Supply Chain Improvement

Eggs are a big hit at my house.  In fact, my wife has declared poached eggs to be her favorite food (while good, I can’t imagine passing up pizza for a poached egg, but that’s just me).  I assume that most families are similar to ours and eggs provide a quick, easy way to get some protein into any meal.  I think this is core to the reason why the current egg recall is hitting a sensitive spot for many Americans.

More than 500 million eggs have been recalled in recent weeks.  Nearly 2000 people report being sick from eggs thought to be carrying salmonella.  The eggs are traced back to a pair of Iowa farms with common ownership.  Like many food products the eggs were then marketed under multiple brand names and through various distribution networks. 

Some troubling information about this event is that despite the first signs of contaminated eggs occurring in May, the recall was not conducted until August.  The finger pointing between producers, government agencies, and consumers continues today.  Based on this recall, recent peanut recalls and growing concern by Americans over food safety, I would guess we will see more strict federal legislation governing food safety soon.  In fact, the timing would be perfect for the FDA Food Safety Modernization Act to pass the senate in September.

While many industries fight additional regulation, many major food brand owners have advocated for this type of legislation.  A CNN Money article highlights some of the financial impact on brand owners when a recall occurs.
•    Kellogg’s took a $34 million hit in their 2008 earnings as a result of the peanut recall.
•    Overall peanut butter sales volume declined by 22% at the beginning of 2009

As with most legislation, the Food Safety Modernization Act is descriptive in terms of authority, but vague in terms of how companies would implement practices to support improved safety in the food supply chain.  Here are a few pieces from the current legislation and my thoughts on how technology can be used to help enforce the process.

“require that each person (excluding farms and restaurants) who manufactures, processes, packs, distributes, receives, holds, or imports an article of food permit inspection of his or her records if the Secretary believes that there is a reasonable probability that the use of or exposure to such food will cause serious adverse health consequences or death”

This bill pertains to the majority of the food value chain.  Food chain participants must be able to create and store records related to the products they handle.  Clearly, technology can assist with the capture and storage of this information.

“Requires each owner, operator, or agent in charge of a food facility to: (1) evaluate the hazards that could affect food; (2) identify and implement preventive controls; (3) monitor the performance of those controls; and (4) maintain records of such monitoring.”

Again, technology will play a critical role implementing preventative controls and monitoring the performance of the controls.  Supply chain technology can help support best practices such as stock rotation (first-in-first-out, first-expired-first-out), lot/batch tracking, product labeling, and quality inspections.

Additional Resources:
Fisher Nuts improves traceability in manufacturing and warehousing operations with HighJump warehouse management (WMS)
Three Components of Product Traceability in the Food and Beverage Supply Chain
Mom’s Foods Case Study

I have to admit I am not an avid World Cup soccer fan...but I have enjoyed the coverage and subsequent drama unfold with a few of the higher profile upsets and controversial rulings on the field.  The ironic story regarding the English team's history with the "Ghost Goal" certainly caught my attention (England clinched its only World Cup victory in 1966 with a similar dispute goal line marker) as the one disallowed versus Germany, en route to a 4 - 1 German victory.

What I found particularly interesting was reading how Sepp Blatter (FIFA President) first maintained the "human aspect" of the game was key and could not be replaced, only to later change positions and seem open to technological advances to assist the officials.

http://www.guardian.co.uk/football/2010/jun/29/sepp-blatter-goalline-technology

How does this relate to direct store delivery (DSD) companies and their challenges?  It seems that Sepp did some soul searching and came around to the concept of at least considering, if not implementing, technological advances.  So what are some signs for DSD companies to recognize when it is time to move forward with a project that advances their use of technology?  Below I talk about five points that really should trigger at least an investigation into what alternatives exist.

1.  Hinderance or Help?
Your company bought that software (route accounting systems (RAS), mobile sales solutions, or maybe an inventory application) or possibly hardware with the intent of helping your employees get the job done faster and better than ever.  At first things were great and you saw immediate improvement in your daily process, but those days are gone.  Today you are more frequently forced to create work arounds or miss opportunities all together due to limitations in your technology suite rather than it helping you achieve improved results.

2.  Reliability Issues?
How often do you hear your route drivers complaining of having to "re-key" a route due to data loss?  Or perhaps a rushed purchase order has been placed due to an unrealized inventory issue from a batch posting failure?  A better question would be - how many times can you let this happen before you realize there is a problem?  Whether it is hardware or software that is letting you down, when these solutions start to impact your business due to failure it may be time to act.

3.  Falling behind competitors?
When the calibre of your lawn falls behind that of your neighbors there may be some good natured teasing involved, but not much more.  When your ability to deliver goods, invoice accurately or manage your supply chain falls behind your competitor you have a much more serious issue to deal with.  In today's economy DSD providers are having their margins tightened while dealing with increased costs, so this is no time to give your competition a head start!

4.  Increasing Cost of Ownership?
What did your IT staff look like when you first implemented your route accounting system?  How did you roll out sales process changes with your route salesmen?  What budget do you allocate to these activities now?  Upgrades, maintenance, support and enhancements are all costs that hit the bottom line.  If your IT spend continues to grow but your ability to handle new functionality (or possibly even maintain the status quo) hasn't progressed, isn't it time to start asking why?

5.  End of Life?
Perhaps one of the more feared phrases of the IT world, if the above listed points haven't triggered the proverbial "spidey senses" then this one surely will start your temperature to rise.  When Microsoft or IBM delivers the notice that product "X" is getting the End of Life treatment you may be able to stretch your utilization past the date, but if anything goes wrong the costs to support / correct / replace will be substantial.  Better to act quickly and start identifying alternative paths to support your business. 

The list of compelling events for your operations may be considerably different depending on the circumstances in which you exist.  But by reading this, I trust that you are actively monitoring where you stand in your technology's life cycle...and good luck making your decisions!

Computer Software Publisher and Distributor Uses HighJump 3PL Billing Management Software to Adapt Its Business Model

HighJump Software, a global provider of supply chain management software, announced Navarre Corporation is extending its service offering to include third-party logistics (3PL) services with the help of its HighJump solutions. Navarre is a distributor and publisher of computer software and home entertainment products. The company processes 2.2 million orders a year and manages 15,000 SKUs on a campus of three facilities with a combined 320,000 square feet in Minneapolis, Minn. and a 30,000 square foot facility in Toronto. After implementing the HighJump Warehouse Advantage WMS, Navarre has seen improvements in efficiency, worker productivity and inventory accuracy.

Read the full press release.
 

HighJump Software announced Foster Farms Dairy has selected the HighJump warehouse management system (WMS) to optimize its operations. The company processes a wide variety of dairy products at three plant locations and distributes throughout northern and central California from multiple branch facilities. In the project’s first wave, the HighJump WMS will be implemented in the company’s three manufacturing locations and one of its distribution centers.

Foster Farms Dairy recently began a search for a warehouse management system as part of its commitment to continuous process improvement and satisfaction of customer quality and service needs. Lon Nebiolini, Technology & Systems Director Foster Farms Dairy, said “We selected HighJump Software because of its strong reputation in the marketplace, successful applications in the food and beverage industries, and its full suite of supply chain execution solutions, which Foster Farms Dairy plans to take advantage of in the future. Another important factor was HighJump
Software’s adaptable architecture, which will maximize flexibility with respect to changing business requirements without excessive costs or business disruption.”

Read more about Foster Farms Dairy's selection of the HighJump warehouse management system (WMS).
 

Walmart….I know it is almost universally recognized as a dirty word for the many challenges they create for their DSD suppliers.  However, today I would like to talk about the beneficial changes to operations that have resulted from their ASN initiative.

Let’s first look at how many “traditional” DSD vendors handled their order flow before ASN’s (I am going to state the implied assumption of pre-sold orders rather than peddle sales here, but really ASN is conceptually impossible without pre-sales).

1. Order is received by vendor “X” hours or days in advance of required delivery (the method of entry is for another discussion at a later date) into route accounting software.
2. Order goes through some level of processing to determine how it will be built.  Eg. Products are aggregated with common packages, or order is built specifically for customer (read my previous blog on whether to build by order or not).
3. Pallet(s) are built by the distribution warehouse staff with paper pick tickets / load sheets.  Possibly with, but more likely without checking of pallet content.
4. Driver shows up the following morning and verifies his load content and has to either manually pick additional product to replace short picks / miss-picks, or if they are lucky gets some help from the receiving staff.
5. Driver delivers goods to store where additional invoice/delivery adjustments may be required due to earlier verification issues.

This process obviously has some fairly inefficient steps here, but I think it is safe to say this was generally accepted, and even still is today with many small to medium sized distributors.

The Walmart ASN initiative continues to roll out across North America.  To be compliant DSD suppliers not only have to pick at a rate of near constant perfection, but they also have to submit this information well in advance of the driver showing up at the back door with product.  Meeting these requirements means manual picking processes have to go away and any pick discrepancies must be accounted for AND communicated in advance of delivery.   This means adding a step to update pick quantities and another step to update delivery handhelds have to above process.  It doesn’t take a rocket scientist (no offence to the rocket scientists), to figure out the changes required to complete these tasks cost $$.  But let’s look at how these operational changes provide benefit beyond being able to continue to supply Walmart with product.

1. Productivity Metrics:  by using either a handheld or mobile computer solution you should be able to track more data than just updated pick quantities.  Why not select a solution to track picking time to generate productivity numbers?  These metrics could be used for incentive picker compensation or alternative motivation plans.
2. Driver Check Out:  with loads already reflecting the changes to pick quantities driver checkout processes should take far less time, getting them out into the trade faster.
3. Delivery Time Reduction:  similar to point above, with accurate load/invoice information route drivers reduce time required to handle the administration side of mobile sales, and should be able to spend more time actually servicing stops.
4. Risk of Fraud:  unfortunately fraud happens…but with accurate order/invoice numbers the need for invoice adjustment will theoretically go to zero.  While I doubt the zero adjustment goal will be present 100% of time, far fewer invoice adjustments means those that happen need better explanation and can be investigated to confirm legitimacy.
5. Route Reconciliation:  here is yet another spot where accurate orders result in time savings.  The lack of invoice adjustments, and accurate inventory numbers save labor for route drivers and reconciliation clerks alike.
6. Inventory Accuracy:  actual pick quantities rather than relieving inventory based on expected numbers give your operation and sales teams real on hand data to know what needs to be ordered, and what is available to sell.

As you can see there are definite benefits to implementing a process solution where actual picked quantities are efficiently tracked.  To truly reap the benefits of this process though, operations should be applying this supply chain improvement not only to their Walmart ASN accounts but to all (or at least the majority) of their accounts!

Traditional perceived challenges to dealing with Walmart aside, I think this is one area where the supplier integration changes they have created in the DSD supply chain best practices are actually forcing operations to become more efficient!  I hope that you consider some of the points above and how they could help your direct store delivery operations as well.
 

In a recent letter to their suppliers (full letter here courtesy of ARC), Wal-Mart outlined a new policy about the enforcement of the MABD (must arrive by date). The gist of the policy is that all purchase orders (POs) must arrive within a four day window preceding the MABD. If a supplier is out of compliance over a period of time, they will be subject to a fine which equates to 3% of the cost of goods sold (COGS). How is that for a chargeback? While it is common place for retailers to have some chargebacks in place if certain conditions are not met (labels, timing, packaging, etc.), this new program raises the risk and cost exposure to shipping to Wal-Mart. Wal-Mart’s go to market strategy is largely competing on price, and to achieve their price superiority they lean heavily on suppliers to lower their COGS so they can pass some of that savings onto consumers. Many suppliers will have no choice but to accept these terms since Wal-Mart represents so much of their business, but this new policy will make it less profitable to sell their wares to Wal-Mart.

 

I wonder if Wal-Mart cannot see the proverbial forest for the trees when it comes to their extended supply chain costs? Anytime we chose to measure/manage/incent on a metric it is quite likely to improve. I have no doubt that the number of POs that arrive within the MABD window will increase, but at what cost? Just last Spring when Best Buy was reporting their Q1 financials they stated they lost potential sales because some vendors had simply not supplied the expected merchandise. I can see a similar situation unfold in the case of Wal-Mart. The more constraints that are introduced into a situation, the less the situation can be optimized. If the supplier has these strict delivery windows they might be less inclined or dis-incentivized to consolidate loads. This could result in out-of-stock conditions on the store shelf, something that clearly costs Wal-Mart money. To the degree this new policy raises the overall cost for the suppliers the less they will be able to work with Wal-Mart on additional price concessions or Wal-Mart could push them to the brink of bankruptcy, neither of which is a good outcome for Wal-Mart.

 

While I am all for management of key metrics, it is always important that the metrics enforced in one division/department support the overall corporate strategy otherwise a sub-optimal result is likely. This new policy is now in effect as of February 1, 2010. It will be interesting in the coming months to see the impact this has on Wal-Mart’s extended supply chain and if it goes the way of the RFID mandates…

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 reviewing supply chain best practices, visibility to inventory levels throughout the different nodes in your supply chain should be one of the practices your company has embraced. This allows your company to be more nimble and still meet customer service levels when supply chain disruptions and exceptions occur.  RSM McGladrey recently released their 2009 Manufacturing and Wholesale Distribution Survey (registration required) which interviewed 923 leaders of United Sates manufacturing and wholesale distribution companies. Over 80% of the respondents held a C-Level position at their company. This report uncovered some interesting opportunities for improvement across the different functional areas of the company but I will focus on the supply chain and information technology responses.

 

An overall theme of the report is the global structure many of the respondents have established as two thirds of the companies source products internationally and 62% export products to at least one foreign market. However, the study notes:

 

           “Approximately 25 percent of companies indicate information flow

and inventory management information from their company’s supply chain consistently meets their business needs only some of the time or not at all.”

 

This is a fairly large percentage of companies that do not have the necessary inventory visibility to run their business. As has been stated many other places the largest cost in virtually every supply chain is the amount of working capital that is tied up in raw materials, work-in-process, and finished goods. If a company does not have good visibility to inventory levels, that generally drives up the amount of inventory required to continue to meet desired customer service levels. This is a clear area where modern supply chain logistics software can add significant value by providing more accurate and real-time visibility to inventory levels throughout the supply chain.

 

Another area of focus about the study was on the topic of information technology.  Just like in the area specific to supply chain, there are several areas for improvement:

 

• About one in five companies indicate current systems are not meeting reporting and data analysis needs
• A nearly identical number indicate current systems are not meeting operational and process improvement needs
• One in four companies indicate they do not have effective systems to communicate with customers and vendors

 

The above statistics show the rigidity of many legacy systems that hinder rather than enable process improvements and do not provide easy and effective ways to make data available for internal or external consumption. If your company is like the companies above, this provides a key list of criteria to evaluate solutions against when you are upgrading your information technology infrastructure to make sure you can meet the needs of today but easily adapt to the new requirements of tomorrow. 

HighJump Software has announced the availability of version 11.0 of the HighJump Supply Chain Advantage product suite. The emphasis of this major release is on enhancing the quality of work life of HighJump Software customers by:

• Improving implementation quality and speed
• Empowering both executives and staff with graphical, actionable business intelligence data
• Allowing customers to select which capabilities to include in each application upgrade

Read the full press release.

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.

Since wine and spirits distributor Empire Merchants implemented HighJump Warehouse Advantage, HighJump's WMS warehouse management system, in its distribution center, the company has seen improvements across its operations. The HighJump solution has enabled Empire to implement just-in-time (JIT) replenishment, ousting its previous paper-based replenishment process and virtually eliminating wait times in its pick lines.

“We couldn’t have picked a better software package and implementation partner than HighJump Warehouse Advantage and CIBER.” says Tony Magliocco, COO, Empire Merchants. “The software is working as the project team designed it. As a result, our fill rates have increased and our distribution costs have decreased dramatically.”

Read the full story here.

Built with supply chain management best practices in mind, HighJump's supply chain logistics software helps companies optimize complicated distribution operations.
 

One of the top reasons people buy HighJump systems is because HighJump applications are designed to easily adapt to the way you do business - not force you to twist your business processes to fit the software. The adaptability promise continues with HighJump's new business intelligence application - HighJump Performance Advantage.


In a nutshell, HighJump Performance Advantage allows supply chain customers to view summary-level operational data in the form of graphical dashboards, and then drill down to root cause in order to correct any problems. Over time, this ability can lead to significant process improvement in a warehouse/DC or manufacturing shop floor.

It's easy to create personalized dashboards to suit your own operation. And you can set up dashboards for every user persona in your operation. Ex: an outbound dashboard for your shipping manager, an inbound dashboard for your receiving manager, and a capacity and utilization dashboard for an exec or warehouse manager.

Pretty cool stuff, but also very practical usage for HighJump customers interested in supply chain improvement and a way to give access to business performance metrics - and a route to operational improvement - to all members of the team.

Check out sample dashboards here: www.highjump.com/performance_management

Cal Petty of CIBER continued the discussion of thought leadership in the supply chain with a great presentation on apply best practice benchmarking in warehouse operations. In his presentation, Cal highlighted three required components in driving continuous improvement in warehousing.

1.       A quality measure of current operational performance (baseline metrics)

2.       An understanding of what is possible based on the nature of the warehouses involved (best practices benchmarks)

3.       A roadmap for planned movement from baseline to best practices

How long after implementing a best practice can you expect to see savings? Cal says it’s best to be patient. It can take from one to three months to see changes. 

Here are three resources Cal suggests for benchmarking data:

WERC: Warehousing Education and Research Council

CSCMP: Council for Supply Chain Management Professionals

APQC: American Productivity and Quality Center

HighJump Software has partnered with John B. Sanfilippo & Son Inc. (JBSS) to create a video highlighting the use of supply chain management software solutions to improve food safety and traceability of food products for recall management. JBSS is the manufacturer of the Fisher Nuts and various private label brands of nut products. Watch the video at http://www.highjump.com/Sanfilippo/.

Food recalls of recent years – peanut butter and spinach among others – have propelled food safety issues into the national spotlight. Also making headlines is the Food Safety Enhancement Act of 2009 for enhanced traceability and regulation of the food supply chain. Supply chain execution technology is a critical component in adhering to these new regulations and ensuring food safety. For effective recall management, full traceability is required – from the supplier, through production, distribution and last mile delivery.

Read the full release.

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.

There has long been debate about off-shoring or near-shoring manufacturing capabilities and whether this is good for the United States. While I will not delve into the heart of that lengthy debate, “Made in the US” has long been an important buying criteria for large segments of the American population and has become even more important in the economic downturn as a renewed emphasis has been made on buying American, albeit with protectionist risks.

 

However, a recent study by the American Small Manufacturers Coalition (ASMC) states “over a quarter of American manufacturers – representing over 90,000 firms – are at risk because they are not at or near world-class in any of the six strategies.” So what exactly are Americans buying if a product is “Made in the US”? The ASMC study details six strategies that are required for global competiveness:

 

• Customer-Focused Innovation (CFI)
• Engaged People/Human Talent Acquisition, Development and Retention (EPT)
• Superior Processes/Improvement Focus (SPI)
• Supply-Chain Management & Collaboration (SCM)
• Green/Sustainability (GS)
• Global Engagement (GE)

This is particularly concerning as companies in China, Eastern Europe and elsewhere continue to build out more robust manufacturing capabilities. Of specific concern are our deficiencies in Supply Chain Management and Collaboration. A key component of world-class supply chain infrastructure is an investment in modern technologies such as manufacturing execution system software or manufacturing data collection. If our manufacturing companies, due to macro economic factors or industry specific dynamics are under-investing, it is unlikely they will be able to compete in an increasingly global marketplace. While this is concerning, we need to heed the warning bell that the ASMC raises and use this as a catalyst for action, rather than let it become a leading indicator to a decline in the “Made in US” moniker.

 

You can read the full report here.

Image via Flickr user shawdm.

At HighJump Software we are working on a new performance dashboard for our WMS Warehouse Management System.  This is a very exciting project which will allow customers to view key metrics throughout their distribution center operations.  While ensuring the dashboards are esthetically pleasing is a key element of the process, the more important part is determining what are the right metrics to include in each dashboard.  In addition to relying on industry associations such as the Supply Chain Council and the Warehousing Education and Research Council, we evaluate potential metrics according to the “SMART” criteria:

 

S – Specific

Is the metric detailed enough to be meaningful?  A metric like ‘Outbound Order Progress’ sounds interesting, but probably lacks the specificity to be useful.  Metrics like order pick accuracy or number of cases shipped are more specific and tangible.

 

M – Measurable

There are a lot of interesting metrics, especially in supply chain, but many companies do not have the data to actually measure the metric.  Total landed cost is one that comes to mind as challenging for many companies.  Before selecting a set of metrics, make sure you validate your supply chain management software solutions have the data needed to calculate the metric. 

 

A – Actionable

If the user looks at a metric and finds it interesting but is unable to take action to improve the metric, then it will not be very useful.  When a metric falls below a goal or a certain tolerance, the user of the metric should be able to determine the root cause and take corrective action to improve the metric.

 

R- Relevant

The metric has to be relevant to the user.  It would not be relevant to display outbound order metrics to the inbound receiving manager.  This is why it is important to have multiple dashboards so that only relevant metrics are presented to the user.  While there will be some overlapping metrics between the DC manager dashboard and the customer dashboard, it is important that only metrics that are relevant are displayed to the targeted user. 

 

T – Time Based

The metric perfect order fulfillment sounds like a good metric, but if I just said the value was 98% that would prompt a series of questions:  for what time period, is it trending up or down, how it compares to last year at this time, etc.  Metrics need to have a specific timeframe associated with them and depending on the metric that timeframe could be hours, days, weeks, months, etc. 

 

Hopefully this is helpful when you evaluate what metrics to use in your supply chain operations.  More to come as our dashboard product nears completion.

If you haven’t checked out voice technology recently, you may want to consider it. There are many other common misconceptions about voice technology in the warehouse, which Chad Collins explained recently. Hardware costs have come down quite a bit in recent years, making voice technology an even better value and making it easier to get started. There are also great benefits of adding voice technology to your operations including greater productivity and increased safety. 

Voice for Warehouse Management
The HighJump WMS warehouse management system offers full integration with Vocollect’s Voice-Directed Distribution®, giving you real-time, voice-enabled communication between distribution center workers and the WMS solution. The solution offers a range of voice-enabled picking options configurable by warehouse, specific pick area or specific employee. Benefits include:

• Improve throughput
• Reduce new employee training time
• Improve safety with hands-free and eyes-free picking
• Leverage configurable, voice-enabled picking options

Sport Chalet Success Story – Vocollect and HighJump SoftwareDownload:

 

Voice for Direct Store Delivery Software
You can use voice recognition software in conjunction with HighJump Load Management to manage picking of pallets. Here’s how it works:

• HighJump Load Management optimizes the load for the vehicle and creates the pick instructions. It passes the pick instructions to the handheld device which converts it to voice commands.
• The picker interacts with the software to record any changes to the picks.
• The completed transactions flow back to HighJump Load Management for completion.

If you're committed to supply chain best practices, be sure to consider how voice technology could transform your operations.