Jan 15

Business Interruption Insurance and the Supply Chain

There has been a lot written about planning for supply chain risk and resilient supply chains. Insurers looking to cut claim costs on business interruption insurance now realize planning for supply chain risk and resilience cut significantly cut claim costs in the advent of business interruption.  That is, if the company has such a plan.

If you work in a large firm, say over $500 million in revenue, it likely lead to your insurance department and possible top management asking already about what plans are in place in the case of disruption.

For smaller businesses, whom may never had put together a supply chain risk and resilient planning, this may be start to be a new requirement.

Looking at this from another angle, where management may not wanted to spend money on risk planning and resilient planning, now it has a financial incentive.  It could be a tangible cost which can be reduced by appropriate planning.  By showing better sustainability of the organization, business interruption insurance costs saves can occur.

 

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Jan 04

Cybersecurity and Sustainability

Ted Kopel, formerly of Nightline, recently released book entitled: Lights Out: A Cyberattack, A Nation Unprepared, Surviving the Aftermath describes enemies of the country taking out the US electric power system by hacking their computers. He envisions months of no power, with extreme food shortages and other major consequences.

Looking at this from a supply chain / logistics perspective the potential for cyber attack seems credible, but the slow response does not.  Supply chain risks is something a lot has been written about. Certainly, loss of data and loss of computer services is one of those risks. In preparing for this back up and restart procedures must be part of the planning process before any potential bad thing happens.

I have no inside information, but I am sure electric power companies have thought about this, and have back up and restart procedures in place. The US electric grid is vast and complex, just like many supply chains. That means there are alternatives available and alternate processes, and no one attack is likely to close down everything.

So planning for loss of IT services should be part of your planning in your supply chain. There will be some time frame involved for restart, an priorities are best established in advance, so you don’t have to start from scratch in a chaotic situation.  Your organization cannot probably exist through a long term shut down. It is part of sustainability planning to be aware of this situation.

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Dec 09

Millennials

I been really impressed by the number of newspaper and internet editors bashing millennials since the incident at the University of Missouri, where a football boycott lead to the resignation of the University President. Article after article appeared complaining about how millennials are cuddled by helicopter parents and how they are not prepared for the world.

It causes me to smile inside as being a baby boomer, myself, in the Vietnam, Civil Rights era many in the older generation at that time had some choice words for us. Now some baby boomers having not learned the lesson and are repeating the error.

As leaders in the supply chain, no matter what your title, you can not be caught in such negative thinking. If your employee shows promise but might be deficit in a particular area, invest your time in the appropriate training and mentoring. Older members of the work force who will soon be leaving it, are responsible for passing on the positive aspects of the organizations culture. It is a legacy you can leave.

Two short stories to end this post. Jeff Silver of Coyette Logistics which hires a lot of people out of college has said he is impressed with the quality of people he is getting.

One of the criticism of millennials is their short attention span and lack of oral communication skills. Kevin Wilson, the coach of Indiana University’s football team says he had train his players to talk because communication is essential to be successful in a team sport.  And as they have learned these skills, he talks how enjoyable it is to coach them. So being supportive can make your job more satisfying and successful.

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Nov 16

The Case of the Missing Lean

Why is  “lean” missing.  “Lean” like the goal to minimize inventories, removal of inventory waste. Why are the 2015 statistics for  inventories up in an environment where everyone is told to minimize inventory.  Why is the “lean” missing?

Who brought this case to my attention?  Some background first: I attended a Chicago Roundtable CSCMP event (Council of Supply Chain Management Professionals) meeting on Thursday November 12, featuring the well respected author, Rosalyn Wilson,  who is the lead author for the annual State of Logistics Report. She reported that so far in 2015 inventories are growing, which inversely effects economic growth.  Mike Regan, the  Chief of Relational Development at Tranzact, and leading supply chain authority asked Ms. Wilson (and I am paraphrasing here)  ” In a world where is lean inventory principles are drummed into everybody’s heads, how could inventory grow as greatly as it has?”  A deep mystery, I present you the case of the missing “lean”.

Rosalyn Wilson responded and I will add additional comments also.

  1. Retailers are concerned about the inventory on the shelves but demand suppliers keep inventory at the supplier’s distribution center and adsorb the  cost until they, the retailer, are ready for it. So holistically, inventories in the system are going up. They remain hidden somewhat cause retailer does not have the direct cost until delivery.  While it does make sense to keep inventories as far back as possible to lower costs in the supply chain process. I can illustrate that by saying engine parts are lower inventory cost than the assembled engine. So why are supplier inventories going up?
  2. Rosalyn Wilson also talked about supply chain demand software being linear in a non-linear world. Is it reasonable for software to predict a scandal causing Volkswagen would sharply lower demand or predict a terrorist attack in Paris? At the end of the day, software is written by humans and is designed to cover most likely scenarios.  People need to be involved in the demand planning no matter what the software does. It is sometimes too easy to let the software do its job, particularly when it is “normal” times it does a far superior job of inventory control. But humans do need to be involved when expected dramatic changes occur.
  3. I will add there are many firms, maybe a majority who have manual processes for demand many times ia let’s continue to do what we did yesterday (which worked out then).  Lean process have made major penetration in many manufacturing processes, but not all by long shot. The smaller the organization, the less likely they can afford sophistication in demand planning. But yes managers need to use their intelligence in manual processes also.

One of the best practices I have seen is for companies to have a pre-assigned committee of managers from various parts of the business, be available for respond when the environment changes and the software can not be counted on for good demand predictions.  Their experience particularly working through a number of changed environment will lead the firm to good decisions, and there will be no mystery about how to change when the demand demands it.

 

 

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Nov 09

Staying current

Small and medium businesses  try to exist in world where many of their customers and suppliers are big time buyers and suppliers with their sophisticated requirements. The supply chain / logistics  managers in these firms can best benefit their firm by taking a leadership role meeting the supply requirements of customers and suppliers. Figuring out where to devote the limited resources of the firm will be a major contribution to the organization remaining sustainable and viable.

This blog was inspired recent presentation  by Dana Stiffler of Gartner to the Loyola Supply Chain Summit. Gartner is leading technology research firm which has in the past decade made a name for itself in the supply chain field as source of research on industry trends and performance. Her talk specifically focused on obtaining supply chain talent in the future but its implications were to the larger pictures of sustainability and viability.

Supply chain / logistics managers in small to medium size companies must deal with a changing environment with limited resources and limited time. Here are some ways to maximize those limited resources

  • Connect with the nearest college or university institution which has supply chain courses. They will likely have programs which will highlight current thinking on where the supply chain is going, and provide direction for your leadership. And importantly that connection will help find students who can take the lower level supply chain managerial jobs when they open and provide the future for your firm. Because of the growing field of supply chain and its need for talent, more and more universities and colleges are developing expertise in this field.
  • Connect with professional organizations in supply chain. These will also be a source of current information for your direction and provide important networking contacts both for your firm and yourself.
  • Lastly, we live in a social media world. Find the sites that will provide useful information to you. If you participate in these sites, additional value will be received.

 

 

 

 

 

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Oct 22

Telling the story

I attended the Loyola Supply Chain Summit in Chicago on October 20, and in listening to the speakers at the event, it has  inspired this and the next blog post. If there was over-riding theme to the conference, it was sustainable supply chains can be economically viable.

Francesca Debase, Chief Supply Chain and Sustainability Officer for McDonald’s closed the conference with her presentation entitled: “How not to be the Falling Tree in the Forest”. Her message was simple, if the supply chain has a major success be sure to tell the story and not be like the fallen tree in a forest which nobody hears when it falls.

Her story has much to do with sustainability but also equally important the need for supply chain visibility. Earlier in her career, she was based in Europe and arrived at work one day with Greenpeace demonstrators in chicken outfits protesting the defoliation of the Amazon, Forests were being cut down to be used to raise soy beans to feed chickens whose food was used in McNuggets. Though she do not say this in the speech, I read this as being a  total surprise to the organization as it did not have visibility in the supply chain this many layers down.

It is hard to know what your supplier suppliers are doing, unless you make a concerted effort to dig down. The demonstrations caused McDonald’s to look. Ultimately it joined with its suppliers including Cargill, to create a sustainable soy bean council which put a  moratorium on the use of defoliate land in the Amazon. It was implied in the speech this will be on going. Here is Greenpeace’s web page from that 2006 period: http://www.greenpeace.org/international/en/news/features/McVictory-200706/

Her presentation’s point was that it was enough to do the right thing or be successful. It is important to get the word out, not just to your people, your company officers but to others  such as your customers. It is important to tell your story to be successful in the long run.

Just a further comment on this process. Yes, McDonald’s did not want to the PR embarrassment and potential lost sales for defoliating the Amazon. It what the cynics will view the motivation for their actions. And certainly that was an element.  My take on this is, that individual’s values do make a difference. Hollywood’s films make all business people greedy misers, but your values can make a difference. Finding ways to economically sustainable while maintaining those important values very much rests on the individuals in the corporations to make that difference.

 

 

 

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Oct 09

Software Sales

Efficient and productive are not terms utilized with software implementations. And there are so many reasons why.

Supply Chain Managers trying to resolve the problems of the day have to turn that aside for  short while to contemplate the future so that in that future, a better job can be done, Among the goals to explore to see the software lower cost, making the organization more efficient, and customer friendly. This is hard to do, with emails, texts, and calls all coming everyday, all the time.

Sometimes deciding on an advance software is part finding a better way. Software sales people tell their managers or more likely the top manager of the company  their company’s software will make everything better.  When top managers hear these pitches, it would be wise right from the beginning that involve appropriate staff people, to help guide the decision process. Lower level managers, once they start considering a process change, need to get top management involved early on.

As a practical matter, no software is going to be introduced in the company without top management approval. That approval includes the hard part of actually authorizing the payment of hard earned cash.  Potential savings may never show up. Hours will need to be devoted to implementing the software. Unexpected and sometimes large costs will show up. These risks should be weighed.

And don’t forget the field, the potential actual users of the software.  Without their support, the software will not work as planned and potential savings will never show, without the field support.

Here are somethings that can help.

For potential buyers of software.

  1. Figure out what the real need is before seeing an sales people
  2. Figure out a process to accomplish this at least in basic way before seeing sales people.
  3. Figure out the potential solution will look to top management
  4. Figure out how the potential solution will look to actual users (amazingly this step seems to be skipped most often). Include them in the evaluation process.
  5. Study the software out there and then brace yourself for the sales people.

For sellers of software.

  1. Know the sweet spot of your software and what it can do. Brush up on actual user experiences.
  2. Dog and pony shows done on PowerPoint probably need to be done, but do not stop there. Learn what the customer is trying to accomplish. It is easy to talk a good game, much harder to really understand the customers needs and how it relates to the software the sales people are selling.
  3. If your software might lead to a solution to the customers problem, only them make the sales pitch. Selling software truly is a business partnership and must be adaptable to foreseeable changes in the environment to be of value.
  4. Help supply chain managers ask the questions, they need to.
  5. Once the sales is made, be demanding on the implementation team to do the job right. Too often, once the sales is made, a software management decision takes the sales person off from the customer , but the sale is really isn’t done to a successful implementation is done. Nor can a sales person really do a good job on future sales unless that person has feel of how the software actually works.

As a buyer of software, in analyzing choices double the implementation time said by the sales people, and double the payback period of the software to be realistic from the sales presentation.

There are many disappointing software startups in companies. You can minimize that chance of failure, but doing the steps above.

 

 

 

 

 

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Sep 25

Carrier sales personnel, the value proposition

Recently, walking out to his car, after work, a transportation management person of a large company with many shipments, was stopped by a carrier sales person, asking who was the transportation management of the company. “Gosh, I really don’t know” was the response given to the sales rep.  Yes, this really happened this year.

Ironically, for the sales person, this was a plus, because he met his quota contacting new customers for the day, I am sure.  But this approach certainly is not a value added to the carrier paying the sales person salary nor was even remote value to the potential customer.

A fairly significant amount of the times sales personnel contacted me over the years, they could not answer these basic questions: What does your carrier do well? What is your firm’s strength? Instead they answered we can do everything. Again, really. Most firms already have carriers or brokers who can do everything, why add one more? And every vendor you add, adds cost to the firm.

I might be more inclined to listen when a carriers sales person says, among the vendors strengths, is we have lots of trucks available in the lane serving your origin X. That person took the time to look at the company’s website and made an educated guess what my shipment needs are. A shipper’s employee chain goal is to meet the company’s objectives. Maybe there issues on a particular lane of traffic. If somebody contacts me and says they have a strength in area where my firm has a weakness, I will certainly listen.

Yes, you can complain about salesman who use the bad “everything” word. However, more than likely its his firm’s upper management not doing their job to give the sales person the tools to sell, including focusing on the carrier’s or broker’s strengths and where it is interested in growing.

The take away from this, that carrier sales people and mostly importantly its sales management will have much more success by focusing how they can provide value for the potential customer. And on the other side of the coin, supplier transportation management should be responsive to those sales who take the time to do their homework on the company they are employed with.

 

 

 

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Sep 13

Coming in from the cold

Quite often a person is transferred into the Supply Chain department with no previous experience in the field. What is important in training somebody who comes into the cold. My answer would be the routine but also the holistic view.

The routine because that what a lot of your time will be sent on. Using the computer system, preparing reports, handling simple and basic problems likely to come up is needed for a person to be successful in the field.

But what is unique about the field is the need for a holistic view.  To be successful in this field, your actions must be in tune with making the organization successful. A plant production might scheduled around its shipping. A large customer may have an unique service need. Inbound materials need to be there when needed and not there addIMG inventory cost when it is not needed. It is important to understand the culture of the organization to be successful. Anybody in the organization will spend a large portion of their working with others.  So it is more than getting that truck at the lowest cost. Your career will not be successful if you have the lowest transportation costs, but the company cannot serve its business.

The holistic concept is something important in the field and may not have been important where the person came from, so that is why it must be emphasized and taught.

 

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Aug 30

A Kind Word about Ego in the Supply Chain

Perhaps it may be time to write some positive words about your personal ego in the supply chain. I have watched Donald Trump attract a lot of media attention by being flamboyant and telling off everyone who is not agreement with him. It seems to work as a strategy to attract media attention, but it is just the opposite what your ego should be like as a supply chain leader.

Your job as a supply chain leader (and you can be a leader even in the bottom most rung) is to get everyone to work together to complete the tasks that need to be done to make the organizations successful. It may mean working with the company CEO. I may mean working with the truck driver who is hauling your product. It may mean working with people at the facility shipping the product. It may mean your boss. A particularly poor strategy to do this is telling people off if you want them to work together.

So where does that leave your ego. There are lot of non-ego thoughts in getting the supply chain to work together, but let us focus on ego for the moment. Ego is expressed in confidence in yourself. But it is a confidence that open and empowering to others, not a confidence that says I’m good and you’re not.

The opposite of confidence is running scared and panicked. Just as people can sense the strength of confidence, they will turn off people who they sense only care for own personal fears. If you are confident, they can use your confidence to gain confidence in themselves to complete the tasks at hand.

So how do you reach a place where your confidence is empowering to the supply chain and those around it? Learning is the place to start. If you come into a situation knowledgeable, it will give you the ability to be confident. Listening is the other key. Listening to the issues and knowledge of others will allow you to know what is going and having a sense of situation yourself. Some of this might be called emotional intelligence.

Confidence also means you will survive your mistakes and those from others. There will be focus on learning from them, rather than a search for blame.

The supply change is a process that is in constant change. Change management requires confident leaders, ready to learn about change, learning how those changes affect others in organization. Frankly, you need a confident ego to ride out the waves not only for yourself but for others

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