The Supply Chain Information Technology blog

Earlier in the year we published our list of the “Top 11 Priorities for Supply Chain Information Technology in 2011.” Now I’d like to look back on a few of them and see how things are tracking. While I’ve only focused on a few in this blog that have recently been impacting my daily life, you can read the entire top 11 here.

UPDATES

Priority #1 - Make some SCIT investments now. The halt in purchasing new systems or upgrades has generated a backlog that will cause bottlenecks in the future. Don’t wait until the masses make their decisions to invest.

UPDATE: Many of you have taken action to make this a top priority. From what we are seeing, companies are kicking off new projects or are already in full swing – SCIT vendors are also seeing very high levels of activity. If you haven’t already started, time is getting short and it may be too late for this calendar year. If you haven’t gotten capital approved for 2011, now is the time to plan for 2012.

Priority #2 - Decide whether to replace or upgrade. Deferment has been a common tactic for making a decision on replacing or upgrading a system. Now is the time to understand the status of your current system(s) and make an educated decision before the purchase.

UDPATE: According to our contacts in the industry, this is taking up a lot of the bandwidth related to priority #1. Technology assessments and deployment planning projects will help you make the right call here.

Priority #4 - Establish the ‘Next Step’ in Your WMS Strategy. Evaluate your current situation relative to your original selection objectives and develop a plan for the ‘Next Steps’ to drive further efficiencies. Conduct an operations and technology audit and identify the specific opportunities to leverage the benefits of the investments made to date.

UPDATE: Whether this priority is a strategy for the future or a tactic related to an upgrade/replacement decision that you are considering now, your “go-live” date should still be just another jumping off point for the next phase.

Priority #9 - Contend with the talent gap. The competition to hire and retain key positions will be fierce. As one means to deal with the talent gap, companies can look at their core competencies and determine the best areas for outsourcing.

UPDATE: I wish this wasn’t true, but it is. Yet, despite the overall disappointing employment numbers, experienced folks in Supply Chain Information Technology are in high demand. Outsourcing may still be your best bet to help bridge the talent gap, but the best resources are seeing higher and higher utilization.

Priority #11 - Close the open checkbook. SCIT projects have been fertile grounds for time and expense vendor contracts. Now is the time to establish stronger vendor-client relationships, and focus on the terms and specifics of the contract.

UDPATE: This is as true now as it was earlier in the year, but it’s becoming more of a challenge due to Priority #9 above.

I’d really like to hear your perspective on these or your other priorities.

-- David Meyers

Other Resources:

Top 11 Priorities for Supply Chain IT in 2011

Top 11 for Profitable Growth in 2011

How Are Your Top Priorities for 2011 Moving? Global Supply Chain Firm Releases Mid-Year Analysis

 

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Tags: top 11, scit, wms

I recently read an article in Logistics Management Magazine about Bridging the LTL Relationship Gap. One of the interesting perspectives in this article was to put the LTL relationship under the prism of the widely taught model of human relationships proposed by Abraham Maslow in a 1934 article, A Theory of Human Motivation. His familiar model is shown here:

Physiological Needs: air, food, drink, shelter, warmth, etc.
Safety Needs: security, order, law, limits, stability, etc.
Social Needs: work group, family, relationships, etc.
Esteem Needs: confidence, achievement, respect by others, etc.
Self-Actualization Needs: realizing potential, self-fulfillment, seeking growth and peak performance.

The analogy in Logistics Management was this:

“Based on an adaptation of Maslow’s Hierarchy of Needs, we have to remember that whatever the party’s intent to create a meaningful relationship, the physiological and safety needs of the other party must first be satisfied. Conversely, if a company or individual is struggling to survive, it will be preoccupied with preservation and will not be able to consider the possibility of relationship development, no less an enhancement.

Given the financial challenges facing many companies today, it’s quite understandable that those that are fighting for their very survival will be looking for an opportunity for profitability and not a robust relationship initiative. Yet, without trust, strong communications, and patience, the longevity of maintaining a business relationship is likely to be tenuous at best.”

I thought this was great viewpoint, and it reminded me of Jim Tompkins’ model of the Six Levels of Supply Chain Excellence and how it also relates to Maslow:


Level I, Business as Usual: Working hard to instill best practices in individual departments within your link.

These are the Physiological components of your supply chain’s motivation. Basic questions – is there a roof to keep my inventory dry, is there proper ventilation, and are there “facilities” for my people to perform the very basic of human needs – are answered.

Level II, Link Excellence: Looking within your link for opportunities to remove boundaries between departments and pursue continuous improvements.

These are the Safety components of your supply chain, such as security, order (order management, inventory management, warehouse management), and stability (ensuring that your processes and technology are stable) and determining if they are the best they can be within the domain of a single link of the supply chain.

Level III, Visibility: Turning the lights on outside your organization to see the information that needs to be shared with other members of your supply chain, revealing what is and isn't working.

This is where we are talking about supply chain visibility, information technology and best practices. Looking at Maslow’s Social level, you are now sharing information in real time and extending your field of views to links that are not yours, but that are attached to your own link. Think of it as extending your family and your relationships.

Level IV, Collaboration: Working with other suppliers, vendors and customers to maximize customer satisfaction and drive out costs throughout the chain.

These are the Esteem needs of the supply chain that take the Social needs to the next level. Not only are you sharing information, but you are acting in a truly collaborative manner. This is demonstrated by implementing processes and technology such as Customer and Supplier Relationship Management tools.

Level V, Synthesis: Synchronizing new ways of thinking and strategies to provide even greater cost reduction and enhanced customer satisfaction.

This is the Self-Actualization needs of your supply chain, and continuous improvement is the evidence of success here. You are now looking to optimize your link as well as your trading partners’ links – sharing experiences, technology, best practices, and investing in each other.

Level VI, Velocity: Reducing the lead-time to incorporate continuous improvements throughout the supply chain.

Although Maslow does not have a level of need that is a one-for-one match with the supply chain analogy here, what we can do is increase our speed-to-market for our continuous improvement efforts.

No matter where you are, either in Maslow’s model, or the Tompkins model, you cannot go to the next level until the needs of the previous level have been satisfied.

-- David   E-mail This | Tweet This | Share on LinkedIn

Tags: supply chain, technology, supply chain excellence

When we started this blog one year ago (read inaugural post) our mission was "To inform, provoke & discuss (not necessarily in that order)".

Much has happened inside and outside of Tompkins, but our credo remains the same. And thanks to the joint efforts of all of our blog contributors, we have honored our objectives.

So I would like to continue along the path of provoking and, as always, welcome your discussion.

Is Your Software Really a “Solution” or Is It just a “Tool”?

The chairman of Black & Decker provided some food for thought when he said, "Customers do not want a 3-inch drill; they want a 3-inch hole."

Throughout our many years of using and implementing a wide range of supply chain IT systems, we have heard these systems referred to with euphemisms such as “tools”, “optimizers,” “integrated suites” (which sounds a little better than “a small set of separate rooms”), and more recently, as the overused buzzword “solutions.”

Although some applications – when properly selected, well designed, thoroughly tested, properly integrated, and completely understood by the business users – may actually be “solutions,” I think we may need to throw a red flag when this term is used too loosely.

It may sound hip and trendy to say things like “Our solution leverages blah-blah architecture on so-and-so platform to enable such-and-such, and will deliver competitive advantage and ROI.”

I know you’ve heard this pitch from more than one software vendor before. And whenever I hear this line, I tend to reach for my wallet to make sure that I still have it and that it is no thinner than it was before.

Unless you know that the ROI is guaranteed (Read this article to see if you are getting what you paid for), all you really have is the 3-inch drill (“tool”) and not the 3-inch hole (“solution”).

What’s worse, rather than the euphemisms mentioned above, you may actually own “vaporware,” “shelfware,” or just a raggedy old (insert your favorite expletive here) application, when what you really need is for the software to provide a strong results for your business.

So, how would you describe your supply chain IT software? Do you have a “tool” or a “solution”?


-- David

 

 Photo Credit: cote

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Tags: software, supply chain technology, technology

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Tags: supply chain, logistics scit

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Tags: technology, implementation, business culture

In some recent discussions with a few of my colleagues, we’ve been debating the relative importance of people, processes, and technology that support operational excellence, as well as what ties them together.

Thinking about my recent blog post on “Bubba-proofing” a supply chain execution system helped me frame up my position on the topic.

Recall that you can’t realistically idiot-proof a supply chain execution system or any system, but you must design it so that it prevents Bubba from doing something that may have catastrophic effects downstream.

Stated in a more positive and holistic sense: You have to design business processes that best deliver operational excellence, configure and integrate the systems to support those processes, and then train Bubba on how to use the system and follow the processes correctly.

When all three of these legs - people, process, and technology - are in balance, you have provided the basis for a stable platform for your business.

When any one of these three legs is cut short, the other two must compensate for the imbalance.

When two of these legs are lagging sufficient length, it is even more difficult to balance your business platform.

Ideally, you have enough length on all three legs – or room to expand (think tripod) – so that you will be able to adjust to the following types of fluctuations and maintain your stability:

• Variability in end-user understanding and comprehension;
  
• A wide variety of exception conditions; and  
  
• Spikes in business volume, etc.

Your ability to expand and adjust these legs will also keep you from blowing your budget and help you maintain world-class customer service.

One could argue this analogy and insist that one leg carries more weight than others (i.e., all legs are not created equal), but I’ll leave that deliberation for another time.

I will also postpone the debate on whether the people-process-technology picture is best demonstrated with a pyramid, a Venn diagram, or a three-dimensional figure.

For now, I think is the key question is: “What ties these three elements together?” To answer this question, take a look at the image of the stool and ask yourself, “what are the rungs that connect the legs?”

As you see in the image, I’d like to propose the following:

·        The rungs that connect people and process are training and operational best practices;

·        The rungs that connect process and technology are operational best practices and configuration/integration; and

·        The rungs that connect technology and people are configuration/integration and training.

Perhaps you have other thoughts on the rungs that support your business platform.

How do you stabilize your stool so that it doesn’t wobble or falter under pressure? What are your philosophies for connecting your people, processes and supply chain technology?

 

--David Meyers

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Tags: solutions, stability

I read that the recent market plunge of nearly 1,000 points was due to what we would call in the IT world, "user error;" in other words, an error that occurs someplace between the keyboard and the chair.

It’s been reported that a trader entered a "b" for billion instead of an "m" for million in a transaction that likely involved a Dow component, which in turn triggered the plunge.

That made me think about a project I’m currently working on and some of the discussions that we’ve been having. As I mentioned in a previous post about this project, we are upgrading an old warehouse management system (WMS) to a newer version. More accurately, we are replacing the old WMS with a new WMS since the two versions have so little in common; the systems are so different that it almost feels like they are from a completely different software vendor (which they’re not).

So during "future state" design discussions for projects such as this one, one of the team members – sometimes all of them – will say, "what if ‘Bubba’ presses Enter before he remembers to Tab over to the reason code field and plug in the right value? The old version wouldn’t let "Bubba" do that!"

This is the point where we imagine – and try to proactively avert– many of these Armageddon-type scenarios that could possibly cause the walls of the DC fall in and kill us all. (Okay, maybe that’s a small exaggeration.)

As this room is filled with a bunch of smart folks, we know that we wouldn’t do such a stupid thing, but Bubba would. So we are all paying very close attention to the options where we can limit the likely Bubba-caused disasters through proper change control and training, and those options that could really trigger some major systems’ problems and require extreme human intervention to reconcile. The latter really requires us to make the option Bubba-proof.

The bottom line is that you can never make a system idiot proof. As soon as you do, up will walk an even better idiot and prove you wrong. But what we are doing is walking the fine line in trying to Bubba-proof the system as much as possible while making sure that we capture all the key components to affect proper change control.

What has Bubba done to your system lately and what did you do about it?

--David

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Tags: wms

A few posts back, I asked, "Where is that last dime?"

Now, as I’m starting a new WMS upgrade / implementation project, the question is even more timely and critical to the success of this particular project.

So here’s the background:

This company has been using one of the more well-known "Best of Breed" (or BoB) SCM software packages (see Tom’s recent post on ERP vs. BoB) since the early 2000s.

The package has been highly modified over the past several years to accommodate incremental improvements in business processes. During this time, the company also added many reports to assist in four wall DC visibility.

Fortunately, since the original implementation, the software supplier has taken great strides in increasing the core functionality of its WMS so that some (hopefully many) of the enhancements and additional reports may be able to be retired.

With that said, why is it such a challenge to continue to find other ways to lower the Total Cost of Ownership (TCO)?

Also, did I mention that this company outsources its fulfillment to a logistics service provider?

To begin with, these guys are well known for operating on very slim margins. And, they are already using engineered labor standards and performance incentives, which drive costs down and increase service levels. Not a very target-rich environment – all of the low hanging fruit has already been picked.

Here is the plan:

This is not a "find and replace" type WMS upgrade. There is very heavy integration with other systems (ERP, TMS, LMS) and homegrown reporting tools. So I intend to carefully weigh the integration alternatives, which include:

• Decoupling external systems – What can be brought into the core application and what additional integration (or re-integration) may be eliminated, along with the staff required to support those external solutions?
• Automation of reports, queries, and other output files – What business critical reports require human intervention or manipulation and can they be automated?
• New technology integration – Are there opportunities where the integration of new supply chain information technologies (e.g., voice picking, etc.) can provide a payback with either improved service level, inventory accuracy, or reduction in labor cost?
• Host order profile – Are there opportunities to work with customers to change order line quantities prior to download to the WMS that could result in more efficient picking (e.g., round up/round down to layer quantities to reduce less efficient case picking)?

Where else can I look? I’d like to know.

-- David Meyers

 

Photo credit: wildxplorer

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Tags: wms, total cost of ownership

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

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Tags: budgets, competitive advantage

On my way into the office this morning, I stopped at my local convenience store for a cup of coffee. During the past year, I stopped going to the "premium" coffee shops as a way to save money. Charging more than $2 for coffee should be a crime anyway. And I’m not talking about buying the sissy coffee type either; I’m talking just plain old coffee – black.

I’ve heard people say, "You could save a lot more money by making it yourself at home." It’s probably true, but that is beside the point. Buying it at the store is convenient (hence the term convenience store) and fast, and they actually have pretty darn good coffee.

Anyway, I know how much a 16 oz. cup costs at this place since I buy it there almost every day. So, this morning I grabbed the exact amount – 65 cents – from my change jar on the way out the door. I made the pit stop, went in and poured the coffee, and while I was standing in line, I reached into my pocket – two quarters, one nickel, and no dime – no dime in any pocket. So I put the change back in my pocket and pulled out a buck.

On the drive in, as I sipped my coffee, I thought that my premium coffee "boycott" and needing 10 cents more was very analogous to what has happened in most businesses and distribution operations over the past year or so.

Organizations have been forced to look at their budgets, cut out the premium stuff (as I did with my coffee), reduce waste, and trim costs wherever they can. And even now, they are still trying to find that last "10 cents."

So, how does that relate to Supply Chain Information Technology?

When supply chain systems are not configured or technologies are not used to their full potential, supply chain costs may remain inflated and service levels can be more difficult and costly to achieve.

You need to do an analysis of your organization's supply chain technologies to uncover cost reduction opportunities – both in terms of the overall supply chain performance as well as in technologies’ administrative costs.

Here are some questions you can ask of your own organization:

- How can existing systems’ functionality be better used to streamline operations?

- What performance metrics and tools best support the overall corporate objectives at the appropriate management levels for them to make better decisions?

- Are there practical opportunities to improve trading partner integration for timeliness and accuracy, thereby decreasing costs?

- Do the technologies effectively support corporate objectives for inventory levels?

- Are there opportunities to reduce technology administrative costs and overhead costs?

Today's business environment demands that companies optimize their technology investments and examine every opportunity to improve operating expenses while sustaining customer service.

You need to dig to find the hidden costs often buried in current systems’ configuration and processes.

Where is your dime coming from?

David Meyers

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Tags: budget, costs