Tom Andel

Your company needs your help
October 8, 2008

Supply chain management professionals have never been so important. Even if you don’t think that label fits you, now is a good time to attach it to yourself and wear it proudly. Your company needs you.

More than 3,000 fellow supply chain professionals heard that call and attended the Council of Supply Chain Management Professionals (CSCMP) annual conference this week in Denver. Whether these attendees were responsible for the flow of goods within their four walls or between a chain of four-walled materials handling enterprises stretched around the globe, the geopolitical forces making the nightly news are demanding strategic thinking from the most tactical of them.

Consider this: since 1987, 80 companies have made and unmade the Fortune 25 list. Their supply chains may have been great, but that doesn’t mean their businesses were. That’s why supply chain people like you have to start thinking like 21^st century business leaders. Supply chain professionals from the 20^th century are used to uncertainty. But the 21^st century is ushering us into an era of business volatility, said Dr. Mahender Singh, head of the Supply Chain 2020 research project at the MIT Center for Transportation and Logistics.

His general session address was about “How to capitalize on future uncertainty.” Sure you may have gotten good at fine tuning your operations for JIT, but in a time when supply chain disruptions in one part of the world cause reverberations in another, tweaking your operations won’t work any more.

“The C-suite still thinks of us as product movers,” he said. “We need to think of business performance, not just supply chain. Weave yourself into the fabric of your company. Make yourself indispensable.”

Bob Parker of Manufacturing Insights gave a great example of this mindset during his session. He noted that service is becoming more important than products, especially commodity products. One chlorine supplier had the bright idea to install sensors in customers’ pools to measure pH levels and then release the right amount of chlorine to treat the situation. The same strategic use of technology applies in the plant or distribution center.

Parker said the use of RFID, sensors, GPS, wireless, etc, are making reliable information available at the shelf level, and this is feeding better information to upper level information systems where strategies are formulated. You need to own that input and be recognized for it. Your analysis can help steer your company away from stale assumptions about inventory.

Robert Martichenko, president of LeanCor, made this point in a session about implementing a lean distribution center. Many companies base their inventory strategies on what’s selling best. A better strategy in these volatile times is to identify what’s stable.

“Don’t rely on averages,” he advised. “Look for what’s predictable.” He used the old A-B-C slotting strategy as an example, where the more popular A items get slotted closer to materials handlers and B and C items are further away.

In the case of Carl Zeiss Vision, Inc., only 12% of orders had only A items in them. Thirty percent had a mix of A, B, and C. He advises that you correlate C items to A items in your slotting strategy. This kind of thinking helped Carl Zeiss develop a new warehouse layout, resulting in more transactions processed per hour. On-time receiving also improved from 73% to 95%, labor was reduced 20%, overtime is down 63%, and total labor and expenses are down 26%. The key is to create a sustained culture of continuous improvement.

Richard Jackson, executive vice president of Limited Logistics Services, did a great job summarizing the strategic importance of what you do and why it’s important for you to know more about your business issues:

“A supply chain professional has a unique view, different from that of the CFO and CEO,” he said. The more you know about how business works, the more your input will shape the discussion that helps formulate decisions.

Are the folks in your company's C-suite aware of what you do? Do they know you exist? Share your insights in a blog response or just e-mail me at tom.andel@reedbusiness.com.

Posted by Tom Andel on October 8, 2008 | Comments (0)