Sure, it’s essential to have contracts with your customers to set the ground rules.

But why would you need contracts between co-workers?

Because it’s spring and love is in the air.

And the best way to keep your company from getting tangled in lawsuits that often run into six figures (and more) to settle is set specific ground rules and require both parties to sign off on it.

A survey last fall revealed that 40% of employees said they’d dated a co-worker at some point during their career. One in four of these employees kept the relationship under wraps.

It’s a given that most companies won’t allow one employee to supervise the romantically connected partner — but it still frequently happens.

But there are serious threats that can undermine the way your business operates.

• What happen if a couple breaks up and it turns ugly?
• What if one of the romantic pair takes up with another employee?
• What if a spurned employee decides to file a harassment lawsuit, or accuses someone of demanding sexual favors?

That’s why “Love Contracts” are gaining in popularity.

It doesn’t have to be anything fancy.

Six rules:

1. No PDAs (public displays of affection)
2. No dating the boss (or someone who answers to you)
3. No gooey or raunchy e-mails using office technology
4. No talk by the water cooler about last night’s action
5. No “dressing for dates” — business attire is mandatory
6. No pouting or temper tantrums if there’s a less-than amicable parting

One problem: Many of the road signs along the way are now obscured, or difficult to understand.

That’s why now is a great time to take a step back and assess where you are and where you’re going.

The biggest influence to take into account: the role of IT in improving your supply chain performance.

But instead of IT spending, expect pressure to “make do and mend,” experts caution. You’ll be called upon to make the best use of what’s already in place. This means there’ll be little discretionary funding available, but you’ll still need to find some money (perhaps under the couch cushions!).

You’ll still be expected to squeeze a few pennies out of procurement, logistics and distribution functions.

One idea: You might switch over to a pay-per-use technology license, rather than an annual contract.

Three areas experts have targeted as ripe for change:

• Supply chain flow management. In response to pressure to improve lead-time indicators and supplier flexibility, you’ll be expected to work with tech vendors that offer detailed analysis and higher visibility of business functions.
• More efficient inventory management. More supply chain operators will be asking vendors to integrate their tools as part of operations, and might even begin purchasing software services from vendors.
• Production and distribution management. Supply chains will need to ramp up contingencies for a growing number of “what-if” scenarios, to be even better prepared to react quickly when conditions change.

There are three “game-changing” technologies that will have a major impact on supply chain operations in the coming years — or even months, in some cases.

Supply management is an ideal environment for exponential growth in technology, experts advise.

Essentially, we’re looking at a snowball effect: Once it starts rolling, it’ll get bigger and bigger.

Three key areas:

Robots. Don’t worry about The Terminator showing up to unload trucks on your loading dock. But robots that are capable of performing industrial chores are expected to grow from 2 million in 2007 to more than 9 million this year. Some companies are already using them on the warehouse floor.

Robots bring three distinct advantages:

• reduce labor costs
• decrease the cost of customization and on-demand production, and
• change cost considerations in outsourcing.

One warehouse manager offers this testimonial. Among the benefits (there are many more):

For each $20,000 robot his company purchases, it saves about $2 million over its expected lifespan. The robots don’t get tired, don’t make mistakes, don’t complain, don’t need vacations — they work 24 hours a day, 7 days a week.

Computers. They’re getting better, bigger (in function), more efficient, and easier to use. As computers become more affordable, more supply chain operations will have the power to change directions on a dime. Production changes will be less of a hassle and headache, as solutions are easier to come by.

Nanotechnology. Scientists have learned to manipulate the atom, and they’re beginning to create practical applications. The possibilities are boundless. In supply chain operations, nanotechnology could revolutionize RFID applications — or even make them obsolete.

You know what usually happens when stock starts to back up when orders drop off.

Product starts dropping into black holes. Damage mysteriously occurs. Inventory comes and goes without proper paperwork hitting the books. It gets tougher to count units accurately.

Bottom line: The tighter your inventory space gets, the more inefficient your productivity will be. One chilling stat: If your already full inventory is increased by 7%, you can expect to see productivity dive by up to 27%.

Ouch!

Once stuff starts piling up in the aisles (often the first spot for homeless inventory), your workload can easily triple.

Instead of picking up one pallet or unit, workers must pick up one, move it, pick up the one they’re looking for, then put back the pallet or unit they moved in the first place.

That’s a mouthful and a headache.

There’s no easy solution.

You can:

• try to reconfigure your existing floor plan to accommodate overstock
• talk to sales or production about ways to expedite sale or use of more stock
• see if vendors are interested in buying it back, and
• try to document the costs and the outweigh the expense, consider making an argument for acquiring outside storage.

Good news: Perfection isn’t necessarily a requirement for top-level competency and success.

First of all, “perfect” is a virtually impossible standard. Even one mistake — regardless of how many orders or units are handled — immediately puts perfection beyond reach.

How much help does that provide for you as an effective benchmark of performance?

One reason the goal of perfection persists is because research from several years ago that said boosting perfect order fulfillment by 3% paid off with a 1% hike in profit margins.

But in subsequent years, a more well-rounded definition of what constitutes perfection has evolved among supply chain operators.

One metric that’s picked up some steam is the “Perfect Order Index.”

Perfect Order Index is compiled by multiplying:

• the percent of orders that were on-time
• by the number of orders that were complete
• by the percent documented correctly.

Beware: POI stats can be pretty brutal at first blush. Even solid supply chain operations are likely to see numbers below 50%.

One critical aspect of benchmarking supply chain performance is setting the parameters.

What constitutes success? Is it when a shipment leaves your docks on time? Or is it if that shipment arrives at the customer’s facility when it’s supposed to?

Many factors — some out of your hands — can control “on-time” performance. For instance, what if the shipment leaves your facility on time, but the independent carrier has problems?

Your best bet is to take it back to basics, at least when starting to devise your method of measuring supply chain performance.

The four basic criteria supply chain benchmarking universally encompass:

• on-time
• complete
• damage-free
• correctly “documented”

Another benchmark that’s been successful for many businesses is calculating “on-time, in-full” performance.

It is what it sounds like: How many of your orders were on-time, (either leaving your building or arriving at your customer’s facility). Then, how many of those orders were in-full — complete shipment, no damages, no rejects.

Heads up: You’ll need a pile of documents to accurately calculate this:

• invoices
• shipping manifests
• bar coding system
• how cartons are labeled
• RFID tagging, and
• even advance shipping paperwork.

A recent survey of more than 300 supply chain execs revealed some interesting observations:

• Only one in 10 (11%) responded that supply chain planning and execution were handled as a single, joined process.
• More than half (57%) said there was some integration of supply chain planning and supply chain execution, and
• Nearly one in three supply chain managers said there was little if any link between supply chain planning and execution.

You might think that these stats reflect a lack of interest among supply chain managers in integrating planning and execution. Nothing could be further from the truth:

92% of the pros responding to the survey said it was critical to achieve better integration in the next 2 to 3 years.

As today’s business increasingly turns to running lean and just-in-time inventory processes, more companies will be expected to plan well enough to react and then handle even more demanding requests.

The biggest barrier, as is in so many cases, is communication.

That’s where the survey from CSCO (Chief Supply Chain Officer) Insights offers a four-step progression toward achieving optimum communication across departments of any given company.

• Baseline: Poor planning between sales and ops; disconnect between supply chain planning and execution
• Phase I, the Basics: Improved feedback between planning and execution; consolidated view of customer/internal demand; closer link between ops and sales
• Phase II, Real-Time Supply Chain: Real-time visibility; networks designed to react immediately, metrics for making/supporting decisions
• Phase III, Sense & Respond Networks: Multi-level visibility; new organization methods for supply chain planning; looking ahead to new supply chain technologies

It was that false sense of security that allowed a bookkeeper and financial officer to loot her employer for $9.9 million — that she used to buy 400 pairs of shoes that she stored in an enormous closet equipped with its own 32-inch plasma TV and a crystal chandelier.

Ouch!

Over a period of six years, she embezzled from her employer, a California cabinetmaker. Each week, she’d ring up $25,000 in credit card purchases (you’d have to work pretty hard to maintain that pace, wouldn’t you?).

The following Monday, she paid off the balance with company funds.

Some of the booty:

• 400 pairs of shoes, at least $240,000
• designer clothing, $300,000
• 160 purses at $2,000 each.

The company didn’t notice anything awry until a customer informed them that the customer’s check had been used to make a payment on the wayward employee’s account.

No auditor was ever hired to check the books, since this employee held such a position of trust.

In the meantime, her employer was forced to lay off employees and restructure operations due to money problems.

She was fired and turned over her assets. The company recouped about $2 million from selling her home, cars and other property.

It looks like she could end up getting a new room soon — one that’s significantly smaller than her shoe closet and with bars on the windows.

A survey of more than 400 supply chain execs by IBM — resulting in a report called “The Smarter Supply Chain of the Future” — ranked topics in this order. Respondents were asked if the topic impacted them to a significant or very significant extent.

• supply chain visibility — 70%
• risk management — 60%
• cost containment — 55%
• increasing customer demands — 55%, and
• globalization — 45%

Execs who were surveyed also remarked that all five topics are critical areas in successful supply chain management.

The IBM study also offered a few specifics.

On the subject of supply chain visibility, the biggest problem is the lack of information sharing and collaborative decision-making. This is not the fault of technology; it’s the way many companies are organized.

Risk management: Supply chains have been stung with more regularity in recent years, from defective products to bankrupt business customers and vendors, natural disaster, and a host of other causes that can take a toll on your efficiency. To get a step ahead of this, it’s become more critical to build risk management into your basic daily functions.

Cost containment: It used to be that supply chains could take a “tortoise” approach in continually improving costs and cost control. But today’s fast-moving economy demands a “hare-like” strategy, reacting daily to whatever cost issues might arise.

Customer demands: Most companies do a great job now of collaborating with your suppliers. It’s time to take that a step further, the experts recommend, and build the same type of relationship with your customers — deploying joint forecasting, for example.

Globalization: It’s not the cure-all and end-all some said it would be. In fact, one-third of the execs responding to the IBM survey said supply costs have actually increased due to global sourcing.  The main issues are product quality and lead times.

That’s the principle behind invoice factoring for small businesses, a trend that’s on the upswing.

Small business is the heart and soul of our economy. More than 99% of U.S. employers — 25.8 million — are small businesses.

With today’s economy, payments are running later than ever. This can greatly harm a company’s ability to take on new customers, and even to secure the most competitive rates from its own suppliers. It also makes it more difficult for these businesses to pay their suppliers on time.

Accounts receivable factoring attempts to build a bridge over this gap for small business financing. The factoring firm provides what is essentially a short-term loan.

When the company’s billing period ends, it re-pays the factor.

There are three steps most accounts receivable will do before initiating a business relationship with a new customer:

• Accept only one invoice for the first transaction, while the factor does due diligence
• Check the credit of the debtor listed on the invoice, and
• Confirm that the sale actually occurred.

That’s the situation that unfolded one day earlier this month at a Florida McDonald’s.

A customer came in and placed an order for chicken nuggets and paid for them.The restaurant told her her they were out of the nuggets.

The customer took it poorly: She called 911 and complained. The dispatcher listened and told her she was sending someone.

She called again. The dispatcher told her an officer had been alerted and was en route.

But when the police arrived, it wasn’t to help the complaining customer. They cited her for misuse of 911.

A statement for McDonald’s said the customer should’ve received a refund to begin with, and they’d sent her a certificate good for a free meal.