For example, San Francisco recently passed an ordinance that bans using toys to entice kids to buy meals (i.e. Happy Meals). If you’re like me, I can’t remember a time without Happy Meals. Not that I ate them every chance I had, but the term “Happy Meal” is arguably as American as apple pie. If you’re McDonald’s, this ordinance potentially puts a damper on future sales since other cities and locales will likely consider similar initiatives.

Those Happy Meal toys with the promotional tie-ins will likely find homes in other places, just not in San Francisco. From a supply chain perspective, this becomes yet another factor to consider in distribution and planning. While not an issue now since the impact is localized, this becomes more of an issue if adoption takes off in other areas. Likely, McDonald’s will come up with a healthier Happy Meal (yes, that sounds strange even as I write it) to skirt the ordinance. It will be up to the supply chain team to ensure that the right inventory shows up.

A few years ago, the smartphone was viewed as strictly a business executive tool. Today, it’s a mainstream device that everyone from high school students to soccer moms can’t live without. It’s no surprise that for shoppers—that makes most of us—the smartphone has become an indispensable sidekick through store aisles. According to a recent study, more than 40% of smartphone users use their own devices to do price checks when shopping.

Admit it, you’re probably done it…I know I have. With the maturity of online shopping sites and phone apps that turn your camera into a UPC reader, finding the right price couldn’t be easier. For retailers, a multichannel strategy is more important than ever. Whether buying through the Web, walking into a brick-or-mortar store, or a combination, keeping items in stock while maintaining customer satisfaction are essential. The battle between pricing pressures and brand loyalty will continue, and in these economic times, price has the edge.

Having said that, customers want instant gratification, and if your store can’t provide it, that customer and sale are lost—likely for good. The access to information is changing the retail landscape, and you don’t want to be caught with empty shelves if you’re a retailer.

Posted 11-09-2010 at 03:25 PM

As we approach the November elections, I’m reminded of the ramifications of politics both domestically and abroad. In September, China stopped all shipments of REEs to Japan in retaliation for Japan’s detention of a Chinese fishing boat captain. And earlier today, rumors swirled that REE shipments were also being cut to the U.S. and the European Union because of environmental concerns. It certainly highlights the fragility of any supply chain and the risks involved regardless of how much planning is involved. Because of China’s near monopoly of REE (the country holds 95% of the world’s reserves), countries such as Japan and the U.S. potentially face decisions being made based on politics that can be detrimental to economies. In this case, the distribution of REEs becomes a trade weapon.

In my previous post, I equated the Middle East’s control of oil to China’s hold on REEs. The most direct solution remains developing alternative sources. But the major hurdle with alternative sources is time.

Closer to home, big changes will likely come across the national and local spectrums. Here in California, we have a number of initiatives focusing on labor unions and environmental controls among others. That’s not to mention the political offices up for grabs including the governor’s race and the state and federal congressional seats.

What does this illustrate? That supply chain and logistics managers have yet another worry to consider: politics. You may already be tiring of the political campaign ads and rhetoric, but politics matter. Politics is often about bargaining, but that’s little consolation especially for our industry when the deals and paths are often chosen for us.

Posted 10-20-2010 at 01:21 PM

One thing that experts agree on is that businesses can’t remain on the sidelines indefinitely. While the financial numbers provide a potpourri of good and bad, they do show that the economy is stabilizing, albeit not as fast or significantly as we would like. Shaky economy or not, increasing competition coupled with growing customer demands will run its Darwinian course. In my book, customer expectations and whether they’re being met is the true gauge of success.

ARC Advisory Group recently released a report showing that logistics providers are more tech savvy than you think. The problem, however, is that many rely on older technology or legacy systems that aren’t scalable nor provide the upfront customer facing to compete. It’s a common issue that I often come across. Whether they’re relying on Excel spreadsheets or an older database system, businesses are using technology, just not the best available. The reason is often due to costs or reducing it, but short-term savings usually mean foregoing long-term ones.

Companies should be reassessing their needs and capabilities more than ever. What most will find is that having the right tools can better prepare them for future growth opportunities, and build a competitive advantage. That may sound cliché, but successful companies have followed that formula for eons…no uncertainty there.

Posted 10-08-2010 at 11:41 AM

One particular grad student stands out (and not just because her thesis is on cloud computing in the supply chain). She asked a rather pointed question—“Why doesn’t the supply chain get much respect outside of the business world?” Jokingly I told her, the supply chain doesn’t get much respect from the business world either.

There’s certainly an ounce of truth to my response, although businesses today are more cognizant of the financial benefits of a strong supply chain and logistics strategy. In many ways, I equate practice of supply chain strategy to the art of public relations. Having worked at various PR firms, I can tell you that PR doesn’t get much respect either, that is, until you need it. For many, they treat supply chain efficiency as an afterthought, unable to see the benefits beyond the cost. But, the logistics industry hasn’t done itself any favors either.

As an industry, we haven’t done an effective job reaching out to the general public. I would venture to guess that public perception—positive or negative—is either low or non-existent, although your typical shopper will likely remember when the store didn’t have a particular sweater in stock. For those of us who work in any industry related to the supply chain, we are often caught up in our own little world. While we may understand and tout the value that we deliver, the struggle comes is in getting the public to recognize that value.

Think it doesn’t matter? Regardless of where you stand on issues, consider public policy for example. From food recalls and railway improvements to green initiatives and transportation regulations, the general public can’t make educated decisions without an understanding of where we fit along with the implications.

A few weeks ago, I tweeted about UPS and its new “We Love Logistics” ad campaign. While it doesn’t quite roll off the tongue, it’s a good start. With any cloud, the silver lining here is that we have nowhere to go but up. We just need to make a concerted effort, and with the next generation of supply chain pros, I expect that to happen.

Posted 10-01-2010 at 12:38 PM

For example, India is a nation where growth can be severely limited by its infrastructure. According to a report by McKinsey & Co., India has $45 billion in losses annually because of inefficient logistics. That’s a staggering amount until you realize that those losses could more than double to $140 billion in the next decade. Right now, 57% of the country’s freight is done by roads, 36% by railways, 6% by waterways, and 1% by air. But, if it is to successfully expand and cut its losses, India will need to build out the rail and waterways system, shifting more than 45% of freight movement to rail. Will it happen? No one can know for sure, but it will take focus from the government and significant investment (more than $700 billion) to make it happen.

Spain has been battered by the economic downturn. And with more than 40 percent of jobs there in the service sector along with an impending need to reduce fixed costs, cloud computing would seem a natural fit. Unfortunately, that doesn’t make the concept of cloud computing widely accepted. According to a recent article, the risk-averse culture of its citizens make the data and where it’s stored an issue, while the large public sector (one of the largest in Europe employing more than 3 million people), has been slow to make any changes in general. In fact, an overall resistance to change has hampered cloud computing adoption. It’s funny because these attributes may as well be describing the U.S. even though cloud computing has made significant strides over the past two years.

For all the talk about the “new normal”, the biggest hurdle is still the unwillingness to change. Both India and Spain understand what needs to be addressed to expand their economies, but unable to make it happen fast enough. Again, my intention isn’t to single out India and Spain because frankly, our country is more or less in the same situation. New normal requires new thinking, or at least, a revised approach. Unfortunately, that’s easier said than done, but at what expense?

Posted 09-20-2010 at 12:22 PM

With that said, the industry of renewable energy is facing a critical time that will either hinder or elevate it. Deloitte’s Global Energy & Resources Group recently released a report on the top 10 issues and trends in renewable energy. Among them, the core issues focus on government regulation, sustainability and funding sources. Flexible regulations and financial incentives in the past have helped to nurture the industry. But with the current economy, those policies and incentives are on shaky ground. In addition, funding sources are in constant demand as startups and emerging companies seek the time, and human and technological resources to grow their green businesses.

One important part of the study focuses on the supply chain, and the need to significantly develop this area to meet the needs of renewable energy companies. In any business, technology only goes so far and scalability is essential for growth and sustainability. Deloitte points out new investors to renewable energy should look to the supply chain. And why not? Besides having a reliable network for receiving and delivering resources, collaborating with partners and customers is often the difference between success and failure when it comes to credibility and reputation.

As I’ve often discussed, the supply chain is the lifeblood of any business. Considering how spending on the supply chain tends to be secondary for many organizations, creating and maintaining a viable supply chain network for renewable energy would certainly be something to tout.

Posted 09-17-2010 at 02:46 PM

Food safety here in the states tends to be lax primarily because there isn’t any regulation with meat (no pun intended) that ensures accountability. By accountability, I mean establishing the necessary visibility to track and trace items as they travel through the supply chain from origin to destination. To take that step further, traceability needs to extend beyond distributors and include those involved in the manufacturing process. Determining the cause or origin of an outbreak especially when it concerns food products can take months if ever to narrow down, and even then, it’s not clear cut. In that time, consumers are impacted from a health and financial perspective, while businesses suffer from tarnished reputations.

In an ideal world, this scenario doesn’t have to be. Small or large, businesses have a wide array of technology to choose from within a suitable budget. GE salmon is a perfect example of why supply chain accountability is necessary. If the FDA finally approves this, the salmon will likely be sold everywhere. While it has yet to be determined if special labeling will be used to differentiate GE salmon from those that are natural, the company behind the product has said no cross breeding will occur. The FDA has been resource strapped for years, and you only need to watch the daily news to see the result.

Regardless of how you feel about genetically altered foods (which many of us have been eating over the years), the bigger problem is that we don’t have a regulated or consistent process for traceability in this country. And that’s something that should scare us more.

Posted 09-08-2010 at 03:00 PM

For supply chain managers, securing shipping operations has become an overwhelming task and in some cases, routine deliveries go through multiple levels of security checks. Cross border smuggling has been an ongoing problem for years, but it seems that the trade has become more violent recently. That leads into a bigger issue: employee safety. A large part of the workforce at American companies in Mexico is made up of U.S. citizens. With the rising crime, ensuring employee safety in the short term coupled with recruiting the best and the brightest in the long term is a constant battle.

According to estimates, security spending accounts for 3 percent of corporate operating costs. And whether or not you travel or live in Mexico, you’re paying as a consumer since those costs get passed on in the form of higher prices.

With the volatility of the environment down there, the importance of supply chain visibility becomes a necessity. While WMS and TMS solutions tend to be looked upon as luxuries here in the states, it’s an essential cost of doing business in Mexico.

Posted 09-02-2010 at 11:38 AM

As with any recall, it’s important to locate the source. But, as we’ve seen time and again, this is not only difficult but usually too late since most of the food has already been consumed. And if history is our guide, the source may likely never be determined. Once again, this brings up the question for businesses—have we learned anything?

Food recalls are nothing new and yet, when one does happen, businesses react like this is the first time for everything. I can already map it out—the initial blame falls on the FDA for lack of oversight; suppliers who have had previous health and work violations are dragged out into the public; and then, everyone talks up a good game about preventing a recurrence in the future. That is exactly what is happening now. Yet, are we any closer to getting answers or change?

The honest answer is not really. The majority of supply chains still lack visibility, while consistent partner collaboration is mostly wishful thinking. Would it have helped to know beforehand which suppliers had previous health and work violations? Mostly definitely, and then businesses could take appropriate action before the fact and not after. But, that’s the problem with recalls today where the strategy is completely reactive instead of being proactive. This recall won’t be the last, but many still act like it is.

Posted 08-23-2010 at 01:36 PM

• No matter how prepared you think are, you aren’t. British Petroleum is a prime example of a company having a crisis plan on paper, but exhibiting little experience in the actual execution.

• The concept of control is a worthy, yet unrealistic goal. You can anticipate issues that may impact your supply chain, but ultimately, you control very little when it comes to external factors. Iceland’s Mt. Eyjafjallajokull volcanic eruption disrupted air travel and commerce for weeks, and for the most part, there was nothing anyone could’ve have done. Companies may have alternate shipping routes and plans, but chances are most didn’t have volcanic eruption in their crisis management manuals.

• What’s old is new again or something like that. Cargo theft has been on the rise since Q4 of last year, while daily cyber threats are the norm. The post Cold War escapades culminating in a spy swap and the kickback scandal involving an Apple executive signal that nothing ever really changes.

• The “new normal” means get used to lower expectations. The economy continues to sputter along, and all the indicators from retail to employment numbers haven’t changed much. So in many ways, slow, steady and even flat is a good place to be for the supply chain.

This may seem simplistic, but information is still your most valuable asset. Having it in real-time can set you apart from your competition, and not having it, well, puts you at the bottom of the barrel. Information may not prevent every disaster or logistical mishap, which is bound to happen, but it certainly makes them easier to handle. And the “new normal” is much easier to swallow, at least until things get a little sweeter later on.

Posted 08-17-2010 at 03:57 PM