate culture, other initiatives, core values and actionable levers to assure success. The ability to monitor the plan, build in key performance indicators and create a communication plan will ultimately drive the success of the strategy. Other considerations while evaluating your existing or future program are cost and value leadership, growth, skills, globalization, corporate social responsibility, risk management, technological changes, and efficiency/ complexity reduction. The chart above outlines the areas impacting stakeholders and provides
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SPECIAL REPORT PROCUREMENT procurement and the business in the direction of the vision for the procurement organization. There are many examples of maturity curves for the procurement area that can be developed from the initial analysis of procurement. The chart below is one example that can measure the path to value-based procurement. Ultimately the goal of every procurement strategic plan is to move procurement quickly along the procurement maturity curve. The chart is an example of a maturity curve for procurement from a very tactical weak organization to one that enhances and drives value for the organization.
THE PROCUREMENT MATURITY CURVE
to the value chain integration phase of the maturity curve, we witness strategic sourcing with matured category management embedded across functions. Purchasing is leading business collaboration; most of the expenditure is under the influence of the team and compliance is high. The business values and expects the contribution of procurement and the CPO as part of the senior management executive team. Increasing levels of value are introduced into the business impacting all aspects of the organization including revenue. When the value enhancement
current state using the research and analysis the team needs to define the future state of the organization. While it is desirable to move from the tactical phase of the maturity curve to the value enhancement phase, it is a long journey to gain credibility, align stakeholders, change the processes and develop the team. Many things can impact procurement’s progress. Can the business culture absorb significant change? Are the people on your team the right people? Can they be developed? Can you get the management support, budget and resources required? These factors can impact your timeline so consider
STAGES OF PROCUREMENT MATURITY
CATEGORY MANAGEMENT FOCUS ON TCO & VALUE The tactical phase of procurement maturity represents a tactical approach where the team is focused Tactical Cost Value Chain Value on transactional activities, Procurement Optimization Integration Enhancement operational effectiveness PROCUREMENT MATURITY and purchase price. While there is a benefit in driving level of the maturity curve is building time into your strategy. the operations and maintaining reached, sourcing provides a strategic tactical relationships with suppliers, competitive advantage with a revenue there is minimal value to the overall UPDATE FREQUENTLY uptick. Things like innovation, speed organization in terms of driving value. Review the key plan metrics on a to market, product innovation and The cost optimization phase of quarterly basis, making adjustments aligned supply chains bring increasing procurement maturity represents as necessary. When there is a need levels of value to the company through one step up where the procurement to adjust the plan, it is essential that architected supply chains that provide team actively understands cost there is clear communication to the a competitive advantage. drivers and the impact of cost on the organization’s senior management bottom line. The focus in the cost and key stakeholders. A welloptimization is to impact supplier thought-out plan that is presented, KEY CONSIDERATIONS margins, price reductions, cost manage approved and implemented will go a The first step in the development and cash production. The activities long way to building credibility and of a strategy is to define the mission in the cost optimization phase are respect and advancement within your of the procurement organization and primarily tactical, and the team has organization. articulate the vision clearly so that the not progressed to supplier relationship procurement team and stakeholders ABOUT THE AUTHOR management. There is some evidence precisely understand the direction that BILL MICHELS is the vice president of operations at that the organization is moving the procurement team is going. By America for the Chartered Institute of Procurement into some analysis of total cost of analyzing the benchmarks, baselines and Supply Chain (CIPS). He previously served as CEO ownership (TCO). and maturity curves, it is essential that and founder of Aripart Consulting, president of ISM As procurement evolves through Services, and CEO of ADR North America. the procurement team analyze the 28
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8/28/19 9:59 AM
SPECIAL REPORT BLOCKCHAIN
By Dan Albright, Sylvie Thompson
Make Blockchain a PRIORITY It’s time for companies to move from proof of concept to reality and capitalize on the potential.
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here’s an old adage that it’s glamorous to say you’re in law school, but nobody wants to admit they’re a lawyer. As Bitcoin has slumped from heartthrob to depressed asset, it could similarly be said that everyone likes to talk about blockchain, but nobody wants to admit they’re into cryptocurrency. However, the reality is that cryptocurrencies are enabling compelling business cases across several industries (regardless of Bitcoin price) and that blockchain is starting to deliver on its potential. First off, what is blockchain? Blockchain is a decentralized ledger that uses distributed peer-to-peer consensus to verify and authenticate all information recorded within the ledger. All parties participating in the blockchain have access to the ledger to transact with each other which helps ensure security, transparency and auditability of the underlying ledger information. Historically, ledgers were held by a single entity that controlled all participants. Blockchain takes the opposite approach, establishing an open ledger system where information is shared equally among all participants within the chain. Ledgers move from being held by a single entity to being held by everyone. 30
Some of the guiding principles of blockchain include: ❯❯ NO CENTRAL AUTHORITY. Information is stored across a network of computers (nodes) making the chain decentralized and distributed—a “shared ledger.” No one entity owns the system and there is no single point of failure. ❯❯ CONSENSUS DRIVEN. Like the traditional ledger, past data is not permitted to be altered or changed. Instead, blocks are added to the end of the chain in chronological order, with each block linked to the previous one through a hash pointer, using consensus among the connected nodes to verify each new block. Disputes are resolved based on consensus of the information held by all participating entities, and no one party can alter the blockchain without gaining access to 51 percent or more of all nodes. ❯❯ TRUST ENABLER. The distributed and consensus nature of blockchain ensures the integrity of that data, eliminating the need to find a “trusted third party” to facilitate and validate the transaction. Blockchains can be implemented in three different ways, based on who can view the information and who can participate. ❯❯ PUBLIC. Public blockchains, like Bitcoin, are open to everyone and all information held within the chain can be publicly viewed, with no specific permissions needed.
❯❯ PRIVATE. Private blockchains are open to only those invited to participate, and information held within them can only be viewed by those entities. These blockchains are gaining momentum with most supply chain proof of concepts, but they do limit full-scale adoption by all potential participants within a required network. ❯❯ HYBRID. Hybrid blockchains combine features of both public and private blockchains, providing control on what information is kept private or made public.
FrankRamspott/DigitalVision Vectors/Getty Images
CROSS INDUSTRY BENEFITS OF BLOCKCHAIN While the promise of blockchain is significant and surrounded by hype, if successfully deployed, there are benefits that could apply to all industries. DATA VISIBILITY & RECONCILIATION. Blockchain transforms the traditional model of data stored by single entities by placing the data in a shared ledger, so that every participant receives a copy of the data. To manage this democratization of data, two functions are necessary:
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and consumers are demanding greater visibility into sources of the materials used in manufacturing. This requires data to be both captured and aggregated. 1) DATA CAPTURE: All industries have realized the compelling advantages to software-driven data analysis, which has led to the proliferation of data-capturing sensors on a wide variety of products as they move through the production floor and the supply chain. 2) DATA AGGREGATION: Prior to blockchain, data captured across the supply chain was trapped inside disparate enterprise systems, making it difficult to string together in an actionable way. Today, several companies are recording blockchainpowered, end-to-end product journeys that are forming the basis for overall brand messaging. ENSURING THE AUTHENTICITY OF GOODS. According to the 2018 Global Brand Counterfeiting Report, the global counterfeit trade is estimated at roughly $1.2 trillion annually or 3 percent of all global trade. Counterfeiting impacts almost all product categories across all price points, posing significant risk (including consumer product safety concerns) to brand owners. Blockchain enables product authentication at the unit level, allowing individual items to be tagged with unique identifiers for tracking and validation, providing full visibility into the product life cycle. PAYING FOR GOODS. Once a shopper decides to purchase, payments have traditionally involved credit cards, but this approach has two important weaknesses: ❯❯ Transaction fees for credit card purchases (typically in the 2 percent range) are rather high,
❯❯ SYNCHRONIZATION: Data is simultaneously and securely shared as nodes within the blockchain to verify and “memorialize” transactions. ❯❯ VALIDATION: New nodes are only added when consensus on the validity of the information (transaction) is verified by the majority of the participants. If a new node fails to follow the necessary blockchain protocols, it is rejected. Through this function, disparate systems with incomplete, conflicting or unreliable information are eliminated for all participants. TRACEABILITY. Blockchain enables organizations to track products across the entire supply chain, with every action recorded and verifiable records securely attached and stored. DISPUTE RESOLUTION. Through its ability to provide distributed delivery records and consensus-driven transaction verification, blockchain can simplify the dispute resolution process and identify in real time misalignment of information during the verification process, reducing costs and time. Theoretically, this could move beyond simplifying dispute resolutions and eliminate the occurrence of disputes in the first place.
VALUE CHAIN DISRUPTOR Blockchain’s early disruption of traditional industry value chains has been particularly salient in the consumer-packaged goods, retail and logistics industries. TRACING HOW GOODS ARE MADE. Supply chains are global and growing more complex. Materials and products travel across multiple geographies before they reach the consumers’ hands, while governments
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negatively impacting retailers. ❯❯ Not all shoppers have credit cards. Blockchain-based cryptocurrencies typically offer lower transaction fees and remove the credit card requirement for purchasers. These advancements both expand the universe of buyers and reduce the financial cost for doing business. STREAMLINING CROSSBORDER TRACTIONS. Blockchain is also playing an expanded role in global commerce. Twenty-eight banks— including Deutsche Bank, JPMorgan Chase and Société Générale—are participating in a proof of concept to “validate whether blockchain can help banks reconcile their international nostro accounts in real time.” SHIPPING PURCHASED GOODS. As goods move through the supply chain, entities rely on logistics operators to transport goods between parties, with hand-offs requiring bills of lading which historically have used a combination of written forms and disparate IT systems, introducing a tax on participating companies and impeding the sharing of data for issues like tracking and fraud prevention.
HOW TO GET STARTED Given the ambiguity in the future technological landscape for blockchain, interested parties should explore and experiment with both public and private platforms. Early adopters will be given the power to set standards and drive the blockchain ecosystem, so time is of the essence to get involved now. ABOUT THE AUTHOR DAN ALBRIGHT manages the supply chain group for Infosys Consulting in the United States. Sylvie Thompson is associate partner, supply chain optimization for Infosys Consulting.
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}
EXECUTIVE FOCUS
{ TRANSPORTATION}
By Smital Naik
CHANGING OVER
YOUR 3PL?
Make people, process and technology the focal point for a smooth transition to a new 3PL.
I
metamorworks/istock/Getty Images Plus
n a perfect world, companies would start working with a 3PL and stay with them forever. Reality and experience show that while many companies hire 3PLs to manage their facilities, the typical contract length is three to five years. Not perfect. Not forever. When those contracts are up, there are three ways it can go—bring the operations in house and do it yourself, renew the existing contract, or hire a new 3PL. We sat down with a leading 3PL provider to talk about how they approach the situation when they are the new 3PL. Here are the tips with perspectives on people, process and technology to ensure the transition to your new 3PL has the least disruption to your operations.
FIRST, THE CONTRACT— READ ALL OF THE FINE PRINT It probably goes without saying that many struggle to understand contractual language and may not spend the time needed to truly read for understanding. It’s especially important to ensure the financial portion of the contract is very clear. 32
Both the customer (you) and the new 3PL need to know what each brings to the relationship, what each is responsible for and exactly what the 3PL is being paid to do. Some important elements to understand are: ❯ Does the pay structure align with the customer’s KPIs (your KPIs)? If the main goal of the customer is to manufacture more products, then it is important to ensure the 3PL’s fixed and variable rates align with this goal. ❯ How will overtime be handled? ❯ Is there a clearly defined scope and definition of work to be performed? How will the scope change process work over the course of the contract life? ❯ What services does the 3PL offer that don’t currently exist? Will I want those services later and how do those get added? What will the costs be at that point?
PEOPLE People are key to the transition. And as the customer, it’s a good idea to be involved in how the people aspect is managed by your former 3PL and your new 3PL. Ask to see and be involved in the transition plan so that you understand and can weigh in on these areas: ❯ ATTRITION: Does your new 3PL have a plan for retaining current employees, at least through the transition period? Ideally you will want to keep as many as possible, for as long as you can. Thus, consider what types of incentives or other benefits you are prepared/able to offer. ❯ TRAINING: Do you want to be responsible for this or will the new 3PL?
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TRANSPORTATION
❯❯ HIRING: You will likely lose some employees through this transition period. Is there a low unemployment rate in your area and has your new 3PL considered overstaffing to ensure there are enough employees? ❯❯ TRANSPARENCY: Be transparent on the issues and problems you were having with your former 3PL. How does this affect the relationship with the new 3PL? Are there major issues that you want the new 3PL to address? ❯❯ LANGUAGE: Change often brings new lingo and job titles, even if the responsibilities remain the same. Certain processes may be called something new. Taking the time to ensure new concepts and wording are explained and communicated clearly through training and documentation saves significant time and confusion and helps in trust building.
on documentation that outlines those processes. This will go a long way to ensuring a smooth transition. There are three key areas to review and analyze during a transition plan: • Customer service levels • Detailed timeline for implementation • KPIs and metrics for operational performance ❯❯ Regardless of your choice in technology, it’s important to remember to avoid process changes during transition. It might seem like the right time to add more change. What’s one more thing, right? This can create confusion particularly if you have a mix of new and seasoned employees during the transition. It requires training on both the current and new processes. Wait to introduce any new processes until after the transition is complete. You’ll be more successful, have less confusion and likely retain more of your workforce.
PROCESS
TECHNOLOGY
Communication, communication, communication. It is so vital to success that it can’t be overstated. It’s important on a regular basis—and even more critical during a transition to a new 3PL. Think about and carefully plan your communications regarding plans and processes: ❯❯ Be transparent on what a current process is and what it requires. What are some common issues that get exposed in that process? How do you want the new 3PL to handle those issues? ❯❯ Clearly define processes and have both parties review/agree
Decisions about technology are based on a company’s needs. Do you want to use what the new 3PL is offering or will you want them to use a particular technology? Some companies that utilize 3PLs for their distribution are beginning to purchase their own software. Thus, the 3PL is responsible for using what is already owned. There are a lot of benefits to this as it can streamline multiple facilities, aid in employee retention and give a greater amount of control to your business.
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When implementing a new technology solution, remain transparent and communicate the expectations and requirements up front before the transition even begins. Some of the key aspects to consider and discuss with clients are: ❯❯ SECURITY: Verify that IT security requirements meet the needs and requirements of you, the customer—and your customers. ❯❯ DATA TRANSFER: Ensure that everyone understands how data will be shared or transferred between your software and the customer’s internal system(s). ❯❯ INTEGRATION: Provide a clear plan outlining what integrations will be included and when.
FINAL THOUGHTS Communication and planning are not exciting or new but they are vital to project success. Make sure that your new 3PL provides a very clear and detailed plan that outlines the transition from start to finish and covers in detail the areas of hiring, onboarding, training and communication to keep all key stakeholders updated on the status of the project. Always sit down with the customer to ensure that both parties are on the same page and transparent about expectations from the start. This kind of frank discussion will go a long way to a smooth transition to a new 3PL and help reduce bottlenecks that may occur later down the road. ABOUT THE AUTHOR SMITAL NAIK is senior supply chain consultant for Open Sky Group, global specialists in JDA Software's supply chain platform.
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}
EXECUTIVE FOCUS
{ WAREHOUSING}
By Lara L. Sowinski
A Different Approach to
INVENTORY OPTIMIZATION Move away from the mathematical formulas, and then start ‘thinking’ like a human.
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era Technology’s Kaushal Dave, global vice president, solutions development and customer engagement, notes that no matter the size of the company, “the problem always starts with inventory.” The approach to solving the inventory enigma is changing though, he says. “Up until now, a mathematical approach was always used. In other words, a mathematical approach as in an optimizer, which includes linear programming and quadratic programming—basically, very complex mathematical heuristics,” says Dave.
HUMAN THINKING Aera Technology began experimenting with a cognitive automation and augmentation approach, and began asking a few simple questions: How does a human look at inventory? What’s your intuition telling you? How many things do you need to look at before making a decision on changing inventory variables? Dave explains that, “The human mind, from a cognition standpoint, looks at a few things and says, ‘Here’s a shortage; here’s an excess. I’d like to move inventory from here to there, but I need to know how much it’s going to cost to do it.’” 34
There are also questions about if it’s best to move the inventory, or produce more and ship it from the factory. Alternatively, would it be best not to do anything and let the replenishment cycle go through? Therefore, when the minimum ordering quantity or the reorder points kick in, it will be automatically replenished. “The human mind thinks this way,” says Dave. “So, we set out to mimic the human mind in order to solve the inventory optimization problem.” While the human mind can look at three of four things concurrently, and then make evaluations and decisions, “The machine can look at unlimited things,” he says. These include such variables as order volatility, demand volatility, production
“THE HUMAN MIND… LOOKS AT A FEW THINGS AND SAYS, ‘HERE’S A SHORTAGE; HERE’S AN EXCESS. I’D LIKE TO MOVE INVENTORY FROM HERE TO THERE, BUT I NEED TO KNOW HOW MUCH IT’S GOING TO COST TO DO IT.’”
Hilch/istock/Getty Images Plus
— KAUSHAL DAVE
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Getty
That Poor Inventory Management Costs A Bundle frequency, current safety stock levels, daily ending balance of inventory, warehouse capacity and so on, combined with the agility of the supply chain. The goal is to arrive at a specific production location combination.
more non-linear than ever,” Dave notes. “There are always going to be disruptions, but reacting with the best decision—or even better, being able to be proactive—is what the technology provides,” that a human cannot.
A survey of 200 senior decisionmakers at U.S. retail companies on the topic of managing retail inventory illustrates the potential for advanced analytics tools, according to Coresight Research and Celect, which conducted the survey.
FUNDAMENTAL SHIFT IN OPTIMIZATION
ONGOING DIGITIZATION
HIGHLIGHTS OF THE FINDINGS REVEAL:
The value of Aera Technology’s solution is evident for large multinationals with multiple, complex systems and supply chains. One company currently working with Aera has 57 ERP systems alone. Another, a CPG company, has a number of separate systems. “They evaluate 100 start-up vendors every year, so they have many systems. There’s a real benefit for them to accumulate data from all those different systems, harmonize and then monitor all those data sets concurrently, and then have the solution provide recommendations,” he says. According to Dave, the future trend is the ongoing digitization of supply chain processes and bringing more autonomy to the process as well. “We are seeing a tremendous amount of interest from C-level executives because they understand the value of this,” he says. “While supply chain planners or managers may think they’re always making the best decisions, senior-level executives know otherwise.” There is simply too much information and data to evaluate. Not to mention, “If a planner leaves the company tomorrow, they take their knowledge with them,” says Dave. “So, it’s imperative that the best planning and the best planner’s experience is digitized within a system, and that it’s augmented with other systems’ capabilities.”
Aera Technology worked with three separate companies, in particular, to demonstrate the effectiveness of their inventory optimization technology: one of the world’s largest CPG companies, the biggest tobacco company, and one of the largest alcoholic beverage companies in the world. In each pilot, Aera was able to reduce safety stock and free up working capital. For the CPG company, “We looked at approximately 10,000-plus recommendations, and delivered substantial cost savings on these inventory reduction opportunities,” says Dave. At the same time, “We are also recommending inventory increases in some locations, because it’s not always inventory reductions that are needed.” This is “a very different and fundamental shift in how we see inventory and how we approach the problem,” he says. “We allow the machine to do its job and digitize the human approach. And of course, do it 100 times better by looking at 100 different things, which is not possible with the human mind.” Disruptions, either internal or external, also pose challenges to inventory optimization. Some examples include port strikes or weather events, or even huge sales promotions. “Supply chains are more volatile and complex than ever, and they’re
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WWCoresight Research and Celect
estimate that markdowns cost U.S. non-grocery retailers approximately $300 billion in revenues in 2018, equivalent to around 12 percent of all U.S. nongrocery retail sales.
WWMisjudged inventory decisions—
including overbuying, buying the wrong type of products and misallocating inventory—account for an estimated 53 percent of unplanned markdown costs for retailers.
WWThe average full-price sell-through rate among U.S. non-grocery retailers is 60 percent, according to the survey. In total, some 50 percent of survey respondents cited inventory misjudgments as a barrier to selling at full price.
WWThe survey findings underline the
intense competitive pressures that retailers face due to rapid changes in the retail and consumer landscapes. Survey respondents ranked competition and greater consumer choice regarding where to buy as the top external pressures prompting them to make better merchandising decisions.
WWThe vast majority of retailers—
some 86 percent in total—can identify specific uses for advanced analytics in their retail sector, such as to inform decisions regarding how much stock to buy, how to formulate promotional activities and which products to buy.
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EXECUTIVE FOCUS
{ SOFTWARE & TECH}
By Amy Wunderlin
E-commerce Drives
MOBILE TECH ADOPTION in Field Operations
The demands of e-commerce fulfillment and delivery are requiring investments in disruptive technologies and enterprise-class mobile devices to empower front-line workers.
T
he introduction of digital marketplaces and a booming e-commerce sector has placed a strain on the entire supply chain. Transportation costs are high, capacity is tight and customer expectations are higher than ever, requiring faster and more agile operations. To fulfill this increasing consumer demand for immediate access to goods and services, companies are reevaluating each process in their supply chain and introducing emerging 36
technologies where applicable. A new study, Future of Field Operations, by Zebra Technologies Corp., reveals that mobile technology investment is a top priority for 36 percent of organizations and a growing priority for an additional 58 percent to keep up with rapidly evolving and increasing customer demand. The findings indicate a majority of investments in mobile enterprise devices will be made to enhance frontline worker productivity and customer satisfaction in field operations,
including fleet management, field services, proof of delivery and direct store delivery workflows. “Driven by the acceleration of e-commerce along with customers’ heightened expectations and more focus within companies on differentiating service levels, the field operations industry is rapidly adapting the way it looks at its mobile technology investments,” says Jim Hilton, director of vertical marketing strategy, manufacturing, transportation and logistics for Zebra Technologies. “Our study shows how growing challenges related to the on-demand economy drive organizations to adopt transformative, disruptive technologies such as augmented reality and intelligent labels to provide visibility and integrate business intelligence for a performance edge.”
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SOFTWARE & TECH
Yozayo/istock/Getty Images Plus
MOBILE DEVICES AS A COMPETITIVE ADVANTAGE
E-commerce fulfillment from either the retail store or from a regional or urban distribution center (DC) is also growing, promising increasingly rapid order turnaround times. In order to provide real-time and error proof data capture and scanning, Wheeler says retailers need to be mobile.
Two of the biggest e-commerce trends driving mobile adoption are challenges in last-mile delivery and expanding fulfillment options, says Mark Wheeler, director of supply chain solutions for Zebra Technologies. “We’re all at the point where we expect to have visibility into that delivery process and confirmation of that delivery process, and where appropriate, signature capture at the point of delivery,” he explains. “We’re going to be tracking those materials through that process—from the sortation hub to loading on the vehicle to delivering at the end customer—so data capturing ability to scan a variety of different barcodes is increasingly part of that solution on the e-commerce side.”
“WE’RE ALL AT THE POINT WHERE WE EXPECT TO HAVE VISIBILITY INTO THAT DELIVERY PROCESS AND CONFIRMATION OF THAT DELIVERY PROCESS, AND WHERE APPROPRIATE, SIGNATURE CAPTURE AT THE POINT OF DELIVERY.” — MARK WHEELER As these e-commerce trends grow, equipping front-line workers with enterprise mobile devices remains a priority to stay competitive, though only one-fifth of organizations have a majority of their field-based
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operations using enterprise mobile devices, according to the study. The study estimates companies will reach 50 percent adoption in five years, driven by higher levels of inventory and the need for more accurate shipments and asset counts. Respondents indicate most organizations intend to invest in handheld mobile computers, mobile printers and rugged tablets. From 2018 to 2023, handheld mobile computer usage with built-in barcode scanners is forecasted to grow by 45 percent, mobile printers by 53 percent and rugged tablets by 54 percent. Greater e-commerce connectivity at the consumer level is also driving enterprise mobility adoption. Not only is it now easier to order goods and services, but online reviews and social media allow consumers to hold service providers to higher standards. The study found that 90 percent of consumers read online reviews before visiting a business, 88 percent trust online reviews as much as personal recommendations, and 86 percent hesitate to purchase from a business that has negative online reviews. In addition, whether its business-
to-consumer or business-to-business, consumers expect the convenience of ordering service calls and deliveries online and can track shipments while in progress. The authors of the study claim that mobile technology enables
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SOFTWARE & TECH
field teams to solve these challenges. “Teams can review equipment repair histories before leaving on their routes and quickly access online documents, specifications and parts inventories or order parts deliveries if they encounter problems later,” the study says. Mobile technology, the authors say, also enables field teams to process mobile payments for customer convenience and shorter cash-flow cycles. In addition, advances in machine learning-based software applications that collect data from sensors will provide teams with data-driven indications of required equipment maintenance or merchandise replenishment so they can proactively set appointments. “Data-driven, mobilized field operations offer beneficial workflow disruptions like these that can raise service to match or even exceed customers’ growing expectations,” the study’s authors note. The large screens and ruggedized design of business tablets also make it easy to read detailed equipment schematics, delivery orders or task checklists, and keep workflows moving in a wide range of environmental work conditions.
TOTAL COST OF OWNERSHIP STILL A CONCERN Tertiary concerns and post-sale factors are important for organizations when evaluating front-line worker enterprise mobile devices. Nearly 80 percent of respondents usually or always conduct a total cost of ownership (TCO) analysis of business devices prior to making a capital expenditure, and only 32 percent believe that consumer smartphones have better TCO than rugged devices. “There’s pretty broad acceptance 38
Mobile Enterprise vs. Consumer Device Mobile enterprise devices are optimized around the needs of an enterprise user, which often means operating in a more challenging environment, says Mark Wheeler, director of supply chain solutions for Zebra Technologies. The major differences between an enterprise and consumer device are as follows:
WWMore durable, designed to
survive drops and exposure to liquids
WWLonger battery life
customer service (37 percent), device life cycle cadence (36 percent) and repair costs (35 percent). Such factors increasingly influence the purchase cycle, showing that those who do not provide clear value or cannot control these costs will quickly be overtaken by those who do. “It’s really just educating the customer on what the implications of these decisions are—both on the operation side for the end user and on the IT side from a management perspective. And if we can help the customer understand all of that, it’s a win-win,” adds Wheeler.
WWOptimized camera for data
EMERGING TECHNOLOGIES & FASTER NETWORKS
WWMultiple scan engines
Emerging technologies and faster networks are disrupting field operations. The survey shows seven in 10 organizations agree faster mobile networks will be a key driver for field operations investment to enable the use of disruptive technology. Significant industry game-changers will be droids and drones, with over a third of decision-makers citing them as the biggest disruptors. The use of smart technologies such as sensors, RFID and intelligent labels also play a role in transforming the industry. More than a quarter of respondents continue to view augmented/virtual reality (29 percent), sensors (28 percent), RFID and intelligent labels (28 percent) as well as truck loading automation (28 percent) as disruptive factors. “Giving assets throughout the supply chain a digital voice is something that we’ll see across the board,” adds Wheeler. “Interest in RFID, intelligent labels, sensors of different types throughout the supply chain is increasing visibility and accuracy of the delivery process.”
capture
WWServiceable, so it can be repaired if damaged
WWEnhanced audio WWLong life cycle in the market that enterprise devices have a lower total cost of ownership. But we also see that the most prominent decision in the investment tends to be those upfront costs, the initial acquisition—even though they understand that over the long run, it’s going to be more expensive,” notes Wheeler. “The key is to have the customer focus on what’s the real cost, the real value of choosing A versus B?” The survey reveals the following TCO considerations when investing in new front-line enterprise technology: replacement (47 percent), initial device (44 percent), application development (44 percent) and programming/IT (40 percent). Almost 40 percent of respondents say device management and support costs are important in addition to
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Calling Callingall allsoftware softwareand and technology technologyproviders providers If Ifyou youensure ensurea asafe, safe,efficient efficientand andreliable reliableglobal globalfood foodand and beverage supply chain then you could be recognized. beverage supply chain then you could be recognized.
NOW ACCEPTING NOW ACCEPTINGNOMINATIONS NOMINATIONS Nomination deadline: September 20,20, 2019 Nomination deadline: September 2019 Winners willwill be announced in the November/December 2019 issue Winners be announced in the November/December 2019 issue
Global Supply ChainChain Solutions for for Global Supply Solutions the Food and Beverage Industry the Food and Beverage Industry
SUBMIT YOUR NOMINATION AT:
FOODLOGISTICS.COM/AWARDS FOODLOGISTICS.COM/AWARDS Nomination dates and issues may change. Consult the call-for-entries email and nomination survey for confirmation
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EXECUTIVE FOCUS
{ PROFESSIONAL DEVELOPMENT}
By Carol Leaman
FRONTLINE LEARNING IMPACTS BOTTOM-LINE RESULTS In a fiercely competitive economy, success and failure ride on the decisions your employees make every day.
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its workforce doing the right things at ou operate in a sea of data. the right time. You track things like Want to reduce safety incidents, for total recordable incident example? Make sure your people know rates, rejects, overall the correct procedures for handling equipment effectiveness, lost-time dangerous equipment and hazardous injury frequency rate, throughput, materials. Want to reduce scrap? Train order processing and downtime. operators on the processes specific to And for good reason. All of this your operation. data helps you remove bottlenecks Training is about influencing and and make processes more efficient. changing the behaviours that impact It helps you increase yield and your business metrics most. accuracy, and decrease costs without Measuring that connection seems sacrificing quality. It allows you to impossible. Even an army of data keep safety incidents low and frontline scientists performance high so you can Training is about influencing couldn’t tie a test score to a stay competitive. and changing the business result. To sum it up, behaviours that impact your But with the data let’s you right approach make smarter business metrics most. and the right decisions, faster. technology, manufacturers can now But in that rush to move forward link training programs to their business faster, frontline employees are getting goals and see how much of an impact left behind. Amid all the data points learning has on their operations. And out there, learning’s often not one of they can do it in real time. them. And when learning is tracked, Much of this is thanks to machine it’s usually in terms of participation learning and artificial intelligence (AI). and cost—which is the wrong kind of data. By collecting massive volumes of learning So, what data should you track data that goes beyond test scores, when it comes to training your manufacturers can uncover the true people? Simple. The same things connection between frontline training, tracked across the business: impact on behavior change and business KPIs. performance and the bottom line.
YES, LEARNING DRIVES BUSINESS RESULTS All business targets share a common denominator. People. A business’ ability to reach its goals depends on 40
FIRST YOU HAVE TO CHANGE YOUR APPROACH
Before that happens, you need to think about how training is delivered in complex environments where frontline employees are busy and hard to reach.
s
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S S
PROFESSIONAL DEVELOPMENT
Thus, before you can start impacting business outcomes, you need to help employees remember what they’ve learned first.
Here’s how learning tends to go: when frontline employees need training, they’re pulled off the floor for hours- or days-long training sessions where they’re overwhelmed with a lot of one-size-fits-all content all at once. But here’s the rub. This kind of training doesn’t engage employees. It doesn’t drive enough participation to make a difference. It doesn’t capture the data you need to make better decisions. And it doesn’t keep up with the rate of change in your business. Plus, the numbers are stacked against firehose-style learning. According to the forgetting curve, people forget 70 percent of information within the first 24 hours (that number jumps to 90 percent if information isn’t reinforced within 30 days). So, by the time they get back on the floor, most employees forget the majority of what they learned. When employees forget, they do one of two things: make a judgment based on their experience, or ask a co-worker for help (which relies on that co-worker’s judgment and experience). Sometimes it’s right, sometimes it’s wrong. But every time, it’s just a best guess.
Because each session is so short, it fits naturally into the daily work schedule. Which means microlearning can happen on the floor, at convenient times during the day, so employees never stop being productive. Like ALWAYS BE (MICRO)LEARNING anything else on the job, it too If you’ve never heard the term becomes a habit. before, microlearning is all about Using the same technologies that delivering ultra-relevant information, link learning to your business goals, in short bursts, reinforced over time. In other words, microlearning it’s the polar personalizes People opposite of the what each FORGET 70% People of information traditional, longemployee FORGET 90% of information form methods needs to not reinforced of training we’re know. So, if used to. an employee’s Here’s what falling microlearning behind looks like: at on safety the beginning protocols, of each shift, for example, 24 hours 30 days employees spend they’ll get three to five targeted minutes laser-focused on a handful of information to bring them back up to things they need to know to perform speed. better on the frontlines. That process At the end (figuratively speaking, repeats every day, building on new because with microlearning training concepts and reinforcing ones they’ve never ends), each employee should have already learned. (and maintain) the knowledge and behaviors they need to excel at their job.
FORGETTING CURVE
PART TWO In the December issue of Supply & Demand Chain Executive, we’ll explore part two of this article: employee engagement; KPI tracking; and program implementation. ABOUT THE AUTHOR CAROL LEAMAN, MAcc, FCPA, is an award-winning thought leader with an impressive track record of successfully leading tech companies. Carol is a celebrated entrepreneur and trailblazer whose articles appear in leading learning, business and technology publications. sturti/E+/Getty Images
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WORK HARD, By Mackenna Moralez
Crocheting
A NEW SKILL Choice Shops’ Penny Sayce finds comfort in crocheting for the needy.
A
loop here. A pull there. And don’t forget to complete the stitch. These are all things that Choice Shops’ company stock controller Penny Sayce has to think of when she is crocheting. It all started with a local craft group, Sayce explains. The group, called Keep Calm and Get Crafting, held a daylong event where members led various workshops to encourage people to start using their hands and “get crafting.” “One of the workshops I attended was crocheting. Apart from doing chains when I was a child, I had little crocheting experience,” Sayce explains. “The instructor was enthusiastic and patient while helping everyone. I left feeling inspired and excited about continuing what we started.” Over the years, Sayce has perfected her craft. She realized that her newfound talent could be used to help the less fortunate. She regularly makes baby blankets for a charity in the U.K. that provides items to premature babies. For the blankets, Sayce uses yarn that is made with pale colors. While Sayce extends her talents to charity, she also makes items for her grandchildren as well, noting that her favorite item she created is a Captain America blanket for her grandson. Still, picking up a new hobby isn’t always easy. There are certain rules 42
“IN SUPPLY CHAIN, YOU ARE OFTEN WORKING ACROSS MULTIPLE DEPARTMENTS TO CONNECT THE DOTS OR TO GET A COHESIVE RESULT, SO I SEE SOME SIMILARITY THERE.” — SAYCE
involved with crocheting. Sayce advises that people should have the right hook size for their yarn. Typically yarn labels will give hook
size recommendations. “I find YouTube videos invaluable when learning a new stitch or technique,” Sayce says. “Crochet instructions can come in many different forms such as written instructions, short-hand patterns, symbol diagrams, photos or even videos. We all learn in different ways, so you have to find what works best for you.” There’s a supply chain element that comes with crocheting, though. Sayce explains there are times when she is feeling adventurous in what she wants to create, but there isn’t a pattern for what she wants to make. So, she takes elements from different patterns to get the results that she wants. When working on her grandson’s blanket, Sayce took a pattern on how to make a circle and then taught herself how to stitch a star onto the circle. “In supply chain, you are often working across multiple departments to connect the dots or to get a cohesive result, so I see some similarity there. You may also see a process that works well in one department that you can implement in another,” she says. Similar to supply chain, multitasking is critical. Being organized and tracking progress are transferable skills between the two, Sayce notes. To stay organized, she keeps a project book with notes on her creations whether they’re finished or not. Sayce credits the Crochet Project Bible for improving her communication skills and helping other people in the hobby. “Good communication skills and awareness of terminology across departments is another similarity with supply chain management,” Sayce says. “Ensuring that everyone understands the different terminology and the craft is invaluable.”
SUPPLY & DEMAND CHAIN EXECUTIVE | September 2019 | www.SDCExec.com
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The Global Enabled Supply and Demand Chain Map This map provides the solutions and services that can give your supply chains a competitive edge.
Version 35.0
The Global Enabled Supply and Demand Chain Map VERSION 35.0
(This map replaces Version 34.0 from the September 2018 issue.)
SUPPLY CHAIN INTEGRATION & TECHNOLOGY • Artificial Intelligence & Machine Learning (NEW) • Automatic Identification & Data Capture, including Barcode, RFID, Voice & Wearables • Automation • Business-to-Business (B2B) Connectivity, Standards & Integration • Blockchain (NEW) • Bring Your Own Device (BYOD) • Collaborative Production Management • Contingency Planning • Descriptive & Predictive Analytics • Electronic Data Interchange (EDI) • Enterprise Asset Management (EAM) • Enterprise Application Integration (EAI) • Enterprise Data Management & Synchronization
• • • • • • • • • • • • •
Enterprise Resource Planning (ERP) Hardware Options Import & Export Compliance Management Internal & External Portals Internet of Things (IoT) Inventory Optimization Network Infrastructure & Optimization On-Premise, Cloud, Software-as-a-Service (SaaS), On-Demand &Hosted Applications Real-Time Freight Contract, Bid and Tender Automation Regulatory & Customer Mandate Compliance & Governance Issues Security & Cyber Security Warehouse Management Systems (WMS) Wireless Applications & Devices
SUPPLY CHAIN INTEGRATION & TECHNOLOGY ENABLERS C2FO CT Logistics
DMW&H Elemica
Interlink Technologies Penske Logistics
PROCUREMENT Automation
• • • • • • • • • • • • • •
• Product Cost Management • Purchase Order & Requisition Management • Relational Contracting • Spend Management & Analysis • Supplier Enablement & Supplier Information Management • Supplier Onboarding, Enablement & Integration • Supplier Performance Measurement & Monitoring • Supplier Relationship Management & Supplier Development • Supplier Risk Management • Supplier Segmentation (NEW) • Value-Focused Supply Management • Working Capital Management
Benchmarking & Metrics Collaborative Bidding (NEW) Content & Category Management Contingent & Temporary Labor Services Management Enterprise Supplier Collaboration Employee Business Services Management (including Travel & Entertainment) Financial Fraud Group Purchasing Organizations & Solutions Hedging Strategies Marketplaces Negotiations & Contract Management Network Optimization New Laws & Regulations
PROCUREMENT ENABLERS C2FO CT Logistics Elemica Penske Logistics
SOURCING • • • • • • • • •
• Outsourced Manufacturing, including Offshoring, Nearshoring Auctions & Reshoring Strategies Automation • Relational Contracting Collaborative Bidding (NEW) • Sourcing Business Models Commodity Team & Supplier • Spend Analytics & Supply Collaboration Strategy Content & Category Management • Supplier Relationship Management e-Request for Information/ Proposal (eRFI/eRFP) • Tail Spend Management Financial Fraud • Total Cost of Ownership & Total Cost Analysis Market Analytics • Trading Exchanges New Laws & Regulations
ORDER & DEMAND CAPTURE • • • • • • • • • •
Automation Benchmarking & Metrics Capacity Planning Demand Planning & Forecasting Demand Sensing & Shaping e-Request for Information/ Proposal (eRFI/eRFP) Merchandise Planning Network Analysis & Optimization New Laws & Regulations Order & Demand Management
• • • • •
Outsourced Manufacturing Predictive Analytics Promotional Planning Quote-to-Order Automation Sales & Operations Planning, & Sales, Inventory & Operations Planning • Supply & Demand Chain Network Design • Supply Chain & Production Planning • Supply Chain Coordination & Event Management
PRODUCT LIFECYCLE MANAGEMENT • • • • • • • • • • •
Collaborative Design Design for Supply Chain Design for Sustainability & Environment New Laws & Regulations New Product Introduction Outsourced Design Services Product Data Management Product Portfolio Management Request for Information Reverse Logistics Sustainable Packaging
SOURCING ENABLERS CT Logistics Elemica DMW&H Penske Logistics
ORDER & DEMAND CAPTURE ENABLERS CT Logistics Elemica DMW&H Penske Logistics
CUSTOMER RELATIONSHIP MANAGEMENT • • • • • • • • • • •
Big Data Analytics (NEW) Channel Management Customer Analytics & Intelligence Content Management Field Service & Service Parts Logistics Mobile Sales Solutions Promotion Management Reverse Logistics & Merchandise Returns Sales Force Automation Trade Promotion Management Warranty Chain Management
CUSTOMER RELATIONSHIP MANAGEMENT ENABLERS CT Logistics
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SUSTAINABILITY &
CONTINUING EDUCATION • • • •
Accreditation Associations Certification Universities
CONSULTING CONSULTING ENABLERS CT Logistics DMW&H Penske Logistics
• Alternative Fuel Vehicles & Lift Trucks • Automatic Motion Control Lighting & LED Lights • Automation • Carbon Dioxide Tracking & Management • Energy & Sustainability Assessment • Energy-Efficient Equipment • Heating, Ventilation and Air Conditioning (HVAC) Energy Star Equipment • Leadership in Energy & Environmental Design (LEED), & Green Buildings
FULFILLMENT & LOGISTICS • • • • • • • • • • • • • • • • • • • •
Automation Autonomous Vehicles (NEW) Benchmarking & Metrics Customized Build & Assemble Order & Delivery Management Dashboards Descriptive, Predictive & Prescriptive Analytics Distribution Planning & Distribution Requirements Planning Drones (NEW) Electronic Logging Devices (ELDs) (NEW) Financial Fraud Global Trade Management & Trade Compliance Management Inventory Management & Optimization Labor Management Systems Last-Mile Delivery (NEW) Logistics Resource Management Manufacturing Execution Systems Material Handling Equipment & Services Modeling & Simulation New Laws & Regulations Omnichannel Distribution (NEW)
SERVICE SUPPLY CHAIN • Service Analytics & Optimization • Service Financial Management • Service Parts Logistics
Automation Blockchain (NEW) Collaborative Cash Flow Management e-Credit e-Money Electronic Bill Presentment & e-Invoicing Electronic Funds Transfer & All Forms of e-Payment • Financial Fraud
GREEN TECHNOLOGY • Low-Capacity & Automatic Bathroom Fixtures • Routing Optimization Software • SmartWay Transportation Carrier Designation • Solar & Wind Power • Sustainable Supply Management • Transportation Mode Shift due to Order & Load Optimization • Wastewater Reclamation
SUSTAINABILITY & GREEN TECHNOLOGY ENABLERS CT Logistics Penske Logistics
FULFILLMENT & LOGISTICS ENABLERS 6 River Systems CT Logistics Elemica Interlink Technologies DMW&H Penske Logistics
• Service Operations across the Aftermarket Service Supply Chain, including Asset Management, Spare Parts, Field Services, Warranties, Service Management, & Repairs & Returns • Service Supply Chain Planning
PAYMENT • • • • • • •
• Order Management Inputs • Outsourcing Services • Reverse Supply Chain & Logistics, & Returns Management • Route Accounting & Management, & Direct Store Delivery Solutions • Security & Cyber Security • Service Parts Logistics & Service Supply Chain Planning • Simultaneous Outbound & Inbound Management • Supply Chain Event Management • Supply Chain Execution • Supply Chain Security • Transportation Management & Optimization • Urban Logistics (NEW) • Vendor-Managed Inventory • Voice-Driven Solutions • Warehouse Control Systems • Warehouse Execution Systems • Warehouse Management • Workforce Management • Workforce Training
• • • • • • • • • •
Financial Supply Chain Management Financial Transaction Management Freight Audit & Payment Services Global Trade Finance Letters of Credit PayPal & Bitcoin Procure-to-Pay (NEW) Purchasing Cards Reconciliation & Reporting Solutions Spend Data Management
DECISION SUPPORT • Benchmarking & Metrics • Big Data Analytics (NEW) • Business Process & Performance Management • Change Management • Dashboards • Descriptive & Prescriptive Anayltics • Enterprise Business Intelligence • Information Sharing • Inter-Enterprise & CrossFunctional Collaboration • Market Intelligence & Analytics • Regulatory & Customer Mandate Compliance • Relational Contracting
SERVICE ENABLERS DMW&H Penske Logistics
PAYMENT ENABLERS C2FO CT Logistics Penske Logistics
• R esearch & Consulting • Revenue, Price & Profit Management Automation • Six Sigma, Quality & Lean Practices • Staffing & Incentive Management • Supply Chain Skills Management & Professional Development • Supply Chain Relationship Management • Supply Change Risk Management
DECISION SUPPORT ENABLERS CT Logistics
INDEX OF ADVERTISERS 6 River Systems . . . . . . . . . . . . . . . . . . . 27
CT Logistics . . . . . . . . . . . . . . . . . . . . . . . 15
www.6river.com Fergal Glynn (866) 60-CHUCK fglynn@6river.com 6 River Systems understands the benefits that robotics can bring to fulfillment centers. With e-commerce booming, the company saw the potential that automation has and jumped right in with its Chuck robot.
www.ctlogistics.com Ron Dodig (216) 267-2000 ext. 2222 rondodig@ctlogistics.com Since 1923, organizations have leveraged CT Logistics to provide global freight audit and payment, TMS and supply chain solutions. CT designs and implements customized supply chain and rate management solutions. CT’s Business Intelligence platform provides global spend visibility and data analysis using SOCII and ISO 9001:2015 certified processes.
C2FO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 www.c2fo.com Emily Figg (866) 463-6565 emily.figg@c2fo.com C2FO was created out of necessity from observations of a broken system. The company creates a seamless match between A/R and A/P, enabling efficiency in the riskless provisioning of working capital between buyers and suppliers.
Clean Energy Fuels . . . . . . . . . . . . . . . . 13 www.cleanenergyfuels.com Michelle Wells (949) 437-1361 michelle.wells@cleanenergyfuels.com Clean Energy Fuels Corp. is the leading provider of natural gas fuel and renewable natural gas (RNG) fuel for transportation in North America, with a network of over 535 stations across the region.
DMW&H . . . . . . . . . . . . . . . . . . . . . . . . . . 19 www.dmwandh.com/ Elizabeth Dempseyr (201) 933-7840 edempsey@dmwanH.com DMW&H has a refined approach to automated solutions. The company designs, integrates, installs and supports complex material handling programs that deliver complete, collaborative and automated solutions that exceed customers’ needs and expectations.
Elemica . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 www.elemica.com David Cahn (770) 241-3950 david.cahn@elemica.com Elemica’s digital supply network connects process manufacturers to thousands of material suppliers, logistics service providers and customers. The company’s cloud-based network ensures an efficient scalable and secure connection.
INDEX OF ADVERTISERS Interlink Technologies. . . . . . Map Only
Old Dominion Freight Line. . . . . . . . . 11
www.thinkinterlink.com Lynn Granatir (419) 893-9011 ext. 170 lgranatir@thinkinterlink.com Since its launch, Interlink Technologies has strived to make informed decisions that help keep supply chains on track. By providing paperless, real time information in the warehouse, Interlink Technologies has become a pioneer in warehouse management systems.
www.odfl.com (800) 235-5569 customer.service@odfl.com Old Dominion Freight Line is a leading less-than-truckload (LTL) carrier providing premium service with competitive transit times nationwide. Old Dominion’s claims ratio, on-time delivery and safety records are among the best in the industry.
KPMG. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
www.penskelogistics.com (844) 868-0818 customer.service@odfl.com Penske Logistics engineers supply chain solutions that deliver powerful results for market-leading companies. With offices across the globe, Penske can help your business move forward by boosting efficiency and driving down supply chain costs.
www.home.kpmg With a presence worldwide, KPMG maintains a clear vision and values by offering audit, tax and advisory services.
Material Handling Industry (MODEX 2020). . . . . . . . . . . . . . . . . . . . 29 www.mhi.org (704) 676-1190 MHI is the nation’s largest material handling, supply chain and logistics association. It offers education, networking and solution sourcing for the industries through programs and events, such as MODEX.
Penske Logistics. . . . . . . . . . . . . . . . . . . . 5
Verizon Connect. . . . . . . . . . . . . . . . . . . 44 www.verizonconnect.com (866) 844-2235 Verizon Connect Verizon Connect connects its customers by automating, optimizing and revolutionizing the way vehicles are moved around the world. The company’s full suite of solutions and services enable customers to become safer and more efficient while being more productive.
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