SCMBlog

Sony's roadmap to the elusive Zero Footprint

noreply@blogger.com (Ayush Sharma) — Fri, 09 Apr 2010 07:46:00 +0000

Finally! Finally someone had the guts to commit to a ‘Zero” environmental footprint. Today, Sony surprised the rest of the world by making headlines of a different kind. They committed to a complete zero environmental footprint by 2050. Their plan, titled “A road to Zero” is a really, really long term decision but at least it is something. I think this is the most groundbreaking announcement they have made in the recent past. This despite being in the headlines for their new PlayStation controller and for a slew of new cell phones. Very recently, I’d written about the concept of “Supply to Zero”, an idea inspired by Bill Gates’ concept of “Innovating to Zero”. Sony has taken this a step further by covering all aspects of its business.

Sony’s Goals I must say their goals are extremely lofty. Sony has announced targets based on four environmental perspectives – biodiversity, climate change, control of chemical substances and resource conservation. Their specific targets for the term starting fiscal 2011 and ending fiscal 2015 (which translates into March 2016) include:

- 30% reduction in annual energy consumption of products (compared to fiscal 2008)

- 10% reduction in product mass (compared to fiscal 2008)

- 50% absolute reduction in waste generation (compared to fiscal 2000)

- 30% absolute reduction in water consumption (compared to fiscal 2000)

- 14% reduction in total CO2 emissions associated with all transportation and logistics (compared to fiscal 2008)

- 16% reduction in waste from sources like parts packaging used by suppliers (compared to fiscal 2008)

- Increase of waste recycle ratio to 99% or more

- 5% reduction in utilization ratio of virgin oil-based plastics in products (compared to fiscal 2008)

- Assessment of impact of resource procurement and facility construction on biodiversity, and promotion of biodiversity programs such as groundwater cultivation

- Minimization of the risk of chemical substances through preventive measures; reduction in use of specific chemicals defined by Sony; and promotion of use of alternative materials

Source: Asahi article

Analysis The sheer comprehensiveness of their commitment surprises me. It seems to cover the entire breadth of the product lifecycle, including parts of their supply chain. The distribution piece is covered – albeit in a minor way until 2015. Plans include using more economical and environmentally friendly modes of transport. Also, they’ve committed to reduce the amount of incoming packaging – something that a lot of companies like HP, Dell and Wal-Mart have already been practicing. The direct impact that this is going to have on their procurement piece is yet to be seen. The goals here are a bit generic-sounding like “Understand greenhouse emissions attributable to parts and raw materials”. This is understandably a first step. I would personally love to see what they discover in this regard.

This is a something that will inspire a lot of “green” news in the future. Wal-Mart announced just last month that it was going to work with its suppliers to reduce its carbon footprint. What Sony has announced is certainly a more massive effort. What does tomorrow herald? A great new dawn? Do give me your thoughts.

Supply Chain: Efficient or Flexible or Constructal?

noreply@blogger.com (Ayush Sharma) — Wed, 31 Mar 2010 16:32:00 +0000

Two people whom I personally consider thought leaders in the supply chain space write blogs about Supply Chain Management. They both wrote articles last week which got me thinking about the right way to go about designing and operating the "Ideal Supply Chain". I would love to hear your ideas about this after you read these two viewpoints and my thoughts. The first case in point: Christian Verstraete's blog about Supply Chain and Technology. In his post on The Flexible Supply Chain - ESC Day 1, he recounts the discussions at the Extended Supply Chain 2010 Conference which he'd attended. Here are his opening words
"This year’s theme was: The Flexible Supply Chain – meeting customer needs by responding efficiently to constantly changing market conditions."

On the face of it, the theme seems pretty well thought out - especially with many companies starting to finally look positively towards the future. But this line, especially the mention of "efficient response" reminded me of another blog post on the Kinaxis Supply Chain Expert Community written by Lora Cecere. If you're in the Supply Chain space and are not a member of this community, you should be. It has a lot of information and meaningful discussion taking place. Lora is one of the few supply chain "thinkers" I've come across online. She expresses her thoughts on her personal blog too. She recently wrote a post on her Kinaxis blog titled "What we can learn from Mother Nature". I found this to be an extremely interesting post about "efficiency" being a wrong goal most companies have generally used while designing their supply chains. This is why Christian's article caught my attention. Lora argues that the most efficient networks in nature are designed to be the most redundant, not the most efficient - and that efficient supply networks might function well for a while but break down frequently. Here’s an excerpt.

"Over great seafood in Austin, we discussed what nature teaches us about networks. Networks with the greatest resilience -- ability to stand the test of time-- are not the most efficient. In fact the least resilient networks in nature are the MOST efficient. Instead, the most resilient networks have two characteristics:

Redundancy: In nature, the networks that last over the generations are those that have the right amount of redundancy. Excess capacity, extra nodes, and bypass routes. The efficient network with minimal capacity, node-to-node connections, and no parallel routes fail. This is especially true in push environments.

Dynamic reconfiguration: Likewise, in nature, the networks that stand the test of time have the ability to reconfigure under stress. Networks with the most centrality have the greatest failure rate."

About a month back, I was introduced to something called the Constructal Theory. It is a design theory that mimics nature's design philosophy in engineering. There's a Wikipedia article explaining the theory.

"in the constructal theory's point of view, the naturally optimized forms such as rivers, trees and branches, lungs and also the engineered forms coming from a constructal evolutionary process of maximization of flow access in time."

I have been thinking about the application of Constructal Theory in Supply Chain Management. The basic premise of the theory is for flow systems (in this case, flow of materials in a supply network) to maximize flow access. This is especially true in the case of supply chains too. Maximizing flow access in time will allow more reach while using up the same amount of resources (from a network point of view). The supply chain application does make sense but it isn’t proven yet. Let us for a moment assume it has indeed been practically shown that the theory applies to supply chains too. Consider the goals discussed in the ESC conference - A flexible supply chain that responds efficiently. Note that the network (in this case the supply chain by design) needs to be flexible, not efficient. The ideal network would respond efficiently to changes. Building an efficient network and a network responding efficiently are two completely different things. Now let us bring in Lora's thoughts about the best networks in nature being redundant. However, redundancy is the enemy of efficiency. So how do we build a supply chain network that responds efficiently? The answer is the 'people' factor. At the core of a Supply Chain are the people running it. I have previously written about the importance of people in building a world-class supply chain. One very important lesson anyone can take away from this confluence of viewpoints is the following:

"The flexibility of a supply chain and its ability to respond to different demand patterns is a direct result of the network design. However, the efficiency of a supply chain and the speed of response depends more on the people that run the supply chain."

Thanks to Lora and Christopher for sharing their thoughts and giving birth to this post of mine. I wonder how many of today's "world-class" supply chains can claim - after reading this article - to have a "flexible supply chain that can respond efficiently"? What do you guys think?

Wal-Mart's India operations and the supplier sustainability sentiment

noreply@blogger.com (Ayush Sharma) — Fri, 19 Mar 2010 15:40:00 +0000

Right off the bat, let me thank SupplyChainToday’s Facebook page for posting the video that eventually led to this blog post. The video is an interview of the President of Wal-Mart’s India operations. The reason I felt strongly about this video is because several sectors including retail have reached a flat growth curve. Looking ahead, the developing world is the area retail companies are going to expand. Like the massive green initiative that Wal-Mart recently announced, it has been one of the first American retail companies to have set foot in the developing world too. And it has been forced to do this very differently. India, like a lot of developing countries is heavily regulated in the retail sector. Wal-Mart is taking an interesting approach in India by acting as a wholesaler/distributor to the millions of retailers.

Here are two key discussions from the interview. I’ve embedded the whole video at the end of the post. It runs to about 14 minutes and I think its time well spent.

Question: Wal-Mart in India is not really in the retail business. Can you explain why this is so?

Answer: In India, retailing is a protected sector and the government currently does not allow any multinational company to operate in retailing. That’s why we don’t have retailing in India. What we propose to have in India is a wholesaler cash-n-carry business which is only permitted for business members. We’re also partnering with Bharti Retail who’ll run and own stores. But we do provide them with merchandise and marketing expertise.

Question: How would this business to business model work?

Answer: Essentially India is a nation of retailers. India has 12 million kirana stores (mom n pop stores). This is per capita (despite the size of India) the highest in the world. These stores buy from wholesale markets and direct manufacturers. The distribution chains operated by big companies like Unilever serve close to 1 million of the 12 million kirana stores directly. So a majority of these stores have to go to wholesale markets to buy products. It is a low-cost operation but it is also very inefficient. Especially in the area of fresh produce, meat, etc., it is very archaic. So how this model works is you have a selling point where you directly source product from manufacturers and sell these products to kirana stores at great prices.

The interview goes on to talk about other aspects of the business and how government regulations and legislations affect the way they do business in India. I find this model very interesting because Wal-Mart is taking its expertise – that is logistics and distribution and creating a business model to reach economies that they normally wouldn’t have been able to enter. This also ensures that Wal-Mart is able to continually grow its business in other parts of the world. This move also benefits India as they would be getting the supply chain expertise of one of the most evolved and efficient supply chains in the world. Two facts from this interview that I think will interest a lot of you are

There is no organized supply chain in India. There is not much forecasting and retailing runs on a largely push based system.
Almost 40% of all fresh produce in India gets wasted between the time it is produced and the time it reaches the customer.

Also, it is to be seen how soon Wal-Mart is able to integrate their Indian suppliers into their sustainability watch. The green initiative is going to direct the future of Wal-Mart’s interaction with their suppliers. It’ll be interesting to see how they approach this in the developing world where governments are not very carbon friendly as yet. Watch the rest of the interview and let me know what you think.

Interview with the President, Wal-Mart India

Wait! A Supply Chain Water Footprint? Seriously?

noreply@blogger.com (Ayush Sharma) — Wed, 17 Mar 2010 14:56:00 +0000

Do we in the Supply Chain industry really care about something called the Water Footprint? Is it something that you’re even aware of? I was not aware of this until I read a Harvard Business blog post detailing the impact water shortage might have on businesses in the future. Sure – we’re hardly started with the whole Carbon Footprint issue and you dare bring this upon us!! The author of this post is CEO of a sustainability consulting company. Is it just me or are we really trying to invent newer ways to make our already complicated world of business all the more so? Is it not enough that we’re battling hard to get the right item at the right place and time, while being efficient and making money doing so?

While reading the article, I started wondering if the concept of a Water Footprint was pertinent to all industrial sectors. One aspect that has made the carbon footprint this popular, is the fact that the concept can be applied to all companies irrespective of whether they are involved in manufacturing or service. The apparent immediacy of the problem compounds the effect. I can easily say that the Water Footprint is a concept that will apply mainly to manufacturing companies. It is the very nature of the problem we’re trying to tackle that makes it so categoric. The HBR article itself talks about a beer brewing company SABMiller and how they’re evaluating water use in their supply chain. SABMiller has even released a report in collaboration with the World Wildlife Fund which details their perspective. But for a beer brewing company – or any beverage company for that matter, water is indeed an important resource. The article goes on to list other sectors that water footprinting might be relevant. Here’s what the article had to say (note that there is not one non-manufacturing sector mentioned)

Supply chain water footprinting is not just confined to the beverage sector. Borealis (a plastics materials provider) and Uponor (a plumbing and heating systems company) have initiated a study of the water footprint in the plastics value chain, from raw materials to plumbing and water systems installed in a home. The goal is to reduce resource use in product design and manufacturing in addition to developing water-efficient products.

Again like I said, it is the nature of the problem we’re seeking to tackle in this case. For pertinent industries however, analyzing water usage does make sense. Again, what level are we willing to take this to? The HBR article also talks about a World Water Week event conducted at Stockholm recently.

The linkage between water and business was a hot topic at the August 2009 Stockholm World Water Week. Bjorn Stigson, president of the World Business Council for Sustainable Development, singled out supply-chain water use for specific attention. As fresh water becomes more scarce and supplies uncertain, how companies use water and where it comes from will increasingly affect their business risks and opportunities.

I did some further research and found that the issue indeed is a ‘silent giant’ – something that’s out there – we just don’t know about it yet. I found a website dedicated to this issue - Waterfootprint.org. They have an interesting take on the supply chain perspective of Water Footprint.

The water footprint of a business - that is its 'corporate water footprint' - refers to the total volume of fresh water that is used directly and indirectly to run and support the business. It consists of two components:

the operational water footprint, i.e. the direct water use by the business in its own operations,

the supply-chain water footprint, i.e. the water use in the business’s supply chain.

Many businesses have a supply-chain water footprint that is much larger than the operational water footprint. This is particularly the case when a company does not have agricultural activity itself but is partly based on the intake of agricultural products (crop products, meat, milk, eggs, leather, cotton, wood/paper).

When consumers use the products from a business, there can also be a water footprint in the end-use stage. Think about the water pollution that results from the use of soaps in the household. In this case one can speak about the end-use water footprint of a product. This footprint is not part of a business’s water footprint, but it is part of the consumer’s water footprint. That does not mean that the business can withdraw from some responsibility about what happens in the end-use stage.

Check out the image I’ve attached. It should give you a perspective about what this metric means to your business. The Waterfootprint.org website is a good and informative read nevertheless and it gives valuable input on a topic I never knew existed until a couple of days back. Here are some links to studies that you can download if you think the topic is pertinent to your organization. They are sourced from the Waterfootprint.org website.

Barton, B. (2010) Murky waters? Corporate reporting on water risk, A benchmarking study of 100 companies, Ceres, Boston, USA.
Ercin, A.E., Aldaya, M.M. and Hoekstra, A.Y. (2009) A pilot in corporate water footprint accounting and impact assessment: The water footprint of a sugar-containing carbonated beverage
SABMiller and WWF-UK (2009) Water footprinting: Identifying & addressing water risks in the value chain, SABMiller, Woking, UK / WWF-UK, Goldalming, UK
Hoekstra, A.Y. (2008) Measuring your water footprint: What’s next in water strategy, Leading Perspectives, Summer 2008, pp. 12-13, 19.
Hoekstra, A.Y. (2008) 'Water neutral: reducing and offsetting the impacts of water footprints'
Gerbens-Leenes, P.W. and Hoekstra, A.Y. (2008) 'Business water footprint accounting'

It does take time for a concept to prove itself. I think people supporting this issue as part of a broader sustainability strategy for companies will need to convince businesses of the economic viability of measuring the Water Footprint. That is going to take time – think similar to what happened with the Carbon Footprint. Remember there’s 5 things you can do today to improve your personal Carbon Footprint. Personally, at this point in time, my opinion mirrors my post title – Water Footprint? Seriously?

What I found in the Apple Supplier Responsibility Report - 2009 vs 2010

noreply@blogger.com (Ayush Sharma) — Mon, 15 Mar 2010 14:45:00 +0000

It seems like the “Apple” of the eye is the talk of town this year. January was all sweet news as the world anticipated and later debated the features of iPad – Apple’s flagship device that’s shipping April 3. On the other hand, the month of February has not been as kind to Apple – especially its supply chain. First, came reports that an Apple Supplier (read Foxconn) had roughed up a Reuters reporter in China. This news caught wind and brought back memories of the Foxconn iPhone leak suicide case. I’d debated whether these acts were turning into a New kind of Supply Chain Risk caused due to over-secretive company policy. Later towards the end of February, reports started floating around claiming Apple’s supplier responsibility report contained a mention of illegal child workers – an issue that spread like wildfire and prompted many strong reactions. I wrote a post about this issue detailing what companies need to do if they were faced by similar issues. This post, entitled “The Apple that ate the child” went on to become the one of SCM Blog’s most popular posts in February. Today, I aim to compare Apple’s Supplier Responsibility Reports from 2009 and 2010 and present my findings. I think you’re going to be quite surprised. The impact – as always, lies in the minute details.

KEY DIFFERENCES

Change in focus: As I looked through both reports, closer to the top, I saw a slight change in how the report opened. I’ve pasted screenshots here to show you what I mean. In 2009, the introductory passage looked to familiarize the reader with Apple’s supply chain structure and make him understand who was being measured. In the 2010 report, Apple looks to make the reader understand the importance of the supplier code of conduct. It clearly articulates the areas in which the Supplier Code of Conduct seeks to exercise its authority.

This is a good step forward. Apple has looked to depict the seriousness with which it looks at the various aspects of Supplier Responsibility in the 2010 report. Apple gets a plus for this one.

Number of facilities audited: Apple has audited more locations in 2009 than it did in 2008. In the 2009, they’d audited 102 facilities compared to 83 in 2008 and 39 in 2007. However the rate of increase in the number of facilities audited has reduced dramatically. I’m not quite sure if this is because they plainly ran out of facilities to audit or something else. My tries to find out the total number of facilities Apple’s suppliers run ended a blank. Do let me know if you have some insight into how many facilities Apple has in total.

The Child Labor Saga: This fact is something that shocked me too. After all the angry commentaries we’d read about Apple finding illegal child workers in their supply chain. Check out the images to the left. Turns out, the 2009 report tells of Apple having found illegal child workers in SEVEN facilities compared to the THREE facilities quoted in the 2010 report. I wonder if there was as much noise made about the same issue last year. Any comments?

Environmental Impact: There are a few more disturbing facts that I was able to uncover from the report for those concerned about the Green Apple. The percentage of compliant comapnies has gone down from 2009 to 2010. While this is probably because of the increase in the number of facilities they audited this year, the decrease is uniform across a lot of categories. For instance, the percentage of “Management systems in place” for over 5 categories went down in 2010 compared to 2009. Check out the two graphics here. The one colored blue is from the 2009 report and the green image is from the 2010 report.

You can look at the reports for yourself here. It certainly looks like there is a lot of information in the supplier reports that a company could use. Especially if you’re Apple’s supplier and have not been audited yet. Should Apple really have rated themselves so high? Are they doing enough? What do you think? Let me know in the comments section.

You might also want to read the other articles I’ve written about this issue – “The Apple that ate the child” and “A new kind of Supply Chain Risk”.

Twitter Stream: Interview with HP's CEO and Community clouds in Supply Chain

noreply@blogger.com (Ayush Sharma) — Sun, 14 Mar 2010 08:33:00 +0000

Every week, I post five interesting articles and links I came across in my Twitter Stream with their sources. I try to think of it as a weekend series where I get a chance to look at other people’s ideas. Check out my Twitter page. It is just one of the several ways of connecting with me. I’ve also created a list of “Supply Chain” related people I follow on Twitter. The list keeps growing. In my first Twitter Stream post, I’d mentioned that the lis t had 55 people. Today, the list has 85 people and is growing everyday. Here is this week’s five tweets. Do let me know what you think.

Twitter Stream #03

McKQuarterly Interview with HP's CFO: Thinking longer term during a crisis http://bit.ly/dtdFzn

thegreengod Recycling efforts fail to change old habits: ... in the past decade, even as environmental concerns have sparked “... http://bit.ly/dovo2n

SupplyChainMgt Should We Switch To Consumption-Based Carbon Dioxide Accounting? http://ow.ly/16NxOc

rmontellano RT @SupplyChainBlog: 5 Case Studies on Companies That Win at Social Media and eCommerce http://bit.ly/18aq9n

christianve Community #clouds can foster #collaborationacross the #supply chain http://bit.ly/91VtYd Combining services facilitates this

I especially think the community clouds idea has a lot of potential. Thanks Chris and thanks to all the tweeters in my stream. Keep the ideas coming.

What are your ideas about the Twitter Stream series? Do you think it adds value to you?

A new workflow.. and other (seemingly) trivial things!

noreply@blogger.com (Ayush Sharma) — Thu, 11 Mar 2010 06:47:00 +0000

Sometimes, I post updates about how certain changes have greatly affected me. I hope these updates help you learn something new and useful too. Last weekend, I changed my workflow – and the outcome has been dramatic.

Anyone who knows me personally, knows that I use feed reader applications in time-blocks through the day to keep myself updated about current trends everywhere. I use both Google Reader and Feedly in various ways. If you don’t know what a feed reader is, don’t panic. The concept is quite simple. Here’s a short intro courtesy Wikipedia.

In computing, a feed aggregator, also known as a feed reader, news reader, rss reader or simply aggregator, is client software or a Web application which aggregates syndicated web content such as news headlines, blogs, podcasts, and vlogs in a single location for easy viewing. Aggregators reduce the time and effort needed to regularly check websites for updates, creating a unique information space or "personal newspaper". Once subscribed to a feed, an aggregator is able to check for new content at user-determined intervals and retrieve the update.

If you’re still not clear about the concept, read this Newbie’s guide.

I’ve been using feed readers for years now. They help me stay up to date about things I’m interested in. Many of this blog’s popular articles like “The Apple that ate the Child”, “A new kind of Supply Chain Risk” and “A green and sustainable Wal-Mart” were written because of news I got through my feed sources. But this has its inherent disadvantages. I’m interested in way too many things. Most of these websites end up publishing over 20 articles (usually news tid-bits) a day. This ends up leaving way too much information for me to consume, increasing number of unread items everyday and last I checked, something I used to enjoy had become a chore. Last weekend, I started a massive reorganization. Here’s all I did in the space of a couple of hours.

Created a new Google Account for SCM related feeds.
Got rid of over 10 feeds that I hardly visited.
Moved all my SCM/Supply Chain related feeds onto the new account.
Organized remaining feeds into seven different categories: Workflow (8), Blogging Tips (2), Casual (9), Finance (4), Humor (2), Mobile (4) and Tech (7)
The result is a grand total of 36 subscriptions (down from 50- something), organized into relevant buckets.

Also, as fodder for thoughts to use in this blog, I’ve started building a (massive) database of Supply Chain Related blogs on my new Google account. I like to think that I have the most comprehensive list of blogs in the field – but I continue to find newer ones everyday. For the moment, I’m focusing on blogs that are being updated regularly.

I’ve classified them into just 4 categories for the sake of simplicity. Company Blogs (9), Educational (1), Green (2) and Personal Blogs (20). I continue to add to this list of 32 subscriptions. I’ve also decided to use Feedly which is a magazine-styled feed reader to consume my Supply Chain feeds. It helps me be more efficient while consuming large amounts of information.

Apart from this, I’ve also joined the Kinaxis Supply Chain Community. If you’re a supply chain professional, I think this is a good place to share ideas about SCM. It has several of the industry’s key thinkers blogging and taking part in discussions. I’ve made it my browser’s start page so that the first few minutes every time I open my browser are spent contributing to discussions. I’ve also started using different browsers – so my personal stuff is on Google Chrome, while my Supply Chain websites, feeds and the like are open on Mozilla Firefox.

These are all small changes to my workflow and I’ve just tested them out a few days. But I’m noticing massive improvements in speed and efficiency already. I’m not getting bogged down by information overload and can concentrate and use the information better. Hope you found at least some of the information useful. Do let me know what you think. Do you want me to share more information like this in future? Or did you find this particularly irrelevant and uninteresting? Write to me.

Future of the "Supply Chain" in Management

noreply@blogger.com (Ayush Sharma) — Tue, 09 Mar 2010 06:12:00 +0000

Yesterday, I told you about the innovative concept of an online Supply Chain Conference. I also did tell you t hat I was going to review interesting topics in the coming few days. Here’s the first of such articles. This is about a discussion called “The Smarter Supply Chain of the Future”. The reason I chose this discussion was because of the issue in focus. We do not know how supply chains are going to morph in the future. Companies constantly experiment with new technologies like the “WalMart RFID” venture which is now being implemented in their stores as well. Some of these ideas work while some don’t. Yet, it is these ideas that are going to give shape to the “Supply Chain of the Future”. In this scenario, it helps to get an insight into what Supply Chain executives all around the world are thinking in terms of future directions of their supply chains.

The first part of the discussion focuses on an IBM survey about what Chief Supply Chain Officers (I wonder where the term came from. I haven’t seen it being used much myself) think are the key issues facing supply chains today. Based on this, the survey plots a ‘map’ that is supposed to lead your supply chain to become future-ready. This is useful folks!! Find the entire presentation embedded below.

Smarter Supply Chain Of Future - An IBM Survey

ISSUES The five biggest issues SCM Executives have pointed out (in order from most important to least) are

Supply Chain Visibility This is by far the biggest concern of executives – and rightly so. Even today, after technology has advanced to the level where truly wondrous things can happen, our supply chains lack a streamlined model that will ensure complete visibility to all nodes of the supply chain. Sure, each company has its own approach to this problem. Wal-Mart’s Retail Link and One Network’s hosted solution are two different ways of tackling the same problem. A common goal requires a common solution. I wish one of the supply chain leaders would come forward and take the initiative to form a group that can work on an open-source data model that will provide real-time information about product movement across the supply chain.
Risk Management Risk and SCM go hand in hand. The very mention of risk leads us to think about physical damage to goods and the like. More recently, economic and political concerns have become part of the definition of risk. I myself debated on “A new kind of supply chain risk” not too long ago.
Increasing Customer Demands This is the topic that struck me as being ironic. We’re the ones pushing for an “always on” society where all consumer needs are ‘real-time’. In the case of information delivery, this need has been satisfied by the advent of new technology and the penetration of the internet. It is but natural that people come to expect increased speeds and reliability in product delivery too. Again… Common goal, common solution is what we’re looking for.
Cost Containment Cutting costs has been on the mind of businesses forever. Today, we’re just looking at the problem differently and finding newer ways of cutting costs while maintaining product and process quality. Lean processes are being incorporated into more industries than we had ever imagined. Today, if you’re in the supply chain industry and ask “Who is Deming?”, you’re considered ignorant.
Globalization A connected world is seldom a less complex world. Globalization presents a lot of practical challenges. While some companies have grown adept at tackling these problems (this might explain why globalization is at the bottom of the list), others are still struggling.

While looking at these issues and providing a roadmap to the future is a win for all, one thought whose importance simply cannot be overstated is that “Technology is a tool – a means to the end, not the end in itself.”

THE “SUPPLY CHAIN” IN MANAGEMENT Another important aspect about the future is going to be the importance of the “supply chain” in management as a whole. In the past, the sole goal of companies was to be profitable and make the most money for its owners. Somewhere down the line, they all started to care about their employees and how a company treated its employees became critical at least from a PR point of view. Today, companies have to balance a whole gamut of issues including being “Green”, efficiency, CSR, etc., This list is bound to grow in the future with “Supply Chains” becoming more important than ever to companies of the future.

Today, for the first time I came across the term CSCO (Chief Supply Chain Officer). This just restates to me the increasing importance supply chains are getting in today’s marketplace. The future is going to be even more complex. We know about the Digital Supply Chain. I think we’re just at the tip of the iceberg. There are other concepts that we’ll invent as we go along. Social Media in supply chains is one such. It certainly is an exciting time in the world of “supply chains” where the future is unknown yet anticipated. The only known fact is that “Future Supply Chains” will become more important in the context of management as a whole.

You can listen to the “SCM World Live” discussion from the comfort of your home too. You just need to register (for free) on their website. Let me know what you think about my perspective. Did you listen to the discussion too? What did you think about the conference – Sensation or sham?

Would you like me to cover specific topics in the future?

SCM World live - A new beginning in Supply Chain Conferences

noreply@blogger.com (Ayush Sharma) — Mon, 08 Mar 2010 07:47:00 +0000

Last month, I was notified by a good friend, of an extremely innovative approach to conducting a “Supply Chain” conference – a global conference where you get to share ideas with thousands of experts in SCM from the comfort of your desk and chair. While I would certainly like to know how many of you were aware of an event like this, I would also like to provide the rest of you key to a wealth of information about important topics in Supply Chain Management. This conference was organized by Rapture World on 24 Feb 2010. The event is called “SCM World Live”. I was amazed at the number of speakers, the sheer range of topics covered and the scale at which it was conducted. The website reports to over 3000 “supply chain” executives having attended the event from across the world. The website describes the event in these words

SCM World Live is the virtual supply chain conference for senior global supply chain, logistics, procurement and operations directors looking to share best practice and ideas around supply chain management, without having to travel to a physical supply chain conference. This unique virtual supply chain event allows senior global executives to network, learn and hear from leading supply chain experts, and get all the benefits of attending a physical supply chain conference, without the associated expense and time.

At least for me, it is one of those “Why didn’t I think of this?” kind of ideas. I’m pretty sure this is one of the first (if not “the first”) events to be conducted at this scale in Supply Chain Management. The best part is – the event is now available “on demand”. This means that if you’re cursing yourself right now for not attending this event, you can stop right away. You can listen to all the speakers by registering for free on the website. I think this is a great opportunity. I have registered myself on the website too. Over the next week or two, I will be writing about talks from the conference that I found interesting. Keep a watch for those articles on SCM Blog.

Twitter Stream: What is the difference between Logistics and Supply Chain Management?

noreply@blogger.com (Ayush Sharma) — Sun, 07 Mar 2010 21:38:00 +0000

Time for this week's Twitter Stream updates from SCM Blog. I come across a large number of useful links covering the various aspects of Supply Chain Management in my Twitter Stream. I try to share a few useful ones in these posts.

Today's post covers a wide variety of topics right from musings about what problems Social Media is solving for us to things your employees might be expecting from you that you don't know about. If you're on Twitter, you might also want to follow my tweets. You can also follow people in my twitter stream if you find the tweets useful. Thanks to those who are in my Twitter Stream for providing me useful posts every day of the week.

Twitter Stream #02

procurement What’s the Problem We Are Solving with Social X?http://bit.ly/dpBtIp #procurement

scm_tweets I see that Amazon doesn't pay tax in most states...even states they have offices in. So local small biz ends up subsidizing Amazon's biz.

procurement Logistics and Supply Chain Management, What is the Difference? http://bit.ly/aGeXqA #procurement

SCLBlog

Applying ERP to the biomass supply chain - Environmental Expert (press release) http://bit.ly/acYdqU

sara_broca Eight Things Your Employees Want From You http://bit.ly/alekZQ #management

Do you like my Twitter Stream Updates? Give me feedback so that I can continue to improve the quality of content on this "Supply Chain" blog.

Disclaimer: The tweets themselves are property of the respective publishers whose profiles are linked from here.

Nokia and the failed smartphone story

noreply@blogger.com (Ayush Sharma) — Fri, 05 Mar 2010 06:27:00 +0000

Today, let us take a look at the future direction of Nokia – the largest cell-phone manufacturer in the world. With a lot of companies biting at its heels in the smartphone business this past year, I was extremely surprised when Nokia posted Q4 sales of $11.25 Billion. They went ahead and proved my prediction completely wrong – and I’m glad they did. We wouldn’t w ant to see the erstwile emperor of the cell-phone industry go down without a fight now, would we?

I had based my prediction that theirs was a “Strategy of Doom” based on the fact that they were actually slowing down production of smartphones, especially considering the fact that smartphones were the fastest growing cell-phone segment in 2009. Initially, in 2009, it looked like Nokia had lost 10% market share in this segment while the smartphone market itself had grown by 4%. But now, Nokia boss Olli-Pekka Kallasvuo has been saying that their share in the smartphone segment rose from 35% to 40% after it moved to shake up its product portfolio.

I’M BIGGER It looks like a war of words now with Apple CEO Steve Jobs proudly proclaiming that Apple was in fact the largest “mobile devices company” in the w orld in terms of revenue for what seems to be a quite ‘custom defined’ category. Nokia’s Kallasvuo dismissed these claims saying that it was too broad a definition of mobile equipment. To his credit, Jobs had included laptops and iPods in the mix too. I’ll leave them to fight about who has the lion’s share in the market and take a look instead, at what Nokia has been doing in terms of strategy to help their cause.

THE NOKIA STRATEGY There are certainly a lot of takers in the smartphone arena – most notable of which are the top three – Nokia, RIM and Apple in that order. But let’s not forget the nifty little Android Operating System which is Google’s baby in the field. They’ve the fastest growing app store in the market compared to app-store size. They’ve been releasing newer phones at a quicker rate than most other players. Rounding out the list with Palm and Windows Phone 7 series (a ridiculosly long name), the smartphone war is only going to get bigger. But Nokia is taking measured yet big steps to keep its position solid in this area.

Nokia has been buying up companies that fit in to their overall strategy. I need to thank Fast Company for helping me out on this one. The list includes Navteq for maps, Loudeye Corp. for music, Twango Inc. for photo sharing and Cellity AG for contact management. If you think that’s quite a list by itself, I’ve another interesting piece of news. They have a deal in place with Intel to create apps!! Now, apart from this, there is one fact that is clear. Their new phones have bombed – atleast in the US.

MEEGO The ray of hope, is now a new platform. I’d told you in my previous article that Nokia was betting its hopes on an inhouse successor to Symbian – their operating system of choice for years – called Maemo. This platform has now been merged with Intel’s Moblin platform to create MEEGO. This is going to be a

“software platform that will support multiple hardware architectures across the broadest range of device segments, including pocketable mobile computers, netbooks, tablets, mediaphones, connected TVs and in-vehicle infotainment systems.”

The reason this is big is it covers a lot – and I mean a LOT of consumer markets.

THE SUPPLY CHAIN PIECE As is true with any successful company, Nokia has a world-class supply chain that gets product out to customer in a jiffy. An important point to note is the level of penetration Nokia has in the developing markets of India, China and Africa is going to fuel the rise of the smartphone business in these countries. The way I look at it, Nokia is far more well-positioned to make use of its network in the developing world and Europe than it is in the US. And with the iPhone bombing in China, I have a tingly feeling that when the time is ripe for smartphone invasion in the developing world, Nokia is going to be in a good position to squeeze the maximum out of it.

For this to happen, they are going to need a proven platform which is what they are hoping Meego will be. The failed smartphone story in the mid-2009s that I was talking about was a necessity for Nokia to innovate. I have a strong feeling that the resurgence has begun. Expect exciting smartphones with compelling software, set to take advantage of Nokia’s top class supply chain.

Do you think Nokia will reemerge in the smartphone space? Do you disagree with my analysis of the situation? Let me know.

Making sense of the ISM "Report on Business" - Feb 2010

noreply@blogger.com (Ayush Sharma) — Thu, 04 Mar 2010 07:02:00 +0000

Often, there are very few valid sources that one can trust to act as key indicators for the state of the economy as a whole. The ISM Report on Business is one such report published by the Institute for Supply Management on a monthly basis. I believe this is one of the few reports that gives a holistic viewpoint of how the market is acting at any given time of the year. I look to this report for pointers every so often, like my review of the ISM ROB in December. I’m going to try and break down the February report.

ANALYSIS: In a nutshell, the economy is continuing on its path of recovery, as predicted – but it is taking its time. I could spot a couple of positives as soon as I saw the manufacturing report.

Employment is growing faster (2.8% growth in Feb) and the trend has been continuing for 3 months now. Its obvious why this is a good thing.
Inventories did increase from Jan to Feb but the change was minute. Also, the general direction of inventories is ‘contracting’. This is good too because it signifies that companies are not taking things for granted and stocking up – at least not yet.

Also, as you can see from the screen grab, out of the top 6 categories in the manufacturing report, five categories (with the exception of employment) have been seeing a continuing trend for over 6 months with inventories topping out at 46 months.

New orders have dropped significantly from Jan to Feb – but this is probably an isolated dip rather than a trend in itself. The new orders should rise again in March when the budgets are out and spending begins. This is one reason why I feel the 6 months from April to October of 2010 are going to be extremely important from a holistic perspective as the optimism in the economy in these months is going to directly affect sales in the 2010 holiday season.

The Non-Manufacturing index has registered 2.5 percentage points higher than last month at 53%. Generally, growth in Manufacturing is a leading indicator for growth in the Non-Manufacturing sector. I believe we’re going to see stronger numbers in the NMI in the coming few months fueled by spending on SaaS services with the goal of reducing costs and increasing overall value to the organization. Consumer spending is going to be they key to overall economic recovery. It does make up a sizeable percentage of the US GDP.

NOTE: As a side note, I’d like to add a few lines about the importance of the role supply chains are going to play in the economic recovery. The article is from an article about a Toronto Conference.

In five to fifteen years, the rise of India and China, an aging demographic within the industrial world, and integrative trade and global value chains will be additional factors to deal with.

Supply chain management becomes ‘critical to success’, said Hodgson, who noted that firms having an international strategy “built around integrative trade will be in better shape.”

“The whole fundamental model for doing business today has changed. Canadian structural challenges include fiscal deficits and debt, an upward shift in the loonie, NAFTA ‘drifting’ with North American trade stalling as the US focuses on security, the dominance of global value chains, and energy and climate change policy.”

You can read the whole article here. I would like to thank Douglas Bachelor for the source. Food for thought anyone?? Shoot a comment and let me know what you think.

The Apple that ate the child...

noreply@blogger.com (Ayush Sharma) — Wed, 03 Mar 2010 08:15:00 +0000

Sometimes an Apple to apple comparison is just not possible. Especially when you’re comparing the outsourced component of your manufacturing. I mean, how many companies have you heard admit to have discovered child workers in their supply chains? I’m talking about the shocking new discovery about child workers in some of Apple’s factories. This is an especially disturbing discovery in the light of the fallacies of Apple’s supply chain that have been discovered in the recent weeks. First it was the Foxconn employee who committed suicide. Next it was the Reuters reporter who was manhandled for taking pictures of a Foxconn manufacturing plant. Now, Apple has admitted in a 24 page report that three of its manufacturing plants used 15-year old children in countries where the minimum age for employment is 16. Does this come as a surprise to you? Are you shocked that the Mac that you could have been reading this article on was built by a child who was probably better off getting an education? Maybe you are. But will you do something about it? Probably not. After all, Apple is a company that brings out award-winning products year after year. And who knows what standards the other manufacturing companies have? Perhaps you’re right. Perhaps you’re not. Check out the image below. Its a grab from Apple’s Supplier Code of Conduct, the way it read few days back. Update: They seem to have subsequently changed this to read “Suppliers may employ juveniles who are older than the applicable legal minimum age for employment but are younger than 18 years of age.”

Let us get a few perspectives on this issue. What have people been saying? (The sources link to the articles. Eg., ‘Businessweek’ links to the article from which the quote is taken)

BUSINESSWEEK

Apple didn’t name its suppliers and manufacturers. The company visited sites in China, Taiwan, Thailand, Malaysia, Singapore, South Korea, the Czech Republic, Philippines and the U.S. Apple also found three cases where suppliers “falsified records” to conceal underage hiring, more than 60 facilities where employees were overworked, 24 partners that paid less than the minimum wage and 57 who didn’t offer all required benefits.

REUTERS

Apple, a famously secretive company, has come under some criticism over the years for the labor practices of its suppliers, particularly in China.

ASSOCIATED PRESS

Apple said it found 17 "core" violations, the most serious type.

GIZMODO

February has not been a good month for the Apple supply chain. After the assault, the arson, and the poisonings, now Apple's annual supplier report reveals that this year 11 minors were found working in factories that manufacture their products.

SPEND MATTERS

I'm typing this post on a state-of-the-art Macbook Pro. It's silver (unpainted aluminum, to be specific) but depending on your CSR vantage point, it may as well be red. As in blood red. Just as it's impossible to tell conflict diamonds sourced from war torn regions in Africa versus those untainted by suffering, it's also impossible to know if my Macbooks -- and iPhones for that matter -- came from a factory employing child labor (or a facility that trampled on the free speech rights of journalists researching a story).

This compelling piece of news has raised a lot of pertinent questions in my mind from a business perspective. How exactly can you determine the level of authenticity of your suppliers? How can you make sure they’re doing what they promise? And most importantly, what do you do when you realize that they aren’t? I can easily think of three broad areas under which companies can analyze their supply chains from a PR perspective. The goal is to have simple take-aways that will help put you on the right thought process when time comes for you to initiate action at your company.

The Green Promise

Companies have been promising us lean and green supply chains for years now. But is the Green supply chain fact or fiction? It certainly makes sense from a PR perspective to let the world know that your supply chain is Carbon Neutral. But the fact of the matter is that no supply chain in the world can even dream of being carbon neutral in the next few years. Wal-Mart announced just last week that they were starting a new Green Initiative that involved their suppliers. Even for Apple, green was one of the hot topics discussed in the recent shareholders meeting.

Take-away: Does your company have an environment policy? If not, now is a good time to create one. If they do, is it holistic? Check for the following:

Does it involve your suppliers?

Do you report your GHG emission numbers or at least include them in a public report?

Do you monitor your suppliers with visits? If you monitor your suppliers online, there is a good chance the ground realities are extremely different from what you think they are.

Check out the 5 things you can do today to reduce your Carbon Footprint.

Ethics and Morals

Often included on paper and frequently neglected in reality. That’s the one line I would use to describe the way many companies handle their ethical policy especially when it comes to their suppliers. The article you’re reading right now is a great example of this. Most companies include it because it is mandated. But many times, the ground realities are vastly different.

Take-away: Think about the following

Is your company loyal towards its ethical policy?

Does it involve how your suppliers treat their employees?

Does it include the effect of hazardous materials and steps taken to mitigate this risk?

Supplier Scorecards

Many times, letting your customers know about your supply chain in more detail is necessary to maintain the integrity of your practice and also to let your suppliers know of the stringency of your company policy. Supplier scorecards are a great way to do this.

Take-away: Think about the kinds of manufacturing your companies’ suppliers help carry out.

Are your suppliers being rated on a set of categories? How many of those can you make public?

Can you set a reward for suppliers who meet certain pre-specified standards?

Do your consumers really care about your suppliers’ performance and their integrity? (Surveys are a good way to find out)

These are basic steps written in the hope of starting a thought-process that you can go an implement at your organization. Let me know what you think. Does your company have a supplier policy that is as strong as the big organizations with thousands of suppliers? What do you think will be the effect on your supply chain if you implement these steps? And most important of all – Will you buy a Mac in the future?

Update: I just found another article that covers supplier risk management in the same light. Thanks Pete!

5 Steps to reduce your Carbon Footprint today [Green]

noreply@blogger.com (Ayush Sharma) — Tue, 02 Mar 2010 16:03:00 +0000

Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

A few days back, I wrote a post which introduced the concept of “Supply to Zero”. Although seemingly impossible at this point in time, the idea (inspired by Bill Gates’ recent talk at TED), is about how we can reduce the amount of CO₂ that is produced as a result of the various activities that make up Supply Chain Management.

The Carbon Footprint is a much talked about metric in today’s world. After Copenhagen and Doha, I’ve been seeing that a lot has been written about this term. It seems more companies are interested in adopting this metric sometime in the near future and use it for reporting purposes – especially with the risk that a similar metric is going to become mandatory in the near future. There is a “State of Green Business” forum going on as I write this blog post. The world is finally waking up to the fact that we need to get “Green” into the picture and make sure that we have a reporting mechanism in place to measure improvement. I have a video below, which highlights this exact idea. This video takes a look at individual, collective and corporate levels of responsibility we need to take up for our environmental challenges.

This video accompanies a presentation entitled: "Being Honest With Ourselves: Putting Numbers Behind Green Business”. You can download a copy of the presentation here.

But the real question that arises from all this is “Can you really measure your Carbon Footprint?” The average footprint for a person in North America is 20 Tons of CO₂ every year. The average for the entire world is about 4 Tons of CO₂ every year (Imagine the amount by which the rest of the world offsets the footprint of North America). Just look at the graph here to get an idea.

So back to the question we were trying to answer. Can you end up reducing it or eliminating it completely? Turns out you can. I’ll give you five ways you can reduce your Carbon Footprint today. If climate change is really a concern for you and you want to do your bit, you’ll do it today. Something like turning water off when not in use goes a long way.

Turn down the water heating setting to 130 F along with turning down the central heating slightly (try just 3 degrees reduces 1100 pounds annually).
Check the central heating timer setting - remember there is no point heating the house after you have left for work.
Turn off lights when not in use. Replace 75 watt bulbs with Compact Fluorescent lamps.
Inflate your car tires regularly (can save 400-700 pounds of CO₂annually).
Install CFC free air conditioners. (Energy Star Products are certified to have low CO₂ emissions). Get cavity wall installation done. Savings are up to $350 per month. Cost can be recovered in 5 years. Turn off the air conditioner when you’re out.
It’s as simple as this. Five small steps today are a potential starting point. Also, I’ve listed a few resources below. Most of these sources will help you calculate your personal Carbon Footprint and tell you how you can reduce it immediately with just minor changes to your lifestyle.

Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

Resources:

What do you think? Is the Carbon Footprint something you’re worried about? Will you follow these steps? Write to me in the comments section and let me know.

Twitter Stream: Supply Chain Forecast 2010 and the Zero Rupee bill

noreply@blogger.com (Ayush Sharma) — Sun, 28 Feb 2010 08:45:00 +0000

It is time for another small baby step. I've noticed of late that a lot of interesting articles that I'm reading on a daily basis are coming from my Twitter Stream. I've begun to follow a lot of interesting people. I've also created a list of people related to Supply Chain. You're welcome to check it out and follow them - it might save you some hard work. Right now it has about 55 people in it but I keep adding more everyday. You might also want to follow me on twitter and make use of the links I share.

So I've decided that I'll share tweets every once in a while that show up in my Twitter Stream and that I find useful. I sure hope you find it useful too. The tweets themselves are property of the respective publishers whose profiles are linked from here. It is just one of the many ideas that I have for this blog. Tell me what you think.
Twitter Stream #01

@SupplyChainBlog: New Harvard Study: 30 Key Findings on How The CEO Engages With Social Media http://bit.ly/706jPQ #facebook #linkedin
@SupplyChainBlog: Supply Chain Guru Predictions for 2010: http://www.scdigest.com/assets/FirstThoughts/10-01-28.php about 2 hours ago via web
@subrigavar: Wal-Mart's efforts on grocery-including local growers in produce mix http://bit.ly/db6Hwk #WalMart#csr ? via @benkummer #supplychain
@procurement: Zero Rupee Notes ... Not Just for India Anymore? http://bit.ly/dbbdWj #sourcinginnovation
@SCLBlog: Wal-Mart aims for greener supply chain - UPI.com http://bit.ly/9vfbIW
Do you like this idea of posting links that you might find useful? Let me know. Comments/Feedback are always welcome.

A Green and Sustainable Wal-Mart?? [POV]

noreply@blogger.com (Ayush Sharma) — Fri, 26 Feb 2010 15:33:00 +0000

Today, Wal-Mart made a groundbreaking announcement. They decided to involve over 100,000 of their suppliers in an initiative over an extended period of time and actually reduce their global carbon footprint. This will involve suppliers all over the world and this is as groundbreaking as sustainability gets – especially after what Wal-Mart did last month. The more important question to ask at this stage is if this move will spur companies to take up initiatives of the same order and scale. Of late, there has been a lot of talk about corporate social responsibility and how to tie it into the way companies do business every day. This gave rise to the term sustainability. The EPA has been especially vocal in publicizing the various benefits of having sustainability on the radar. And, with Copenhagen and the number of delegates we saw there, most businesses in America knew at the back of their mind that it was not long before they were forced to report their level of sustainability.

So, what has Wal-Mart actually promised in today's announcement? Let us take a look at the key takeaways from today's meeting.

Reduce 20 Million Metric tons of Greenhouse Gas Emissions from their Global Supply Chain.
Taking a transparent, efficient, measurable and accountable approach involving their suppliers.
Its going to involve a larger group – 100,000 suppliers all over the world
Its going to start a race amongst the suppliers to be greener and more efficient
Efficiency is the key term here
They want to show the world that they can decouple business growth from carbon growth

One interesting fact that I noticed at today's event, was that Wal-Mart openly talked about how much waste they have reduced and will continue to reduce from packaging material. It seemed interesting to know how 20th Century Fox's supply chain reduced packaging material in their DVDs and were able to save significant amounts of money in doing so. They even showed us a live example. What was even more interesting to note was that they had partnered with TreeHugger for this event. This only goes to show how much Bentonville wanted this to be a great success. The event took off with a lot of sweet talking directed to the suppliers. Given Wal-Mart's troubled past, it looks like they've now come to realize that they need suppliers' co-operation to make this initiative worth mentioning in the future.

POV – [THE GOOD]: The goal Wal-Mart has set is lofty. By looking to reduce greenhouse gas emissions in the next five years to the rate of 1 1/2 times their projected emissions growth until 2015, Wal-Mart is showing unprecedented initiative. They seem to have gathered a strong pack to support them - including the Environmental Defense Fund, Price Waterhouse Coopers, the Carbon Disclosure Project and many more. Personally, I feel this step signifies a new direction for Wal-Mart. Simply by being the first to take up such a massive initiative, they are going to set the rules of the game. It never ceases to surprise me how Wal-Mart keeps finding ways on increasing their profitability.

[THE BAD]: One pitfall they need to avoid going ahead is “public perception”. We have all seen the damage these protests can do to their image. Its all good that Wal-Mart is taking control of the situation for the greater good of society (which is how they’re marketing it. I am yet to buy it) and their own sustainability. But this measure is going to warrant drastic changes by the suppliers. Wal-Mart was the suppliers’ soothsayer today. However, knowing history, I wouldn’t be surprised to see suppliers complaining in the near future. This is what makes me apprehensive. Because this initiative of Wal-Mart should not fail. If it does, other companies will shy away from trying green ideas unless mandated.

This looks like a lot to swallow for Wal-Mart's suppliers too. Especially after they made significant changes to their supply chain to eliminate delays in shipment. But it is in line with their overall strategy - and like it has always been: If you want to do business with Wal-Mart, you play by their rules. This new announcement might herald a new wave in CSR initiatives in the near future. But I'm betting that a lot of big companies will be waiting and watching - if the experiment is a success, it will trigger an avalanche.

'Baby Steps' - and a new Facebook page

noreply@blogger.com (Ayush Sharma) — Wed, 24 Feb 2010 15:34:00 +0000

Today, I am starting a new experiment with this blog. I am beginning to investigate newer ways to promote SCM blog. Social media is something that is of great interest to me and I see it as being the primary medium of communication as the Internet moves forward. I also see it as the future of supply chain management. This blog is more and more beginning to take the direction towards finding the next big thing in supply chain management. As a precursor to this, it is imperative that the current trends in supply chain management are analyzed and documented.

As you might have noticed I use links from a lot of social media websites like Facebook, Twitter, etc. Today, I'm proud to let the world know that SCM blog has another home at Facebook. If you use Facebook, visit the SCM blog page, become a fan and connect with other readers of the blog. Suggest the blog to friends who would find the content interesting. I am also looking at ways in which I can analyze and incorporate in this blog, the thousands of tweets that I read everyday. These tidbits more often than not contain vast realms of information.

The reason I'm sharing this information is because as SCM blog's readers, you are my end customer. I would be going against what I wrote if I did not keep you in mind and informed you of the developments on the website. Also, a few years down the line, it would be interesting to have documented proof of the base small steps that SCM blog has taken along the way. Today, I'm also starting a new tag called 'baby steps'. All posts that improve the blog's overall design, interface and user experience will be tagged 'baby steps'.

As always, I work hard to give you a clean, interactive experience while reading SCM blog. Blogging about supply chain management, is going to be a wonderful learning experience for me too. If you have any ideas that would improve your overall experience on this blog, do let me know. I am constantly looking for ideas (big and small) that I can incorporate into SCM blog. I look forward to your suggestions/comments. Keep a special watch out for future 'baby steps' . My special thanks goes out to the readers who've posted comments.

Supply to Zero - The Green Supply Chain [Green]

noreply@blogger.com (Ayush Sharma) — Mon, 22 Feb 2010 14:25:00 +0000

Bill Gates is doing some amazing work for the betterment of the world with his foundation. Today, I saw a video that showed me he is dedicated to his mission. This video is a talk he gave at a TED Conference. In this video, which I’ve embedded after the jump, he introduces the concept of “Innovating to Zero”. The idea behind this thinking is very simple. He introduces the concept of CO₂as a function and explains the approach we need to take to innovate and bring the Carbon emissions level to zero. You can watch the video below.

I say it is a half hour well spent. Especially if you’re involved in some manner with a supply chain organization. It is the nature of our business to consume energy and produce Carbon Dioxide. Logistics is a key cog in Supply Chain Management and a potential area where most Carbon reductions can be made. Here’s a look at companies that have taken a step in this regard. See if you can do the same. Green is not only effective, turns out it costs less in the longer run too!!

Trucking companies, particularly those that haul temperature-sensitive freight, increasingly must adapt to “green” initiatives as food producers and retailers seek sustainable supply chains, reports the Journal of Commerce. The trend is being driven in part by grocery chains that are looking for greater control over inbound inventory and manufacturers looking for more sustainable shipping, reports the Journal of Commerce. This often translates into shipping more freight with fewer trucks to cut costs and carbon emissions, according to the article. The article cites Kraft Foods as an example. The company has cut more than 50 million truck miles over the past four years by shifting freight from highway trailers to barges, boats and railcars.

Source: Environmental Leader

FedEx Express, a subsidiary of FedEx Corp. (NYSE: FDX), today announced it will purchase 51 additional gasoline-electric hybrid vehicles from Azure Dynamics Corporation (TSX: AZD). The FedEx fleet of hybrid electric and electric vehicles will total 325 when all 51 hybrid step-vans are delivered during November and December of 2009. Most of the new FedEx gasoline-electric vehicles will be put into service at a Bronx, N.Y., station, making it the first FedEx all-hybrid facility with about 100 trucks.

Source: Fedex News

See what you can do to improve your presence on this planet. I’ve written a few other articles about this. I introduced the concept of “Supply to Zero” – inspired by Bill Gates’ concept. The idea is that the amount of Carbon Dioxide that is emitted right from production until when the customer gets the product must be minimized. In this post, I’ve introduced the idea. Let me know what you think while I build on it for a future post.

A new kind of Supply Chain Risk

noreply@blogger.com (Ayush Sharma) — Fri, 19 Feb 2010 17:14:00 +0000

I just read a very disturbing piece of news about Apple. Apple is a company that is widely praised for its successful software and hardware and even more for the way it manages its supply chain. AMR Research recently ranked Apple as having the most robust supply chain. In 2009, the company was at the top of “AMR’s Supply Chain Top 25”, having been part of the top two for the past 3 years in a row. The company has brought out many game-changing products like the iPod, the iPhone and more recently, the iPad.

It is well known that Apple makes secrecy a vital cog in their strategy for launching new products. CNN went to the lengths of telling you why not to trust Steve Jobs. Apple is headquartered in the US. It makes most of its money in the US. But its manufacturing is completely outsourced to China – to Foxconn. And Foxconn has been in the news for all the wrong reasons.

FOXCONN: If you’re not aware of the Foxconn employee’s iPhone leak suicide case, you probably need to get reading right away. The company (Foxconn) doesn’t seem to treat their employees well either. Apple of course is not directly responsible for any of these events but their secretive policies are. More recently, a reporter was roughed up in China for taking pictures of a Foxconn plant – that too from across the road. It was a Reuters reporter too – and guess what he did… wrote an article of course.

Tipped by a worker outside the Longhua complex that a nearby Foxconn plant was manufacturing parts for Apple too, our correspondent hopped in a taxi for a visit to the facility in Guanlan, which makes products for a range of companies. As he stood on the public road taking photos of the front gate and security checkpoint, a guard shouted. The reporter continued snapping photos before jumping into a waiting taxi. The guard blocked the vehicle and ordered the driver to stop, threatening to strip him of his taxi license. The correspondent got out and insisted he was within his rights as he was on the main road. The guard grabbed his arm. A second guard ran over, and with a crowd of Foxconn workers watching, they tried dragging him into the factory.

The reporter asked to be let go. When that didn't happen, he jerked himself free and started walking off. The older guard kicked him in the leg, while the second threatened to hit him again if he moved. A few minutes later, a Foxconn security car came along but the reporter refused to board it. He called the police instead. After the authorities arrived and mediated, the guards apologized and the matter was settled. The reporter left without filing a complaint, though the police gave him the option of doing so. "You're free to do what you want," the policeman explained, "But this is Foxconn and they have a special status here. Please understand."

Although no finger can directly point to Apple, the notorious reputation of the company just got a shot in the arm.

SUPPLY CHAIN OF THE PEOPLE: At the end of the day, it is the people that make any supply chain great. The amount of respect and training a supply chain gives to its people is directly proportional to the output it can get out of them. All this, irrespective of the amount of automation and processes you’ve put in place. Secrecy is a great marketing tool. But when lives are at stake, marketing takes a back seat. Truly consumer focused companies seldom lose focus of their employees and the effect of policies on their suppliers. I just hope and pray it doesn’t get to the point where these incidents repeat themselves. If it does, we’ll have to deal with a new kind of Supply Chain Risk.

The Art that is Spend...

noreply@blogger.com (Ayush Sharma) — Thu, 18 Feb 2010 15:51:00 +0000

Many CPOs might be in a better position to talk about their spending powers now than they were six months back. And boy did it suck!! You would know that if you were reading SCM Blog. Last year alone, Gartner reported a 5.2% decline in IT spending alone. Forrester found an average of 55% of companies (with over 1000 employees each) in Europe and the US planned to spend less on telecom. More so, with the President of the US wanting to freeze government spending, things tend to look gloomy. And yet, they’re much much better than they’ve been in the last year.

Like always, spending is a leading indicator for a company’s health in the current market, mainly because it replicates a company’s general position relative to its outlook of the economy as a whole. Now, with spending set to grow as the economy trudges to a recovery in 2010, we will need a savior. The general mood in companies is to keep expenses low. Yet, companies have to spend if they’re going to sell anything this year what with inventories going to an all time low towards the end of 2009. The ‘savior’ we’re talking about here, is going to help us be able to spend while still managing to maintain efficiencies.

Today, I see that savior as being SaaS companies. After bearing the brunt of the recession when the first companies to get cut off were purchasing departments and the like, they know the need to optimize their solutions in order to deliver value to companies post-recession is of prime importance. And companies are looking to them to deliver the goods too.

The picture above shows the type of changes overall IT and software spending have undergone since 2000. If history is any indication, we’re going to have a renewed focus on careful spending that exploits synergies and delivers efficiencies.

Software as a service continues to build momentum in the supply management market because the line-of-business buyer can realize the following benefits:

Faster time to value

Avoidance of IT expenses

No separate maintenance fees

Pay-for-use model

Source: AMR Research

It is my firm belief that the SaaS model that delivers the most value from a TCO point of view for purchasing organizations, while maximizing the effect of their efficiencies will be the most successful. Pricing, for SaaS companies continues to move towards the ‘Subscription’ model. This will continue to be the case for the years to come simply because of the freedom of choice given to customers.

New Feature: Similar Posts

noreply@blogger.com (Ayush Sharma) — Thu, 18 Feb 2010 03:37:00 +0000

After the new interface rollout just over a week back, I’m happy to announce that I’m adding a new feature to SCM Blog today – Similar Posts. In the next couple of days, you’ll begin to see related posts after the body of each post just before the comments section. This will have clickable thumbnails with post titles that direct you to articles similar to the one you’ve just read.

It is my endeavor to bring you the latest features as quickly as possible. As always, the primary focus of SCM Blog is to provide interesting content related to Supply Chain Management with a human touch. I hope you like the new feature. Comments, suggestions and feedback are most welcome. Feel free to write to me or send me a DM on Twitter.

I want to thank the guys over at LinkWithin for providing this great service to SCM Blog.

The Flowers that say it all... [Analysis]

noreply@blogger.com (Ayush Sharma) — Sun, 14 Feb 2010 19:33:00 +0000

Happy Valentine’s day people!! Today’s the day to be happy and rejoice with your loved one. Today’s the day to express your undying love through gifts – flowers maybe?! Well, in the spirit of Valentine’s Day, I’ve decided to take a look at how flowers get to the retail store – the Floral Supply Chain…

The floral industry was mostly a mom-and-pop industry until a few decades back.

The floral industry is one of the major industries in many developing and underdeveloped countries. Floriculture as an industry began in the late 1800s in England, where flowers were grown on a large scale on the vast estates. The present day floral industry is a dynamic, global, fast-growing industry, which has achieved significant growth rates during the past few decades. In the 1950s, the global flower trade was less than US$3 billion. By 1992, it had grown to US$100 billion. In recent years, the floral industry has grown six percent annually, while the global trade volume in 2003 was US$101.84 billion.

Source: Wikipedia Article

The numbers are indeed numbing when you think about the money being spent on flowers. Over a hundred BILLION dollars worldwide up from just $3 billion in 1950?! That’s a huge jump. And for any industry, that rate of growth means there has been a lot of consolidation in terms of the players in the business and there has also been a widespread adoption of best practices throughout the industry. Below is a slide that I created that explains the “floral business chain” in all its simplicity. There is another detailed presentation you might want to look at the explains the same.

Also, last June, organizations from all segments of the floral industry came together to bring about a revolution in technology in the 21st century floral supply chain.

Automating manual processes, such as processing purchase orders and invoices, “will bring a significant amount of dollars to everyone in the supply chain,” says Gary Fleming, vice president of industry technology and standards for the Produce Marketing Association (PMA), one of the members of the Floral Logistics Coalition, which is spearheading and financing the project. “I’m talking not only cost savings but also cost improvements. There is a plethora of
both to be had with the incorporation of these standards and technologies.”

Link to Source

A look at the topics discussed at this meet tells us that the floral industry is looking to learn rapidly from other sectors where supply chain technologies have been successfully implemented.

An initiative by the Floral Logistics Coalition aims to improve the supply-chain process by using standard product identification numbers. Here are key
points:
PILOT STUDY Twenty-eight companies, representing all facets of the industry, are testing guidelines for implementing Global Trade Item Numbers (GTIN) and
Universal Product Codes (UPC) for all floral products.
BACKERS The Floral Logistics Coalition, composed of the Produce Marketing Association (PMA), Association of Floral Importers of Florida (AFIF), Wholesale
Florist & Florist Supplier Association (WF&FSA), California Cut Flower Commission (CCFC), California Association of Flower Growers and Shippers (CAFG&S),
Society of American Florists (SAF) and 12 other companies, is sponsoring the study.
BENEFITS The sponsors say the standards would cut costs by automating labor-intensive manual processes; increase visibility in the supply chain; and, in the
long run, sell more flowers.

Link to Source

The organizations comprising the Floral Logistics Coalition include,

Association of Floral Importers of Florida (AFIF)
Wholesale Florist & Florist Supplier Association (WF&FSA)
California Cut Flower Commission (CCFC)
California Association of Flower Growers and Shippers (CAFG&S)
Society of American Florists (SAF)

These and 12 other companies from the industries attended the meet and made some key decisions. The floral supply chain will greatly benefit form these best-of-breed technologies. Once they’re implemented, the efficiency of the system as a whole should increase by leaps and bounds. A problem they’re also looking to address is transportation and distribution. This is reflected in the Wikipedia Article on this topic.

The assignment guidelines are important because the project’s goal is to use the GTIN and UPC numbers when referencing floral boxes and items, respectively.
These numbers will be the standard numbers used in the various supply chain technologies that will bring the savings to the floral industry through bar coding, electronic commerce, data synchronization and radio-frequency identification (RFID).
STANDARD BAR CODES By using the GTIN standards, Mr. Fleming says, “everyone in the supply chain can understand that the number encoded inside the bar code as the GTIN is based on an industry standard protocol, not a proprietary number.” That means that at each step, from grower or importer to transportation company to wholesaler to retailer, the bar code information will tell receivers exactly what is in the boxes.
UPC TRACKING This is expected to benefit both retailers and wholesalers. By attaching UPCs at the original source to items for sale, such as bouquets or bunches, retailers and wholesalers can better track where their best-selling products and poor performers come from. “The UPC numbers identifying the items will link directly to the GTIN number identifying the box containing those items, which will be specific for the farms or importers,” Ms. Boldt says, making tracking easy.
ELECTRONIC COMMERCE This allows trading partners to send purchase orders, invoices and up to 32 other business transactions electronically so they automatically will be fed into computer systems instead of having to be entered manually. Mr. Fleming says studies have shown electronic commerce offers significant return on investment: The cost to manually process a purchase order or invoice is estimated at $18, compared with less than $9 for one processed electronically.
RFID RFID tags store GTINs and other information in tags that don’t have to be seen to be scanned. This “no-touch” receiving would significantly reduce product unloading time, Mr. Fleming shares. RFID also allows for real-time inventory counts. In addition, “you can use RFID for temperature monitoring so you know exactly how much shelf life is left on products,” Mr. Fleming says.

Link to Source

Another outcome of this conference is that the industry has started talking about “supply chain visibility”. The importance of the supply chain

is not obvious in every industry. But there are efficiencies to be achieved by looking and learning from other industries and how they are handling their supply chains. And for those who are in the flower business, here’s a video analysis about the same. Its an old video but nevertheless a gem of a video.

This article is an attempt to give you an insight to an industry many of us wouldn’t have given much though to (unless of course your livelihood depended on it). I hope to highlight the benefits an industry can accrue just by paying attention to best practices across the board. Do email me suggestions of other industries you would like to learn about.

5 Steps to reduce your Carbon Footprint today [Green]

noreply@blogger.com (Ayush Sharma) — Wed, 10 Feb 2010 17:23:00 +0000

Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

The Carbon Footprint is a much talked about metric in today’s world. After Copenhagen and Doha, I’ve been seeing that a lot has been written about this term. It seems more companies are interested in adopting this metric sometime in the near future and use it for reporting purposes – especially with the risk that a similar metric is going to become mandatory in the near future. There is a “State of Green Business” forum going on as I write this blog post. The world is finally waking up to the fact that we need to get “Green” into the picture and make sure that we have a reporting mechanism in place to measure improvement. I have a video below, which highlights this exact idea. This video takes a look at individual, collective and corporate levels of responsibility we need to take up for our environmental challenges.

This video accompanies a presentation entitled: "Being Honest With Ourselves: Putting Numbers Behind Green Business”. You can download a copy of the presentation here.

So back to the question we were trying to answer. Can you end up reducing it or eliminating it completely? Turns out you can. I’ll give you five ways you can reduce your Carbon Footprint today. If climate change is really a concern for you and you want to do your bit, you’ll do it today. Something like turning water off when not in use goes a long way.

Turn down the water heating setting to 130 F along with turning down the central heating slightly (try just 3 degrees reduces 1100 pounds annually).
Check the central heating timer setting - remember there is no point heating the house after you have left for work.
Turn off lights when not in use. Replace 75 watt bulbs with Compact Fluorescent lamps.
Inflate your car tires regularly (can save 400-700 pounds of CO₂annually).
Install CFC free air conditioners. (Energy Star Products are certified to have low CO₂ emissions). Get cavity wall installation done. Savings are up to $350 per month. Cost can be recovered in 5 years. Turn off the air conditioner when you’re out.

It’s as simple as this. Five small steps today are a potential starting point. Also, I’ve listed a few resources below. Most of these sources will help you calculate your personal Carbon Footprint and tell you how you can reduce it immediately with just minor changes to your lifestyle.

Let my voice be heard. Let my impact be felt. Let me do something that can make a difference today.

Resources:

What do you think? Is the Carbon Footprint something you’re worried about? Will you follow these steps? Write to me in the comments section and let me know.

A new interface... and some other things

noreply@blogger.com (Ayush Sharma) — Tue, 09 Feb 2010 17:01:00 +0000

There really needs to be no occasion to thank the readers of this blog. This is but a small drop in the entire ocean of Supply Chain Management articles written everyday and I am thankful to all the people who drop by now and then and consider this blog worthy of reading. Yesterday, I rolled out an update to the interface which you’ll use to interact with SCM Blog. For those who read this blog through their feed readers, I encourage you to drop in and check out the design changes.

With the fresher look come a lot of changes. I have made sure the page is readable on screens with a wide variety of resolutions (including the very popular 1024x768). SCM Blog now has a magazine style interface that helps you browse through articles faster than before. The “Panoramic Slideshow” at the top and center cycles through the articles on this blog, while the “Recent posts” section gives you a quick snapshot of the two latest posts on SCM Blog. The “Browse Categories” section lets you choose from five popular categories on the website. You can also choose to select a topic to read from the tag cloud on the sidebar. As always, you can follow me on Twitter to catch up with what’s been written on this blog. I am also working on getting a Facebook Page for SCM Blog.

As always, a blog is nothing without its readers. I would like to personally thank each and every person who has visited this blog and read its articles. I am indebted to the people who have been encouraging me behind the scenes to write this blog day after day. I also would like to thank Michael Hutagalung for creating this wonderful theme and Jake Ilac for making it compatible with my platform. The update today signifies climbing a small step in what I hope is going to be a long and fruitful journey. I would like all of you to be part of this journey. Thanks for your support and enjoy the new interface.

The Google of Supply Chains? [POV]

noreply@blogger.com (Ayush Sharma) — Wed, 03 Feb 2010 19:34:00 +0000

Yesterday, I attended a presentation that shattered my dreams. Have you ever felt like you had this brilliant idea that no one ever thought of. Your idea is in fact so cutting-edge and your knowledge so incomplete that you decide to wait a few years before actually starting to implement it. You think there is this perfect amalgamation of vision and practicality that will certainly make your idea a great success – only to discover that someone has already implemented the idea – YOUR IDEA on a much larger, grander scale and is a few years ahead in practice than your vision itself. These were my exact emotions at the presentation yesterday. Ask me why?
THE CLOUD: Cloud computing is a concept that has captured my imagination. Not having been at the cusp of the internet’s beginning years, there aren’t as many primitive systems that I’ve faced (when I was 15, I was using Windows XP and a lot of the programs I was using then didn’t have stability issues). When I used the internet, I started with IE6 but ended up using Firefox after a month. Today, I use Google Chrome. I pride myself in using the most advanced technology available to me.
Given this backdrop, cloud computing seemed to be a natural extension to everyday computing. It seemed to be but natural that all your data and information would go where you go. You would be able to turn your data on or off with a single click and it would be available wherever you go. Like many people in my generation, I took to cloud computing services (like Google Docs, Dropbox, Evernote – you get the idea) to help me complete my everyday tasks with ease.
For the past few months however, I began pondering the idea of supply chains residing in the cloud. By this I don’t mean the actual physical supply chain (obviously) but the data that supply chains are made of. The data that has the ability to make or break supply chains. The data visibility that many companies are trying so hard to achieve at the back end without sacrificing their competitive advantage and (in this economic climate) without sacrificing too many resources. Cloud computing could be the panacea for this issue. The whole idea of cloud computing revolves around a single concept – DATA IS UBIQUITOUS. This concept is true in supply chains as well. Data and its visibility are of paramount importance. Even today, supply chain managers are struggling with the Bull-Whip effect. The use of a cloud computing infrastructure that took POS data and shared it with the entire supply chain for a particular product line would put an end to the entire concept of forecasting and would enable supply chains to be entirely demand-driven. Suppliers would be able to work with actual sales data and not forecasted data. And if this is true for the entire supply chain, the whole notion of the Bull-Whip effect would not exist.
ONE NETWORK: Well, yesterday I found a company that does just that (thus effectively shattering my dream of being the first one to have thought of such a concept). One Network Enterprises is a SaaS provider that helps make supply chains better – in the cloud. The entire software is plug-and-play. You pay a subscription fee and you’re hooked onto the network immediately. I like the term “Community Supply Chain Management” too because that is telling it like it is. It is basically a huge network that companies hook onto along with their suppliers and use actual data to drive their supply chain and collaborate with one another. I was also able to look at a few screenshots of the software (could not see the actual demo because of some security issues) and the software looks extremely intuitive and natural to use. Like Mark Skoda – who was the presenter yesterday – put it,

“Anyone who knows how to draw stick figures and play tic-tac-toe can use our software.”

A pretty convincing sales pitch, I must say. Let me make it clear here that neither am I endorsing the product in any manner, nor am I writing this article for money. I am truly astonished to see an idea that I had, being implemented so thoroughly. I can plainly see that this company is doing with supply chains what Google is doing with the enterprise – moving data to the cloud. Mark likes to call One Network the iPhone of Supply Chains. But from a holistic view, they certainly are “The Google of Supply Chains”.
This whole experience has humbled me (All my fingernails are gone. Food for thought I guess!!). Watch me walk into the sunset in solitude… having buried my idea, I now search for something new.