Category Archives: Supply Chains

Who Really has a Supply Chain Strategy?

Posted on July 23, 2015 by | Leave a comment

Dan Gilmore reports on his mini survey about the slippery concept of supply chain strategy and it implementation.  I think it’s a really good question.  And what he found is provocative.

Who Really has a Supply Chain Strategy?.

It seems only a few firms have really embraced a far reaching strategic management approach to the integration of supply chains with corporate strategy.  And his data show that they are still focused on internal improvements, whereas most studies show the biggest leverage is connecting with customers downstream rather than with suppliers or with internal processes.   So I’m guessing there is a really long way to go.

While we have lots of tools for supply chain improvement, 3PLs have proved better at providing the information flows critical for integrating with customers or suppliers more directly.  I think that trend will continue, even in spite of the spate of mergers and acquisitions in the 3PL space.  It’s as if firms are seeing they don’t have the tools, let alone the glimmer of a strategy.

And this is true even of giants like UPS, which is rumored to be buying Coyote Logistics in a 1.8 billion deal.  It means we need software and we need user interfaces that can jump the corporate boundaries to connect the supply chain.

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Posted in Logistics, Supply Chains

It’s the Supply Chain Process, Stupid

Posted on July 21, 2015 by | Leave a comment

This interesting viewpoint comes via Huffington Post.  Not too much substance, but there is a germ of truth.  Firms are so hung up on security and privacy that they refuse to share information that would make supply chains work much better for all.  It’s possible they could be engines for growth. This has been true for 20 years now, and computer scientists have done little to facilitate sharing of data easily. The spectre of security and privacy violations and the media attention on companies when there’s a breakmeans no one will take a chance

Image result for Huffpost Business

It’s the Supply Chain Process, Stupid | Ho-Hyung Lee.

There is an opportunity for governments to require data sharing. We are starting to see it in trucking, where the driver incident data is coming online. Rails have been providing STB waybill data to the US government for years, though it is often incomplete and inaccurate and there’s no enforcement of accuracy.  And private firms like PIERS have been acquiring some data, like ocean container moves,  and making it available for a price.  But to have generally available and public movement data would greatly improve the joint planning of supply chain activity across chains.  That’s what is needed.  Sort of Google Maps traffic with details.

It’s politically so unlikely in the current US environment that this call is whistling in the wind.   The US is all about security, privacy, and individual or corporate control of any asset.

 

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Posted in Production Operations, Supply Chains

How to Hedge Against a Greece-Like Crisis

Posted on July 17, 2015 by | Leave a comment

Some great ideas from Yossi Sheffi at MIT. I’ve been teaching about these since the 1990s, inspired by the classic book below, which has a wonderful chapter and case on the subject.

  Global Operations and Logistics by Dornier, Ernst, Fender, and Kouvelis.  Amazon Link

The concepts are similar to what Yossi is saying. You can hedge various ways:

  • financially with options, futures, and contracts— (derivatives; we are always quoting the Southwest Airlines jet fuel example of a few years ago, but this kind of hedging needs to be part of every company’s portfolio of skills);
  • operationally, by locating production in several areas and being able to scale it up or down according to where you have the best total return after expenses, including currency conversions for procurement and sales (drug companies are expert at this);
  • sustainably, by shifting away from or replacing inputs that are scarce or penalized by currency or political issues (eg. ‘conflict minerals’).

What would you do in the case of the Greek crisis of today, the crisis that isn’t a disaster yet?

How to Hedge Against a Greece-Like Crisis.

 

Recently the airlines have not been so successful hedging fuel prices with derivative contracts.  It’s gambling pure and simple, and markets for commodities are remarkably likely to shift without telling us.   So operational and sustainable hedges are more likely to yield guaranteed results. But they are costly, involving product or process re-engineering, or multiple facilities operating at less than full capacity in different enough locations to produce anti-correlation with other markets.

 

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Posted in Production Operations, Strategy, Supply Chains, Sustainability