Is IT a remedy for GM's poor results?

General Motors Corp. is turning to automation to improve its auto parts distribution system to dealers, ending practices that had made for a bumpy ride for its auto parts supply chain. By the end of 2007, GM expects to have its approximately 8,000 U.S. and Canadian dealers using its Retail Inventory Management (RIM) system, which relies on intelligence gleaned from nationwide parts sales to recommend parts-restocking policies at dealerships, Computer World reported.

Today, GM parts distribution relies heavily on the judgment and practices of individual dealer parts managers, who typically wait until the end of the week to submit a batch of parts orders. This has meant that a large percentage of parts orders have arrived at GM distribution centers at the same time, driving up labor costs because workers earn overtime pay as they rush to fill orders.

One main question is Is IT a remedy for GM's poor results? The answer is maybe. It's for sure that the giant auto maker must reduce its cost of development and also supply chain cost heavily in the next three years to survive and this plan is in line with cost reduction objective, but this should be combined by a set of other restructuring efforts acting in a coordinated way to be helpful.

Chinese university to tag 300,000 library items

The recently merged RFID tag and inlay manufacturer UPM Raflatac has entered into an agreement with Shanghai RFID System Technology to provide its RFID tags to Jimei University Library in Xiamen, China - an agreement covering the supply of some 300,000 RFID tags. The new RFID system being deployed for Jimei University Library will help the library automate the borrowing and returning of library items, thereby reducing queuing times and theft. RFID technology will also speed up the sorting of library items, which will result in items being returned to the shelves quicker. Inventory is made much faster and easier by simply passing the RFID reader along the bookshelves.More libraries to come

According to Using RFID, rafsec's tags are designed specially for RFID library applications. Edward Lu, business development director (Asia) for UPM Raflatac's RFID business, said: "We're excited to be taking part in this large-scale RFID library project. We have been supplying RFID tags for library applications for many years in many parts of Asia but the technology is just starting take hold in China. Our collaboration with Shanghai RFID System Technology will permit us to expand our presence significantly in this rapidly growing market."Jimei University Library will move to phase two of the implementation in the second half of 2006, with more RFID implementations also to be conducted in other libraries throughout the campus.

(Source: SupplyChainer.com)

New research on supply chain vulnerability

Using GPS technology, the U.S. Department of Homeland Security tracked cargo from several companies between 2002 and 2005. The goal of the project, named Operation Safe Commerce, was to identify weak links in the supply chain. According to a Feb. 28 report on ComputerPartner.com, the conclusion that is being drawn from this report is that "companies actually know very little about what goes on in their supply chains." The article cited unsafe practices such as: truckers dropping off containers without ever encountering terminal security, containers left in unsecured areas, and containers bypassing a port that's considered safe and traveling instead through a country that poses a greater threat -- without either the company or U.S. Customs and Border Protection being informed.

According to Industry Week, These practices will soon come under closer scrutiny, according to the article, as the government demands more information about the supply chain. While compliance with the Customs-Trade Partnership Against Terrorism, or C-TPAT, which requires that companies take responsibility for the security of their supply chain, is currently voluntary, it is believed that soon all companies will be required to participate. To view the full article which provides a detailed analysis of upcoming regulations visit: http://www.computerpartner.nl/article.php?news=int&id=2632

The art of a Chief Supply Chain Officer

There are many fads, new concepts, cures and solutions in the area of supply chain management for a variety of problems and every day we hear about something new. Most of them promise better performance in supply chains. But an important point here is, what works in a company may not work in another one. Every company has to find right solution for its problems itself and there is no one size- fits all thing in the area. So personally, I don't think that general solutions available help companies to be pioneer and achieve competitive advantage. They may help companies to improve their performances but it will be marginal. In addition to the point that there is difference between one company's supply chain with another, I can add that there are also differences between one company's different supply chains and this is a point which is neglected in many cases. Different supply chains within the company need different strategies and different solutions. The challenge here is that in reality, it's not that easy to separate these supply chains and they interact with each other in a very complex way. The art of a Chief Supply Chain Officer is to determine which type of strategy is suitable for each chain and how to leverage the power of new technologies to implement that strategies.

Effective Supply Chain Manager (1)

Recently I was thinking about the role of supply chain manager in the organization. Along with his day to day duties and responsibilities, an effective supply chain manager also does some other things which contribute to the profitability of a company. One important role in within the product development area. Supply chain manager can attend in weekly sessions about products development and provide designers and project managers with the valuable information like sourcing condition of some components or increased costs of applying some materials into the new products.

Lack of skilled labour still holding back RFID adoption?

The deployment of RFID technology continues to be hampered by a shortage of individuals skilled in the technology, according to a new survey by the Computing Technology Industry Association (CompTIA). Seventy-five percent of the technology companies participating in the CompTIA survey said they do not believe there is a sufficient "pool of talent" in RFID technology to hire from. That figure is down slightly from a similar survey conducted in 2005, when 80% of respondents said there was a shortage of RFID talent. Among companies that believe there is a talent shortage, 80% said the lack of individuals skilled in RFID will impact adoption of the technology. The figure is significantly higher than a year ago, when 53% of responding companies said the shortage of talent would have a negative impact on RFID adoption.

Complex and evolving

"RFID is a complex and still evolving technology, and expertise is absolutely required for its usage to be a success," said David Sommer, vice president, electronic commerce for CompTIA. "The skill sets and 'need-to-knows' related to RFID are many and varied. Clearly there is work to be done in our industry in terms of RFID education, training and professional certification."CompTIA is currently working with more than 20 major players in the RFID market, including product manufacturers, distributors, system integrators, education and training providers, and end-user customers, to develop a professional certification of RFID skills for individuals working with the technology.CompTIA's RFID+T is a vendor neutral certification of RFID skills that addresses the needs of RFID hardware/software manufacturers, value added resellers, training developers, and end-users of the technologies. The certification, scheduled for worldwide availability on 28th March 2006, is intended for technology professionals with 6-24 months of experience in RFID or related technologies. Among the skills the certification exam will test are installation, configuration and maintenance of RFID hardware and device software; site surveys and site analysis; and tag selection, placement and testing.

(Source: CompTIA, Using RFID, SupplyChainer.com)

Make you supply chain agile (1)

Flexibility: That's like an oxygen for supply chains today, a necessity for competing in an environment where dynamic costs puts a premium on agility. Let's all hope we'll never see $100-$200 a barrel oil, but you sure better have a plan if we do. So, we have to gain an understanding of what is the characteristics of an agile supply chain and how to make it happen. Here comes some suggested by Dan Gilmore from Supply Chain Digest. This is the first part:

Continuously Plan Your Supply Chain Network

Traditionally, firms have treated supply chain optimization as a strategic event run every two to five years, until a major corporate event occurs, like an acquisition, or "the pain is so bad they can't stand it". This periodic analysis does deliver significant value; a firm typically will reduce the operating expense in scope by 5-15% upon implementing a supply chain network redesign. Despite the significant initial operating improvements, results often begin to deteriorate within months. Why? Firms operate in a dynamic environment, where constant change threatens to create new imbalances within their supply chains. Kilgore says that in order to sustain the value provided by sophisticated analysis, firms need to conduct continuous rather than sporadic planning efforts. Continuous analysis enables companies to accelerate decision-making, view the supply chain holistically, and answer ad hoc questions with fact-based analysis. SCDigest notes that while a small number of companies, such as Pepsi/Frito-Lay, have taken this approach to continuous supply chain network planning and achieved very positive results, they are the exception, at a time when it is more necessary than ever given today's dynamic corporate strategy and cost environment.

(Source: SupplyChainer.com)

Supply Chain Organization Success

Supply chains have been in the business spotlight for years now, as companies like Dell, Wal-Mart, and others have built much of their competitive advantage on efficient supply chains. That said, a new survey of 300 North American companies conducted by AMR reveals that most companies are actually in the early stages of defining their supply chain organizations. About forty-two percent of surveyed companies either lack a supply chain organization altogether or have less than a year of experience in managing a supply chain organization. These figures show that there's a lot of organizational learning yet to be tackled on the supply chain front. In this regard AMR has offered three tips for success to young supply chain organizations:

Supply chain planning reporting to the supply chain organization improves new product launch successes.

Use customer scorecards to measure performance.

Cross-functional involvement with sales and marketing teams improves success.Companies with mature supply chain organizations are deeply involved in cross-functional planning ("When asked if a company had more than a 70% success rate in new product introductions, survey respondents indicated that supply chain teams with planning groups directly reporting to the supply chain organization met this hurdle 50% more frequently than if planning teams reported elsewhere in the organization"), customer scorecarding (" the higher the company performs in sensing demand and new product introductions "), and involving the sales and marketing teams ("While 59% of companies surveyed take more than two weeks to sense true channel demand, companies with sales and marketing having direct reporting relationships to the supply chain organization are more likely to be a leader in demand sensing. Companies that are better in demand sensing also have higher success rates in S&OP as well as new product development and introduction [NPDI] efforts").One of the most valuable aspects of a business survey is how it can offer insight into what top-performing companies are doing. AMR hopes that these insights distilled from mature supply chain organizations will be adopted by younger organizations.

Indian government asks fertilizer industry to focus on SCM

Well good news for consultancy firms in active in India:

IndiaIndian Government today asked fertilizer industry to strengthen its distribution network so that supplies reach farmers living in the countryside. "Industry should strengthen its distribution network in order to ensure down the line availability of fertilizers at the farmer's field," Indian Chemical and Fertilizer Mininster Ram Vilas Paswan said at meeting of the Fertilizer Advisory Forum.

He said consumption of fertilizers would increase threefold, if adequate supply is made available to the farmers at the right time.He also stressed that there should not be hoarding of fertilizers at any level in the supply chain leading to even a temporary shortage.

Paswan asked the fertilizer industry to remain vigilant in order to ensure that no adulteration takes place in the supply chain."Industry needs to develop packing and marking standards so that farmers can be sure about the genuineness and quality of products while buying fertilizer," he said.The minister again clarified that no state-owned fertilizer units would be put on the block for sale, instead they would be revived.

"We are trying to ensure availability of gas for this purpose," he said.Asking farmers to use micro nutrients, Paswan said they should not use urea just because it was low cost.

New Book on Health Care Supply Chain

If there is one area of discourse within supply chain dynamics that has been ignored or underplayed, it is the complexity of the health care supply chain. This lack of evidence-based inquiry has hampered the field, which has lacked a comprehensive, research-substantiated offering. A new book, "Strategic Management of the Health Care Supply Chain," by Eugene Schneller, professor of health management and policy in the W. P. Carey School of Business, and the late Larry Smeltzer, begins to fill the gap. This book looks at the health care supply chain from a new, holistic perspective, pulling in concepts from strategic planning. The book is based on Schneller and Smeltzer's observations of best practices from progressive health systems such as Swedish Medical Center (Seattle), the Mayo Clinic (Rochester, Minn.) and BJC HealthCare (St. Louis).

"Strategic Management of the Health Care Supply Chain" also builds on the key concepts of sourcing, demand forecasts, distribution models, risk assessment and supply management excellence. Readers will find that they can gauge the movement that their own systems have made in improving the supply function."While frequently the largest employers in American communities, hospitals have been seen as part of the public service environment that does not produce an 'economic good,'" explains Schneller. "From a supply chain perspective, materials have not been seen as assets. However, more recent economic impact studies demonstrate that hospitals are a major driver of economic development and are part of an overall infrastructure that is necessary -- if not sufficient -- for economic development."

I personally recommend this book to all the people interested in managerial issues in health care industry specially supply chain.

New supply chain executive courses at MIT

MIT is going to run two short executive courses on July this year. I thought maybe some of you would like to go there:

The first one is: Demand Driven Supply Chain Management

In this course, supply chain optimization models and engineering marketingmodels that support demand-driven supply chain management will be examined.Differences in modeling approaches across industries such as consumerproducts, consumer durables, retailing, and industrial commodities will alsobe discussed. Several cases will be presented that describe successfulapplications in distribution, retailing, and manufacturing companies.

The second one is: New Approaches to Optimizing Inventories

In this course, modeling concepts and details will be presented for managinginventories as part of holistic supply chain optimization at all levels ofplanning. Cases describing successful applications in retailing, consumerproducts, and manufacturing companies will also be discussed. The instructor for the courses is Jeremy F. Shapiro, my favorite professor...I myself recommend these courses to busy practitioners and CIOs who want to become updated with current issues in a short time.For more info you can visit these two links:

http://web.mit.edu/mitpep/pi/courses/optimizing_inventories.html

http://web.mit.edu/mitpep/pi/courses/supply_chain_management.html

Gap's poor results and changes in the supply chain

Yesterday, I read in the Financial Times that Gap, giant american retailer, has shown poor results and its sales has dropped 11%. Today, I saw another intersting piece about their immediate changes in company's supply chain: Gap's supply chain officer to leave !

The departure of Cullen is the latest in a string of high-level executives to leave the specialty apparel retailer. The interesting part is that the company doesn't plan to replace the chief supply chain officer post. Instead, the company said it will separate the sourcing and logistics functions to better align the global sourcing team with the brands, and logistics with inventory planning and distribution.

Gap also said that Stan Raggio, a former supply chain executive with the company, will return from retirement to lead its sourcing division as senior vice president of sourcing and vendor development. Raggio will report directly to Chief Executive Paul Pressler and will work closely with the company's operating units, Gap said. Raggio, who worked at Gap from 1991 to 2002, will rejoin the company on March 16. (OK, BACK TO THE ROOTS ! )

The company's logistics division, which formerly reported to Cullen, will continue to be led by senior vice president Colin Funnell, who will now report to Byron Pollitt, Gap's chief financial officer.

Competition in the supply chain space is intensifying...

Bad news and good news: A market survey done by Frost & Sullivan recently about SCM market shows that competition has become more and more intesifying.The market for supply chain management (SCM) is increasingly gaining momentum with the introduction of RFID technology and the retail expansion happening around the globe. Also, there are signs of consolidation in the supply chain space due to the evolution of software suites, which are cost-effective and have minimal integration issues."Competition in the supply chain space is intensifying mainly after the entry of ERP vendors, who provide end-to-end solutions which incorporate SCM functionalities within them," notes Frost & Sullivan Research Analyst, Raja Srinivasan. "The fragmented market is entering into a consolidation phase which is evident from the recent mergers and acquisitions and this trend is expected to continue in the near future."This is good news for companies looking for partner in supply chain solutions because they can enjoy their increased bargaining power and also improved quality of service provided by SCM solution providers.