Track A: Planning and Sourcing

A1: Getting Supplier Relationship Management Right

• As shown from partial results of the most recent survey on SRM, the major concerns for outsourcing to low cost countries are quality and on-time delivery.
• From the same survey, it appears that the metrics were introduced and fixed the problem in a very satisfactory manner, which supports the idea that having an SRM program in place is a good way to go.
• Cost of transportation is causing some distributors to perform packaging and other value add services at their DCs instead of at overseas suppliers.
• Visibility remains a key challenge in SRM.

A2: Replenishment, Allocation and Inventory Management Practices

• We commented on the fact that the data shows 100% of the participants place same product in all DCs. While this practice has the obvious rationale to be closer to each market, we brought up the question of how companies are currently positioning their inventory based on optimized calculation (trade off transport vs. holding cost).
• Ideally, we would like to report more granular by industry, and by segment. However, the limited data does not allow for representative statistics. We need to encourage the consortium members to input their data on the replenishment / inventory accuracy section of the questionnaire.

A3: Has Your Network Design Gone Global?

• A formal modeling system is required to perform network design on a global scale.
• The frequency of completing network design efforts is increasing as the length of supply chains extend and the volatility of the network increases.
• Network analysis is very complicated and data intensive if done at a detailed level, which requires expertise and experienced analysts.

A4: Planning and Sourcing in an Era of Soaring Fuel Costs

• This isn't fuel shortage we're experiencing; it's a commodity shortage. Grains, metals, etc. are all up dramatically.
• Fuel hedging is not simply a pipe dream. Manufacturing companies with sophisticated Sourcing groups that are already purchasing other commodities are currently hedging fuel. Being able to budget and lock-in a profit is more important than getting rock-bottom rates. Companies that would have to outsource the process to a financial institution appear less likely to adopt due to the costs on top of the risk.

A5: Controlling Asian Sourced Product Quality

• Success factors for Asian sourcing are:
• Take personal responsibility for product quality.
• Have a formal process for finding and qualifying Asian suppliers.
• Stratify products so the most important are given the most attention.
• View Asian sourcing strategically -- versus direct or opportunistic.
• Track the quality of finished product and in-process quality of Asian suppliers.
• Have a formal Asian supplier development plan.
• Certify suppliers.
• Frequently visit with suppliers and review performance regularly.

A6: Sales Forecast Accuracy -- A Lot of Talk but Is There Enough Action?

• One of the best practices includes the measurement of the quantitative component of the forecast signal (the business intelligence). The statistics run on the data indicate that while the qualitative input is 70% documented, captured and accounted for, it is only up to 35% analyzed and measured afterwards.

Track B: DC and Manufacturing Operational Excellence

B1: Reverse Logistics -- Opportunity Area or Black Hole?

• Companies' measurements of reverse logistics activities are generally far less formal and complete than distribution activities.
• Most session participants provide instructions and labels to customers with the original product, making the returns process flow much smoother.
• The most effective returns strategies are to stop them from happening in the first place. But in many industries, high return rates are a fact of life that companies can do very little to reduce.

B2: Distribution and Manufacturing Scalability

• Concern for lack of trained management to replace aging leadership is a major issue for creating a scalable operation.
• Concern for how to manage the next generation focused on lifestyle quality vs. financial incentives.
• Companies have to get very good at outsourcing in order to derive the benefits that are expected or needed from focusing on core competencies.

B3: Distribution Outsourcing Lessons Learned

• There are a lot of reasons to outsource distribution operations, including cost, service and capital investment.
• Considerable effort must be expended early in an outsourcing relationship in order to ensure expectations are communicated and a method of measuring results is established.

B5: Inventory Accuracy Improvement Techniques

• Despite general axiom, some operations find physical counts cheaper to perform than a full bore cycle count program, due to product, storage and system characteristics.
• Well designed and executed warehousing processes and procedures are key to improving inventory accuracy.

B6: Delivery Practices in a Direct-to-Consumer Environment

• Leading companies are striving to consolidate orders with the same origin and destination and are most effective when all orders are received before the first order is shipped.
• Delivery windows are seldom used unless specified by the customer. The most frequent time windows are 2 or 4 hours.
• Companies that offer same day delivery before a cutoff hour typically charge the customer for this service.

Track C: Technology, Security and Environment / Sustainability

C1: Transportation Technology Applications -- State of the Art

• Many companies that have a TMS are not fully using the capabilities of the system which provides a significant opportunity to improve operations for little to no investment.
• Implementing a TMS is a significant opportunity to reduce freight costs in this environment of high fuel costs.
• The most effective fleet operations fully utilize technology for vehicle routing, on-board computers and optimizing trailer loading software.

C2: Supply Chain Performance Management Systems (SCPM)

• From our attendees' perspectives, the single most important component of having visibility of the supply chain is to be notified in advance of exceptions, and to be able to take action to remedy those exceptions.
• Supply chain alignment, along with performance improvement, are top objectives of supply chain performance measurement.
• Organizations can have a difficult time or ignore measuring the effectiveness of KPIs, scorecards, and other performance data reported by SCPM systems. Tying use of data reported to bottom line results is challenging.

C3: Top 10 Security Concerns for 2009

• Embracing 10+2 in a proactive manner presents an opportunity to optimize inefficient processes and improve supply chain performance.
• Technology, in and of itself, has limited use -- organized criminals figure out how to circumvent quickly. A vigilant and engaged work force remains critical.
• Companies must be vigilant to understand new requirements for product import safety, new cargo screening mandates and WCO standards.

C4: Technology and Security -- What's Working and What's Not?

• Impact of security regulations is huge and needs consistent monitoring for importers. The US Congressional mandate to screen 50% of cargo on passenger airlines by January 2009 was cited.
• GeoFencing, or the tracking of vehicles and container movement within approved or predefined routes, is current high ground for high tech security measures.

C5: Environmental Lessons from the Leaders in Operations

• Jim Tompkins: "The real lesson here is that, while green supply chain initiatives should be embraced for their impact on the environment, they really are just another catalyst for doing all the things that we should have been doing all along."
• Katharine O'Reilly, eyefortransport: "Greening a supply chain is fundamentally a cooperative process, with a majority of successful green initiatives based on changing relationships with suppliers, partners, and logistics providers."
• Chris Ferrell: "Doing your part to save the environment isn't going to be enough for shareholders, (so) companies are finding win-win opportunities that help preserve the environment and enhance the bottom line."

C6: Environmental Ideas You Can Use

• It was the collective opinion of participants that companies who say they're willing to incur a cost increase to become substantially more environmentally friendly are being disingenuous . . . they're planning on making that money back somewhere.
• Jim Tompkins: "The objectives of the environmental movement are the same as the efficient supply chain. I've been 'green' for the last 30 years, but only realized I was 'green' within the past 12 months."

Track D: Transportation and Ports

D1: Solutions to North American Port Congestion

• Taxes CA is levying on shippers may represent the tipping point.
• Once a shipper finds an alternative to LA/Long Beach, they don't come back.
• Top industry concerns to overcome:
  • Congestion
  • Infrastructure
  • Industrial land
  • Energy use
  • Skilled workforce
  • Public support

D3: Rail and Intermodal Considerations

• Cost remains the primary reason shippers migrate to intermodal.
• Improvement efforts have been four-fold:
  • Infrastructure
  • Assets
  • Process-oriented
  • Technology-based
• Intermodal is unlikely to ever achieve service levels equivalent to "over the road" (OTR), but industry improvements and investments are closing the gap.

D4: Parcel Rate Discounts and Accessorial Charge Mayhem

• A majority of companies focus on one or two core parcel carriers to leverage their volume.
• Because of the increasing significance of accessorial charges, companies are aggressively seeking discounts as a way of reducing overall costs.
• Know your portfolio of parcel needs very well so that you can negotiate from known volumes, zones, weights and service types. Utilize more sophisticated bid and audit processes and software tools in order to evaluate all options and potential charges.

D5: Fuel Cost Impacts on Your Supply Chain Network

• Networks designed even 18 months ago may be due for another network study based solely on the cost of fuel.
• While TMS implementation/upgrade scored highly in the survey, simply turning on TMS modules that companies already have but don't use can provide a low cost means of increasing efficiency.

D6: What Everyone Needs to Know About Customs and Trade Management

• Under the proposed "10 + 2" rule:
  • Importers would have to electronically file information, along with the bill of lading number, at least 24 hours before their cargo is loaded on board a ship.
  • Carriers would have to file container status reports daily and stow plans no later than 48 hours after departure from the last foreign port.
• Companies should prepare to renew their commitment to the C-TPAT requirements. In many cases, this involves a re-evaluation of their entire program.
• TSA air cargo screening requirements will mandate that any shipper that moves cargo in the U.S. on passenger planes should be aware of the changing requirements and develop a strategy to ensure that their cargo will not be left at the airport in January 2009.

Track E: Consortium Company Top Quartile Leading Practices

E1: Global Sourcing Practices

• Top quartile companies:
  • Use performance scorecards with vendors.
  • Rate their vendor compliance programs as more effective than all other companies.
  • Are more likely than other companies to review purchasing terms with international vendors when initiating a new vendor relationship and when renewing a contract.
  • Are somewhat more likely to see vendors not ready to ship, carrier delays and sales forecasts as important causes of expediting import shipments.

E2: Ocean Transportation Practices

• A little over 98% of the top quartile companies' ocean volume moves under contract.
• Top quartile companies:
  • Are no more likely to benchmark rates than any other company.
  • Use a formal bid process to award ocean freight to carriers.
  • Performance metrics are more predictable than all other companies in the survey; they clearly have tools and techniques, carrier relationships and economies of scale that provide advantages.

E3: Product and Shipment Visibility Practices

• Requiring vendors to provide electronic information is one of the more important vendor initiatives identified by survey participants.
• Real-time data provides the best visibility into the status of materials moving through the supply chain. Top quartile companies tend to place slightly more emphasis on visibility.
• Service provider compliance with status update requirements is also very high for top quartile companies.

E4: WMS Technology Application Practices

• Due to mergers and acquisitions and diversity of processes, nearly half of the companies are using multiple WMS, but that same group of companies are in the process of upgrading, changing, or standardizing their WMS.

E5: Supply Chain Technology Selection Practices

• More than half of top quartile companies will acquire best-of-breed point solutions for each application requirement and invest in integration.
• Top quartile companies generally seek to integrate their supply chain solutions to the highest extent possible.
• 89% of top quartile companies award business to carriers with the help of a technology-based tool.
• There is a big difference between top quartile companies' use of SCEM technology compared to all other companies.

E6: Air and Cargo Freight Practices

• Top quartile companies:
  • Competitively bid air freight, compared to 75% for all others.
  • Utilize air freight forwarders (versus going directly to air carriers) to a much greater degree than all other companies.
  • The average number of days between air freight delivery and issuing payment is 11 days for top quartile companies, compared with 28 days for all others.
• Criteria must be developed for selecting the optimum carrier mix. Consider transit times, reliability, on-time delivery, rates, availability of capacity and tracking and visibility.