After The Ash Settles

Have we over-outsourced our supply chains?  Michael L. Hetzel, a vice president at ProQC International, says that we in the US have, in a paper distributed to American Society for Quality (ASQ) members.  I believe that we have done so in Europe, as well.

Hetzel maintains that extended and distant supply chain structures have isolated and siloed procurement, quality, design, and logistics functions, with each focused on its own objectives and measurements - to the detriment of the end-to-end supply chain.

The stunning realization in all this is that loosely-connected functions in the supply chain are more likely to fall apart under stress than a strong system of better-integrated links would be.  There may be no stronger argument than this for the value of  - the necessity for - carefully structured business relationships among supply chain partners.

Perhaps near-shoring, in-shoring, right-shoring and the like might mitigate the consequences somewhat.  But, the risk of supply chain catastrophe in a world of bankruptcies, sudden and sometimes unforseeable communications and logistics breakdowns, economic turmoil, civil unrest, government actions, and Icelandic volcanic eruptions is simply too great to do otherwise.

Not To Throw Cold Water On It, But . . .

The US Department of Transportation's Secretary, Ray LaHood, announced the inception of the "America's Marine Highway" program in April.  For those weary of bailouts and stimuli, the initial grants involve under $100 million (with an "m" not a "b").

Are short-sea and other maritime transport modes really viable in the US?  I don't know.  I do suspect that longer-distance river transport could be more employed than it is if: 1) shippers stopped to think about it, and 2) locks and other infrastructure  elements were upgraded and maintained.  But, it does seem reasonable that, if Secretary LaHood's concept embodied compelling merit, profit-motivated players in the private sector would have jumped on the notion quite some time ago.

It's appealing that there might be environmental benefits to the movement of goods over water instead of over the road (either rail or highway).  In the wake of BP's catastrophic misadventure in the Gulf, there might be some concern about the environmental risks of a maritime shipping accident involving who knows what kind of cargo.

In the broader economic equation, I'd like to know if marine highway proponents have considered: 1) the cost of added handling and delay if a water link were to be added to supply chains; and/or 2) the added complexity of introducing more players into the complex business relationships that make up end-to-end supply chains. 

Miss Lucy Had a Baby

The Q1 issue of CSCMP's Supply Chain Quarterly (www.supplychainquarterly.com) features an article, Time for a checkup?, that suggests a thorough supply chain examination might uncover logistics cost reduction possibilities of ten to twenty per cent.

The approach proposed is well-thought-out, well-structured, comprehensive, and useful.  And, yet, I couldn't shake the lyrics of a children's song, "Miss Lucy called the doctor, Miss Lucy called the nurse . . ."

My challenge with the piece is that the program appears to contemplate a more-or-less static and self-contained system, with singular control and direction.  Some mention is made of variable service levels for different products, customers, and/or markets, and one illustration includes a cryptic note about "trucking and other service providers."

Ultimately, my contention is that optimizing one element of an end-to-end supply chain, without the involvement - and collaboration - of other players in the chain, risks sub-optimizing the whole.  Not to mention that it fails to leverage the knowledge and experience of all partners in the chain.

The authors, Dr. Timm Gudhus, a consultant from Hamburg, and Dr. Herbert Kotzab, a professor at the respected Copenhagen Business School, do allow that "there continues to be a gap between logistics theory and business practice."  It is possible that, in some dimensions, business practice might be out in front of theory.  My hypothesis might be that the audit process described could be orders-of-magnitude more effective if greater weight were to be given to the integration and relationships among supply chain partners, rather than being limited to the mechanics of product flow.

Okay, we've heard from the doctor(s) and we've heard from the nurse.  I've no clue what we might hear from the lady with the alligator purse.

I'm Too Sexy

Don't get all lathered up, it's only a song title.  I may be erratic, but I'm not delusional.

Respected veteran supply chain journalist Jean Murphy recently wrote that stronger supplier relationships are a "post-recession priority."  She went on to outline the stresses that tough economic times put on outsourced and/or extended supply chains.  Now, businesses are struggling to get their supply chains up to speed, she continued.

Right Said Fred, invoking the name of a band from the era of Frankie Goes To Hollywood and Cocteau Twins.  Right Said Fred, btw, gave us the marvelous tune referenced above.  But, do I hear the strains of Carole King and It's Too Late in the background?

Where was all this concern when it really mattered, at the worst of the hard times?  Wasn't that the right time to go the extra mile to keep things together, to invest in maintaining the business relationships that would make the difference when recovery inevitably arrived?  Of course it was.

Those who did so are going to be way ahead of those who didn't (and are scrambling today).  And those who are turning to advanced technology to make up for lost time - and lost opportunity - are likely to be disappointed.  Remember that for the next downturn - or if this recession turns out to have a double dip in its course.

When the late night conversation turns to this particular topic, my friends sometimes accuse me of going all DJ and channeling Wolfman Jack on speed - oh, wait, that's redundant.

Don't get me wrong.  Technology is great, and can propel supplier relationships to higher levels of performance.  But it is no substitute for having built and tended to the human side of the equation - the "for better or worse" commitment of authentic human representatives of enterprises in advanced supply chains that can weather extreme challenges, rebound, and move forward.