Do you buy software or transform your operations?

It's been a very interesting 2011 and I've been fortunate to engage in some really good conversations with clients and prospects about technology and supply chain operations.  These conversations covered a range of topics that you would typically expect:  facility layout, material handling equipment/systems, software, etc.  However, the most thought provoking discussions occurred with senior management teams that really centered on how they wanted to use technology to 'transform' their operations in support of the business.  I did a quick look-up of the word transform and found the following definitions:

1. transitive verb - change something dramatically: to change somebody or something completely, especially improving their appearance or usefulness

2. intransitive verb - undergo total change: to change completely for the better

 

In particular many of these conversations focused on software and how these supply chain leaders wanted to acquire and implement software to really help "transform" the operation supported by improved processes, training for associates and continuous improvement programs that will help reduce supply chain costs as a percent of sales.  These conversations very clearly did NOT focus on "the cloud" or mobile computing or other elements of technology - the focus was how to leverage the technology to drive costs out of the equation. Sure we talked about the cloud, etc. but the real discussions centered on how their teams would actually use the technology to truly improve their operations - i.e. reduce process cycle time, improve productivity & utilization, reduce errors, waste and more. 

 

Many, many of the customers I spoke with were experiencing signficant growth in their business and are forced to continue 'to do more with less' in order to minimize costs.  Scott Trainor from Dell was recently quoted in an article where he discussed how Dell is transforming it's supply chain. Trainor spoke about how Dell is segmenting its supply chain:

• for optimization and for executing lean approaches to reduce waste
• to reduce operational complexity and increase Dell's cost leadership

Powerfull stuff!  This mirrors many of the discussions I was involved in with customers this year.  As 2011 winds down and we all catch our breath for a while, it looks like 2012 could well be the year of even more transformation for supply chain operations as it relates to technology.  We see signs of the economy recovering in many sectors and the resulting growth and impact on supply chain operations is clearly being felt.  Many of these customers have already implemented tremendously successful transformational solutions that leverage technology, but are now looking for the next 'big win' in 2012.

So here's to a roller-coaster 2011 and cheers and best wishes to all of you in 2012.  Continued success to you and your teams as you look to transform your operations in support of your 2012 business goals!

If you experienced a particularly significant transformation in your supply chain operations this year, let us know by leaving a few comments here. I'm sure the DC Velocity readers would love to hear about your success and lessons learned.

HAPPY HOLIDAYS!

 

 

 

 

 

 

 

 

 

Blogging from 30,000 feet & Thanksgiving

Happy Thanksgiving to all DCVelocity readers!  I'm thankful for the technology that allows WiFi to be available to me on my flight home for the long Thanksgiving weekend.  Blogging from 30,000 feet is not exactly something I thought I would be doing when I started writing this blog for DCVelocity.

Speaking of technology and Thanksgiving, I think this is a great time to reach out and thank your business partners for helping you and your business. So let me be the first to say "Thank You!" to all of my customers, prospects, business partners and associates. 2011 has been a blur. So as we pause for a few days of giving thanks before the mad rush toward the end of the year, I would encourage supply chain technology providers to reach out and thank their customers and for customers to offer some thanks to their technology vendors as well.  We're embracing all kinds of technology as we look for ways to optimize our supply chain operations but it's the people on our project teams working together that really enable us to enjoy the benefits to our businesses that technology brings.

I would also like to say a special "Thank You!" to the team at DCVelocity that does such a great job of bringing supply chain practioners, suppliers, consultants, educators, students and more together in our pursuit of supply chain excellence.

Take a moment, send someone you work with a nice note of thanks.  Growing up, we've all heard that saying thank you is simple, it's fast, it's free, it's not done often enough and it's greatly appreciated. A quick call, a short email is all it takes. Thank you!

CSCMP, Steve Jobs, Supply Chain Innovation

The 2011 Annual CSCMP Conference was a blur. Philadelphia provided great weather, an excellent venue and even some exciting moments with the Phillies and Eagles on Sunday the opening day of the conference.  Excellent attendance, some great sessions and of course tons of networking opportunities among the attendees.  Of particular interest to me was the Roundtable luncheon on Tuesday - it seemed that each regional Roundtable was not only well represented but several seemed to be bursting at the seams.  International attendance seemed particularly strong this year.

 
                                    CSCMP Annual Conference - Roundtable Luncheon

I admit I have a vested interest in the Chicago and Arizona Roundtables and both of those were extremely well attended.  The Arizona Rountable will be hosting their 5th Annual CSCMP-AZ Symposium at ASU SkySong in Scottsdale on November 8th and I encourage any CSCMP members in/around AZ at the time to attend.

Innovation continued to be a common theme among many of the exhibitors at the Supply Chain of the Future with a particular focus on cost savings, productivity and continuous supply chain performance improvement.  Kiva stole the show with a very nice working demo of their solutions and Llamasoft seemed to attracting a lot of attention with their solutions aimed at helping to optimize supply chain performance and reduce costs.

Sadly, following the conference we all learned of the passing of Steve Jobs, Apple Co-Founder and visionary.  The continued emergence of iPad technology, iPhones (and other smartphones to be fair), cloud technology is very encouraging.  Steve Jobs' vision and product developments have clearly had an impact on us as consumers, as well as practioners in supply chain. Supply chain techology and solution providers continue to push the envelope with their applications as more and more new college grads step into the world of supply chain and demand more from their companies and solution providers - it's a fascinating trend to be a part of.  With that, I'll close with a thank you to those schools and universities that are cranking out some fantastic new supply chain grads and to the entire CSCMP organization and volunteers for putting together a fantastic conference.  See you next year in Atlanta!

2011 Annual CSCMP Conference Kicking Off

It's hard to believe it's that time again, but the 2011 Annual CSCMP Conference is about to kick off.  The event is being held in Philadelphia and I'm looking forward to seeing lots of industry friends and associates.  There will be plenty of educational sessions and panel discussions around the latest and greatest developments in supply chain from productivity, software, HR issues, green initiatives and more.  I'll be updating my blog with events, happenings and hot topics from CSCMP over the next few days.  I look forward to seeing you in Philadephia! 

Warehousing is Hard Work - If Consumers Really Knew...

Where did the summer of 2011 go?  Seems like most of us endured one of the hottest summers on record based on my trips to Dallas, Chicago, Salt Lake, Charleston, Atlanta and other parts of the US. During those trips I've had the opportunity to see many, many distribution centers and have seen an extremely wide range of material handling equipment and systems. I also saw hundreds of hard working people in those DCs. Some of the hardest working people I observed were in the picking operations in these DCs. It struck me how hard these people work day in and day out so that we, as consumers, are able to get our favorite foods, drinks and other products at our local stores. As you may know from my previous blog entries, I like to talk about the People, Process and Technology components of logistics.  As I watched an order picker in a grocery DC this summer, I was reminded how important the "People" really are to DC operations.  I watched a single order picker in an aisle that had to be 200 feet long, or longer, riding an electric pallet jack and wearing a voice-controlled headset.  He was the only picker in the aisle. It seemed to be a very lonely job and one without end as I watched him pick case after case after case.

Does the average consumer have any idea how hard a warehouse team works to receive, store, pick and ship their favorite products? I don't think so.

Several years ago when my father-in-law passed away, I inherited a piece of material handling equipment. He was an independent and entrepreneurial guy. He and his partners started what turned out to be a very successful screw, nut and bolt manufacturing company in Chicago. My father-in-law ran the warehouse. I worked in the warehouse for part of one summer and the 'automation' in that warehouse consisted of a few forklifts (or "tow motors" as he used to call them) and a fleet of trusty "hand trucks". Those hand trucks were used to move "kegs" of screws, nuts and bolts around the warehouse from receiving, to storage, to picking areas where screws were weigh counted and "dumped" by hand to fill orders. It was very hard, messy work. The "hand truck" I inherited actually has the word "Receiving" stenciled on the side of it - lest anyone in "Shipping" try to borrow it!  This piece of material handling equipment obviously has some sentimental value to me, but it also serves as a constant reminder to me as I tour DCs and talk to customers. 

While we all strive to improve the efficiency of distribution operations, reduce costs, etc., it fundamentally comes down to the people working in that DC.  The fastest conveyor, slickest WMS, latest scanning or voice technology means nothing if the people in the DC are not trained, coached or motivated to succeed. So as this hottest summer on record draws to a close, I applaud all of those warehouse associates that work extremely hard each and every day so that consumers can enjoy their summer BBQs with their favoite products among family and friends. To those of us that advise customers on how to improve operations, I urge you to put the people in that operation on the top of the list of priorities and ask a few simple questions:

• How will this technology or automation not only improve operations, but how will it affect the people that interact with it?
• Are we doing all we can to train, coach and motivate those people in order to achieve total system success?
• Have we engaged the HR team to help integrate these improvements into the culture of the DC?
• Have we even asked the people on the floor for their input, or are we designing solutions in a vacuum - hoping they will miraculously be accepted?

We've all seen many warehouse "improvements" fail to achieve the desired results due to lack of focus on the "People" component.  Sure the "hand truck" may be a primitive piece of material handling equipment, but it's a person that works with that equipment and it's the person that we need to focus on just as much as we do the technology and process.

Send me a photo of your version of a "hand truck" in your operations - we'll try to see who has the oldest piece of material handling equipment still in operation.

 

WERC Annual Conference - People Matter

It's been 2 weeks since the Annual WERC Conference was held in Orlando.  Attendance was strong and there were some great sessions and networking events throught the conference.  Two keynote presentations really stood out, and both dealt with the people side of our business.  I always try to mention the People, Process, Technology components of any supply chain initiative, but Randy Lewis (SVP Supply Chain & Logistics) at Walgreens gave one of the most powerful presentations that I have ever seen at a logistics-related event. Randy spoke about a program designed to employ disabled individuals across the Walgreens distribution centers.  The program started in 2007 in their Anderson, SC distribution center. It is a wonderful story about Randy's personal passion and vision and how this vision became reality for Walgreens.

Randy told the story of how the program moved from concept to reality.  The presentation was filled with video profiles of many of the disabled Walgreens DC employees working side by side with their 'typically abled' co-workers.  The results of this program are staggering in many respects.  Today, Walgreens employs 950 disabled workers across thier DC network.  Randy talked about the impact of this program on everyone involved and how this program has positively touched the lives of everyone involved.  Randy has told this story to audiences of all kinds, including features on national television and news programs - it truly is an inspirational and touching story and I highly encourage you to read more about it.  Randy and his team will open their DCs to anyone (even competitors) in order to help others learn about the benefits of this program - it is truly a game changing approach to business.

Robyn Benincasa closed out the conference with a powerful presentation about "Human Synergy" and teamwork.  You see, Robyn is a two-time Eco-Challenge World Champion and she is also a firefighter in San Diego.  She knows quite a bit about teamwork and competition. Robyn's examples of what "total committment" as an individual means in terms of teamwork and success were phenomenal.  If you missed her presentation, you can download a copy here.

Robyn and Randy challenged the WERC attendees to push themselves to the limit as individuals contributing to whatever team they are a part of.  As Randy reminded us all, 'our deepest fear is that we are powerful beyond our imagination' and it is that fear that holds us back.  Randy talked about how we are 'quiet when we should have spoken', or 'sitting when we should have taken action'. I really encourage you to read more about Randy and Robyn and see how you can apply their lessons to your supply chain initiatives - as I always say, technology is great, processes are great, but it's the people that will help us succeed in the long run.  Thank you Randy and Robyn for presenting such powerful messages at WERC!

ProMat 2011 and Technology Advances

It's hard to believe but ProMat 2011 has come and gone.  Traffic at the show was up significantly over the past few years - which was a very welcome sign for all attendees and exhibitors.  First of all, I tip my hat to MHIA for doing a great job delivering another quality event!  On top of it all, the Chicago weather was fairly cooperative (save Wednesday night when my west coast guests and I were caught in a pretty good wind/snow/sleet storm as we left the restaurant - that thankfully was short-lived). Spring is indeed, on the way!

 
    Eastward view of the Chicago River from Michigan Ave. on Sunday evening prior to the start of ProMat.

Feedback among visitors that I spoke with was that they were impressed with lots of new technologies and innovations among the exhibitors.  Some pretty impressive robotics, AGV applications, more sophisticated cubing/weighing systems and of course lots of good software innovations.  The common theme was how these innovations are designed to help customers improve supply chain performance, reduce costs, increase productivity and more.  Given the tough times we've all experienced, any technology that can deliver on these promises should be welcome.

Of course, as I often speak about, it's not technology alone that will take us to the supply chain promised land.  People and processes remain critical components of any successful supply chain initiative.  I was pleased to hear about several case studies in the educational sessions where the focus of the presentation was on people, process as well as developing a performance-based cultures and continuous improvement programs.

One last common theme I heard from many exhibitors was that while they are proud of their technology advances, many are now facing a very tight labor market for skilled engineering and software people to help deliver solutions to their clients.  It's funny how quickly the tide has turned.  Not very long ago, we had an abundance of skilled resources as the economy cooled and now it seems the critical component in the people, process, technology triad is people.  A challenge, but I believe it's a welcome challenge for most.

I hope you enjoyed the show as much as I did. Let us know what you thought about ProMat 2011, we'd like to hear from you.

 

Chili's = People, Process & Technology

So what does Chili's have to do with supply chain technology?

We all read and talk about the importance of balancing people, processes and technology when it comes to projects.  I read a very interesting article in the Wall Street Journal the other day about how Chili's (yes Chili's the restaurant chain) was addressing a very serious business issue (rising health care costs) and how they addressed not only the business issue, but the people (labor), the processes (the way food is prepared and served in their restaurants) and how they leveraged technology to help achieve the desired results. The other interesting component that was mentioned in the story was how all the changes being made were done "without compromising the guest experience" - something that is not typically mentioned in a traditional "people, process, technology" discussion. Whether your "customer" is an external or internal customer, not compromising the "guest experience" is a fascinating aspect that I would guess that not many of us really pay attention to at the start of a project.

Chili's took a very hard and strategic view of their labor model, their processes and how all of these components were essential to address the underlying business issues.  So many of us get caught up in our own little world that we don't often get a chance to read about how other industries are using some of the same words and techniques that we use.  When you consider the flow of material, the labor, the processes (and required analysis & engineering) at at Chili's restaurant, it truly is a microcosm of a supply chain. It's amazing how Lean and process improvement techniques are being applied across all kinds of businesses - even at your neighborhood Chili's!

Support Your Local CSCMP & WERC Organizations

Local CSCMP and WERC organizations offer fantastic opportunities to network, learn and more. I would encourage all of you to participate in some small way.  I just participated in the N. Texas WERC Conference where over 200 supply chain practitioners spent the day attending educational sessions and networking with a host of sponsoring companies in a 'mini tradeshow'.  Interaction was great and feedback was very positive.  On a similar note, the CSCMP-Arizona Roundtable will be holding their 4th Annual Supply Chain Symposium on November 9th at the ASU Skysong Innovation Center.  There are several excellent speakers lined up along with 15 sponsoring companies.  Speakers include:

• Barry Broome - CEO/President - Greater Phoenix Economic Council
• Elijah Ray - SVP Client Solutions - UTi Integrated Logistics
• Rick Blasgen - CEO/President of CSCMP
• Dave Maloney - Senior Editor - DC Velocity magazine
• Randall Gibson - Managing Principal - Diamond Head Associates
• Dick Landis - President/CEO - HELP, Inc.
• Darin Endecott - Global Quality Director - RUAN Transportation

Presentations will include topics for "Inside the Four Walls" and "Outside the Four Walls".  If you or anyone you know related to supply chain will be in Phoenix on November 9th I would encourage you to plan on joining the group the day.  It promises to be educational and rewarding.  For more information and registration simply click on www.cscmp-az.org/2010Symposium.aspx .

Take some time, attend a local WERC or CSCMP meeting or event - you'll be glad you did!

 

SaaS supply chain execution solutions and golf...

In my previous blog, I highlighted an IDC Research study that discussed how SaaS will overtake traditional software deployment.  No doubt the SaaS, or on-demand, market is growing for supply chain applications. Over the past few months I have engaged in many, many conversations, presentations and proposals for on-demand supply chain applications.  Yes, on-demand applications can provide companies with tremendous benefits including:

• elimination of up-front license fees
• elimination of hardware and 3rd party software purchases
• elimination of long-term support & maintenance agreements
• minimize the impact on IT resources

However, that does not mean that the project is simply plug and play.  You don't just flip a switch and instantly install your WMS or LMS application - there is still work to be done.  This is especially true in supply chain execution applications that involve the movement & management of inventory, people, equipment as well as integration with complementary applications (ERP, TMS, WMS).  A SaaS-based WMS or LMS can clearly help reduce project costs and time, but project discipline, change management, testing, data conversion & integration all still need to be accomplished for the project to succeed.  Newer SaaS-based supply chain execution solutions are more configurable and flexible and that too will help reduce project costs and time. However, the human element of any system implementation still takes good 'ol Project Management and people skills. I like to draw an analogy to the golf equipment industry.  Yes, today's golf equipment allows you to hit the ball farther and with better control (supposedly), but it still takes practice and you still need to play all shots over an 18 hole round extremely well to win.  Supply chain execution projects are no different.  SaaS-based solutions allow us to implement more quickly and in a shorter total time frame, but we still need to execute well across all project phases to succeed.  A successful and sustainable WMS or LMS project requires commitment to 'practice' each and every day in order to deliver the desired results on an on-going basis.  "Course management" is not something the average golfer thinks about, but those golfers who really understand the game and are committed to continuous improvement know that course management (like Project Management) is essential. We may not all be PGA or LPGA material, but there is no reason we cannot win our share of "tournaments" in supply chain execution projects as long as we commit to continuous practice and diligent project management.  Discipline, "course management" plus leading edge technology can help you take your game to the next level.

SaaS predicted to Overtake Traditional Software Delivery

"As a result, a permanent change in software licensing regime will occur" according to an IDC source.

Pretty interesting findings and some compelling numbers behind this story based on research by IDC.  Further, IDC expects a number of industry changing shifts as a result of the emergence of the SaaS (software-as-a-service) model including:

• SaaS market for enterprise applications and other software will reach $40.5B in 2014 up from $13.1B in 2009
• By 2012, nearly 85% of new software firms will offer their products based on the SaaS model
• Manufacturing software including logistics management, transportation and warehousing is expected to be among the leading application areas fueling the growth of the SaaS market

Think about the implications across the market, for vendors and customers alike. No doubt this shift will have a dramatic impact on software sales processes and certainly will have an impact on software sales commission plans.  IDC states that this shift toward SaaS software purchases will result in "a nearly $7 billion decline in worldwide software license revenue in 2010". 

How this will impact support contracts, service level agreements (SLA) and buying behavior will be hard to predict but it seems pretty clear that we will all be facing a paradigm shift in terms of software licensing and purchases.

What is your experience with SaaS purchases?  What new obstacles did you have to overcome vs. traditional software licensing purchases?