Great Suppliers Make Great Supply Chains - Paul Martyn - Forbes - 14 Feb 2017

As an analyst who covers supply chain management (SCM) and procurement practice across industry, I tend to keep my keyboard focused on the disruptive themes that continue to re-define it. That said, if you’re expecting me go on about the unprecedented growth of the SCM solution markets, the accelerated pace of innovation, tech adoption, social change, etc., don’t hold your breath. I can’t, as the data argue otherwise. Too many of us conflate diversification with acceleration –and there’s a difference. The most notable, defining advances of the last decade (Amazon, Twitter, Google, etc.) share something in common: they do not require consumer investment. If you take those monsters out of the equation and focus on corporate solution environments, the progress, while steady, has not been remarkable. Let’s just say there remains plenty of room for improvement, especially in supply chain and procurement practice areas.

I fell onto this tangent unexpectedly. It happened while interviewing Mr. Dan Georgescu, Ford Motor Company, adjunct Professor of Operations and Supply Chain Management, a highly regarded expert in the field of automotive industry supplier development. “For supply chains to be successful, performance measurement must become a continuous improvement process integrated throughout,” he said. “For a number of reasons, including the fact that our industry is increasingly less vertically integrated, supplier development is absolutely core to OEM performance.” As I listened intently to Mr. Georgescu’s comments, I found myself thinking about the sorry state of SPM practice in other industries.When considering how many different workflows have rolled-up under the SCM and procurement umbrella, I kept wondering what happened to SPM. Why is it still buried somewhere in the supplier qualification process of strategic sourcing? Think about it. Companies have addressed how they buy, how they pay and how they comply; organizations look to squeeze cost and/or apply automation at every turn, but when pushed to discuss how they manage their supply networks, the bottom falls out. Current practice is dominated by a combination of freeware, spreadsheets, Survey Monkey and traditional scorecards, or nothing at all. And having seen the general-purpose SPM solutions offered by the ERP vendors, it’s not hard to understand why SPM hasn’t gone mainstream. Simply put, the available solutions lack relevance and because the user experience is cumbersome, procurement professionals haven’t adopted them. For the startups poised to fill the gap, it would seem they have good reason to feel optimistic. Kent Barnett, CEO of and SPM upstart named ClientLoyalty, describes his company’s approach to SPM as “a data driven solution for optimizing supplier performance.” Like Mr. Georgescu, Mr. Barnett is passionate when discussing the solution gap and the value associated with bridging it, as was Steven Jeffery in a separate interview. Mr. Jeffery is the co-author of the book The Art of Creating a Quality RFP. Simply put, it’s apparent the industry’s thought leaders want to talk about this. All three gentlemen agreed that unification of purpose and a focus on supply network accountability is the goal. They also agreed that managing performance is bigger than collecting quality and delivery metrics. And finally, they could not have been clearer about the untapped value of supplier collaboration. Whether you measure it in terms of quality improvements, reduced risk, or breakthrough innovations, the idea that few organizations have a credible, continuous improvement process for managing their supply relationships is a conspicuous miss. Said Mr. Barnett: “We establish live connections to the KPIs that define supplier performance, including relevant subjective measures. We also scan relevant news feeds and social media capturing and merging ‘sentiment data,’ as these data are often credited with spotting trends earlier than others. We live in a big data world paired with game changing predictive analytical capability. Why not apply such capability to SPM? Said Mr. Jeffery, “We know that mission critical, Tier 1 supply relationships exist at the departmental and/or Line of Business level –that there is a high probability that some of our most critical suppliers wouldn’t even turn-up in an enterprise-level spend analysis. Bottom line, we strive for a balanced, collaborative relationship with our Tier 1s. We rely on each other. You could say that our performance management philosophy is built around that reality.” Six Sigma is a set of management techniques intended to improve business processes by greatly reducing the probability that an error or defect will occur. In the automotive industry, Failure Mode and Effects Analysis (FMEA) is a derived process –a mainstay capability embedded and studied throughout a product’s lifecycle. The industry recognizes FMEA outputs as critical indicators of performance, so it works tirelessly with its suppliers to make continuous improvements. It actually scores its suppliers based on their willingness to participate in such collaborations, because it’s recognized as mission critical. So, does the automotive example provide a teaching moment for other industries? The analysts agree that as much as 15% in additional contract value can be achieved via effective SPM practice. But when you factor-in SPM’s role in reducing risk, cost, improving quality, participation, innovation transfer, market intelligence, sourcing effectiveness, etc., the upside is unbridled. Is there another procurement process that can be logically extended to deliver such benefits? What we know is that effective supplier performance management is a data driven process; that optimizing the right supply mix and collaborating with suppliers to achieve ongoing improvements is not something that happens in an onboarding process; it doesn’t happen when a quality problem is highlighted three months after the fact or in the midst of a delivery issue. We intuitively know that SPM should not be an episodic, retrospective process. And when we account for the advantages that other continuous improvement processes keep delivering (e.g. Lean, JIT), the irony is, the ripple effects of a supplier problem in such highly tuned, top performing environments, are often felt more severely. Put another way, can top performing SCM and Procurement departments afford to operate without modern SPM capability? Most companies strive to live by Peter Drucker’s infamous words, “you can’t manage what you can’t measure.” And despite all the lip service paid to the idea that buyers and sellers must learn to collaborate, how many application contexts provide a better home for driving that effort and measuring the resulting impacts than SPM? It’s simple. Great suppliers make great supply chains. While huge strides have been made in sourcing and contract compliance, and where systems for monitoring quality and delivery metrics continue to improve, these and other data need a common, modern, integrated platform. Without one, practitioners will only scratch the surface of what’s possible.

SCMA Expert's Corner: Developing a Successful Supply Chain Strategy January 2014

Expert's Corner: Developing a Successful Supply Chain Strategy January 2014
Business strategy consists of the choices executives make on where to play and how to win to maximize long-term value.

“Where to play” specifies the target market in terms of the customers and the needs to be served.
“How to win” spells out the value proposition that will distinguish a business in the eyes of its target customers, along with the capabilities that will give it an essential advantage in delivering that value proposition.
To “maximize long-term value” means — when there are mutually exclusive options — to select those that will give the greatest sustained increase to the company’s economic value.

Business strategy is a unified, comprehensive, and integrated plan designed to explain how an organization intends to compete and succeed in the market place.

There are two main strategic directions:
1.Operational effectiveness = the replication of the industry best practices
2.Strategic positioning = creating a unique and sustainable competitive advantage.

Companies like Walmart, Toyota, and HP demonstrated that operational efficiency can lead to tremendous business success, while companies like Zara, Tesla, and Apple prevailed by differentiating themselves through strategic positioning. An organization strategy provides the context that enables the leaders of various business units and departmental functions of an organization to act congruently with each other.

Today, supply chain strategy has become a competitive weapon essential to success in launching products, entering markets and responding to competitive threats while navigating the challenges of globalization, supply risk, currency fluctuations, volatile commodity prices, and ever increasing energy costs.

The main steps of the process of designing a successful supply chain strategy are:
1.Set up a comprehensive supply chain strategic planning process
2.Review of the corporate strategic direction
3.Design the supply strategy and select the supply objectives in congruence with the corporate business objectives
4.Define the supply key performance indicators
5.Evaluate the strategic fit between the supply strategy, the economic environment, and the corporate strategy.

Supply chain professionals need to be strategically savvy and focus on the development of effective and efficient supply chain strategies, aligned with the organization’s overall strategy, that enable rapid and flexible reaction to the changes in the economic environment in order to create a sustainable competitive advantage for themselves and their organizations.

This new type of competence will differentiate the successful supply chain professional within their organization as well as in the global market place.

Dan Georgescu currently works as the Supplier Technical Assistance Resident in Global Purchasing for Ford Motor Company of Canada. He is in charge of supplier development for the over 600 suppliers of the Oakville Assembly Complex. Dan is an SCMA education strategy consultant and instructor, and serves as the Chair of the Academic Content Review round table, and the Chair of SCMA’s Instructors Development Education Committee. He is a member of the Mechanical and Electro-Mechanical Engineering Program Advisory Committee at Sheridan College, and a member of the National Accreditation Review Panel of the Canadian Supply Chain Sector Council (CSCSC). Dan graduated with the Gold Medal for Academic Excellence from the Wilfrid Laurier Supply Chain Management MBA program in 2006. He also holds a Master of Science degree, is a certified Six Sigma Black Belt, and a Professional Engineer.

Great Suppliers Make Supply Chains Great!

InSights - 01 November 2012 at 16:24 GMT

Canadian companies are outsourcing their manufacturing activities in order to take advantage of lower wages in developing countries. In some cases, the final assembly is the only activity still being performed in Canada. In other cases, even the final assembly, is outsourced. The products are sold on the North American market and the companies reputation rides on their ability to deliver products at the level of expectation of the local consumers.

This situation is helping define a new type of competence that will differentiate the successful companies in their ability to respond to the global market demands. The companies that focus on the

creation of effective and efficient suppliers' development programmes will benefit from a new and sustainable competitive advantage.

In 1985, Michael Porter, introduced, in his book ‘The Competitive Advantage’, the concept of the Value Chain. He suggested that activities within the organisation add value to the service and products that the organisation produces, and all these activities should be run at optimum level if the organisation is to gain any real competitive advantage.

The supply chain is an integral part of the organisation and as a result the firms have to shift their focus into the realm of supply chain design and supplier development. This implies that the supplier selection decisions should be guided not only by operational factors but also by strategic factors such as flexibility, the capacity to innovate, and the supplier’s business-technology alignment.

Some large-size companies have supplier development programmes in place. Most of these programmes are glorified "Supplier Quality Award", in which suppliers receive an award for a certain level of quality and on-time delivery. While there is nothing wrong with doing this, it falls short of what is truly needed in a successful supplier development programme.

At a minimum, a supplier development programme should be aimed at aligning strategies across the value chain, lowering supply chain total cost, increasing profitability for all supply chain participants, increasing product quality, and achieving near-perfect on-time-delivery at each point in the supply chain.

Supplier development is all about providing suppliers with what they need to be successful in the supply chain and it is today’s fundamental competitive advantage.

.............................................................................................................................................

Dan Georgescu is a well-known supply chain management expert who specialises in supplier development and an accomplished public speaker (ca.linkedin.com/in/dangeorgescu).

As the Supplier Technical Assistance Resident (Global Purchasing - Ford Motor Company), he is in charge of supplier development for the Oakville Assembly Complex.

Dan published ‘Making Supply Chain Design the Rational Differentiating Characteristic of the OEM’s’ in the International Journal of Production Research in 2007. His research interests are Knowledge Propagation in the Value Chain and Supplier Development as a Sustainable competitive Advantage.

He graduated with the Gold Medal for Academic Excellence from the Wilfrid Laurier Supply Chain Management MBA programme. He holds a Master of Science degree; he is a certified Six Sigma Black Belt and a Professional Engineer.

Sourcing The Future - What lies ahead for procurement

Sourcing The Future

The future may be unwritten, but that doesn’t mean we can’t prepare for it. Purchasingb2b editor Michael Power talks to five procurement experts for a virtual roundtable about what they see on the horizon, as well as the trails they’ve blazed so far.

With the busy schedules procurement professionals juggle, looking backwards into the past or forwards towards the future can seem daunting. Purchasingb2b gleaned the collective wisdom of five procurement experts from across and beyond the purchasing field. Our virtual roundtable spoke in separate interviews about what has gone into making procurement the profession it is today, and where they see the field heading in the short term as well as 10 or 20 years from now. They also spoke about what skills purchasing people will need going forward and what the procurement professional of the future will look like.

Our experts were: Dan Georgescu, global purchasing, Ford Motor Company of Canada; Joel Ramsey, partner, McCarthy Tetrault; Denise Shoesmith, vice-president, materials management, HealthPro Procurement Services Inc; Patricia Moser, vice-president of supply chain at Grand & Toy; and Donald Harvey, director of transportation contracting at Canada Post. Grand & Toy sponsored the discussion.

The story so far
To first get perspective on the topic, our panelists weighed in on how procurement has developed until now. Echoing several participants, Grand & Toy’s Patricia Moser noted that, perhaps, 20 years ago procurement was less a profession and rather a group of tasks performed by employees within an organization who had ended up performing those tasks through default.

“It’s a continual evolution—the level of professionalism in procurement has certainly increased significantly over the years,” Moser said. “Years ago, you didn’t really need any training to go into it—not even from a business perspective. Now you see a lot more high-level professionalism leading procurement organizations, shaping them to be key supporters of the whole organization.”

The reason for the shift, she said, is procurement professionals—once isolated within different organizations—have been able to demonstrate the positive impact they can have on an organization.

From the perspective of healthcare, the amalgamation of hospitals’ procurement functions into large, multi-shared organizations has changed the way the profession functions, said Denise Shoesmith of HealthPro. A decade or more ago, much of the work of procurement was done in a hospital’s halls rather than through a formal process, she said.

“If you needed something decided, you went and found the doctor or the head nurse or department manager and you had a conversation and you sorted things out,” Shoesmith said. “That’s just so different now; I think that’s a key driver to the way we have to change our business.”

Procurement professionals now must decipher how to work within various cultures from different healthcare institutions, she said. Because of that shift, hospitals are recognizing more and more the importance of the procurement function. “I like to think of it as procurement getting out of the basement and up onto the main floors,” she said.

Canada Post’s Donald Harvey noted the skill level needed within procurement had once been much lower. He also agreed that many people once “fell into” the job from other areas within an organization before doing more activities related to procurement, such as putting purchasing orders in place. “It wasn’t necessarily a career choice they made, it was just a bit of an evolution into that role.”

A view from the C-suite
But since its earlier days, our participants agreed, procurement has taken on a more active role within many organizations. Some procurement professionals have advanced to a spot in the top rungs of their organizations. What accounts for that shift?


“Traditionally, purchasing has been identified by the financial officer as a cost centre because they spend money,” said Ford’s Dan Georgescu. But more and more, he noted, spend has become a strategic activity, with purchasing identified as a source of competitive advantage as opposed to a cost centre. In large corporations (although not necessarily in smaller companies) the chief procurement officers are usually holders of post-graduate degrees with a thorough business education, Georgescu said. This is an advantage when discussing procurement matters with those in the C-suite, he noted.

“In order to convince the decision makers of the strategic nature of the procurement department you have to be able to speak their language and be able to show them return on investment, net present value, and use the tools and language of the financial profession,” he said. “So whenever you have to invest in something you have to use the business case approach.

The fact that some organizations now have chief procurement officers whose role is to be the executive who directs an organization’s purchasing functions at the highest level is a clear example of how the profession has developed into the C-suite, said McCarthy Tetrault’s Joel Ramsey, who advises clients on strategic sourcing, technology, software development and licensing transactions.
The realization that businesses can’t run without such high-level procurement executives has, in large part, come from a changing understanding over the last 20 years of what constitutes a business, Ramsey noted. Retailers are moving away from being only a store to more of a service—for example, operating in part or entirely online. As the technology needed to operate virtually becomes more complex, the role of the purchasing professional becomes ever more crucial.

“The guy who’s in charge of negotiating the deal to get the right IT system, and the website up, and the payment processing systems and the mobile apps, those are the guys who need to be well integrated into your strategic plans as a business,” Ramsey said.
That influence will continue to grow as procurement professionals build relationships with groups within an organization, such as sales and marketing teams, said Moser. The professionals within those departments will then begin acting as champions for the importance of procurement.

“If you have a lot of those champions throughout the organization, the communication goes out that you’re an effective business partner, and that’s where you want to be,” Moser added. “At the senior levels, you don’t want to be the kid pressing the face against the window while the big kids are having the meeting in the big room. You need to be at that table.”

Trends for the future
As that influence grows, the need for procurement professionals to become more strategic about their roles within organizations will increase, said Shoesmith. In healthcare, as procurement becomes a more valued resource, the need to understand the supplier marketplace will become more important, she noted.

“We have to implement—and anticipate the need to implement—practices that can deal with issues that may be coming up,” Shoesmith noted. For example, with a sizeable drug shortage in Canada and the US, there’s a growing need to anticipate and address issues, be flexible and adaptive to ensure hospitals get drugs they need to continue to offer care. “To do that you have to be very strategic about what might happen. What does the pipeline look like? Where’s the base of production? What might influence those shortages or back orders? Going forward, and in the immediate near-term, it’s even greater recognition that this is a global marketplace.”

The trend towards that growing influence at the highest level within organizations will also lead to more procurement and supply chain professionals actually leading corporations, said Moser. The
trend has already started, she noted, with more people from the profession responsible for more within organizations.

Moser presented an image of the future of procurement and supply chain based heavily on technology. In the future, she would like to see a database that can supply strategy, an approved vendor list—everything procurement professionals need—that can be called up immediately. The database presents, say, the three best options, the best cost, value and so forth. The procurement person tells the database which option is the best and within minutes the database technology has retrieved the necessary approvals.

Whether that scenario materializes remains to be seen. But Moser noted there will be a move towards more online purchasing opportunities. While there are signs of such arrangements, the concept hasn’t fully caught on yet, she said.
“I think you’re going to see more, potentially corporate-type eBay websites which will increase competition, and potentially provide more of an opportunity for smaller businesses to actually gain some business,” Moser said. “In some aspects you can almost create a portal where you have certain requirements and it becomes an internal eBay, or a group eBay—I imagine a version of that into the future.”

What you’ll need
What skills and attributes will the procurement professional need in the future as sourcing moves up the corporate ladder? What will the procurement professional of the future look like?
While still requiring many of the skills important to them today, Moser said, the procurement professional of the future will need the ability to build partnerships within organizations. Having skills outside of their purchasing niche will serve the procurement professional of the future well.

“I think that every procurement person—now and in the future—should have sales training,” she said. “We see a lot of sales people, but to actually step into their shoes and see how they get trained and what the thought process is [is useful]. Sales people sometimes can make the best procurement people because they know how the other side lives and works.”

A general education in business will also serve them well, she noted, since an understanding of an enterprise as a whole will help them break out of being a niche player and move into an organization’s higher echelons. “I think you’re seeing a lot more of that,” she noted.

The best-in-class procurement managers will have the same skills as any executive within an organization, noted Ramsey. Writing skills, an understanding of contracts and the ability to bring people together are all-important characteristics.

“A really good procurement manager is also a project manager, which is a really tough skill to master,” Ramsey said. “The procurement professionals who distinguish themselves have these skills more than others.”
For Shoesmith, enthusiasm and curiosity top the list of important skills for procurement professionals to pursue.

“They really have to want to understand,” she says. “They’re not just pushing a pencil. They need to be very much involved—and enthusiastic about being involved—in the process. They’re trailblazers, they’re trying to figure out what’s happening out there. It’s the folks who are willing to take a chance, those who are willing to do things perhaps differently than the way it’s always been done.”
The core skills of procurement remain important, said Ramsey.

But a diversified knowledge of other areas such as marketing, finance, technology, accounting and human resources are growing in importance for procurement managers. As well, a degree and a broad education are becoming increasingly important.

“This profession is changing quickly, it’s very complex and it touches on so many areas,” Ramsey said. “They need the ability to pick up new knowledge quickly. Having that degree gives them that broad base. And I think they need a professional designation, and the focus on continuous learning that comes as part of the commitment to a professional designation.”

For Georgescu, the ability of the purchaser to evaluate the strategic direction of an organization, align the strategic objectives of various departments and develop KPIs that will be in line with the strategy will be important attributes.
“They have to have the numeric tools, the math, behind the business cases,” he said. “They have to have knowledge of accounting, knowledge of statistics. More and more, uncertainty becomes the rule, as opposed to the exception in our day-to-day activity. The way to deal with that is to apply pragmatic statistical rules to predict outcomes.”

For example, when evaluating suppliers, procurement professionals will need to be able to look at the financial statements of those companies and understand the economic sustainability of those companies.
“This is the kind of competence that was not required up to now,” Georgescu said.

Challenges ahead
With all the skills and attributes they will need going forward, the road procurement professionals travel in the future will likely have a few bumps. One challenge those working in the field must deal with is thinking outside of the purchasing silo and taking stock of how they fit into an organization’s overall structure and strategy, said Moser. Procurement people must step up and work in areas that aren’t necessarily within their comfort zone, and get used to providing input and contribution enterprise-wide.

“I’ve seen so often procurement people going into a full-scope meeting that might be about a whole bunch of different aspects of the business and either not contributing or contributing but only from their perspective of the world,” she said. “I think it’s great to be proud to be really good at what you do, but I think we allow ourselves to be niched too much in organizations.”

According to Harvey, the field’s complexity—for example, in terms of case law—will remain a challenge for procurement professionals. “The challenge to the professional is to keep up with that case law,” he said.
To Shoesmith, the challenges procurement managers of the future will face are similar to those they face now. In health care, the procurement person must be able to manage conflicting needs from disparate groups and still work within provincial requirements.

“It’s really ensuring that all the t’s are crossed and i’s are dotted—everything is fair and equitable and transparent, and we still come out with the best end solution for whoever we’re purchasing for,” Shoesmith said.
In a short time, procurement has made great strides from its place as a “default” job in many organizations to a highly skilled field that now has a view to the highest rungs of many organizations.

Senior executives are realizing the value procurement brings to their organizations’ strategic goals. Going forward, procurement managers who work to refine a broad spectrum of skills and knowledge, boast high-level education and stay abreast of technology will be in a better position to claim a much-deserved spot in the C-suite.

Sourcing The FutureWhat lies ahead for procurement
BY Michael Power - Purchasing B2B
October 05, 2011 11:53am

http://www.canadianmanufacturing.com/purchasing-and-procurement/news/sourcing-the-future-43501

Ford's Supply Chain Strategy – Re-Invented

This is an article published in "Materials Management and Distribution - Canada's Supply Chain Magazine" about my seminar - Ford's Supply Chain Strategy – Re-Invented - at the 2011 PMAC National Conference in Whistler, BC.
MM&D Digital Edition canadianmanufacturing.com
Dan Georgescu, MSc, PEng, MBA

Aritcle Published in "VOICE" - Expert's Corner - PMAC Newsletter - September 2011

PMAC Expert's Corner - September 2011

Supplier Development – Today’s Differentiating Competitive Advantage
Dan Georgescu MSc, PEng, MBA

Published in the World Trade Blog on November 16, 2012 - Posted In: Manufacturing & Supply Chain
Originaly published in the Global Supply Chain Blog on September 19, 2011   

The accelerated change in many industries has created the need for supplier development, for better supply chain strategy, design, and management. In the automotive manufacturing industry, the competitive pressures and the ever-present quest for lower costs causes an intricate network of temporary alliances and ephemeral relations that leads to lack of a common product, manufacturing and SC design strategy between the suppliers and the OEMs which dilutes the OEMs technological competitive advantages and erodes their product development tacit knowledge. The automotive OEMs need a new competitive advantage.

According to Planning Perspectives (PPI) - a leading business-to-business advisory and consulting firm and the world’s leading authority on buyer-supplier relations that performs an annual in-depth analysis of North American automotive OEMs and their Tier 1 suppliers - scoring high in the North American OEM-Supplier Working Relations Study has a very real impact on the OEMs' future fortunes. For many years, the study has shown that automakers with the best rankings, receive the greatest benefit from their suppliers in a variety of areas, including lower costs, higher quality and supplier innovation.

Toyota ranked first while Ford ranked second last in the PPI 2005 survey . Between 2002 and 2005 Toyota gained 32 percent in the opinion of suppliers while Ford lost six percent. Ford and the other US automakers were perceived as being singularly focused on cost reduction, having little regard for supplier survival and not caring about supplier intellectual property. All these impressions led to adversarial relations with suppliers, and led the suppliers to shift resources to the Japanese car makers and increase product quality for the Japanese manufacturers while only maintain product quality for the US manufacturers. Many suppliers indicated they would like to drop the US companies as customers if they could.

These results of the supplier survey correlated with share value, with Ford experiencing declines, while Toyota increased.

In 2005 Ford transformed its supply chain strategy and decided to focus on supplier development. Ford implemented the Aligned Business Framework (ABF) with the objective of rendering long-term strategic partnerships with suppliers. Some of the ABF measures included paying upfront for engineering and development costs, extending the relationship with the supplier for the life of a vehicle, improving commonality of parts, an emphasis on collaboration in achieving competitive costs, technological leadership, and reaching social responsibility and environmental targets.
Another initiative is called Matched Pairs. This is a program in which the design engineers are paired with procurement people as the face to deal with suppliers on specific projects. This works as they have to present a united front to the supplier. If left alone each would have conflicting objectives—to spend and save respectively.
As a result of this supply chain management strategic shift, in 2010 Ford ranked first among the North American OEMs and third overall. The improvement in the supplier relations rankings was perfectly correlated with the bottom-line results. The most significant supply chain strategic shift was the intense focus on Supplier Development. As a result, Ford was the only North American automotive OEM that did not required government financial assistance during the 2008 – 2010 credit crisis and economic recession.



Supplier Development is the new competence that allows organizations to focus on the creation of effective and efficient supply chains and to benefit strategically from this new and sustainable competitive advantage.

The Supplier Development Seminar offered by PMAC as part of the professional development series is an excellent source of information about the subject.

Supply Chain Visibility

Cutting through the fog
How visibility can help organizations weather supply chain storms
BY MICHAEL POWER ON SEPTEMBER 15, 2011 11:42AM



FROM THE MM&D JULY/AUGUST 2011 PRINT EDITION: Supply chain visibility gives you the ability to act if cargo goes missing, gets tangled up at the border or otherwise slides off the rails. Not having this visibility can mean shortsighted decisions. What tools can help you to maintain visibility? What risks lurk when you don’t have proper visibility?

For Dan Georgescu, the risks of not maintaining visibility are huge. Georgescu notes the supply chain for the company is nothing if not complex. Ford has roughly 6,000 tier-one suppliers, and the number of tiers can be high.
“It’s very difficult to estimate the total number of suppliers in our supply chain,” he says. “Since the number of tier-one vendors is so high, our visibility is kind of restricted to those. We focus our resources to look at our tier-one suppliers and count on them to propagate our strategies deeper in the supply chain. So we’re putting policies in place to mitigate the visibility risk.”
To Georgescu, the greatest risk lies in quality issues and supply disruption. At thousands of dollars per minute, Georgescu notes, supply chain disruption is extremely expensive.
Such disruptions can seemingly come from nowhere. When the earthquake and subsequent tsunami hit Japan on March 11, Ford reacted fast to secure from Asia whatever supply it could, and develop alternative sources to replace those lost to the disaster. Luckily, Georgescu says, Ford was successful in seeing that none of its plants was shut down due to the crisis.
“In order to be able to do this, you have to have a structure that allows you to immediately dedicate resources to such an event,” he says.

Border delays
Cargo can also be delayed at the border and a lack of visibility in the supply chain means not knowing the reason for a delay, or how long it will take, says Candace Sider, Livingston International’s director of regulatory affairs for Canada. For example, a shipment can be delayed while crossing into Canada while the Canada Border Services Agency (CBSA) examines it. Or, other government departments may have release requirements that haven’t been met. If cargo is stopped at the border, the delay can be several days. “That can lead to assumptions that it’s delayed at one end of the supply chain but really it hasn’t even been released from Customs yet,” she says.
The solution comes in the form of a real-time tracking system. Livingston uses a suite of web-based tools for importers called Insight. Importers can log in and check where their cargo is. The system updates itself based on, for example, whether there’s a Customs release, if cargo gets pulled at the border for examination and so forth, Sider says. “It’s continually updated so it gives that importer or exporter visibility,” Sider says.

Organized information
It’s no longer only supply chain professionals within organizations who need that visibility, says Dan Carruthers, director of supply chain solutions at Oakville, Ontario-based Lakeside Logistics Inc. Other departments within an organization also benefit from access to the information. And providing those business areas with that intelligence helps to improve communication and break down silos within companies.
“But there’s all sorts of people within organizations that should be looking at the information,” says Carruthers. “We provide it so the financial people can look at it, customer service or sales can look at. We try to give them information so that each one of those functions can come in and get that information without having to chase it through the organization.”
Lakeside Logistics provides day-to-day information about a customer’s goods—what Carruthers calls transactional information. This includes data such as a shipment’s location, what time it will arrive and whether it will be late.
“The traditional way to get the information is, I’ll pick up the phone and call somebody,” he says. “You play telephone tag, or you send them an email and they may not respond or it might get sent it to the wrong person. They might be away. We force that information to them. They’ve got a job to do and they’re relying on some of that information either to make day-to-day decisions or to handle events that are going sideways.”
The company also provides customers with “executive management” information, Carruthers says. That information is organized to include a look at where their business sits in terms of costs, on-time performance, by customer, ship point or other KPI they want, he says.
“Distribution is very complex,” Carruthers says. “The information doesn’t come in a nice, convenient form. What we’re trying to do is put it back into the same unit of measure that they measure everything else with, so they can understand the cost impact of what they’ve done and see whether they’re making any money.”
For Keith Lambert, senior vice-president of The Forzani Group, integration provides visibility. His company is now blending together its software systems—such as its financial planning, open-to-buy, merchandizing and allocation-and-replenishment systems. That integration, which Lambert says will wrap up next year, will allow those systems to be viewed concurrently and in a consolidated form.
“No two systems are alike, so no two systems are going to give you the same information,” Lambert says. “Integration means you can get the visibility you’re looking for. You get the view into one as opposed to having five separate windows open, and you have to go back and forth into different systems to understand it.”

Information overload?
So can you have too much information? Is it always important to know exactly where cargo is?
When operating in a just-in-time environment, it’s tough to imagine getting too much information, says Georgescu. Any supply chain hiccup is immediately felt. And with so much information produced by technology and automated systems, it’s easy to retrieve and digest only the information one needs, rather than sifting through unorganized data. “A lot of information is handled by software,” he says. “That means, when a decision-maker needs that information he goes to the particular database and pulls the report he needs. ”Carruthers shares that enthusiasm for information. With people now looking for instant information access and instant results, it’s important to keep data as current as possible. But clients may need help understanding what information is available and using that information as effectively as possible. “It’s not good if you throw volumes of data at them that they have to sort through,” he says. “You have to understand what they use the data for and put it in a format so they can quickly get at it and use it.”