Nov 15

Importance of people in warehousing

Earlier this week, I did a tour of the Mary Kay warehouse serving the Chicago and Midwest region.

The warehouse uses a pick to light process. There are lots of boxes with orders in them going down the line.  Lackadaisical workers could easily mess this up, miss a box or not put the correct products in.   However Mary Kay has a seasoned staff in the warehouse with most workers who are permanent employees there having more than 5 years experience.  Employees are rotated to various parts of the line which I think helps employees stay focus on what they are doing. Company culture is a strong support of their employees. It shows. My guess is that while there warehouse staff is probably more expensive than average with their longevity, but getting the orders out correctly is what makes this worthwhile economically.

There are limits to automation. Their sku’s are changing so picking equipment would not work as product shapes and sizes are constantly changing.   Sku’s are limited to about 1000 to keep the current process in shape.

I suspect that they will look at what Staples has done with various box sizes to improve transportation utilization. Right now, from what I can tell, boxes are limited to three sizes.

 

 

 

 

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Nov 12

50 years of supply chain history

Council of Supply Chain Management Professionals (CSCMP) is 50 years old this year.  The Supply Chain Digest put out a short 5 minute video to list the changes in the field as well as the organization. It was shown last month at the CSCMP annual convention. You can see it here at the 3 minute 40 second mark of the weekly Supply Digest video for CSCMP.  Dan Gilmore made the video with Jim Stevens narrating the video.

http://bit.ly/HPY1tt

It is a testament to the speed of change on how much the field has changed.  In the western world not much changed in history from the Roman Empire and its vast network of roads to the Age of Enlightenment when sailing vessels revolutionized commerce. But with computers changing our ability to manipulate data, change has moved to the fast track. Data visibility of transportation, inventory and management costs have given us new muscle to improve the process. How will this process mature over the years? How has this affected your career?

Supply Chain personnel love to organize and plan, but how we do that has greatly changed and the changes are still being understood and improved.  Keeping up with your education in the field will be a key for growth.

 

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Oct 31

US-China Transportation Infrasturture

10/31/2013

Yesterday I attended a luncheon sponsored by The Chicago Council of Global Affairs on US-China Transportation Infrastructure.  There are annual meetings between China and US on transportation infrastructure and this year’s was held in Chicago during a global trade seminar hosted by the Chicago Council. Among the attendees were Gao Hongfeng, Vice Minister for the Ministry of Transport for the People’s Republic of China and John D Porcari, United States Deputy of Transportation.  My thoughts and comments on the event follow.

All the speakers and they had to do this, had their talking points, including Chicago’s Mayor Rahm Emanuel who spoke at the beginning of the event. There is something to be learned from these talking points and I will go over that shortly, but I suspect the real value of the conference was obscured by exclusively going over these promotional topics by the speakers. The speakers missed an opportunity to tell what is value of these conferences and why they should occur.  Exporting and importing is very detailed field with detailed problems. Both US and China had appropriately a number of bureaucrats from various departments at this meeting who needed to deal with the issues and bottlenecks of trade. The man sitting next to me who was an environmental consultant and spoke Mandarin Chinese said at to me, you need face time with Chinese on a regular basis if you want to have success dealing with them. The human interaction and the chance to work on these individual details is the real value in the conference.

Gao Hongfeng in his speech and response to questions talked about the many infrastructure accomplishments of the Chinese government. John Porcari did the same for the US government.  Implied but left unsaid are the challenges both countries face. In China, a continuing growing economy means transportation infrastructure has to be created. The US infrastructure is old, badly needs updating. The US federal government for the first time is trying to establish a national freight policy. See this link: http://bit.ly/1cpmOy3

One important feature of transportation planning is what I would call last mile planning.  The big national governments can plan for the longer distance connections. But city, province, state and regional bodies are needed to do a good job planning for the local parts of the infrastructure. This is true even in China, where central planning is part of the DNA of the government.  Because of the expense, central governments need to subsidize significantly this investment for the general public good even on the local level.

Gao Hongfeng spoke in Chinese. The young lady who translated his comments did an excellent job with a challenging technical vocabulary. The Chinese speaking person next to me confirmed my thoughts on the success of the translation. Gao Hongfeng is an interesting and impressive individual with a lot of challenges of his plate. His education is listed as being from the Inner Mongolia Hydro Electric Power College and distance learning of the Central Party School. It is a comment on our changing times that distance learning is now accepted as normal and proper.

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Oct 23

Importance of learning culture

Yesterday I met a representative of a tool and engineering company.  In talking to her, I was interested to learn that the company’s policy was that it would support all outside education of there regular employees regardless of a direct line benefit to the company. The idea behind that was that employees needed to have a culture of learning to serve their customers.

If you are in the supply chain and logistics field, change is constantly happening.  Not only are the markets for your firm constantly changing , suppliers are having issues, transportation options are slowing up, speeding up or going up in price. The best practices in the field are constantly changing.  Unless one is willing to learn, being able to change as your business environment changes is not going to happen.

For the individual, this is a challenge, because the day to day job pressures, usually means learning is on the off hours of the job. But if one makes learning an important career value it will happen.

 

 

 

 

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Oct 11

Omnichannel and Dominick’s

Two events yesterday drew my attention. I attended a program by the CSCMP Roundtable in Chicago at the Motorola Solutions Innovation Center where the topic was omnichannel order fulfillment. If you get a chance to visit the Innovation Center, take it, as it is quite worthwhile to see where technology is headed. Yesterday it was also announced that Safeway would close the Dominick’s grocery chain by early next year, which at one time was one of the big two grocery stores in the Chicagoland area.

To me, the Dominick’s failure spoke both of the importance of omnichannel and its limitations.

Ominchannel means there are many ways to reach a potential customer with such data to support it . From a supply chain point of view, multiple methods of purchase, be at the store, online, or some combination of two adds to its complexity.   Just one small example: one innovation discussed at the meeting yesterday was to have just a few floor samples for women’s clothes but have the customer request her size as she goes to the dressing room and it would be presented to her right there. This will affect how things are stored and shipped to the store.

To learn the value of its massive data, Office Depot hired mathematicians to crunch through the data. Learning what is there will affect how they organize the process in the future.

Dominick’s is like a lot of grocery stores had a saving card, called Fresh Values, which they can see who bought want and where. The information Dominick’s sent me through emails and the website rarely corresponded to anything I actually bought from them. If they they used that data well, would it encouraged others and myself to buy at Dominick’s?  This may have been a missed opportunity.

But all the data in the world, probably would not have made the Dominick’s chain profitable as it once was. Dominick’s was a middle market store, not the highest cost or the lowest cost, or highest quality or lowest quality. Walmart, Costco was one side, and Whole Foods was on the other.  To survive in that environment, to get the customer to come back, a company needs to reach that customer on an emotional level.   Only looking at the transactions with customer, which is all omnichannel can do, would not have been enough to save Dominick’s.   The store experience, the connection with the community which competitor Jewel does well, and employee responsiveness were crucial pieces of the puzzle not addressed well by Safeway,  the owner of Dominick’s.

 

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Sep 29

Changes in truck brokerage laws

Come October 1, 2013, there will be important changes when a shipper uses a broker. For reference see this DC Velocity article:

http://www.dcvelocity.com/articles/20130805-take-this-load-and-follow-the-rules/

Come October 1, carriers can not broker a load out a shipper has given to them. This is called double brokering and has been common. Interline shipments is still allowed.

When a shipper uses a broker, the bill of lading must list the actual carrier handling the freight. The broker or 3PL can be listed separately and notations that they are going to be paid.

Brokerage surety requirements will increase to $75,000 from $10,000. Some people believe this increase will knock out many smaller brokers. $10,000 is almost nothing in today’s dollars and I view the increase as appropriate.

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Sep 25

The uselessness of small data

For the last couple years, “big data” has been one of those next best thing buzz words of business. Its basic premise is now that we have oodles of data, lets figure out how to use to make the organization more effective.

Data can also be viewed though in a six sigma/lean format. The waste in data is a hindrance and a cost to effective management. So for fun, in this blog post we called that near useless data “small data”.  I am not writing about inaccurate data here although that is another waste of resources but rather about accurate or inaccurate data no longer needed.

For example, there was a large company on which had no way to eliminate its obsolete sku’s for its product file. Yes, it was physical possible but so many hoops and details needed to be done to eliminate the sku,  nobody bothered. There were the prime company objectives to be done that left little time to police the data.  There were products sitting in warehouses which were market obsolete, or had so few sales that it was not worthwhile to the organization. Time was spent looking at the data, inventory took up space, and resources for the firm was used for useless purposes.  Ultimately this problem was addressed by changing the entire accounting system in the organization.

All of us as individuals face this dilemma in determining who we thin out our email files.  Lots of data, much of it useless. Do we do it before the IT department forces out to weed out in a hurried basis?

The reality is that organizations and individuals are time stressed.  I advocate that organizations and its managers should set priorities for down or less stressful periods at least once on annual basis. Among those priorities should be review of its data to find the small data which takes up time and money. Removing the clutter, allows the organization and yourself to do more efficiently.

 

 

 

 

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Sep 12

Going against conventional wisdom

Today, I took a tour of the the Mi-Jack facilities in Homewood, IL where they make the gantry cranes which load and unload containers on to intermodal rail cars.

To be competitive the company needs to make a gantry crane relatively quickly for the railroad. But the parts and machines used in assembly take many months to produce. So the company has elected to go against the standard logistics principle of limited just in time inventory. It orders the required supplies and machinery based on its guess on business levels.  It would be impossible to meet customer demands given the long lead time if they did not do this. Importantly the price paid by the customers covers the cost of the inventory as a cost of doing business.

When you go against the textbook, there has to be a good business reason for it. It has to be feasible and profitable. That does not mean the conventional wisdom is wrong rather that is not all inclusive.

 

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Sep 04

Logistics of the Affordable Heath Care Act

After listening to Daren Whisman, Director of Financial Operations of Memorial Hermann, a health care organization in Texas, being interviewed on Supply Chain Brain at http://bit.ly/15u3kDL, it caused me to think about the supply chain and logistics affects of the Affordable Health Care Act called commonly Obamacare.

Lets start with supposition that medical and healthcare field is changing.   My premise is that it is unlikely no matter what happens that returning to the original process pre-Affordable Care act is likely, because it had become too costly. Affordable Care reflexed a strong emphasis  on new direction of health care to wellness.  One important avenue to reduce overall health costs, is to encourage people to live a healthier life style.

The supply chain and logistics implications is that healthcare services will less and less be centered on medical facilities such as hospitals and doctors offices to clinics, drug stores, and neighborhood cultural institutions. This will in turn mean more customers, more locations to deliver, more places to determine demand and supply. To those firms in the healthcare business it means a change in business and change in their logistics. Logistics service providers who may not have had to consider healthcare safety issues will now find themselves in this arena.

So as is almost any major change, logistics and supply chain will need to change with it.

 

 

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Aug 27

Dealing with a major retailer

Many smaller businesses have products they wish to sell to large retailers. There is a summary of Youtude video put out by Walmart in this article in Supply Chain Digest: http://www.scdigest.com/ontarget/13-08-21-3.php?cid=7335. (The Youtube reference: Walmart channel 8thandwalton: Walmart Senior Buyers on what makes a good supplier) With large retailers there are multiple bottom lines which decide if your products get on the shelves.

Bottom Line Number 1

The key issue purchasers ask is will this increase the sales of the store if we sell your product. Just changing sales from a displaced competitor with no net revenue gain is not enough  It is about them not you. That is bottom line number one, but not the only one.

Bottom Line Number 2

To make their supply chain efficient, safe and to avoid legal problems all large retailers have a large set of procedures the supplier must meet to be able to sell to them.  Lets use Walmart as an example but other large retailers could also be used as an example.

Walmart is legendary for setting requirements for their customers. It is important to realize that they do this so their processes are efficient. Importantly, they have a policy of helping suppliers meet their requirements. There are some large retailers whom this so not a policy and they do not help suppliers meet their requirements,  leaving the supplier to guess and muddle through hoping to meet requirements and oh yes, in the process fumbling along increasing costs beyond what is necessary.

Bottom Line Number 3

The supplier must meet Walmart’s delivery metrics.  In order not to be surprised with a bad report card, your firm should be collecting these metrics yourself. Failure to meet metrics will mean heavy fines and lost profits and eventually the supplier would lose the account.

What is true for Walmart is true for other large retailing chains including grocers.  South Loop Logistics can help your firm resolve these problems and making the processes of the supply chain efficient and replicable.

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