If you listen to some financial talking heads and political pundits, things in the economic world are much better, and the path ahead is clear (if you believe Vice-President Joe Biden). If you listen to some folks on the other side of the spectrum, we’re all doomed and you’d better stock up on ammunition and vegetable seeds for the post-apocalyptic world we are about to enter into. (Speaking of which, have you tuned in to radio and television personality Glenn Beck lately and heard some of the callers?)

The truth is somewhere in between those poles. And to a large degree, it depends upon which vertical you’re in and which markets you serve.

Regardless, it is never a bad idea to take advantage of lean times to fine tune your operations and business processes, assess your supply chain systems, and plan for the future – in this case, some level of financial recovery – by optimizing your supply chain and the information technology required to support it.

Many companies are in a budgetary "freeze" and have either set their 2010 budgets at 2009 actual spend levels or cut them back to some degree.

I saw a few projects delayed and/or scaled back last year, which unfortunately, puts those organizations at a competitive disadvantage – either because their competition is continuing to move forward with their improvement initiatives, or those companies are failing to gain momentum for an economic comeback, which is certain to happen.

So with all of that said, how are you freeing up capital to invest in operations consulting and improvement, as well as advancement of your technology capabilities?

Or have you found yourself in a dilemma where you can’t fund an improvement project, because your operation is performing sub-optimally, and/or you can’t perform optimally until you improve your supply chain operation?

In future posts, we’ll discuss how to free up capital. In the meantime, let me know what you are doing to get out of this catch-22.

-- David Meyers

After working as a supply chain IT professional for many years, sometimes people start considering you an expert in certain areas. So, as it happens, whenever an RFID consulting opportunity comes our way at Tompkins Associates, heads usually turn in my direction.

As the resident RFID "expert," I recently spoke with Maida Napolitano at Logistics Management Magazine. She was working on the article, which ran in their February issue, Warehouse and Distribution Centers: RFID Revisited.

Her article focuses on the ROI of RFID, and she notes four key benefits that RFID-enabled warehouses and DCs can achieve within the first 12 months of deployment. They are:

Eliminate shipping and receiving errors,

Improve productivity,

Establish traceability, and

Achieve inventory control and accuracy.

RFID is not going away any time soon. So, if you want to get some ideas about the advantages of RFID and learn more about what Wal-mart is doing with their RFID initiatives, check out this article, or post comments and questions right here on our blog. I would like to hear your thoughts.

--Paul

In my line of work, I often talk with software vendors and users. Usually, I end up learning something new, and this week was no exception.

The other day at the Tompkins’ Emergency Technology Center (ETC), I was talking to Dick Lipari from Royal 4 Systems, and we were discussing the relevance of Royal 4 Systems’ WMS flow lot control functionality to the food industry. The awe-factor of this functionality is complete traceability – high supply chain visibility – from first touch to end delivery.

During our discussion, Dick made the comment that 20 bills concerning the integrity of the food supply chain are currently before Congress. I must admit I don’t subscribe to Congressional Quarterly, but I believe Dick, because last year’s Salmonella and E. coli outbreaks are still fresh in my mind.

At the same time, I’m remembering how many of us were on edge a few years ago waiting for California’s serialized ePedigree requirements to hit pharmaceutical distributors like a ton of bricks. But the initial buzz has fizzled as California relented and pushed back its deadline partially due to the compliance costs that state agencies and facilities would have to bear.

However, with food products, it’s different. Food contamination stories make great press. Given our 24/7 multi-source news coverage culture, every outbreak results in a call for government action. There may be a backlash against big government, but when the safety of the products in our pantries and refrigerators are in question, we demand that the government take action.

And our demand for government to act isn’t limited to the food chain. I was reminded of that fact when I received a DC Velocity e-advertisement from the Homeland Security Administration admonishing distribution operations not to let their chemicals be "their next weapon." DC Velocity also recently ran an article on this topic.

So as we move toward the future, government regulations concerning control and visibility within supply chains are only going to increase, and distribution network operations will have to comply with these regulations. Many of these operations have systems inadequate to the task, and these requirements will hit them like a ton of bricks.

It’s time to start preparing for the future of your supply chain. So what are you doing in the meantime besides checking the lot numbers of the peanut butter and salsa in your kitchen? How important is visibility to you, even without government intervention? Don’t you want to know where your food has been?

-- Tom

Other Resources:

Tompkins’ Emerging Technology Center (ETC) focuses on integration and testing, technology evaluation, employee training, and emerging product demonstrations. At the ETC, companies have the opportunity to evaluate fully-operational material handling and system technology solutions without risk or financial investment.

For more information, visit:   http://www.tompkinsinc.com/integration/EmergingTechCtr.asp

 

Photo credit: Masahiro Ihara

When thinking about creating a collaborative supply chain, imagine that you are a conductor for an orchestra and are raising your arms, preparing the group to begin.

But when they group begins to play, you can’t make sense of the tune because each member of the orchestra is playing from a different sheet of music.

In this scenario, we learn that you have to do more than pull a group together and signal them to begin. You need to be prepared and make sure everyone is on the same page.

This is also true when in the process of a supply chain collaborative system selection or when implementing a collaborative supply chain: Having accurate information that can be viewed by all parties is ideal for good collaboration.

And for many organizations, an IT system may be exactly what they need to achieve a collaborative supply chain.

However, as with any IT systems-supported initiative that involves multiple viewpoints, there are risks that should be realistically formulated before casting the visibility and collaboration net wide for all to take part.

Before we take a look at the risks, let’s run through some core elements of the collaborative supply chain:

• Forecasts – Sales forecasts at the stocking unit and stocking location are valuable information for suppliers providing materials or finished goods. Visibility into the sales forecast is a great place to start. Ultimately, and depending on your own forecasting capabilities, involvement with suppliers in collaborative forecast updates is sure to yield future improvements in forecast accuracy.
• Sales History – This information is similar to forecasts in its value to suppliers. Sales history provides a basis for understanding how forecasts are developed and insight into past activity, which can further secure the supplier’s commitment to your forecast. Sources for sales history may be detailed point-of-sale data or may be a refined version that supports the forecasting process.
• Inventory on Hand – Visibility into inventory on hand provides yet another validation point for suppliers in understanding where their inventory lies within your supply chain. Understanding and managing inventory over time gives additional insight into typical product movement, which may not be evident in the sales forecast or sales history.
• Replenishment Needs – Communicating the replenishment needs to suppliers is central to any supply chain operation, and the need to collaborate in this area is ages old. Typically the transmission of the PO and the acknowledgement from the supplier are the key elements. Email, fax and paper-based operations are the lowest common denominator for many organizations, and moving toward electronic systems is often met with resistance. The more advanced offering that supports collaborative replenishment involves real-time communication of replenishment needs based on the supplier’s order quantity capabilities, followed by a timely acknowledgement that includes any adjustments and later provides an advanced ship notification which represents the shipment(s) that will arrive at your doorstep.

One important factor in acceptance of the meaningful collaborative supply chain is that the relevant, available information is accessible to the appropriate parties involved.

As an example, sending a supplier your sales forecast to a production scheduler via email is a positive step toward collaboration.

However, making that forecast available on a single platform that can be viewed by the supplier’s finance group, sales group, distribution center operations, and transportation providers ensures that they’re all referencing the same version and are planning or operating based on more than delayed or distilled information.

This type of open visibility and collaboration with the right channels is a tricky balance, but the downside of delayed point-to-point communications and related inaccuracies makes the more thoughtful balance worthwhile.

When opening up visibility to your suppliers and leveraging trading partners’ capabilities, there are also risks. These key risk factors include:

• Security of Information – Opening up to suppliers and logistics partners relies on IT systems that provide for data security. In addition, agreements to recognize the data as proprietary for parties involved in the collaborative process should be evaluated.
• Stability and Data Availability – Once the supply chain evolves into the collaborative model, reverting back to manual methods in the event of system downtime could be a considerable disruption. Ensuring system uptime and redundancy of processes is a must.
• Single Version of the Truth – Consolidating all of the elements of the collaborative relationship in a synchronized manner ensures suppliers and logistics partners are reading from the same sheet of music. The flip side of this in terms of multiple point-to-point communications can lead to chaos.

We’re interested in knowing your thoughts on these risks and benefits, as well as what you might be doing to further the collaborative supply chain. Looking forward to your input and comments.

- Matt

Photo credit: Monica Liu