By Andrew K. Reese and Sarah Murray
Spring this year brought a faint thaw in the global economic deepfreeze, as little by little slightly less negative data began to trickle out of disparate sectors.
Supply chain executives have been laser-focused over the past year on reining in inventories, driving down costs and otherwise ensuring that their companies sustain the least negative impact from the current downturn. That's understandable: We're all in survival mode. And "saving the enterprise" literally means finding innovative ways to save jobs, save market share, even save the company itself.
However, as the economy starts ticking upward again, enterprises will be turning to their supply chain functions to begin ramping up supply quickly and agilely to meet increased customer demand. "Saving the enterprise," in this case, means that supply chain executives already must be working today to ensure that their business strategies are not focused solely on "short-term survival" but are truly positioning the company for sustained growth moving forward.
The winners in the next lap of the economic race are likely to be those enterprises that have spent the recession putting in place the people, processes, technologies and partnerships necessary to meet the requirement not just of the current downturn but also of the next upswing in the business cycle.
In this year's article, we turn to the Supply & Demand Chain Executive 100 to give you their best advice, and even some real-life examples, to not only help your company in the short-term, but also position your company for the inevitable growth to come.
Prepare your supply network for the future by redesigning it today to take into account not only the current economy but also future logistics challenges, such as rising fuel costs and the need to reduce carbon emissions.
(San Jose, CA)
Focus on the "shouldbe cost" of each cost element that makes up the total cost of procurement to expose inefficiencies across the supply chain across multiple functional organizations contributing to cost such as product engineering, procurement, logistics, finance and manufacturing.
Investigate solutions to extend the functionality of manufacturing and warehousing systems to eliminate inefficiencies in manufacturing, supply chain, warehousing, outsourcing, data collection and transaction processing.
ADR North America, LLC
(Ann Arbor, MI)
With travel budgets tight but the need for training as high as ever, leverage e-learning programs that allow staff to improve their competencies and help you fill critical skills gaps.
(San Mateo, CA)
Explore whether a community supply chain management solution can help you synchronize "real" demand with "lean" supply and gain real-time visibility across your trading community.
Look into open source solutions that can reduce upfront capital expense for technology while also reducing risk and remove barriers to scalability.
ATC Logistics & Electronics
(Fort Worth, TX)
If you have complex logistics requirements, including returns management and "Six Sigma"-level standards, consider a 3PL with a track record serving other demanding customers in your industry.
Tackle procure-to-pay automation as a whole, not just discrete parts of the process, in order to gain better visibility into the financial supply chain.
A global supply chain requires tools that provide the visibility into a product's global lifecycle necessary to make decisions in response to continuously changing economic trends.
Blue Sky Technologies
When operational expectations vary outside of company-configured complex event tolerance levels, make sure you have solutions in place to alert, track, trend and analyze the exceptions so that you know exactly where to focus your efforts.
Bowen & Groves
Small and midsize companies should look for enterprise planning solutions that are flexible and fully support customization to ensure that the company's most valuable and unique business processes can be handled with ease.
Leverage a "collaborative sourcing" solution for strategic categories like transportation and packaging to allow category managers to work with their suppliers to identify ways for both parties to operate more efficiently, thus producing natural savings without unduly squeezing supplier margins, ensuring savings today and a stable supply base tomorrow.
Supply chain systems can fall out of sync with the business environment, leading to inaccurate demand forecasts and supply recommendations and unnecessary risk. Consider a managed service to access expertise to maintain business rules, algorithms and models within these systems without having to hire new resources.
Extend supply chain control into the cabs of your trucks by deploying technology to automatically collect data on driver behavior and vehicle location/speed in order to optimize fleet performance, maximize safety and improve supply chain visibility.
Use technology solutions to integrate scheduling, operations, quality and maintenance as a way of unlocking hidden capacity on the factory floor by managing production scheduling in real time, pinpointing the causes of plant inefficiencies and providing immediate feedback on key operating metrics.
You invest in quality, and so should your suppliers. CHEP is investing $160 million in quality improvements to enhance its customer service relationship by buying new equipment, improving its information technology equipment, and repairing and upgrading the roughly 100 million pallets it owns in the Americas.
New product introductions are ever more critical for building revenues, but quality must remain at the highest levels. Quality lifecycle management solutions can enable predictive and diagnostic product quality management across entire product lifecycles, lowering the cost of high quality while speeding market launches, keeping brands protected and improving overall financial performance.
The parts managed by field service organizations are vital to customer loyalty and profitability, but companies must leverage technology to optimize/lower this inventory while improving key service metrics.
Advanced sourcing technologies allow buyers to represent their needs in greater detail, including their willingness to accept innovative alternatives from suppliers. In return, suppliers are able to propose alternate items, materials, and service levels, which can include innovative new products and sources of supply that can deliver short-term cost savings and long-term competitive advantage.
Participate in a group purchasing organization to leverage pre-negotiated agreements and external supplier and contract management services.
Getting smart about risk management delivers great value whether the economy is stagnant or roaring.
Strategies and processes for managing supplier information, monitoring overall financial and operational stability and establishing early warning systems for alerts when conditions or parameters change are key to reducing exposure to risk.
(San Francisco, CA)
Now is the time for collaboration with key strategic suppliers to plan a path to mutual success as the economy begins to strengthen once again. And now is the time to implement systems to manage suppler performance.
(St. Louis, MO)
With demand at peak volatility, if your company uses Sales & Operations Planning meetings to make strategic decisions based on your forecasts, ensure that your planning solution gives you the data you need to back up your projections and help your executives make decisions based on fact, not just "gut instincts."
When the economy turns and demand begins to increase, SMB's will need solutions that are scalable, and software-as-a-service tools offer low cost-of-entry while the potential for future growth in the upturn.
(Richmond Hill, ON)
Quality was "job one" in the 1980s but got hidden behind supply chain optimization priorities in 1990s. Quality Risk Management offers a proactive, knowledge-based approach to quality realization that allows the entire value chain to be heard and to share information. QRM allows information to be turned into knowledge and allows critical quality assurance processes to be automated, improving the quality and time-to-market for new products.
Leverage solutions that match your buying needs to excess supplier capacity, says the holder of the patented Gindlesperger Method. William Gindlesperger invented and patented this methodology for automatically matching companies that are looking for suppliers with suppliers that are looking for work, a service that benefits organizations both when the economy is down and when it is up. The Gindlesperger Method identifies suppliers that can produce a product or provide a service based on specifications submitted by the buyer. Since the buyer pre-selects the suppliers to be in its network, quality and delivery requirements are not compromised with unknown vendors.
(Redwood City, CA)
Deploy solutions that give you the ability to execute demand and supply balancing "on the fly," based on real-time information from anywhere along the supply chain.
Make sure your decisions are based on real-time, relevant information by using dashboard technology that allows drill down to an appropriate level of "actionable visibility."
e-Procurement success begins with buy-in among end users, but also suppliers – bringing the supply base into the initiative early can help ensure successful ROI.
In today's increasingly borderless, real-time business environment, the lines that once distinguished ERP and SCM are becoming less defined. Consider a single source solution that unites ERP, SCM and CRM.
ET2C International Inc.
Sourcing in China? Consider leveraging a partner with an Asian-based buying office that, for a fixed monthly fee, offers a fully operational and fully staffed office on the ground in the world's fastest growing markets.
eZCom Software Inc.
A luxury retailer contracted eZCom to help increase the number of vendors participating with EDI, with the net result of driving a significant increase in the percentage of electronically processed orders.
Now is the time for companies to begin thinking strategically about their workers. Make hiring decisions across all labor categories by leveraging a unified technology platform for acquiring all workers, including contingent labor, service providers and direct hires.
Even in tough times, outsourcing isn't always the answer. An analysis by FORTE for a global medical device manufacturer showed that outsourcing distribution operations to a 3PL would cost more and produce no efficiency gains.
FreeFlow uses a "Progressive Disposition Process" to help clients dispose of the excess active inventory weighing down their balance sheets before the goods become obsolete.
Ensuring identified savings get realized using a "savings tracker dashboard" can help build the credibility of the company's procurement function as it fights to brings cost reductions to the bottom line.
Greybeard Advisors LLC
Look to solution providers that can help you build internal support for investments in supply chain improvement by communicating in "the language of the CFO" and by providing a credible transformation roadmap and business case.
Don't know if B2B outsourcing is right for you? Tap the Total Cost of Ownership methodology developed by a third party consultancy for GXS to see whether outsourcing will save you money.
Don't just be Lean, be responsive: Set up appropriate KPIs to measure and manage the company's ability to be responsive to changes in the marketplace – particularly critical as the economy turns up again.
(Lake Forest, CA)
Horizon's Global Supply & Demand (GSD) database offers a 24/7 window into the worldwide supply and demand for customer-specific part numbers, helping to cut response times, minimize stockouts, liquidate excess inventory and reduce purchase costs.
Data are the best defense against the risks associated with distressed suppliers. Ensure you have the tools necessary to provide increased visibility into supplier information and a better way to manage the flow of supplier data.
Insight into material substances used in products and processes is vital. A critical inflection point in manufacturing history was overshadowed by economic woes: An abrupt shift from traditional supply to regulated, “green” chemicals and materials. Inventory is dangerously lean. When demand improves, it will be met with skepticism and conservative production. Companies must secure traditional supply, while competing for new eco-friendly materials. Winners will be those who avoid supply interruption, breeze over regulatory hurdles, and make the green transition before their peers.
Leverage tools that give you visibility into supplier operations and quality programs (such as Six Sigma) to ensure that the products meet requirements.
Infor believes that supply chains can be chaos-tolerant, with tools like supply chain network design enabling companies to plan, manage, and implement supply chain strategies that take into account that the world is a messy, unpredictable, and scary place. Through this realization, supply chain managers can save the enterprise because they are prepared for any situation—whatever that situation may be.
Inmar CLS Reverse Logistics
In good times and bad, returns can be a supply chain killer. A leading fragrance manufacturer lacked an established returns processing system and warehoused a staggering 17 million units of unprocessed returned items. Within a short time Inmar CLS enabled the company to achieve an 80 percent asset recovery rate, resulting in annualized savings of $5.9 million.
A leading entertainment company leveraged a production team from InnerWorkings to manage all its point-of-purchase, direct mail and promotional items, resulting in significant savings.
Insight Sourcing Group
The reduction of supplier inventories in the downturn could result in severe shortages in a rapid upturn. ISG is helping companies develop supply assurance clauses in major contracts, leveraging the suppliers' desire for the business that is out there today to protect their clients' ability to respond when the market turns.
Implementing a global trade management solution can help companies take advantage of the trade-related cost savings desperately needed today while preparing for future trade expansion that will remain efficient and optimized.
Reduction in spending during difficult times can be a double-edged sword: exercise extreme caution, making sure the reductions are not disruptive to the organization or pose the risk of eliminating revenue generating opportunities.
The time is now for organizations to assess their supply chain processes and proactively create an integrated, enterprise-wide information platform that enables a single view of demand and supply.
John Galt Solutions Inc.
Burt's Bees is using collaborative forecasting, enabled by John Galt's web-based Planning Portal, to realized improvements in forecast accuracy and inventory fill rates, giving the organization flexibility to make changes quickly as the market and their organization changes.
Now is the time for training, goal setting, evaluations and rewards to those who have contributed the most. Be sure to recognize your stars. And also count up your contribution and pass on lessons learned for the team members that will be facing their own downturn in another six years.
Hubbell Lighting is using RapidResponse from Kinaxis to dynamically align supply and demand, and to help assess and mitigate risk, as well as respond to unplanned supply chain events, including through daily supply chain runs to continually reconcile demand plans to reality.
Knighted Computer Systems, Inc.
Provides hundreds of modules assembled into functions that can be assembled into a purpose-built, tier-one WMS solution or can be installed separately so that customers have resilience in the current economy while being ready to scale up again when good times return.
Pasta-maker Barilla America transformed its transportation planning with LeanLogistics – accurate allocation of transportation cost at the SKU level supports analysis of customer profitability by stock-keeping unit.
Logility's supply chain solutions are helping customers survive the economic uncertainty by better equipping them to meet manufacturing and distribution challenges and rising customer expectations.
(East Rutherford, NJ)
A Fortune 500 manufacturer credits Management Dynamic and its Trade Import solutions as its secret weapon when preparing for 10+2. "As an overall organization we found ourselves very prepared for this. Not because we were mind readers or had a crystal ball, but because earlier work had begun from an overall compliance perspective. We are now in a very good position as far as what is coming for 10+2."
Solutions that operate on a common service-oriented architecture platform can help maximize the value of technology investments by reducing complexity in implementations.
MCA Solutions is helping service businesses to demonstrate increased value to both their internal provider organization and their customers in this economy through more responsive forecasting, expanded service offerings, network re-design and "what-if" business scenario planning.
Metastorm said organizations that have deployed business process management consistently report a return on investment of 10-20 percent per process project. It can help strengthen an organization's corporate infrastructure – making organizations more effective and more agile so that as the economy improves, an organization is primed to take advantage of new opportunities better, faster and more profitably than its competitors.
(Palo Alto, CA)
MetricStream recommends supplier site inspections in order to capture, analyze and assess quality-related issues and provide transparency and visibility into the supply chain.
ModusLink Global Solutions
ModusLink suggests strategies such as deferred configuration and packaging postponement, as well as alternative revenue streams such as value recovery and asset disposition to not only combat today's economic uncertainty and global softness in consumer demand, but to also optimize the supply chain for future profit.
New Generation Computing
(Miami Lakes, FL)
NGC's Consumer Product Safety Improvement Act compliance software, coupled with the company's PLM and global sourcing solutions, can play a key role in helping companies to succeed not only in the current downturn but also when the economy rebounds.
Next Level Purchasing, Inc.
(Moon Township, PA)
Purchasing professionals should acquire new skills and techniques: The correlation between skill levels and savings reveals that by developing the skill levels of a purchasing department, an organization will most likely see a substantial, measureable increase in cost savings, reduction in risk, and also an increase in productivity.
Business intelligence solutions can help companies gain visibility into cross-functional processes across their enterprises and beyond, use analytics to identify and address obstacles, target areas for improvement, and uncover opportunities for growth – capabilities that are essential to help companies survive the recession and be well-positioned for post-recession growth.
A collaborative trade finance solution can help buyers extend payment terms without negatively impacting the supply chain, while suppliers can opt to get paid faster to fund operations.
Pace Harmon advises that, in the current down economy, companies that can maintain their profit margins with falling demand, as well as quickly ramp back up to meet increasing demand when the economy rebounds, are the ones that will remain successful in the long run.
Panorama Consulting Group
An ERP system implemented in a timely, cost-effective manner: a $100 million industrial manufacturing company has saved over $1 million/year in hosting and maintenance costs after tapping Panorama to evaluate, select and implement an ERP system to help reduce its costs and adapt to lower sales volumes and reduced employee headcounts.
Yard Hound from PINC Solutions is the only yard visibility and management solution on the market that offers real-time location information of mobile assets in the yards using passive RFID technology, with sufficient accuracy while at a price point practical for the yard management needs.
PowerTrack, U.S. Bank
PowerTrack suggests optimizing processes and implementing easily scalable solutions now, specifically as it relates to invoice processing and payment activities and gaining enterprise-wide control to leverage data on a global basis. This will not only drive physical supply chain optimization, but financial optimization as well.
By leveraging the purchasing power of more than 550 manufacturers, Prime Advantage delivers cost savings through group volume, discounts and rebates.
Time to do a Valuation on every aspect of the business, scrutinizing each process to determine whether it is a profit center and can it be improved; if it can be eliminated without materially affecting profit; or if it is an essential process then can it be re-engineered to be more efficient.
(Red Bank, NJ )
A compelling ROI analysis alone cannot address an organization's need to reduce the risk involved in implementing an enterprise-wide procure-to-pay automation project. To help companies offset some of the risk involved, PurchasingNet launched PNet Education & Training Courses.
Do more with fewer resources. Puridiom's procure-to-pay solution enables clients to experience more purchasing power while utilizing fewer resources, such as time and labor. The company's tools have been shown to reduce cycle processing times up to 80 percent.
(Den Bosch, Netherlands)
Use an advanced planning and scheduling system to make supply chain data visible and constantly review supply chain performance to identify areas of inefficiency.
(Foster City, CA)
As the economy continues to exist in a recession, the technology Rearden Commerce has created allows for pared down spending that is crucial in the economic downturn, but also provides companies with a solution that will keep businesses running at maximum efficiency and capacity throughout all types of economic cycles.
Look into an ROI assessment before you implement the solution, and then clearly and concisely communicate the cost savings and added value that the supply chain application will provide.
RedTail Solutions Inc.
The easier you make it for your trading partners to connect with you, the more you'll be able to automate the transactional aspects of your trade relations.
Don't be afraid to move forward with that big software purchase: Craig Setter, EVP and COO, Dunkin Donuts, said of his company's adoption of Retailx, "We're looked at as, by far, one of the best and are beating industry standards in every category."
River Logic, Inc.
Try integrated business planning now for cost containment, and also later to identify and evaluate growth-related strategies.
(Menlo Park, CA)
Are you a smaller OEM, lacking in supply chain sophistication? Check out Riverwood's Hybrid Outsourced Services Team, which can give you access to the same capabilities enjoyed by your larger rivals – but without the fixed costs.
Save on transportation costs by pooling shipments, leveraging a larger shipping population to get better rates. Also, invest in supply chain security to mitigate threats and disruption and to build a more resilient organization.
The best of times in the worst of times: The State of Georgia tapped SciQuest for a fundamental change in the way it procures goods and services, helping to ensure that agencies are leaner and more efficient in the years to come.
Selected Services – POOL4TOOL
The key factors for sustainable success in purchasing are the establishment of a holistic approach as well as the integration of IT applications as an inherent part of the overall purchasing strategy.
Adopting an approach that effectively utilizes highly-effective product quality management tools to better manage product performance is one of the primary ways in which companies can avoid the cost and public disgrace of product recalls.
Smart Software, Inc.
Adopt supply chain management strategies that focus on the short-term and quickly produce improvements that deal with increased risk and financial pressures. As part of this effort, take the time to improve demand forecasting processes and implement inventory optimization procedures.
(San Francisco, CA)
Winning business in today's competitive marketplace requires adaptability and agility. Demonstrate to potential clients that you have the right product within the timeframe needed – accurate inventory and fulfillment no longer happens after the fact and is now a precursor to winning new business.
Source One Management Services, LLC
(Willow Grove, PA)
In this economy, free is still good. Source One's online procurement and contract management tool www.WhyAbe.com can be used by anyone in any industry free of charge.
Companies like Sports Image are using SPS' Trading Partner Intelligence service to provide their inside sales staff with online access to store-level inventory reports and interactive analyses, resulting in improved sales for its retail partners.
(Los Angeles, CA)
Manage postage expenses your way, not the postage meter's way: PC Postage allows businesses to print postage, mailing address and return address in one step, plus save up to 11% on Priority Mail service and Express Mail service.
One of the easiest ways to decrease program costs is by helping end users adopt efficient ordering behaviors. This includes placing more orders online and eliminating small, inefficient orders.
Use strategic meetings management to see what your company is spending on meetings and events. StarCite users often save 12-25 percent on corporate meetings immediately.
A manufacturer that needed to develop a new sales channel deployed Sterling's integrated system technology to grow sales of a key account by over 600 percent. In addition, the company grew revenue by tens of millions from a new distribution channel while cutting B2B development and implementation time by 75 percent.
Unilever tapped Terra Technology for its demand sensing software. Doug Sloan, director, Supply Chain Operations for Unilever U.S.: "In these volatile times, it is important to respond quickly to shifts in consumer preferences and control costs. Improving forecast accuracy enables Unilever to produce the right product mix, decrease costs and better serve our customers."
Last October, ToolsGroup introduced "Rapid Inventory Rightsizing" (RIR), which quickly reduces a company's working capital needs and eases the impact of the credit crunch. Individual companies can typically expect to generate cash of between 10 and 30 percent of their inventory value, while maintaining the same or improving customer service.
Total Quality Logistics
Arm your company with load-building qualities, like a tool that will consolidate partial shipments into a full, multi-drop/pick truckload, so that you can better leverage what you have when the market begins to turn.
(New York, NY)
Procure-to-pay automation and online connection to financial institutions delivered by TradeCard enable credit to be inserted into the supply chain without straining buyers, suppliers or financial institutions.
Streamlining operations and establishing supply chain best practices is critical as Transplace's customer, Anna's Linens, continues to grow.
Streamlining operations and establishing supply chain best practices is critical as Transplace's customer, Anna's Linens, continues to grow.
Streamlining operations and establishing supply chain best practices is critical as Transplace's customer, Anna's Linens, continues to grow.
PBD Worldwide Fulfillment Services is using UPS Paperless Invoice to improve Customs clearance times: time to Guatemala is down from 24 hours to two; the Dominican Republic is down from 36 hours to two.
Upside Software Inc.
Create a central repository for contracts. This will ensure access only for authorized users, increase visibility into contracts and helps organizations better manage contracts by allowing for alerts/notifications to be sent out on important dates and milestones.
Some retailers are using a type of "green lane" system where trusted, high-performing suppliers are allowed to ship direct to store, bypassing QA processes. By doing this, nodes of inventory are removed, reducing risk and costs while improving service performance.
Define and monitor risk indicators for suppliers, material groups, regions and markets. The early identification of risks enables various departments to implement and coordinate appropriate measures in time to avoid or reduce risks.
Zebra's Materials Flow Replenishment solution is helping customers eliminate unused inventories and improve asset utilization now, while securing the visibility to manage increased production and shipment when the economy improves.
Price optimization solutions deliver scientific, data-driven pricing guidance that enables B2B companies to overcome pricing challenges such as inconsistent price outcomes, insufficient price and margin analysis, over-discounting and limited insight to existing data that will not only improve margin performance during difficult economic times, but also capture significant profit gains and strengthen a company’s long-term ability to compete.
Working with Specialists
To tackle the supply chain challenges specific to your business vertical, look for an industry-specific solution provider with a business model that combines the efficiencies of outsourcing with strategic insights and industry best practices to drive logistics improvements.
(Blue Bell, PA)
Provides chemical industry consulting services, TMS technology and transportation management services.
(New York, NY)
Specializes in helping high-tech companies deliver service parts to the right place, at the right time, within two to four hours.
(Scotch Plains, NJ)
Offers packaged retail sourcing systems to help companies start running global sourcing processes from product development to delivery.
TradeStone's Merchandise Lifecycle Management solutions take retailers' merchandise mix from the concept and design stage, all the way through to delivery. Customers have seen multi-million-dollar paybacks: The technology can take up to 26 weeks out of the concept to delivery cycle, increase sales by 15 percent and increase margins by up to 30 percent.
Leveraging the Network
Many solution providers today allow your company to tap into a network of trading partners, accelerating enablement, automating transactions and expanding your range of partners.
Tap into existing connectivity networks that allow for rapid integration by removing the need for time-consuming data mappings.
Leverage existing supply networks that let you quickly connect with "pre-enabled" suppliers to improve your supply chain visibility.
This multi-carrier e-commerce platform for the ocean shipping industry enables shippers, freight forwarders, 3PLs, brokers and importers to electronically plan, process and manage their shipments.
Real Time Freight
Real Time Freight solution connects all internal and external parties involved in the freight transportation process in a secure, real-time, closed-loop environment.
Consider consolidating on a single B2B platform that can automate the exchange of data with suppliers and provide greater supply chain visibility.