Supply Chain Improvement

HighJump Software was recently named to the annual Food Logistics 100. The FL100 is a listing of technology solution and service providers selected by the editorial staff of Food Logistics magazine that are helping food, beverage and CPG companies gain a competitive logistical advantage.
 
“HighJump Software empowers food manufacturers, distributors and retailers to tackle a number of critical challenges, including increasingly complex regulations, rising costs and slim margins,” said Timothy Campbell, President and CEO, HighJump Software. “We’re honored to have been recognized by Food Logistics once again as a technology provider of choice for the food industry.”

Read the press release to learn more about how HighJump Software helps food and beverage companies with supply chain improvement.

Just when we thought we could call the Green Bay Packers playoff chances dead and anoint the Vikings as the class of the NFC….things change.

With Wal-Mart’s quiet back peddling on their initially aggressive RFID initiative or attempted Tiger Woods-esque call for privacy on the potential benefits from their investment, RFID has gradually slid into the trough of despair. Many technologies become over-hyped as service providers and consultants proclaim they can solve virtually any problem with the latest and greatest technology. Within the supply chain world no technology capability has been more hyped in the last ten years than RFID. But as is the case with many technologies that do not live up to the hype, companies start to shun them and become instantly dismissive of the potential benefits the technology could provide. Should companies put a stake in RFID? Is it dead?

I would argue that RFID will come out of the trough of despair and provide real/tangible value to companies….if they deploy it correctly. In the past companies have done one-off/point solution projects that provided little or no benefit, other than fulfilling a compliance requirement. A recent study by four university professors entitled “Empirical Evidence of RFID Impacts of Supply Chain Performance” offers hope to RFID enthusiasts. One of the study’s key findings was that for an organization to realize significant value from RFID required that the technology be deployed across the entire business operations or supply chain. A key point this study highlights is even deploying RFID throughout your company is unlikely to deliver significant value unless you are working closely with your extended supply chain (suppliers, manufacturers, logistics service providers, etc.). In order to remain competitive companies will be required to collaborate and work more closely with their supply chain partners. This will be a pre-requisite for companies looking to really leverage the value of RFID (in a non-closed loop scenario).

I recognize that I just advocated for deploying RFID throughout your entire extended supply chain but a key caveat: don’t apply it blindly. It is important that you consider the complete spectrum of data capture and communication options. There are several different technologies that can be used for data capture. Starting at the most simplistic pen and paper have been used prior to the adoption of barcodes. In most cases, companies have advanced beyond that to use one-dimensional barcodes, two-dimensional barcodes, multi-part barcodes, voice technology, etc. You need to evaluate if RFID (passive or active) is the right data capture and communication solution for the use case(s) you are considering. If you determine RFID is the right technology for the use case, per my earlier point above, make sure you examine the touch points of the process throughout your extended supply chain.

One last note that supports RFID’s return from the dead is the fact that the cost of the technology is becoming cheaper. As more RFID tags are produced, manufacturers gain additional economies of scale and can pass along those savings to buyers. In addition there have been several advancements in reading the RFID tags which in some cases have dramatically lowered the hardware costs. While this trend still needs to advance significantly to open up more potential use cases, it is trending the right way for greater adoption of RFID.

All in all, RFID has hit a sizable bump in the road like the Vikings did last week, but I don’t expect it to derail its long term prospects (or playoff chances).

When you hear a news story about a supply chain issue at your favorite retailer, you might think that it is not your problem, but you might want to reconsider.  According to the recent 2009 Global Retail Theft Barometer Report from the Center for Retail Research, United States retailers lost an astounding $42.2 billion last year due to retail crimes such as shoplifting, employee theft and supply chain fraud/errors.  The $42.2 billion breaks out into the following main categories:

• $18.7 billion for employee theft
• $15 billion for shoplifting
• $6.8 billion for supply chain errors or fraud

That $6.8 billion a year translates to over $70/year of additional cost the average family pays because your retailers do not have the appropriate technologies and processes to reduce these errors and catch instances of fraud.  All of the costs above translate into higher prices for consumers since the retailer needs to cover the costs to stay in business.  The report estimated that the cost of store crimes to consumers is over $435 for the past year.  These are meaningful amounts for most families and might warrant the question: what are you (retailer) doing to make your supply chain more secure from source to consumption at the retail shelf?

While I am sure many retailers are painfully aware of the statistics, these numbers should be a wake-up call for many retailers about the need for additional investment in track and trace technologies and supply chain logistics software. An important fact this study highlights is that not only is shoplifting a major issue but having your own employees steal from the company is a problem that needs a better solution than many retailers have today. With improved supply chain visibility and a movement toward real-time inventory availability on the store shelves, retailers will have better information to start uncovering areas that merit additional investigation.  At these levels of loss many companies will have a compelling ROI case.

Next time you speak to a friend who works at one of your favorite retailers, you might want to ask if they are investing enough in supply chain technology and visibility from store shelf to purchase. It could end-up saving you some money.

Today, HighJump Software announced the release of HighJump Performance Advantage, a business intelligence dashboard specifically designed to enable supply chain process improvement. The solution combines modern graphical dashboard technology with industry-developed standards to produce actionable visual data for executives and management.

For more information, read the press release or visit the HighJump Performance Advantage page on our website.
 

I am a frequent reader of Logistics Viewpoints by Steve Banker and Adrian Gonzalez, an excellent blog on supply chain news and trends.  In recent posts they mention that several retailers such as Wal-Mart and Kroger are undertaking programs to reduce the SKUs available in stores.  They cite this as a positive supply chain improvement with less SKUs flowing through all the levels of the supply chain.  After reading this post, a few questions jumped to my mind:

1. Is this good for consumers?
2. What will be the supply chain ripple effects?

On the first question, my initial reaction was anything that reduces choice is bad for consumers. Sure the companies are not taking their best seller off the shelves, but they are removing items that presumably get bought occasionally and now a buyer is going to come into that store looking for these items only to leave frustrated. On the other hand lower supply chain costs could result in lower overall costs for other items in the store which would be a benefit for consumers. Given Wal-Mart’s corporate strategy and low pricing approach, I would surmise this is where they are headed with this SKU rationalization program. For the average consumer the net-net of this is probably a slight benefit whereas consumers looking for the “fringe” SKUs will be hurt.

On the second question, I think SKU rationalization in brick and mortar stores will lead to SKU expansion in online retailers. While these products might not be on anyone’s “A mover list” they still are needed by certain segments of consumers. I think this could be a boon for niche retailers (to the degree walmart.com does not simply add these SKUs to their offering) since they will have more products that only they carry. The carrying cost for an online retailer is much smaller than a brick and mortar store because they can have one unit in stock for viewing by the entire internet populace to make a sale whereas the brick and mortar store has to ship a unit to each store and then have it take up valuable retail shelf space. In the online world the incremental cost of online shelf space is minimal, just a few pixels and voila. This shift has supply chain implications as e-commerce fulfillment is very different from traditional retail/distro fulfillment. As we saw in the dot com boon several warehouses had difficulty managing the different fulfillment challenges that each type of fulfillment posed.  For large retailers that plan to increase their SKU selection online, they should plan to optimize their e-commerce capabilities or risk reducing cost of one order type only to watch it increase for another.