Jun 14

Marketing and the Supply Chain

Supply chain professionals have had their hands full of issues since March 2020 when Covid hit full force. Supply chain has dealt with among other things: market and transportation variability, shortage of capacity in both transportation and warehousing, unexpectedly high-rate variability. and just for fun some spectacular cost increases. Just some of the major issues Supply Chain has dealt with.

But feel empathy for the Marketing and pricing people in your organization who have the conflicting priorities of increasing business for the firm while making an increasing profit. Supply Chain issues have thrown a number of curve balls to their work. Periodicals focusing on the supply chain have been focused on the supply chain issues but I am not seeing much written on how this is affecting the rest of the organization, besides busting the CEO and CFO budgets for the year. But the supply chain bumpy ride also needs to be viewed holistically. Here we will look at one aspect of this, the marketing process dealing with the supply chain.

Customers want stable and low-cost pricing. While Supply Chain is not the only thing making this impossible it is a major contributing component to making prices are not stable nor low.

Marketing and pricing personnel incentives are to grow the business and increase the margin. So what options are open to them in a chirpy environment. What maybe “right” for one set of suppliers and customers may not work in a different situation. Some options:

  1. Ignore the issue and hope for the best. Drawback: This does not help either the organization or its customers. Plus side: Way too easy to implement.
  2. Have variable pricing on every order to reflect the market. Drawback: Organizational complex and information being input may not be perfect. Plus side: Helps to preserve margins.
  3. Have set pricing but for short periods of time. Drawback: Will not perfectly reflect costs. Plus side: Organizationally simpler, preserves some margins and easier on the customer
  4. End providing supply chain services to the customer. See the next paragraph for detail. Drawback; The transportation and supply chain service may a selling point to the customer. Plus: Less variability in costs to worry about, helping to maintain margins

Maybe your “A” customers may have sophisticated supply chain capabilities and may be better cost wise to arrange their own freight. Maybe your B and C customers are not so capable dealing with the supply chain. There are situations where B and C customers contribute significant profit to the firm, and making easy and not to costly to buy from your organization may make marketing sense.

The role of the supply chain people here is to provide Marketing people with a realistic view of the supply chain landscape as its effects the organization and its customers. It is fair and useful, to ask what do their customers want from the organization to understand the market and maybe provide some productive thinking the Marketing people may appreciate.

Ultimately the supply chain’s role is to make the marketing area of the firm successful. Many times, asking the right questions may be the most efficient way to deal with issues.

Posted in Logistics, Management, Process Management, Supply Chain, Sustainability, Transportation, Uncategorized | Tagged | Leave a comment
Nov 15

Clouded Crystal Balls

Ask any person on the street about the supply chain and they are likely to say it is messed up. Was that hard in middle 2020 to see the strain the supply chain would have when Covid pandemic let up some? It is certainly obvious in retrospect, as seen from 2021. What are the lessons from this series of events?

Let’s look at why the future was so misty in 2020 and then look at the lessons that could be learned from this.

What was logistic and supply chain professionals looking at in later spring and early summer 2020. One word I think can characterize this period of time: survival. Business suddenly dropped 30% to near 100% for many organizations. To say this was a challenging time would be a gross understatement. To survive many organizations laid off or fired personnel. Then in 2021 found them unavailable to return when the market changed and they were needed.

It was hard for manufacturers or distributors to predict when demand would return. Even hard to know if their suppliers would be in production again and if so how much production.

Many of the elected government officials’ philosophy was that government had little or no role in planning the economy other providing some temporary financial help for businesses. Proactive thinking about the future was discouraged in many federal, state and local governments.

In retrospect, when the demand faucet was turned on, could the following been predicted?

  1. Port congestion would occur once the buying binge occurred, reflective of a simmering demand awaiting the moment to occur.
  2. Truck drivers were scarce and in short supply before Covid hit, and predictively it would be worst after business returned
  3. Warehouse workers would be in short supply once business started to return.
  4. Computer chip demand would skyrocket once production began in earnest.

So what can we learn from all this?

Always plan for the next market shift even when you are trying to deal with the current market. Now is the time to think about when supply starts getting larger than demand, even as you are planning to deal with the immediate problems.

Government leaders, academics and professional organizations need to start planning for next market shift also. I do not recall one Zoom program in middle 2020 asking about what happens when the market starts to return. Many people think of government as only rules and regulations and slowness. But government is also in a position to plan and coordinate industry leaders to work together. Imagine if government leaders hosted management-union meeting-draymen teams-railroad at the Port of Los Angeles and Long Beach in the spring of 202 to plan for the upcoming surge in business?

What if businesses planned their resurgence in the fall of 2020. It many have helped if they kept so sort of contact with laid off employees indicated they would rehire them as soon at they could. It might of helped the labor shortage. Maybe working with schools for training programs might of helped.

I do believe that academics and others will study this period from what we can learn. I think we all must realize that sudden changes in demand and supply can and do occur.

Even in crisis periods, at least some time should be spent planning what is ahead. There is a major advantage just to be able to ask that question. It would even provide guidance to handling the immediate crisis.

Posted in Inventory planning, Management, Process Management, Supply Chain, Supply Chain Education, Sustainability, Transportation, Trucking, Warehousing | Leave a comment
Jun 02

Supply Chain from Both Sides

It is June 2021 and there appears to be a shortage of everything, semi-conductors, steel, and paperboard just to name a few key products. There is a Joni Mitchell song, famously covered with Judy Collins entitled: Both Sides Now. I will just substitute the words “supply chain” in place of “love”:

“I looked at the supply chain from both sides now /From up and down / I really don’t know supply chain at all”

When the pandemic came people talked about a demand in terms of a “V” a “W”, a “U” and recovery in the form of “K” with demand going for some up and others going down. It appears that is where the discussion ended. What we could not predict was when demand would go sharply up but it was almost inevitable that would happen sometime and it is doing that now.

We all get caught in the moment, and spend too little time planning for future, even it can predicted, particularly when it is different from anything we know. In retrospect, planning should have began for probable sharp up side when we were near bottom in April 2020. What was unknown at that time was how long we would be at bottom or the next cliff up, but a sharp upturn was inevitable looking at this in retrospect.

Part of that is we really don’t know supply chain at all, when it verves from the normal. What are the key industries to form the basis of support of the economy? Some of this may indirect to our organization, such as automobile supplier having lower business due the auto makers not having enough computer chips.

I think there is a silo issue of viewing the supply chain as only your company, its suppliers and customers. This future question on the sharp upturn was beyond anything experienced. It could not be programmed in advance. The question is how to view this from an entire economy level. What are the key industries needed? How have these industries reacted to the market falling off the cliff? Will these adjustments that were to deal with bottom of the economy inhibit a response when a sharp rise occurs.

The first step in this is just knowing to ask the questions. The second step would be need to have a realization that organizations need support for this transformation beyond their walls. Government, Universities, and Professional Organizations need to be encouraged to explore these type of new transformative issues. While ultimately it will be individual organizations will need to spend their own capital to accomplish their needs, there should be a realization that the issues are bigger than any one organization or company. It needs to be viewed as a supply chain community to deal with such big issues.

Consensus is not needed in this community process. Rather the energy expended will provide the light for individual organizations to plan. In some cases community support will be needed where there is a long planning lead time such as semi-conductor plants which takes year or more to build. The ride will be last bumpy if we plan for it.

Posted in Infrastructure, Learning from failure, Management, Supply Chain, Sustainability, Uncategorized | Tagged | Leave a comment
Apr 18

The Importance of You interviewing for Supply Chain Positions

Last month, a non-profit not related to my company or involved in the supply chain, was hiring in a senior position. I was privileged to watch final job interviews with for this position in that organization. Of the two finalists, one became nearly unanimous pick to be hired. I asked myself why? Both were talented people and both could have done the job. Was there anything that could be learned about this interview that might help people interviewing for supply chain jobs that would help candidates find the right job and the company to have a good hire? Spoiler alert, the winning candidate did a thorough self evaluation of herself to find out why she was successful in her career and clearly communicated that.

My career has been decades long and there were periods of unemployment. I have learned watching these interviews that in retrospect I spent too little time thinking about myself. But in part that was caused companies doing poor jobs of understanding what they needed in their future employee, so I will write about that aspect first.

In thinking about the job positions I applied in the past, I realized they were more focused on the transactions of the business, needing this skill and that skill, which yes needed to be done, but the skills alone would not lead to employee of high value to the company. I found myself focused on the words of the job description and not what was needed above and beyond that which leads to a valued employee. In those interviews, I did not distinguish myself.

Here is an example of what I mean by focusing too much on the job description and not what makes a successful employee. Many people are skilled programmers. But programming skills mean the employee has the tools to do the job, but that alone will not create a valuable employee. But the programmer value as employee goes way up if that person can understand what the business does and needs to be successful in the marketplace. They need to be able to formulate the right questions to learn what really needs to be done. The other part of this the programmer has to know the limitations of the software they worked on and be able to communicate that.

With an opening caused by a retirement, the non profit formed a committee to plan how the process for the job fulfillment process, and how it would be presented. Importantly they went out to the organization’s field to solicit what was necessary for the new employee’s job position. The result was seven major skills or attributes which were critical for success in that position. That led to questions about how could a person achieve success in these diverse seven fields. Some of the seven were skills, others were the attributes would lead to the candidates success in the job. That in turn led the committee to look for candidates who could meet this criteria.

The successful candidate needs to have more than the necessary skills for the job. They need to know why they were successful in the past. The successful candidate used her career choices to show why she would be successful for the position. As the interview went on, she used the road blocks in her career to show how she responded by the organizational challenges. These were excellent vignettes about challenges of this position and how she would fair in her position and her ability to move forward. A key points about her participatory nature were spelled out often in the interview.

This candidate almost perfectly fit the position offered. But I think just as important she would have ruled herself out from a position were her skills and performance would have clashed with the organization.

So yes, in a job interview document you have the basic skills for the job. Realize that does not set you apart from others. Look at your successes and realize that it was not the basic skill but how use this base to move forward and make the organization successful.

Posted in Management, Supply Chain Career, Supply Chain hires, Supply Chain Hiring, Supply chain interviewing | 1 Comment
Jan 10

Supply Chain Hype in a Post Covid World

So the vaccines have started to show up. What will the post Covid world look like. There will be a lot of hype on a post Covid world. But focus on your markets characteristics before going with the flow.

You probably heard or read that big cities will die because there workers will continue to work remotely in post Covid world. If your market graphic are on high end income workers maybe the hype has some validity. But if your market are lower income people they will not have the resources to move. They will stay in the cities.

Another hype will be e-commerce will virtually destroy retail in actual structural stores. E-commerce will be one of the hardest to predict, because somewhere there is ceiling and when people can back into brick and mortar stories it will slow the rapid growth of e-commerce. Look at clothes bought on e-commerce which have a very high return rate. There is incentive to retailers to get people into their stores because it is more cost efficient and likely more profitable. Again, take the hype of e-commerce and look at your markets to see what they are doing.

The hype is everybody will want e-commerce goods instantly, like in 2 hours or same day at least. If you are Amazon that is your market. Maybe your customers will wait a few days if the product is unique enough or less costly to buy, Know your market.

The hype is everything in the supply chain will be digital and blockchain technology. Yes there are good uses and processes using digital technology and blockchain. Just be aware, there will be markets which will more sophisticated in technology than others, and maybe the low technology markets are your specialty. Even among big companies where they spend their capital dollars may not be on superior technology but other market needs. Of course technology can fail due to hackers or just plain bad programming. Your playbook should have a plan in place should that happen and yes, there is very, very high probability it will.

So enjoy the hype, but from your business or organization prospective pit a critical eye to it.

Posted in Management, Process Management, Sales in the supply chain, Sustainability, Training, Transportation, Uncategorized | Tagged | Leave a comment
Sep 24

Preparing For the Unknown

On Tuesday, September 22, 2020 I watched a webcast of an educational session at the Council of Supply Chain Management Professionals (CSCMP) annual conference entitled: “Strengthening the Supply Chain: Pandemics, Hurricanes and Your Business”

Back in 2019, nobody was predicting a world pandemic in 2020. So, yes, that was not in your or anybody’s budget. Governments have not planned to devote resources to this. Plans were not made. The federal government actually disbanded one of units which deals with pandemics, because why waste money on something that was not going to happen.

So when the pandemic happened, there was little or no forethought on how to respond to totally unexpected event, most everybody ended just did an unplanned reaction. The presentation told about some government bodies who were had a planned crisis procedure while others were clueless.

The message of the educational session, you cannot plan for the unknown but you can be prepared. By preparing you can figure who needs to brought to together to respond to the event. In events like these, your computer data will not be available. So they suggested looking for “sentinels” of information, such as your employees who know what has happened in the past . Shipping clerks, customer service people, sales and finance will have that computer data in their heads. In a time of crisis, perfect information is not needed, but whatever good information you can get is always useful.

Many organizations have a crisis committee in place, for just such an occurrence as Covid 19. An inventory of the organization’s resources is useful in a dramatic and probably a black out period, where normal resources are not available.

It is possible to prepare for the “unknown unknowns” when they hit. You will be way ahead of the game is you prepare. Some crisis are limited to a just a small geographic area or a maybe just one plant. But preparing for these will be useful in a worldwide crisis like Covid 19.

Posted in Inventory planning, Management, Sustainability, Transportation, Uncategorized | Leave a comment
Sep 07

Vaccinating the Supply Chain

Coming to a national state near you is likely to be a mass vaccination program for Covid 19. DC Velocity had an interesting interview in their August 2020 with Dr. Clive Hohberger. The article focused on the supply chain vaccination change itself, but in a period of shortage of transportation supply, this will affect almost all of us in the field.

Here is the article: https://www.dcvelocity-digital.com/dcvelocity/august_2020/MobilePagedReplica.action?pm=2&folio=16#pg18

So let us from a ground level, first and the 30,000 foot level, next.

Most of us logistics/supply chain professtionals have spent a lot of time late last month and early this month (September 2020) responding to transportation cost complaints from our customers, customer service, finance, sales, and C level management. Truck equipment and intermodal equipment is in short supply causing doubling and some cases tripling of transportation rates.

That will die down a bit when produce season ends which will free up some truck capacity. Only to get tied up with the winter holiday season and probably soon thereafter vaccination transport which will take top priority.

My best information is that the vaccination product will need refrigeration, which will put at a premium refrigerated storage and reefer truck trailers. Everyone will know this is a priority and normal van drivers may be recruited over to the refrigerated side. One could make an educated guess that the federal government will be involved in this process and in the absence of lack of organized industry, would likely dictate the terms of this.

So that me means that additional safety stock of an organization might be something to plan for. Likely the shorter distance you can keep to your customers the easier it will be to meet customer expectations on delivery. It also means you can anticipate high transportation and warehouse costs to continue through mid-year.

Professional supply chain organizations can play a major role in this. On the basic level, they are in a position to start a conversation on this issue. There is not much conversation on it now. Secondly they can be a catalyst for getting an industry approach to this issue. There are lot of smart, capable people out there, who can think through the issues of vaccination transportation supply. They can suggest proposals to make the process more efficient

A third thing a joint industry effort can do is make the federal government more transparent on its thoughts and processes in this. It is know the Trump administration wants to fast track the vaccination program. Making the government process more visible gives time to respond to it. That response will make it a better process. Keeping secret as it is now does give the government benefit of surprise, but I do not think that benefit is anywhere near the benefit of industrial and local, state governments, all collocating on this. If Biden is elected, he will need to work with what is already there given the time constraints. He may not get full visibility of this process until after taking office,

So in summary: Plan for supply shortage in transportation market during the winter and spring vaccination season. Support and participate in the industry response to this issue.

Posted in Inventory planning, Logistics, Public Policy, Supply Chain, Sustainability, Transportation, Trucking, Uncategorized, Warehousing | Tagged | Leave a comment
Aug 07

Supply Chain Unknowns

Here is the famous quote from Donald Rumsfeld, then Secretary of Defense on February 12, 2002. Read it. Does not seem like your current job description these days:

Donald Rumsfeld

“There are known knowns. There are things we know we know. We also know there are known unknowns. That is to say, we know there are some things we do not know. But there are also unknown unknowns, the ones we don’t know we don’t know.”

Welcome to the Covid 19 pandemic. He was laughed at because syntax of the words in 2002. Now all of us are living this phrase, at work and at home.

So what is in our bag to deal with the known, the known unknows and the surprise unknowns which are hitting us.

Remember Supply Chain is a team sport. Yes we may be physically distancing from each other, but we can “zoom” in with people on our team, who might be able to see things we cannot. They might have experience doing things we have not done. And when something happens their minds working with your mind will make the best of the situation.

Your old, grumpy and outdated technology probably has data that you can use to determine where the heck you are in this process. What did ship to your customers in May 2019 and how does that compare to May 2020? What does your data imply? Your data may stimulate your imagination if you let it.

Maybe your data tells you your known unknowns. If there was data on this subject, the company could better serve the market and be more efficient. You may not be able to afford new technology now, but even in a pandemic the future is not permanently cancelled.

There are conferences, meeting, and periodicals, now mostly virtual, which might have clues about the unknowns and how to deal with them. I found sifting for gold in these is difficult. All it takes is one good idea, among the many ideas advocated to make the time in the search worthwhile.

Those of us who managed to survive our late teenage years, generally learn that our knowledge and skills are finite. That is not limitation. It is really opportunity to connect with the world and learn and be able to execute our work better. Being in the supply chain in team environment gives opportunities to grow and thrive others may not be so fortune to have.

Posted in Uncategorized | Tagged | Leave a comment
May 08

Plants and the Supply Chain post Covid-19

Maybe you heard in your career a company leader bragging, how he designed the new or rebuilt to have no room for inventory, to keep down inventory costs and yes, force a manufacturing discipline. Certainly I heard some of these type comments. Sometimes just viewing a production facility will tell you that was the way it was designed. While no inventory practices looked good then, times have changed.

No doubt the Covid 19 will lead to restructuring of the Supply Chain, when everyone can catch their breathe. Some of that effort should be spent looking at the operational facilities which your organization either owns or operates.

Certainly in the silo of manufacturing, it is darn easy to ignore other issues outside the basic production design, but supply chain should take a seat in the process (as well as other groups in the organization). Let’s take a look at inbound supplies, plant operation, and shipments to the customer.

One of the process change likely to occur is to go away from a single source supplier, which was urged upon us last century and early this. Does the single dock door for inbound supplies that many medium size facilities have work in an environment of multiple suppliers. Will there be a need to stock supplies in a nearby warehouse?

Production is likely to redesigned with physical distancing restraint’s in planning for labor operations in the plant. How will that affect dock space? If more inventory in needed in an uncertain environment, is worth the cost? How will it be handled?

Trucking today, spring 2020, is plentiful but that will not always be case. Many are predicted shortages in 2021. How do you make facilities driver friendly while maintaining security and safety? Signed documents probably will be a thing of the past except when there is exception which needs to be noted on the bill of lading. Computing power for electronic documents may need to be created.

How is customer demand likely to change? What service standards will be valued? What will be needed from a transportation

Certainly one wants to explore supply chain change outside your door of your operation. Plan also to take a seriously look inside to company production operation processes and determine how they need know be changed to reduce risk and decrease long term costs.

Posted in Inventory planning, Logistics, Process Management, Supply Chain, Sustainability, Transportation, Trucking, Warehousing | Tagged | Leave a comment
Apr 15

One Step into Future for the Supply Chain

When something like Covid-19 comes along, yes, we are scurrying just trying to survive the challenge. Steady suppliers, manufacturers and customers are no longer steady. But when a big change comes you will already have one step in the future. It will be a different future from the one you experienced and might have anticipated in the past. That future is now and we need to start asking questions so we can prepare.

There will be a lot of questions to ask. There will not be immediate answers in many cases. Here some thoughts on questions to ask.

We have all read about Supply Chain risk. Now, we are going through an active trial of supply chain risk. What have we learned from this trial? How will we deal with this risk in the future?

What do we learn about our own organization and dealing with risk and disruption? How have others handled the disruption? Did you give yourself time to think about the present and the future. You have already entered the future but not necessary the final version of the future.

How agile and prepared were your customers in handling changes in the supply chain? Was communication timely? Was it accurate? How will your customers response to the new future? How will that affect the supply chain? What value added services can you provide for this future?

How well did your suppliers do? Were they agile and prepared? What should be required of suppliers in the future? Does the organization have the right mix of suppliers?

How does all this effect you. What will work be like in the future? Are process changes needed? How will working with you co-workers change?

You might feel should get a crystal ball with good sauce music as background. The answers to these questions will not be clear, but merely by asking them you will get yourself ahead of the game.

Posted in Logistics, Management, Process Management, Supply Chain, Sustainability, Uncategorized | Tagged | Leave a comment