May 23

Success has to be more than cutting costs

I recently attended the annual one day seminar of the CSCMP Chicago Roundtable. The key note address Dr. Jonathan Bryne, a senior lecture at MIT and yes, a supply chain consultant.

The thesis he presented was that to be a success in the supply chain, one must successfully add to the profitability of the firm.  Many supply chains he encounters are being run reasonably efficiently says costs are were they should be. The costs have been cut.  But the value that supply chain personnel provide firm needs to be more than being efficient, it needs to help the firm increase its successful and profitability. Supply Chain which all the business operations is in a unique place to do this.

With the real time data that supply chain software is generating, it is much easier than in the past to cost each individual customer and each product or sku. Supply Chain personnel need to be proactive to use this data to find how can manage its customer approach. One simple example: A regular customer orders daily LTL shipments but those not bring much profitability because of the shipping costs and labor its entails. Sales can be approached to ask the customer to make larger order quantities, with both parties sharing in the savings and increasing the profitability of the account.

Dr Brynes said in some cases, highly profit accounts had led firms to realize they can invest more in customer service for this customer, providing additional services which would make it harder for the customer to rationalize a change in vendors.

There were several questions from the audience but relatively low profit customers whom might make up most of the volume in the business. His response was to use supply chain data to learn how to best manage this group of customers.

Non-profits which have a supply chain can make the same sort of management exploration, but with the goal of how effectively is the supply chain helping the organization meets its objects. Are there changes in the process which would help that?



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May 01

Using the Energy of Complaining

Complaining, you hear it during coffee breaks, at special events, and yes, of course, in the rest room. By nature, the supply chain/logistics affects many departments, many people, management and customers. With that many moving parts, something will be suboptimal. In lean processes, the goal is to reduce waste.  Since complaining is a process, there are chances for significant gains by removing the waste. Let me be clear, the complaining itself is not the waste of energy, it is the lack of response that wastes the energy of the complaining.

Imagine a steam engine with some of the steam being given off as waste.  Now, imagine that you capture the steam being wasted to do some useful function.  That is the analogy I wish to make with complaining.

Looking at complaining as an asset does take a change of focus for some. The aim is taking of what could be destructive criticism and turning it instead to constructive criticism.

Or to say it another way, the organization’s employee is an asset who can improve the success and profitability of the organization. Improve handling of complaints can enhance this process.

Steps taken should include:

  1. Listening.  Many time the important information in complaining is only available outside the organization. Organizations should provide a forum for this process to take place, making the information visible.
  2. Responding. Avoid negative feedback to the speaker of the complaint.  That person just took a risk to himself/herself to better the organization This is a risk that should not be made into a crime.
  3. Analyzing the complaint. Not every complaint can be responded in the way the complainer would like. However a response, either yea or nay to the proposed change is necessary.  The response should include the reasoning of the decision. If the criticism is respected, then is a chance for further efforts by that individual to improve the organization
  4. Crediting.  Crediting is a powerful motivational tool to encourage people to be proactive. So when something goods comes about as a result of a complaint, the person who brought up should be publicly recognized.



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Apr 05

Imagining Sustainability

I attended the opening day keynote at the Promat convention entitled: Building Supply Chain Sustainability for Competitive Advantage: Lessons learned from leaders in innovative facility design. I will focus what caught my attention below. For other details on the speakers and what they said, you can find it here with write up:

When you have a group of speakers from large and successful companies like UPS and Boeing which have tremendous resources to do things, when they speak about sustainability, it is easy to think: Yea, they have the money and they can do anything. I have trouble getting a extra box of pens in my budget!

I was in that mode of thinking until I heard Rick Bingle, Vice President of  Supply Chain Recreational Equipment Inc. (REI) discuss his company’s brand new warehouse in Arizona which is LEED  Platinum certified, the highest level green. The key thing that caught my attention was  his comment  that before there is a green building, the internal processes of your firm within the building must be thought out in a green way so that building can achieve LEED certification status.  In short, one has to use his imagination to envision a green future and have that as part of one’s thinking. For REI the key decision was making most of the machinery use electrical system that used 24 volt electricity. That led to a lot of tradeoff decisions between various methods of doing things. The bottom line result is that the solar panels will supply 100% of the power to the building. So when the solar panels are paid off in 3 years, there will be almost no energy cost to run the operation. I assume the extra building costs to build LEED building will have a similar payback.

In the business world there needs to be tangible benefits to being sustainable and green. In REI’s case, if they did not imagine sustainability benefit, their warehouse would have been like every other one out there, with higher than necessary costs.  To be successful at this they had to allow themselves to imagine that things could be different and improved.  When doing any capital project, just by asking how to do this particular project can be done in a green and sustainable way has a chance, sometime a good chance, as being the most economical way to do things and bringing productive innovation to the process.

There are a couple practical issues choosing sustainability, both of which deal with time. One is time and the lack of it. It is just so easy to do what has been done in the past. It is certainly less time consuming.  One has to make the effort to bring sustainability into the conversation and process, Yes that does take time. This is something where a person, an individual, has to prioritize this because of the potential benefits.

The other issue is how much time does your company allow for return on investment. This is much less under many individuals control. Andrew Wilson, who led the pannel discussion noted that lack of long enough time horizon is a major block to sustainability efforts.  Many sustainability projects jsut have a longer payback period. Generally the payback will not be in a quarter or two.  Maybe the best strategy is  start with small sustainability projects with quick payback to build credibility necessary to do projects that take longer to payback.



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Mar 21

Logistics Customer Service is More Than Things

Customer Service is more than just about things; things such as omni-channel, data, warehouse choices and which transportation carrier to use.  Supply Chain and Logistics is very people and organization centric. One can know all about the bells and whistles of the supply chain, but if you are not aware of the people and organizations in it, success will be elusive. University and colleges do a good job of teaching about the things of logistics but many times ignore studying the people and organizations which populate that universe, leaving students not fully prepared for the “real” world.

What information should be imparted to students preparing for a supply chain/logistics career? Let me suggest these topics: budgeting, employees, change management, organizational cat fighting and intern programs.

Budgeting:  Students are taught the CEO version of budgeting, the 30,000 foot view of the organization, the global view. Rarely is it also explained how budgeting affects employee actions  in the middle and bottom rugs. Plant Managers, Sales people, marketers, production planners, plant workers and you name it to be success must meet or beat the budget directed assigned to them. Working with people, a key to know is or at least guess at what organizational budget issues and directives affects their actions and  decision making.

Employees: No matter what an organization thinks and treats its employees, working with people one should view them as an asset, capable of contributing to both to their own organization and possibly to yours. It is too easy to think when employees do not do things the way you want that they are lazy and dumb (stronger words are usually substituted for dumb).  But these same people, when they are listened to and respected, will many times share valuable institutional knowledge. More often than not the project your working on will not be a success if that institutional knowledge is not factored in. Learning to value others is not something that come naturally and needs to be taught.

Change Management:  Usually thought about only about in connection with the group of people assigned to make the changes, the concept needs to be enlarged to include all the employees affected by the change. Communication and listening are key issues.  If no focus is done on change management at the ground level, employees will ignore the project or in some actively work against the project at hand.

Corporate Cat fighting : One of the most difficult issues in change management is the resistance to change among people. It is a natural impulse.  This resistance sometimes results in making the persons leading change look bad. It is important at that time to dig out that cell phone saved file about being confident. Resist the urge to get in a corporate cat fight and find ways to work with these people. There is a long term here and the friction generated can be turned in many ways to help future collaboration on change. By listening with your ears and your mind, real issues which would have eventually come to a head anyway may be headed off early in the process.

In developing intern programs, corporations would be wise to structure them so that come in contact with employees to accomplish some minor task. Just filling out reports, while necessary, limits the value of these programs as ways to develop employees.

Ultimately by gaining these skills you greatly improve the productivity of yourself, which why these skills are important to learn.





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Feb 22

Working with the Difficult Inclined

One of the joys of career life is coming in contact with wonderful, competent, and caring people. In the logistics/supply chain there are plenty of those types. There also thieves, scumbags, and people who have a disagreeable personalities.  Some times you are stuck in the middle with them because of contractual obligations or legacy holdovers. In this essay will call these unpleasant people the difficult inclined (DI). In time they will go away, but you have a job to do and you are sometimes stuck with working with them.

Do not look to the US present political climate in how to deal with these people. In political climate, there is social media bashing, belittling, and humiliating going on at record levels. If you do those things in your work life you will come in at the short end of the stick and make a bad situation much worst. Instead use preparation, metrics to verify performance, patience and yes humility.

When you are dealing with a responsible person, one sentence might lead the other person to not only do what is required but all the necessary work around it. That will not happen with the DI. They will do as little as possible and only what you directly and clearly ask. To get the necessary  work done requires more detailed preparation, more detailed planning and clear scope of procedures must be prepared.

Ron Reagan’s administration was famous for its “trust but verify” motto. In the DI case  there probably isn’t trust, which why metrics need to be developed to tell if the job details have been completed. Know that the DI probably will try to subvert the metric. Some data verification will be necessary.

Deep down, the DI loves when they sense you are perturbed about them because its own way gives them power over you. So a certain amount of patience is needed plus most importantly, the ability not to lose emotional control of the situation.

You can bet that the DI will love to take advantage of smugness, arrogance, and superior you feel towards them.  These emotions can blind one to the facts of the situation and the DI knows it. So keep interactions professional and have humility. Broadcasting that you are much better than the DI, will ultimately be used in a harmful way. Humility should not be confused with fear, Pollyanna states of mind, or subservience to the DI. It is rather an understanding and respect of the situation. It is focus of the job that needs to be done rather than on the DI.

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Feb 01

SC advise for Hell and Hand Basket

Perhaps some of may have noticed that the political environment is getting a bit of chaotic out there, hell and hand basket type space.  Those us in Supply Change and Logistics make our living trying to organize chaos in a multi-party environment. Preparing for this type of stuff, even has a name Supply Chain Risk.  So what advise those the supply chain offer the present political system in dealing with chaos?

Supply Chain/Logistics organization have little control of disastrous weather, politicial decisions, new technology and surprise customer decisions that show up in their world.  The political environment is in a surprise period too and people struggling on how to deal with it.

First, I will discuss about handling these surprises in the Supply Chain. Second, there will be apart about preparing for unknown unknowns.

When the unexpected happens, most supply chains will gather people from as many expertise they can get, both inside and outside of the organization, to develop an action plan to resolve the immediate issue. We will call these groups emergency teams. Why do they bother with this bureaucracy rather than have a boss just make edict on high?  (Although it usually the boss he arranges these meetings.)  Any response that does not consider those who are affected by the decisions will be sub-optimal at best and may make the situation even worst.  In the political process, a multi-interest coalition will likely make better decisions and have more clout than one interest group going at it alone.

In the Supply Chain these emergency teams need to establish objectives and ways to measure success. Communication of issues and successes is strong key to success of the efforts, once success is defined. In the political system, people are looking for ideas and actions that make sense, so communication is a key there also.

And when the crisis is ended, the supply chain emergency team work is not over. There will need to be follow up to see what they can learn and prepare for the next unexpected events. Once you go through ones of these the unknown unknowns, the concept becomes a lot more real. For instance, automobile manufactures were hurt badly by the earthquake and tsunami in Japan leading to long and expensive plant closures.  Now many of them have plans re-start programs when a major supplier is lost. There is a term for this type of planning which is Supply Chain Risk with the idea that initiates planning for unexpected events which  might be helpful when an emergency committee responses to a new issue.

The political system because it is so large and many times unorganized has trouble learning lessons and preparing, but perhaps that should be part of the political plan process also. Just reacting usually puts one behind the eight ball.

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Jan 24

When You Experience Poor Leadership

My last blog was how everybody in the supply chain can and should be a leader and a good one at that.  We all know the opposite happens. It sure does! Poor leadership can result from poor practices, processes and attitudes. It is a major road block to achieving success.

It is easy to get very angry in these type of situations. Poor leadership will not only prevent a given project from working or working well, but will have an adverse affect on your career and the business culture in your life.

Good leadership requires clear goals, listening, respect for others and patience. In a bad leadership situation these skills are still needed by you. It will minimize the damage to the project and yourself.  Complain if you must in private, but listen and learn, there will be more opportunities ahead and what you can learn will be of value.

If you are in a bad situation with your boss whose poor leadership results in hindering your success, and condensing belittling attitude towards you, it time for a change.  Perhaps you have seen employees in bad situation for years. I have. Most cases there is a fear that there is no other choice but to live in that bad situation.

When you are being belittled by poor boss, you have to make it a point to think positively of yourself, which is of course the exact opposite of the input you are getting. Look for help from supportive spouses, relatives and friends.  Getting a positive attitude about yourself is one of the hardest things you will ever do.  Remember how bad being belittled makes you feel, so avoid doing that others as result of the frustration you are feeling

It is easy to focus on job income and promotion but you should also be looking for a company culture to helps you be productive and successful.  Those in poor business cultures are going to have less successful career life, with significantly more health issues.  Good health is result of not only healthy eating and exercise but a good mental situation.

Bad situations come and they will only stay bad — if the work is not done to change them.



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Jan 10

Supply Chain Leadership Even If It Isn’t in Your Title

I volunteer at a food pantry and one day I asked the people there if in their career life they had ever had a good boss. None of the people I spoke to could remember even one good boss.

When you talk about bosses, you are really taking about leadership. Good leaders are needed everywhere, but Supply Chain despite its technological intensity ultimately is a people business and a team operation requires good leadership.

No matter where one is in the supply chain, the top, the bottom or somewhere in between it is important to know that leadership is required. Much has been written on leadership but here are things particularly important in logistics and the supply chain.

  • Developing a clear ideas on what needs to be accomplished and how can it be measured.
  • Understanding how this affects other members of the supply chain team you are working within the company and without. This requires the ability to listen to them, and the ability to learn. Respect for everyone is a key. That respect should include seeing the process from their perspective.
  • Empowering the appropriate personnel to act as needed. It might be that your first thought is only your boss can do this.  Maybe that person has the ultimate power but if the boss does not know there is reason to empower a person it might never happen. Yes, you can provide leadership even when you are not the boss.
  • As problems occur, look as these as opportunities to learn from errors or the environment of the business and do better.
  •  Put the processes in writing, but not in stone, so as things change, the process and you can change. You can provide leadership to change the process as appropriate.

Yes, leadership requires one more thing, passion.  Passion for the people who work with you, again inside and outside the company. Passion to be on task and do a good job. Passion to make the process enjoyable.

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Dec 06

The importance of your neighbors

In recent issue of Trains Magazine, there was a story about a regional railroad crew in the southeast United States. Enroute they would stop the train, feed an apple or some similar fruit to a mule who was always smart enough to walk to the tracks when he heard the train coming. The crew when asked why they did it, they said yes it was enjoyable making the stop but it was important to that their business had good relations with the people who resided in the area.

Supply Chain risk which has been written about a lot. There are worries about severe weather, earthquakes and other natural disasters. There is worry about supplier of product or transportation services disappearing or being unavailable for a long time. But its your neighbors in your community who make the zone ordinances which allow your business to operate and operate efficiently. It is likely your neighbors will be the supply of people who might hire to help run your supply chain.  So it is part of the company’s effort to ease and eliminate supply risk, good neighbor relations are important.

So planning community relations is part of the process. Maybe it having school children to explain what you do. Maybe it is supporting your local community college and having them having supply chain classes. Maybe it is keeping in contact with local government. After all what you do, helps a community grow.




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Oct 24

The S&S-Sales Force and Supply Chain

Sales forces want to sell. Supply Chain wants to deliver, but with understanding of the cost to the enterprise and the physical realities of warehousing and transport.  The part in the last sentence after the word “but” is where the complexity comes in the relationship between sales and the supply chain.

Meeting customer expectations for expedited delivery costs money.  Getting products shipped in peak demand periods is hard.  Customer delivery requirements can be difficult. If every customer load is hot, there is an issue there. Supply Chain sometimes tells the sales force personnel that customer expectations can not be met. Ugh! It is enough to make you thing Supply Chain thinks the customer is only somewhat right.

How can one approach these challenges? It fairly important to create an environment where sales can be successful. The approach that has the greatest chance of success is one where the company, supplier of the customer, creates value for that customer.

Let’s take a look at the issue of every load for the customer is hot, many times requiring premium transportation which hurts the supplying company profit.  Supply Chain should encourage sales not to just react to hot loads but to find out why they are happening. If you can lower the customer’s stress and therefore lower his costs that might be a win for everyone. I seen this type of problem resolved in many ways ranging from the simple, having customer service call every few days to the complicated where the supplier plans customer demand.

The ideal solution lower both supplier and customers cost and builds a stronger relationship which keeps the customer buying from your firm.

Most organizations have at least an annual sales meeting. Representatives from the Supply Chain / Logistics area of the company should attend at least a part of the meeting, to hear issues and complaints.  Communication will spark ideas to improve performance of both meeting customer expectations, in some cases shaping those expectation, and improving company processes to serve those customer needs.

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