SCM vs. Logistics

What exactly is the difference between supply chain management and logistics? Is logistics part of SCM? Can the two phrases be used interchangeably?
A comprehensive discussion about this topic can be found in the Supply Chain and Quality Management Forum of 12manage.

A new survey on decision-making in retail supply chain: Please participate

I have been kind of involved in a survey about how companies can make better decisions for buying supply chain IT solutions.

The research is trying to gain some new insights in the area of supply chain and IT management and is initiated in MIT-Zaragoza International Logistics Program and Chalmers University in Sweden.

I strongly recommend you to participate in this survey: You will receive the final report and there will be a prize too; a copy of the book "Resilient Enterprise" by Dr. Yossi Sheffi of MIT.

It will take around 10 minutes of your time. You can start the survey by clicking here.

Wal-mart's RFID plan remains unchanged for 2007

Yesterday I read a recent article in Financial Times on Wal-mart's RFID policy in 2007 and it seems to me that the giant retailer doesn't want to step back from its original objectives. Wal-Mart has said it will maintain the "aggressive" RFID plan in spite of what analysts are calling continued scepticism among suppliers and retailers about the system.

According to a recent article retailer now expects to have five distribution centers and 1,000 of its US stores - about one in four - equipped with RFID readers by April. It wants more than 600 suppliers to be using the tags this year - 300 more than last year.

Consistent plans of Wal-mart, Tesco and Metro Group, in a situation that the general populace has taken a "Wait and See" position, brings this question to the mind that whether we'll see a huge change in RFID adoption level or not…

What do you think?

(Source: Author's article in RFID-Weblog)

SupplyChainer to announce the list of best supply chain partners in 2006

Year 2006 is ending and what I’m doing is to announce the list of the best supply chain partners in 2006. At SupplyChainer I have already developed some criteria and done some ranking for this but I will be more than happy to receive your inputs as well. So send your votes about what companies are the best as consulting partners, ERP solution vendor, SCE vendors, and demand management solution providers and so on.

I’m looking forward to receiving your information about votes. Keep visiting the SupplyChainer.com till Dec. 20 for the final results. Send your emails to ehsan@creative-weblogging.com

Companies failing to address supply chain dependency threats in Asia, Marsh finds

According to a recent survey by Marsh non-Asian companies that have supply chain dependencies in Asia often lack awareness of regional risks and have not addressed these in business continuity plans.

According to Continuity Central, the Marsh survey found that 40 percent of respondents were not prepared for a terrorism attack, while only 28 percent were prepared for a natural disaster that could destroy their supply and business operations.

Matthew Elkington, vice-president of Marsh's Risk Consulting Practice, said: "The dramatic rise in supply dependencies with Asia, and in particular China, creates significant and diverse risk exposures, several of which are unique to the region in terms of their nature or severity. For example, according to the European commission, 50 percent of product risk notifications arising in the EU in 2005 originated from China.

"Intellectual property, counterfeiting and ethical risks are often just as important as the more traditional infrastructure, financial and natural disaster considerations and should be given equal weighting on a company's risk agenda," states Mr. Elkington.

The companies that participated in the survey were a combination of multi-national organizations that have supply chains or sites in Asia and independent companies domiciled in the region

(Source: SupplyChainer.com)

Is 2-D DataMatrix barcode a serious competitor?

As the price of RFID tags are still too high for many companies looking for tracking Technologies, a series of other competing Technologies are trying to catch up and one of them is 2-D DataMatrix barcode.

In the past, some problems regarding the use of traditional barcodes made companies migrate to RFID. Among those problems, it can be mentioned that, the dirt, water and humidity rendered many of the codes unreadable. On the other hand, high cost of RFID tags, software and high-end enhanced readers was also a challenge which still exists today.

By the way, some companies such as ImageID Ltd., with their 2-D DataMatrix barcode solution, claim that they have combined best of the two world and offer reliable, low cost tracking technology. I myself am not quite sure that whether this is a serious threat for RFID or not in the long run but it may definitely be in the short term till RFID tags become cheap enough to dominate the market. What do you think?

(The post is originally written by the author in RFID-Weblog)

Outsourcing: Look beyond costs...

It's no surprising to see that according to a research done by Gartner, business process improvement is not among the top reasons for outsourcing in the companies.

High pressure from financial markets to increase profitability has resulted in emphasis on short-term financial goals and this has been automatically translated into supply chain actions plans such as outsourcing efforts. But is it really sustainable?

I don't think so. I agree with the point of view of Ousourcing Times that:


Instead of placing emphasis on low cost when choosing an outsourcing partner, companies will gain more by looking at the bigger picture, and scrutinizing if the firm has the necessary resources and the ability to deliver. The firm should be a part of the strategic decisions taken by the parent company, and commitments should be based on long-term returns that benefit the business as a whole, rather than just saving on short-term costs.

(Source: SupplyChainer.com)

My advice for 3PLs

I'm writing this piece for 3PL companies: Put yourself in the position of your clients. What are the main reasons they use your services instead of developing in-house capabilities?

1) State of the art technology
2) High quality customer service
3) Service flexibility
4) Cost effectiveness

Ok, so these are Key Success Factors in your business. Take a look at your action plans and see whether you see all these elements as part of your objectives...

Analyzing Supply Chain Dynamics in Modern Industries

The phenomenal growth of wireless industry and the automotive industry has greatly increased the intensity of competition. Modern business competition seems to be undergoing a fundamental change. The concept of threads, fabric and weaving develops a framework to explore this industry dynamics and analyze the changing value dynamics. The study helps to comprehend the transformed nature of the dynamics in wireless and automotive industry.

Thread-Fabric Framework and KSN

As the market is becoming very dynamic and so the wireless industry, firms in wireless industry form and dissolve partnerships and the chains at a rapid pace. Hence, there is much collaboration to bring the products and services to market as soon as possible to gain the competitive advantage. This also applies to the automotive industry.

Same type of product can be manufactured by many different manufacturers and there can be many suppliers to supply the parts needed with equal or competitive flexibility and quality. All such link-ups of the value adding activities are value threads, and the totality of the value threads constituting the industry are value fabric. If so, then there is no fixed value chain linking the companies, rather it is flexible, contingent and opportunistic. This makes the unfolding structure of the industry as continuous weaving of value threads into certain patterns of fabric.

The Knowledge Supply Network (KSN) and the platform priorities upon which the value delivered by the KSN is launched, makes this value thread weaving more complex. The degree, at which the KSN partners share the forecasting information beyond being Suppliers and Customers of one another, plays an important role in creating the value thread and the bullwhip effect.

It is evident that the business competition is becoming fierce as players striving against one another to propose value threads to their potential partners, to weave their value threads into a pattern agreeable to the market, there by shaping the value fabric of the industry to their advantage.

The patterns of pragmatic logic, helps to identify the thirdness of the wireless industry. This suggests that, there is a high level of complexity involved in wireless industry and knowing the game at every point of time is important to take the advantage. The change of platforms leads to the shift of push-pull boundaries across the wireless industry. For example, the ongoing migration from 2G to 3G, the WCDMA technology promoted by GSM players Vs the CDMA2000 technology promoted by Qualcomm and its CDMA-1 partners. Market demand being so dynamic as per the geographical interests of customers, the change of platform is necessary which demands flexibility, speed and timing, in-short correct meta orientation and correct strategies-tactics. This will help to capture most of the market with maximum customer demand satisfied on right time, also confirming the required flexibility in value chain. It gives rise to fabric patterns which are manifold.

Modeling and simulation

Modeling and simulation of these two types of value chains; Supplier driven value chain and Distributor driven value chain, allow us to check the shift of push-pull boundary, to evaluate the bullwhip effect and flexibility of the supply chain. It also evaluates, how fast the industry can adapt and exploit the changing circumstances. It helps to visualize the various ways; the market fabric might unfold, spin and weave its value threads accordingly. The player’s conception and maneuvers in modern dynamic industries are analyzed using the simulation model. The phenomenon that, formation and evolution of value threads are disorderly, opportunistic and contingent can be experienced. The bullwhip effects can be analyzed and compared in both type of supply chain. The same concepts can be applied to the automotive industry.

A diet for your supply chain...

Dan Gilmore, editor of Supply Chain Digest, is one of the people I really admire as a supply chain expert. His fresh ideas and wonderful articles are always inspiring.

In one of his new articles, he has written about a new book titled "The Wall Street Diet: Making Your Business Lean and Healthy". He has strongly recommended the book as a useful guide in SCM area (I trust the guy so I think you should read it).

As title of the book shows, the ideas are couched in terms of a diet and it makes sense. Why? Because like individuals trying to shed excess pounds, companies and their supply chains are plagued by two related challenges: building a total "health" program, not just focusing on one specific element, and "keeping the weight off" after the initial improvement.

Here are some of the most important elements of the "diet" according to Dan Gilmore:

- Create a "Lean" Enterprise - using Lean principles beyond manufacturing to drive out waste and improve efficiency

- Achieve "Advanced" Supply Chain Management (more in a moment).

- Adopt Six Sigma type quality principles across many business processes to achieve a "quality-focused" enterprise

- Improve metrics to track progress

- Expand use of "smart" outsourcing as a function of really looking hard at what functions and processes could be better performed by someone else.

- Take a new, more enlightened focus on customer satisfaction

(Source: SupplyChainer)