Category Archives: Supply Chain Management

Technology’s Role in Managing the Evolution of the Customer Centric Supply Chain

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Having an effective supply chain has always been key to retail success. Whether you call it micro-merchandising or the customer-centric supply chain, the challenge has traditionally been to quickly identify trends or activity in a store that is outperforming the norm, and rapidly roll this out to all stores with similar attributes and customer behaviours. Indeed, much of the ‘flair’ that separated well- from poorly performing retail operators was down to the ability of some key individuals to spot trends, clusters and patterns that drove better understanding of customer behaviour, and act upon these insights to deliver to customers’ demands.

This macro-level insight is, however, no longer good enough. Today, retailers need to be able to understand not only how items are performing across the entire retail estate as well as within individual stores and spot trends and patterns accordingly; they also need to be able to marry this micro-level performance to geographic and demographic information to reflect the demand from a particular store’s customers. And, they need to be able to forecast how those same items will be performing in weeks and months to come.

This is the capability that is required to truly deliver today’s customer-centric supply chain. But it demands a level of detail simply too difficult for humans to manage. Software solutions are designed to raise the average performance level by helping the poor or below average operators benefit from the expertise of the higher performers and placing this supporting technology in the hands of those key individuals who would act as district or regional manager.

But the needs of today’s customer-centric supply chain have outpaced even the majority of these solutions.

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DHL establishes Supply Chain Distribution Centre in Brazil

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DHL Supply Chain, the contract logistics specialist within Deutsche Post DHL Group, consolidated the logistics operations of three Sanofi divisions in Brazil by establishing a new distribution centre in Guarulhos, near São Paulo. The project, initiated by Sanofi in 2014, covers all portfolios of Sanofi, Sanofi Pasteur and Medley Brazil. In addition to the operation of the newly installed logistics centre, Sanofi redesigned its distribution networks for the complete Brazilian market and the corresponding export processes. The development of the new site means investments of 200 million Euros between 2015 and 2020. Already today, it is one of the largest distribution centres of Sanofi worldwide and the largest operated by DHL in Brazil for the healthcare sector.

Guarulhos was chosen as the ideal location due to its proximity to Sanofi’s industrial plants, large consumer centres and main logistical hubs of the country such as the Port of Santos. With 36,000 square meters of fully air-conditioned storage area and almost 50,000 pallet positions, DHL’s Distribution Centre has increased Sanofi’s daily shipping capacity significantly, especially with regards to operations of cold chain processes. Thereby ensuring speed, quality and safety for all steps along the supply chain.

“The objective of this project was to simplify and enhance Sanofi’s storage operations and distribution network in Brazil. Consolidating these operations into a single distribution centre has enabled us to foster synergies and streamline the entire process,” says Javier Bilbao, CEO DHL Supply Chain Brazil.

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The Value of a Supply Chain Executive Education

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Executive-level supply chain positions have gained both prominence and importance for today’s global companies, and to support this trend, universities, colleges, professional organizations, and training firms have enhanced their supply chain and logistics programs to help executives stay current on supply chain trends.

It wasn’t that long ago that supply chain managers worked mainly behind the scenes, stealthily orchestrating the movement of products from the raw material stage to manufacturing/production and right on through to the final delivery of the finished goods.

Typically occupied by employees who had successfully “worked their way up” through the company, these executive-level supply chain positions have over the last few years gained both prominence and importance for today’s global companies.

To support this trend, universities and colleges have enhanced their supply chain and logistics degree programs; organizations like APICS and the Institute for Supply Management (ISM) have expanded their certification programs; and training firms offer myriad options to help executives stay current on supply chain trends.

These executive education offerings provide executives with the opportunity to hone their skills, upgrade their technology acumen and better understand the inner workings of the modern-day supply chain.

Read more at The Value of a Supply Chain Executive Education

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3 ways to strengthen security with software supply-chain automation

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Federal agencies are striving to become more innovative and iterative, leading to growing adoption of open source within the government. The issuance earlier this year of the Federal Source Code Policy illustrates how this technology, once anathema to government agencies, has become the de facto standard for the creation and deployment of many applications.

With the explosive adoption of open-source components being used to assemble applications, agency personnel are now tasked with ensuring the quality of the components that are being used. Developers must have confidence in components’ security, licensing and quality attributes and know for certain that they are using the latest versions.

Unfortunately, many agencies that are adopting the RMF are also relying on outdated and inefficient practices and tools that are not designed for today’s open and agile world. In addition to relying on potentially vulnerable components to build applications, some agencies have continued to depend too heavily on common application security tools, such as static application security testing and dynamic application security testing.

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Why are global supply chains becoming more fragile?

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General Motors recently recalled nearly 4.3 million vehicles with defective software. The bankruptcy of Hanjin Shipping, one of the world’s largest ocean carriers, left half a million containers with $14 billion worth of goods stranded at sea.

Fiat Chrysler recalled 1.9 million vehicles worldwide for possible airbag and seat belt failures. Samsung had to recall a million of its newly launched Galaxy Note 7 smartphones after some devices burst into flames. And in Europe, Volkswagen was forced to shut down production of nearly 10,000 vehicles after a supplier refused to deliver key components.

These examples all point to two worrying questions: are global supply chains becoming more fragile and if so, why?

The above Volkswagen example is a good place to start to find answers and begin to address this issue begins it soon becomes apparent this fragility is itself, the first signs of a major shift for global supply chains.

Inherent imbalances – from single company to ecosystem

The automotive industry has come a long way since Henry Ford’s Motor Company mke everything that went into its product in-house. Today, 75 percent of automotive parts are not designed or built by car manufactures themselves but by their suppliers.

That means that manufacturing a car is no longer the job of a single enterprise. It’s the job of a complex ecosystem of supply chain partners. And VW is no exception. Indeed, any manufacturer of a complex product such as a car, hi-tech consumer electronics or even clothing relies upon its ecosystem of suppliers far more than the manufacturer may realize.

Read more at Why are global supply chains becoming more fragile?

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Supply chain risk is a growing concern for the Pentagon

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As the reliance of The Defense Department and its major contractors on vast global supply chains to provide the systems and weapons the DOD needs to perform its mission increases, so too does the risk. These potential risks come in many forms: the financial failure of a critical supplier; a supplier in violation of labor or environmental standards; or foreign infiltration into critical systems. The government is pushing contractors to provide more information about their supply chains, and this analysis will walk you through the supply chain of DOD’s (and the federal government’s) largest contractor, Lockheed Martin Corp., and uses it as an example of how Bloomberg can help you identify and report on potential risk areas.

Critical Nodes

It is possible to identify 350 of Lockheed’s suppliers by using the supply chain function SPLC on the Bloomberg Professional Service. Bloomberg’s entire supply chain database contains more than 1 million customer/supplier relationships. The same data also shows that some of these companies are highly reliant on Lockheed as a customer. Quickstep Holdings Ltd., a manufacturer of composite materials based in Australia, receives an estimated 70 percent of its revenue from Lockheed. Any change in Lockheed’s fortunes could have downstream effects on highly dependent suppliers like Quickstep.

For the Pentagon, Honeywell International Inc. is a much more critical supplier than Quickstep. Honeywell is a top 10 supplier to Lockheed as well as the other big five defense contractors: Boeing Co., General Dynamics Corp., Northrop Grumman, and Raytheon Co. Many defense programs could be disrupted, and alternative products and suppliers might be difficult to find if Honeywell’s goods and services were suddenly compromised.

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How IoT logistics will revolutionize supply chain management

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As with many other areas of the economy, the digital revolution is having a profound effect on delivery logistics.

The combination of mobile computing, analytics, and cloud services, all of which are fueled by the Internet of Things (IoT), is changing how delivery and fulfillment companies are conducting their operations.

One of the most popular methods for fulfilling deliveries today is through third-party logistics, which involves any company that provides outsourced services to move products and resources from one area to another. Third-party logistics, or 3PL, can be one service, such as transportation or a warehouse, or an entire system that maintains the whole supply chain.

But the IoT is going to change how this process operates. Below, we’ve outlined the impact of IoT on supply chain, and how IoT management will transform inventory, logistics, and more.

Internet of Things Supply Chain Management

One of the biggest trends poised to upend supply chain management is asset tracking, which gives companies a way to totally overhaul their supply chain and logistics operations by giving them the tools to make better decisions and save time and money. Delivery company DHL and tech giant Cisco estimated in 2015 that IoT technologies such as asset tracking solutions could have an impact of more than $1.9 trillion in the supply chain and logistics sector.

And this transformation is already underway. A recent survey by GT Nexus and Capgemini found that 70% of retail and manufacturing companies have already started a digital transformation project in their supply chain and logistics operations.

Asset tracking is not new by any means. Freight and shipping companies have used barcode scanners to track and manage their inventory. But new developments are making these scanners obsolete, as they can only collect data on broad types of items, rather than the location or condition of specific items. Newer asset tracking solutions (which we’ll get into shortly in the next section) offer much more vital and usable data, especially when paired with other IoT technologies.

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SenseAware is FedEx’s Internet of Things Response to Supply Chain Optimization

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Supply chain visibility is critical to a company’s operational performance improvement, according to 63% of 149 responding companies in a survey conducted by Aberdeen Group.

“Visibility is a prerequisite to supply chain agility and responsiveness,” the report states.

And it requires tracking the location of a shipment not only at the transportation level, but also at a unit and item level.

Location tracking is good protection against shipment theft or loss, but companies need a deeper level of visibility for their products, according to FedEx.

The company’s solution? The IoT-inspired SenseAware, a sensor-based logistics solution.

SBL uses sensors to detect the shipment’s environmental conditions while warehoused or in transit and sends the data – via wireless communication devices – to a management software system where the data is collected, displayed, analyzed and stored.

It is “the basis of a powerful new central nervous system for the global supply chain,” according to FedEx.

The device is meant to provide intelligence that can help enterprises coordinate and manage product, information and financial flows.

Read more at SenseAware is FedEx’s Internet of Things Response to Supply Chain Optimization

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Merchants scramble as shipper goes bankrupt

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Major retailers are scrambling to work out contingency plans to get their merchandise to stores as the bankruptcy of the Hanjin shipping line has thrown the retail supply chains around the world into confusion.

Hanjin, the world’s seventh-largest container shipper, filed for bankruptcy protection Wednesday and stopped accepting cargo. With its assets frozen, ships from China to Canada were refused permission to load or unload containers because there were no guarantees that tugboat pilots or stevedores would be paid. It’s also been a factor in shipping rates rising and could hurt trucking firms with contracts to pick up goods.

While some retailers’ holiday merchandise has probably been affected, experts say what’s most important is that the issue be resolved before the critical shipping month of October.

Degree of uncertainty

“Retailers always have robust contingency plans, but this degree of uncertainty is making it challenging to put those plans in place,” said Jessica Dankert, senior director of retail operations for the Retail Industry Leaders Association, a trade alliance with members including Best Buy, Wal-Mart and Target.

Plano-based J.C. Penney said Hanjin is one of several ocean freight carriers it uses and when it learned there might be a problem it began to divert and reroute its containers. It said it uses “a variety of transportation methods and ports” and does not expect a significant effect on the flow of merchandise.

Target Corp. said it is watching the situation closely, and Wal-Mart said it is waiting for details about Hanjin’s bankruptcy proceedings and the implications to its merchandise before it can assess the effect.

As of Friday, 27 ships had been refused entry to ports or terminals, said Hanjin spokesman Park Min. The company said one ship in Singapore had been seized by the ship’s owner.

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What’s Behind the Inventory Crisis of 2016?

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The last time the inventory-to-sales ratio was this high was 2009, when we were in the throes of the Great Recession – people lost jobs, businesses closed, nobody was spending, nobody was growing.

What does it mean that inventory levels are this high in 2016? Are consumers not spending? Are we headed for another recession? Or are other forces at work?

Well, in April the Bureau of Economic Analysis reported that consumer spending experienced its biggest gain in six years. And while JPMorgan recently reported an increased probability of a recession in the next 12 months, no one’s sounding the alarm bells quite yet. Besides, inventory levels have been high since last fall.

So what else could be at work?

The Marketplace

Traditionally, a drop in consumer demand would cause a short-term build-up of inventory. But businesses would eventually compensate by cutting orders and manufacturers would produce less. But as we’ve seen, demand isn’t going down. And yet, inventory isn’t moving. Why?

One major culprit is the way consumers shop. Their expectations have changed. This is the age of Amazon Prime, Instacart, Uber and Lyft. Free shipping. In-store pick-up. 1-hour delivery. Easy exchanges and returns. Above all – convenience. If it isn’t convenient for a customer to buy something they want, they won’t buy it – or they’ll buy it somewhere else. Fulfillment has usurped the throne of customer satisfaction.

Traditional retailers have struggled because of this. As young, tech-driven start-ups bite into market with the luxury of fresh starts, traditional retailers have tried to stay competitive. One common tactic has been to keep buffer inventory on hand. Out-of-stock inventory kills customer loyalty. Not being able to fulfill quickly kills customer loyalty. But having lots of inventory doesn’t equate to efficient fulfillment. That requires having a modern, flexible supply chain. Without agility, retailers often lack the competence to satisfy customer demand, let alone fulfilling profitably.

Read more at  What’s Behind the Inventory Crisis of 2016?

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