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2015

I interviewed Manzoor Alam who discussed CPak Economic Corridor - Economic  and Political Impact.

 

 

 

 

 

 

Nice to speak with you today, Alam. Looking forward today to discussing with you CPAK (China Pakistan) Economic Corridor and the economic and political impact, in which we’ll also discuss supply chain. So my first question is, regarding Pakistani entrepreneurs, do they understand the importance of supply chains?


Yeah, Pakistani entrepreneurs are well enough aware and understand supply chain’s importance. They are improving their competencies in the competitive environment as well as their services and the relationship with the customers. Hence, they are using all modern tools and skills to improve further their supply chain areas.


That’s interesting. So what about the CPAK Economic Corridor? Can you talk about what that is and what is the importance for Pakistan and also the region?


The CPAK Economic Corridor is the game changer in the region, as well as globally. It will change the life of Pakistan as well as give a remarkable impact in the regional lives. Pakistan has over 200 million population, therefore, there is no shortage of manpower to accelerate the economic progress in the shortest time. Once it’s (CPak) completed, it may be a reason of peace and stability in the whole region. CPAK corridor will reduce the transportation cost for supplies from China to Asian, Middle East and Europe as well. Pakistan will have great opportunity to practice modern supply chain tools and skills. Pakistan does not need much time to establish infrastructure or facilities for initial start as those are already existed there.


Do you have any evidence showing that the supply chain has been developing in the region?


Yeah, Pakistan has made motorways and highways links for newly established Gowadar Port, which is main focus point for CPAK. China of course is really very far from the Middle East and European markets. Through the CPAK Corridor, China can manage that timely supply to the Middle East and European market within shortest time. It will reduce significant time and will improve the customer demands on time.


Where do you see the opportunities in supply chain?


Yeah. I think there will be great opportunities, because this project fully focusing on supply chain. There will be a lot of, how I should explain it?


Oh, that looks like exciting developments that are taking place in this region.


Yeah. It will reflect a big development in the area. You know Pakistan is lacking of developments in the last two decades. Pakistan was meaning as a terrorist country, which is wrong. Through this economic corridor, you will see Pakistan can play a positive role in the global market. Through this corridor, we will also able to utilize our human resources within our own land. It will also helpful to control human illegal trafficking from east to west. 

 

And can you provide a brief background of yourself?


Yeah. I started my career when I joined ICI Pakistan Limited, which is the main name and probably known name in the industry of Pakistan. My career from the day beginning linked with the supply chain. I worked in the production area, then I moved to Sales & Marketing, where I have been looking after southern part of the country (Sind and Baluchistan provinces). Through the span of time, I have been engaged in the both local and international markets. I traveled Fast East Asia, South Asia and Middle East, where I have an opportunity to view the different cultures and supply chain tools. Supply chain is not only my career but it is passion as well.


And thank you for sharing today.


Thank you.




About Manzoor Alam

 

 

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Manzoor Alam


Business Manager @ STE


LinkedIn Profile

dustinmattison1974

Strategy

Posted by dustinmattison1974 Oct 30, 2015

I interviewed Gustaf Carlsson who discussed Strategy.






Well, it’s nice to speak with you today, Gustaf. Look, and that’s an interesting topic today. I’m looking forward to hearing your views on strategy and what’s involved with strategy as far as understanding context, what’s involved, what is it, and how you work with leadership. Before we start, can you provide a brief background of yourself?

 

Yes. Thank you, Justin, for being here today. It’s a pleasure. My background is that I have like more or less twenty years working in different operative works, mainly within the supply chain management area. And now I have like six years doing consultancy work, mostly in the same area. And a lot of the work during these years has been both as a line manager and also now as a consultant to work with the change. And included in the change you always have the strategy as the foundation. And you run into new situations where you need your company to perform in another way, and then you need to put in a new strategy and wall down circle. I would like to share a little bit about that today, about how working successfully with strategy and defining it and starting the mantles.

 

 

Well, thanks for your introduction about yourself. Can you discuss now the presentation that you were going to do regarding strategy?

 

GUSTAF: Yes, sure. This is kind of a formula that you see here, and it starts everything that you’re not satisfied with the current state. And sometimes you actually have met people that are satisfied with the current state, and then you don’t see anything happen. But you need to be dissatisfied with how things are today then. That’s the first step. And then of course you need to have a clear vision for how to change, and that is where the strategy creation comes in then. So you can create the strategy for how you would do them. And finally, you need to have a process to execute the change, but then we come more into the change management process that could be a specific topic. But all these things together need to be in place. You need to be dissatisfied with the current state, you need to have a vision for a change strategy that you define and want to implement, and the process to execute it. All of these three things together need to be made, and the cost of the change, because there’s always a cost wherever you use change, and you have some resistance of doing that. So this is sort of to say that the broader complex on how to work with this. Moving on then, many people have probably read From Good to Great [inaudible] by Jim Collins. It’s a good book, I can recommend that. And here you can also see that you need to have some other things in place before you run a strategy situation. And that the first that I mentioned, you need to have a good leadership and you also need to define who are the persons that you will work on, who are sitting on your management team and will be creating the strategy and then implement it? So that does need to be in place as well before going into strategy situation. And then you come into what Jim Collins talked about, the fourth dimension, where you go into the investigations, that you need to face the truth and you also find what is your concept, what is the thing that you will do differently and better than anyone else, which will be your success? That is why you do the hedgehog concept [inaudible]. [inaudible] and have the actual dimension where you do the change management part.

 

Let’s go back down and focus on the fourth dimension, then. Strategy today is an extremely well used word, in almost every case, every different situation you have in life you talk about the need to have a strategy for this and that. I would like to bring up some good definition here that I found in a book by Lawrence Friedman. It was a very, very good book on strategy history. And he says, why are you having a strategy? Yes, of course you need to have the ability to look up from what is short term and trivial, and instead of that you need to view the long term, the essential, you address causes rather than symptoms and you see the woods rather than trees. And the strategic thinking is about you need to get more out of a situation than the starting balance of power would suggest. So in very brief then, creating a strategy, it’s something about creating power. You need to create more power by the strategy that you will implement.

 

Then, coming into this concept for creating a strategy, it has been presented by Willie Pietersen in his book, Reinventing Strategy. It is something that I have used many times. It is very useful. It is more or less based on the PDCA cycle, which most of the strategy creation tools are. I would like to highlight here that you have the analysis phase, where you work with facts and figures and face the brutal truths. You come into different insights that you need to have about the customer, about your own company, about the industry where you are in and the environment around you, things like that. And then you come into the really tough work with creating a strategy, starting off with defining which customers are you going to prioritize. And many times you forget about this, and you make it very, very broad on the customers which you are going to satisfy their needs. But you need to think about who are the most important customers? What is the most important customer group for me? Which ones will I prioritize, listen more to when I hear about their demands, etc.? And of course you will serve a much broader audience than those customers, but you need to pin it down on which customers are you going to prioritize? And based on that, also you have to do the winning proposition. And that is what you do better or different than your competitors, which will also give you a great customer value and the higher profitability than your competitors. That is the core of creating a strategy. Defining the customers and finding your winning proposition.

 

And then you move on with aligning the organization. You need to make sure that you can carry on the continued work and get that in place, and then you have the implementation part. And then you need to revisit this at least every year to see that you’re on track. One thing that you need to remember here is that when you form that strategy, you will always have some assumptions on the different conditions that you base it on. And some of this might not be 100 percent correct, or there might be changing due to different reasons. Could be political reasons, technological reasons, things like that. So you don’t have the complete picture when you’re starting, when you’re creating your strategy. There’s always some assumption into this. And this of course means that you need to be able to adjust a little bit along the road. And for doing that, then you need to make sure that you have all the leaders in the organization with you so they are driving towards the strategy implementation and are also able to do smaller adjustments but still aiming at the same goal that you had in the strategy.

 

And that is coming into the step then where you need to connect strategy and leadership, which most of the time is not being done. We talk about the PDCA cycle that you see here and forget about the other part. But I would like to move on here and talk about the leadership in the change, which is also a cycle of four steps. Beginning with that you, as a leader, and each leader actually needs to gain some insights for themselves. That, so to say, corresponds to the analysis phase for creating a strategy. But here now you’re looking on you as a leader, thinking about what are your strengths, what are your weaknesses, what are your guiding principles in life, your values that you have in life? Once you have been doing that, you need to translate these insights into priorities and an action plan for you as a leader, how you will be working, how you will be developing. And then, in the third step here, when you create the leadership credo, here you integrate your personal values and leadership philosophy with the priorities that were set up in the strategy. So you show by your leadership credo that you, why you’re the right person to lead this change, why you’re the right person to participate in this change when we implement the new strategy. And that will create both a commitment from you as a leader, but it also will create the confidence from the staff that they know that you have the qualities that are needed in this situation at our company or organization right now, and you will be able to lead together with us then and implement the new strategy.

And then you go on with implementation and work according this support. So you can see that you have the connections here between, on the left hand side here, you see the strategy cycle, on the right hand side you see the leadership cycle. So you see you have the connections between them. So you take the strategy, you take the winning proposition that comes out, you take that into your leadership credo, and connect what are your strengths, what are your values and then driving forces that will check with the challenges that you have in implementing the strategy and the winning proposition. You also take some information from the line in the organization when it comes to how will be working, etc. You can that also into your leadership credo. And once you have your leadership credo, you will feed that back into the organization and during the implementation you will be basing your leadership on this credo that you have.

 

So by this, then, you’re able to define a strategy, but you’re also able to connect the strategy into each leader in the organization, starting with the management team and going down to make sure that every leader is aligned with the strategy and are working toward the strategy. So by this you get a very good commitment and you get a very good driving force. Not only become a top down approach, it will be spread out in the whole organization. And this has been working well when I’ve been working with this, that you take these extra steps, so to say, that offer great success in the strategy. You also make sure that it will be, it will come into the leadership in the organization.

 

So that’s the things I wanted to share. The important with having the right starting point when you create a strategy, you create the strategy, and then you connect into the leadership in the organization. And by that you have a great way of being successful in strategy creation and implementation.

 

 


 

 

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Gustaf Carlsson


Founder and Managing Director at See & Do AB

LinkedIn Profile


I interviewed Vladislav Mandryka who discussed  Recent Trends in Strategic Sourcing.


 



 


It’s great to speak with you today, Vladislav. This is going to be an interesting topic on strategic sourcing. My first question is, can you describe what is strategic sourcing?

 

First of all, Justin, thank you for the invitation to the an interview. I suppose that our talk will be interesting for procurement professionals. Strategic sourcing in general point of view is a process of systematic collection and evaluation of external and internal data. Why we need it? We need it to design the efficient sourcing strategy. And we can design the exact sourcing strategy when we carefully analyze our internal data; including specifications and conduct the market analysis . Currently, as you can see, there is a high volatility on the commodity markets. And a main aim of strategic sourcing approach is to define the strategic suppliers, I mean our partners, in order to implement the most suitable sourcing strategy with them. It should be a strategic partnership. So the main task of strategic sourcing is to define the right strategy and implement it with the strategic supplier. Shortly I can describe it like this.

 

And then so who should care about this the most? Who cares about strategic sourcing?

 

Well, strategic sourcing requires effective interaction between your procurement team and your internal customer, your stakeholders and in fact with decision-makers. It can be used in the first stage when we analyze the commodity category and provide the market analysis. And it can be used during further stage when we implement the operational strategy.

 

Oh great. So my next question then is, where have you seen some good results?

 

Well, currently strategic sourcing approach used most of companies from Fortune 500’s, like Pepsico, like SABMiller, Bethlehem Steel and so on. Firstly, this approach was launched and successfully implemented in the mid-90’s, and currently most of Western Europe companies use it. And in fact, they receive from 5 to 10 percent of realized savings. It is very good figures in terms of high volatility on commodity market, as I mentioned.

 

And can you provide a brief background of yourself?

 

OK. Speaking about me, I have broad experience in the procurement. I work as procurement during last ten years. They are mostly multinational companies, big companies like my specialties are strategic sourcing, cost analysis and spent management. I have a master’s degree in Business Administration in the Open university business school.

 

And thanks for sharing today on the topic of strategic sourcing.

 

Thank you again for the invitation. I hope that this topic will be interesting and I’m ready for the discussion if supply chain and procurement professional will be interested in this topic.

 

I’ll be sharing this on LinkedIn groups related to supply chain, and also on our blog, that connects to the supply chain expert community. So hopefully we’ll get some discussions.

 

Thank you.

 

Thank you.


 

 

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Vladislav Mandryka


Senior Procurement Specialist at Anadolu Efes, MBA

LinkedIn Profile

I interviewed Mosharraf Hossain who discussed  Leadership Development in Supply Chain (What, Why, How).







Good to speak with you today, Mosharraf. I’m looking forward today to hear your views on leadership development in supply chain. And my first question is, can you discuss first of all what is the leadership zone that you refer to?


Fine. In fact, we can label this concept as ‘7-15 Leadership Approach’ which is very much needed to develop leadership in Supply Chain. In this approach, ‘7’ represent    7 steps to build confidence level and ‘15’ means 15 Leadership Attributes


There are four zones in Leadership such as

1) Red

2) Likers

3) Prospect ; and

4) Perfect zones

 

We can set two dimensions as Practice and Like of 15 attributes for Leadership.

 

In case of ‘Red’ zone, leadership score is 30 which means the person don’t like and practice 15 leadership attributes.

 

Likers’ zone means score between 31 & 45 which represents only likings of attributes not practice.

 

Prospect’ zone’s leadership score is 46-53 which tends to perfect zone of leadership.

 

Perfect’ zone of leadership means best leaders are between 54 & 60 that represent people like and practice most of the attributes. By the way, we can discuss the details of leadership attributes in due course.


And can you talk about how to enhance a confidence level?

 

Yeah. We can enhance our Confidence Level by following 7 steps which is part of ‘7-15 Leadership Approach

 

1) Focus on Leadership not only on Positional Hierarchy

2) Map Dream to be a leader

3) Check 15 Leadership Attributes

4) Connect with Mentor(s)

5) Enhance knowledge base

6) Track Leadership Score to improve

7) Sustain high level of Leadership Score

 

What is the P4 approach?

 

In fact, we can say 2P2P approach (instead of 4P) which is square diagram of four quadrants named Product, Policy, Process and People. Leaders specifically Supply Chain Leaders always focus on two things named Business Volume (in terms of Turn Over) & Initiatives (To improve/sustain) which we can mention two axis in quadrants related with Product, Policy, Process and People.

 

For instance, Leading organizations’ business volume is high and leaders take highest number of initiatives related with 2P2P whereas Laggard organizations’ business volume & initiatives are very low. Moreover, Initiative-focused organizations undertake more initiatives to improve their functions/business although their business volume is low means they are dreaming! to be a leader in relevant industry.

 

Interestingly, we find few organizations which have high business volume but very less initiatives to improve/sustain which growth might be downward sloping like slow poisoning. Finally, we can say that Prospective organizations have mid size business volume and initiatives by which they can achieve their business goals and tend to be a leader in Supply Chain. 


My last question is, can you talk about the impacts about on dreaming, dreaming to be a leader?

 

Yeah. Simply, there are two impacts of ‘Dreaming to be a leader’ specifically in Supply Chain

 

1) Confidence Level will be in ‘increasing mode’

2) Entrepreneurship mindset will be enhanced

 

Well, thanks for sharing today about leadership in supply chain.

 

Thanks for giving opportunity to talk with you. Hope, we will talk more in near future.

 

 

 

 

About Mosharraf Hossain

 

I have completed my Post Graduation in Economics and then started career in Supply Chain in GlaxoSmithKline which was best breakthrough in my profession. Afterwards, I served my professional service to various companies for 14+ years in Pharmaceutical, FMCG & Apparel industry. I have also amazing experience in ERP implementation (Oracle ebs 12.1.3), Training & Coaching having experience of training & coaching 100+ local personnel on Supply Chain, Leadership, NLP and Behavioral issues. In a nutshell, I am comfortable to label myself as a Learner, Practitioner, Motivator and Coach in Supply Chain & People Management domain.

 

You may visit my LinkedIn Profile:

https://bd.linkedin.com/pub/mosharraf-hossain/1a/618/4a2

 

 

 

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Mosharraf Hossain


Lead Logistics, ERP Module Champion- Procurement, Logistics & Project Contracts(Oracle EBS, Version 12.1) at BSRM


LinkedIn Profile

I interviewed Ram Raghuraman who discussed Procurement & Supply Management in India - Challenges & Opportunities.

 

 

 

 

 

 

Hi Dustin, glad to be talking to you today.

 

As I try and answer that question, it is important we understand the evolution of the Procurement function. There have been 4 major upgrades in strategy and function of Procurement as it continually evolves to address the changing internal and external demands. During the initial days Procurement was a purely clerical function operating like an administrative center– it then evolvedinto a Cost Center, with the primary focus being to lower costs. Closer the 21st century, Procurement has morphed into a Profit Center with emphasis on analytics and Total Cost of Ownership and in the cases of certain mature organizations evolved into a Shared Service Provider contributing to both the top and bottom line. In my eyes, this is a four level hierarchy that defines Procurement maturity – Administrative Center – Cost Center – Profit Center and Shared Service Provider. Even the term Procurement is slowly fading away and is being replaced by the more strategic and broader scoped Supply Management.

 

Coming to India, the Procurement function is still quite a ways away from operating as a Shared Service Provider, they are somewhere in between levels 2 and 3 – I find a lot of companies beginning to invest in technology and focus on improving value rather than concentrating solely on costs. However, suppliers are not yet viewed as partners and there aretoo few collaborative efforts – the big companies practice it somewhat, but as you go down the tiers you will find that there is still a lot of opportunities to improve.

 

Why is it important – who should care?

 

Beneath the shiny exterior of Corporate India, there are a few chinks that need to be identified and ironed out. While the bigger companies have policies and processes to eliminate inefficiency and unethical practices, they still abound in the smaller companies which are a vital part of the Supply Chain. This is important to understand for companies that operate in India as well as those that source from India. They should look to increase their visibility into the lower tiers of their supply base and invest in mechanisms to track and enforce compliance. Given the abundance of low-cost resources, Indian companies have never had to focus on efficiency as a means to add value – but with rising costs and weakening global demand, companies are now forced to take a closer look at improving productivity in their Supply Chain and elsewhere.

 

Small and Medium enterprises in Europe and North America should look to tap into the skilled labor market in India especially since the cost of resources is still very low compared to what you will find in developed economies. From a Procurement and Supply Management perspective, organizations are moving a lot of tactical functions to India – Analytics, Category Management, Indirect and Tail-spend management, Sourcing Support, Contract Management, Compliance & tracking to name a few and I see that trend continuing to grow in the coming years. The larger organizations have been able to do this successfully; I see a great opportunity forSME’sto replicate this proven model and increase shareholder value.

 

Challenges and Opportunities:

 

I will talk about the opportunities first. At a macro level, over the last decade India has become a strategic focus for countries and organizations worldwide. There is a huge pool of young, hungry and professionally qualified Indians in the job market – in fact, more than 65% of the total population of India is under the age of 35 with 50% less than 25. Over the next few decades, India will have over half a billion employable people.This is an important statistic to consider not only for companies looking to outsource to India, but also for global organizations that are setting up shop in India to cater to the Indian market. Companies should look at evolving their culture and policies to adapt to a younger demographic as they look to attract and retain talent.

 

Infrastructure, corruption and bureaucracy continue to remain a challenge; however several positive steps have been taken to address this in the recent past. India now has a government committed to encouraging Foreign Direct Investmentand has made several policy changes to make it easier to do business in India.For example, starting April 2016 India will have a uniform Goods and Services Tax across the country to replace the myriad taxes levied by the state and central governments – this would be a significant step in the indirect taxation reform. The government has also identified infrastructure creation as a central part of its road map for economic growth with a multitude of projects underway in building roads, high speed trains and expanding ports. Several new power plants have been commissioned to address the burgeoning energy requirements and an ambitious project to develop 100 smart cities is also underway.

India hopes to become a global economic powerhouse within the next few decades and I see no reason why it can’t!

 

Background:

 

I am the Founder and Principal at BCube Global Solutions based in Chennai, India – we provide a wide range of solutions in Procurement and Supply Management to companies across the world. You can find us on the web at www.bcubeglobal.comPrior to founding BCube I was based in the US working for an earth-moving equipment manufacturer in a number of roles in Supply Management. Thanks to the nature of my roles, I’ve worked with companies across the globe, especially in NA and Europe as well as in China and India. I have an MBA in Global Supply Chain Management from Purdue University and Bachelors in Computer Science and Engineering. In addition I am alsoa CPSM - Certified Professional in Supply Management.I’m a Director at ISM India, an affiliate of the ISM USA which is the oldest and largest supply management institute in the world. This helps me stay in touch with the latest global trends in Supply Management and practice lifelong learning, which I am a big proponent of.

 

I am very passionate about fitness and traveling, I like exploring various cultures around the world. Sports continue to remain a big part of my life – I play amateur cricket over the weekends and follow football and soccer.

 

 

 

 

About Ram Raghuraman

 

 

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Ram Raghuraman


Founder, BCube Global Solutions and Director, at Institute of Supply Management (ISM) India


LinkedIn Profile

Twitter

I interviewed Steve Fernlund who discussed Freight Brokering.

 

 

 

 

 

 

It’s good to speak with you today, Steve. I’m looking forward to hearing your views on freight brokering. Can you first provide a brief background of yourself?

 

Sure. I’ve been in the freight-brokerage business for 40-plus years. I started when I was a young guy, prior to deregulation in the U.S., which took place in 1980. We started a brokerage business back then that we grew quite successfully, and we ended up selling it to an employee stock-ownership plan back in 1995. The employees took over the business and built upon what we had started and did very well for themselves. Since then, I’ve been involved in a couple of different brokerage businesses, both as an owner and as an employee, and spent a brief period of time, about three years, in the publishing industry. That’s my background.

 

You mentioned that you wrote a book on freight brokering. Why did you write that book?

 

I wrote the book over the holiday season last winter. A fellow had encouraged me to write a book based on my experiences, and I said, “What do I have to say? I’m just a dumb freight broker from Minneapolis.” Then I started to think about the fact that there were no books out there directed toward people who owned and operated a freight-brokerage business. With roughly 7000 or 8000 different brokers out there, I thought that book might be necessary.

 

There have been plenty of books written about the mechanics of getting brokers’ licenses and an insurance policy and what kind of forms and documents you use, but there was literally nothing about dealing with the general management issues in running a brokerage and how those impact the lives of the brokers and owners. That’s why I decided to do it. It’s not a lengthy book—it’s not War and Peace—it’s about 80 pages, but I think it covers the broad spectrum of being in business for yourself in the brokerage business.

 

What are some of the challenges of being in the brokerage business?

 

In the current marketplace, one of the challenges is cash flow. I guess cash flow has always been an issue, but it’s gotten to be a much bigger challenge as technology has come to the forefront and as information has become much more current, a broker now is much more of a financial institution than they were just a transportation broker back in the day. That’s probably one of the bigger challenges facing every small- to medium-size brokerage right now.

 

The other challenges are, I kind of plagiarized and created topics around people, process, and product. I think a huge challenge for brokers today is finding people, and, for a lot of folks, it’s knowing how to treat people the right way to get them on your side, to get them engaged in the company, to get them thinking about how what they do will impact the success or struggle of the brokerage business.

 

Certainly, other challenges include legal challenges. There has been a rash of cases in the past decade of brokers getting involved in personal-injury claims involving vehicle accidents and being charged with negligent hiring of motor carriers. That goes to the heart of the process. Carrier section for a broker is extremely important, not only for their business protection, but for the protection of their customers as well. That’s pretty much the tough stuff.

 

Are there new opportunities in this business?

 

Absolutely. I’m glad you asked that. Only recently have I found this out, but there have been about 2000 new broker licenses issued from the FMCSA in the past 18 to 24 months. Depending on whose estimate you believe, there are somewhere between 6000 and 8000 active brokers out there now. That would indicate to me there are a lot of entrepreneurial-type people who’ve decided to get into the brokerage business and provide a service for shippers. The field is full of competitors, obviously with that number of companies participating in the market. The market is extraordinarily large, and there is plenty of opportunity out there for people to start and build a brokerage business.

 

Do you have any recommendations on how to get started?

 

Sure, I think that having a knowledge of the transportation industry is absolutely critical. There’s a perception, I think, that brokering is a simple matter of you go to an electronic load board, and you post up a load that you’ve got from some customer and the phone will ring and you’ll find a truck and you’ll cover it and make your margin and everybody will be happy.

 

One of the key roles that a broker serves is being an expert in transportation. The typical shipper, especially if it’s a small- or midsize enterprise, the shipper, the person making the freight-buying decision has got three or four other jobs. They’re running a warehouse, they’re an accountant, they’re doing something other than just watching transportation. I think having a knowledge of the transportation industry is absolutely critical in making yourself a full-service resource for your customers. I think that’s probably the most important thing.

 

The second critical factor is financial capability. In my day, when we first started in brokering, it was quite easy to start a brokerage with nothing, zero capital. Today it’s in the mid six figures that someone will need to get started, at least access to that kind of money; primarily because you’re paying the carriers much more quickly than we paid them back in 1980.

 

Do you have any final recommendations for people in this business?

 

Yes. My biggest recommendation is: Be proud to be a broker. We’ve gone through a period of time—we’ve been going through it for the past four decades—where the term freight broker has negative connotations. I think it’s an honorable business; it’s a business that wouldn’t exist if there wasn’t a compelling need in the market for it to exist. I urge all kinds of people who are in this industry to take pride in what you do. By doing that, you’re going to be a much better broker.

 

Thanks for sharing today.

 

Dustin, thank you very much, sir.

 

 

 

 

About Steve Fernlund


 

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Steve Fernlund

 

Customer Care Coordinator at TEAM 10 Logistics LLC


LinkedIn Profile

I interviewed David McPhetrige who discussed 'Why I am obsessed with Inventory Optimization'.

 

 

 

 

 

 

David McPhetrige - provides a cloud-based software-as-a-service solution for optimizing the target inventory level for each inventory item in each location. David’s Right Sized Inventory SaaS solution is a data-driven, comprehensive Monte-Carlo simulation that is commercially available at www.rightsizedinventory.com.

 

What got you interested in inventory and supply chain?

 

I’m a degreed accountant. After college, my first job was in cost accounting, and I loved the relationship between financial reports and physical activities such as production, backflushes, MRP, inventory activity, etc. I quickly learned that cost accountants are the financial messengers of inventory performance – and you know what can happen when the messenger brings bad news. Also, the cost accountant is the logical interface between external auditors and operations, so I was responsible for overseeing and organizing inventory audits, justifying inventory reserves and roll-outs of capitalized operations costs in inventory and other operations-related accounting.

 

You describe yourself as “obsessed” with inventory optimization. What do you mean by that?

 

After having been through enough painful S&OP meetings, with their constant, but fruitless, arguments over inventory and service-level bad news enough times, I started thinking about why inventory seems to be such a chronic pain point. I realized that there were great tools for structuring a supply chain – tiers, nodes, etc. I was confident that perpetual-inventory systems used by businesses were mature and pretty solid. I knew that there was a reliable estimator for average inventory on hand: the simple heuristic AQOH = 50% of reorder quantity + safety stock. And it was clear to me that the challenge of this simple but dependable heuristic was in correctly quantifying safety stock, or buffer inventory.

 

Buffer inventory is simply extra inventory on hand to protect a target service level against random variations in demand and supply. A quick Google search will pop up plenty of spreadsheet-friendly, data-driven statistical formulas. And many ERP systems calculate a recommended safety-stock level based on forecast error. And you concluded that these time-honored algorithms were wrong?

 

What I couldn’t figure out was why, if these approaches work so well, inventory continues to be a pain point. So I began a deep dive into the various calculations. For instance, many formulas contain a z factor, which is supposed to convert a service level to a multiplier: higher service level = larger multiplier. This seems simple enough, but the commonly-used z factor reflects the probability of no stock-out events in a given time period, such as replenishment lead time. However, in the real world, businesses do not measure stock-out events – they measure quantities, such as units or order lines. Even the Wikipedia article on service level will tell you that an event-based calculation is harsher than a quantity-based one.. This told me that the z approach was already less than optimal, and the z multiplier would result in buffer inventory that’s larger than it needs to be.

 

So that’s it? The only real issue is with the z factor?

 

Oh, no. That’s just one of about 10 important real-world factors that are either not addressed correctly or not addressed at all in the common formulas! Here’s a non-statsy, common-sense, intuitive factor that is overlooked in most buffer formulas, and not addressed correctly in those that try to include it: Replenishment cycle, how much time goes by between reorders. Small MOQs result in frequent reorders; large MOQs cause infrequent reorders. All supply-chain people know that frequent reorders mean frequent receipts, and frequent receipts provide de facto safety stock, reducing the level of incremental formal buffer inventory. The same thing results from large MOQs, which we don’t like but can’t always avoid, with their de facto safety stock due to the large quantity on hand until perhaps just a day or so before the next replenishment is received. Though it’s easy to understand intuitively, it proved to be a big challenge to translate replenishment cycle into a correct, robust and objective mathematical and statistical analysis.

 

 

 

 

 

About David McPhetrige

 

 

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David McPhetrige


Principal at TopDown Lean Systems


LinkedIn Profile

I interviewed David Sanborn who discussed Trends in Ocean Transportation.

 

 

 

 

 

 

I’m looking forward to hearing your views today on the trends in transportation. Can you first provide a brief background of yourself?

 

Yes, Dustin, thank you for this opportunity to speak a little bit about international transportation business and trade. I’m David Sanborn. I’m a United States Merchant Marine Academy graduate and a Naval Reserve officer in days gone by. I had a third mate’s license with the U.S. Merchant Marines.

 

Since I graduated from Kings Point, which is the acronym for the Merchant Marine Academy, I have been involved in international transportation from the standpoint of working for shipping lines, working for terminal operators, and also being involved in LNG projects. My family and I have been expatriates in a number of locations. I’ve worked in Europe, in Spain and the Netherlands. We lived and worked in Asia, in Hong Kong and Singapore. Most recently, I had a four-year stint on an LNG project in Australia. I am presently working in Panama.

 

I’ve conducted a great deal of business and spent a lot of my time in Latin America. I’m presently located in Panama, working on a green field container project. Having bounced around, you can tell from various places I’ve worked, it’s been a rather interesting time. I’m 40-plus years into the business, have had numerous of opportunities to live and work in some very interesting places, on my own and with my family.

 

Thanks. My first question is: What’s the state of the ocean-shipping industry today?

 

It’s very much in a state of flux. A lot of this has to do with the economies of many countries and the changes in international trade patterns. International trade, in terms of cargo and shipments of freight, is generally down right now. This is not such an unusual circumstance because, in our industry, we go through a lot of peaks and valleys. I’ve witnessed, in the years I’ve been in the trade, at least six or seven such major fluctuations. These have been for a number of different reasons: world economies, individual economic situations, and changing economies in various countries of the world. Many of these variations also have a lot to do with the supply and demand of vessel space.

 

Right now we’re going through a very significant situation where, with the overall trade being down, the shipping lines are working very hard to maintain utilization at reasonable levels on their vessels and in their various vessel strings. The interesting situation hand in hand with this is that we’ve had a very significant decrease in the cost of fuel, and all of these shipping lines have been working hard for the past five years to reduce their operating costs.

 

As a consequence, most of the larger carriers are still doing pretty well financially, but they’re not doing as well as they otherwise would be. Part of that is because the current trend in the industry is to acquire larger vessels in order to get the best economies of scale. We’re up in the 18,000 to 20,000 range with a number of the shipping lines acquisitions. We’re having to deal with the reality that there are a number of major ports in the world that cannot handle those vessels. Nevertheless, especially in the Asia-Europe trade, where the ports do have that capability, we’ll see the larger vessels plying those trades and a number of the major ports in the U.S. playing catch-up, especially those on the East Coast of the United States. The West Coast ports are in better shape in that respect in that they have deeper draft and can handle the larger vessels. Because of the trade numbers being down, we’re seeing a situation where the shipping lines are taking certain vessels out of service for short periods of time, and they’re changing their various trade-lane coverage, so they can improve upon the utilization of the vessels. That’s another interesting situation.

 

The overall biggest issue here is that the freight rates are, in most trade lanes, as low as they have ever been, and this is one of the reasons why many of the shipping lines are in a significant state of flux in terms of trying to fill their vessels with cargo that’s not paying nearly what it normally does. This situation is being somewhat masked because of the lower fuel expenses.  The other cost cutting measures they are taking are always a good thing, but the low freight rates eventually have to improve in order for the shipping lines to sustain long term earnings.

 

Can you talk more about consolidation and what needs to be improved there?

 

There are a couple things. What I’ll do, Dustin, if you don’t mind, is to break this into two parts: one is terminal operations, and the other is the actual shipping lines.

 

We’re seeing more and more shipping lines that are joining forces, merging, forming more VSAs. Most recently, CSAV and the German carrier Hapag-Lloyd have merged. By all accounts, that merger has been very successful in terms of better financials for both of those companies. We’re going to see more of that. We’re hearing other rumors of the lines in China being pushed by their government to consolidate and form a different kind of shipping line. That’s something which, from the looks of it, is moving forward.

 

In overall terms these shipping line consolidations will result in an interesting situation where the shipper is not overly happy about such developments.  They see these mergers as a possibility for less choice and less competition, which inevitably results in supply-and-demand issues. Such actions should, by all intents and purposes from an economic perspective, cause the rates to start to rise again. The rates are too low. The shipping lines cannot sustain competitive and high-service operations with the kind of rates that are out there. That’s going to have to come around. We’re going to see more consolidation, we’re going to see more VSAs, and we’re going to see less shipping lines even attempting to try and run their own lines or services on their own, There aren’t that many out there anymore, anyway.

 

The impact this situation has upon the terminal operations is quite significant, from a couple of different perspectives. One, of course I already mentioned that the bigger ships still can only call in a relatively small array of ports, so that creates an operational situation where the economics and the impact of those larger vessels cannot be felt everywhere simply because the vessels can’t get into the ports that are in the major trade lanes. Having said that, there are some other dynamics. For example, the expansion of the Panama Canal, which will result in a canal that will be able to handle vessels that are three times the size of what they can today in the early part of next year. This is going to enable up to 13,000 or 14,000 TEU vessels to be able to transit to Canal, whereas today they can only handle vessels of 5000.

 

That is going to change dramatically the ability of cargo to flow into the East Coast terminals that, today, can’t because the canal cannot handle that volume. Some of those larger vessels have moved over to the Suez Canal, so Panama has lost some of that market share. However, that’s going to flip back around for a couple reasons: one, as I said, the enlarged canal; number two is that Panama Canal folks have been very smart. They’re implementing a new tariff, which will essentially mean it’ll be cheaper to transit the Panama Canal than it will be to transit the Suez Canal.

 

You’re going to see a situation where Panama is not only going to gain the market share they’ve lost over the past couple years, but they’re going to improve upon that. This results from the reality that there are a lot of shippers out there who really don’t want to go through the U.S. West Coast ports because they don’t want to face the possibility of future problems with various labor issues, productivity issues, congestion issues, that sort of thing. You’ve got the U.S. East Coast ports that are ready, willing, and able to take those larger-size vessels that will be able to transit the Panama Canal. In the next year we’re going to see a very significant change in the dynamics of how freight moves, how vessels move, and what routes they want to take.

 

How should things be done differently in the industry?

 

There are several things we need to take a look at. One is to look at where the most productive ports are. You’ve got a dynamic where—comparing the East Coast of the U.S. and the West Coast of the U.S.—the productivity differences between the East and West Coast are dramatically different. Shipping lines are taking advantage of that productivity and turning the vessels faster in more efficient ports.

 

The service capability of many of the vessels that are in the various trades today are not as good as they need to be. Our port-port transit times are not what they need to be, and our turn times through the ports are not as they should be. We need to send the vessels to the ports that have the highest degree of productivity.

 

The second thing is this—there’s going to be a significant amount of cargo that, no matter what, is going to move through the U.S. West Coast ports; that’s going to happen, as it does today. The West Coast ports must get themselves into a situation where they are more productive and can turn the vessels faster. They have some tremendous issues with respect to how the vessels are stowed coming out of Asia. This is creating a loss of productivity and congestion issues on the West Coast. What must happen is that the terminals on the West Coast need closer direct ties with the shipping lines, and Terminal Operators at origin ports. They need to work out an arrangement, a process, and a procedure whereby the way vessels are stowed are coordinated much more closely among the various shipping lines and among the various sharing agreements together with the terminal operators on the West Coast. In this way they must ensure that when a vessel arrives to a particular location, a particular port—let’s just use Long Beach as an example—that freight is coming off efficiently and being handled correctly, being put in the right locations, and is not having to be drayed all over the port, which is a situation that occurred during and after the ILWU contract issues on the West Coast. The vessels must be stowed with the consideration of where the cargo has to be stowed for ultimate delivery, and movement to the trains for that freight requiring intermodal transport.

 

There needs to be a lot more consolidation, a lot more working together of the various shipping lines in order to allow them to become more productive, and more service focused. We also need to ensure that the capability of the various hubs throughout the world- Suez and Panama, for example, are conscious of the role they play in ensuring vessels are moving through as quickly as possible. This is something that Panama is working very ******* right now, with adding new ports, port space, and expanding the canal.

 

I would say the most important thing out of all this is attention various governments around the world, including Europe, the United States, and Asia need to give to their entire cargo supply chain. They need to be more astute about the importance of ensuring the infrastructure is there to support the cargo operations in these ports. They need to ensure that the infrastructure is built in a timely way to be able to handle the increased cargo, and that there are workable maritime and transportation strategies which will support all the constituents and all the stakeholders. That’s probably the number one thing that has to be done. This effort must be tied together with the various regulatory bodies, again, in the same three places that I mentioned. And make sure these regulatory bodies are not trying to punish the shipping lines and terminal operators, but are trying to understand the issues that they go through so that the shippers can be serviced properly. Not everything that the shippers want or say they need are necessarily good for trade, the supply chain, or for business. The cargo terminal operating stakeholders, the shipping lines, the transportation service providers, the beneficial cargo owners, and the various government bodies must take a holistic approach and partner together in ensuring that our transportations systems are providing good service while giving the service providers a fair return on their investments.

 

Thanks, David, for sharing your views today on trends and ocean transportation.

 

Dustin, thank you very much for the opportunity to speak with you. These are very trying times for shipping lines and terminal operators, as well as a lot of other folks. Hopefully we can pull all of this together, in partnership with the subject matter experts throughout the world.

 

Thank you.

 

 

About David Sanborn


 

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David Sanborn


Director of Business Development at Global Logistics Associates


LinkedIn Profile

dustinmattison1974

Risk Analysis

Posted by dustinmattison1974 Oct 19, 2015

I interviewed Glenn Rosenholmer who discussed Risk Analysis.

 

 

 

 

 

 

 

It’s nice speaking with you today, Glenn. I’m looking forward to hearing your views on risk analysis. My first question is: Why are companies not focusing on the broad perspective in terms of when they do risk analysis?

 

Thank you, Dustin. Good to be on the chat with you.

 

First of all, when it comes to the fact that the big step of making a new footprint, the companies that are mature and have been doing it several times before still struggle with the fact to get the right experience in every move.

 

One of the things that happens is that the companies focus on the tangible things, they are aware of, and are also able to copy it from their earlier move they had. Having said that, compared to move to another country, the infrastructure, as well as the situation to have new setup both in terms of first- and second-tier is underestimated.

That is what is very often cost and schedule are missed. It’s not about the company’s understanding risk analysis; it’s not about the fact that there’s time spent on it; but it’s focused on more of the tangible history and what they actually know about their operation earlier.

 

How do you make sure that you have the experience in terms of the team responsible for moving manufacturing operations?

 

It’s about the culture; it’s about getting the, if you like to call it, the A-team that can provide right skill for the specific in each task.

 

Having said that, what I mean is that it’s actually a lot of planning to get a team with experience,as well as skill, of course, to be put in place well ahead of time, before the actual decision is made. Having said that, scenario planning and the risk analysis should be at least a quarter or, if possible, a longer time, to move a factory, move a manufacturing operation needs full scale feasibility study, as I mentioned is to get the right team and the right experience.

 

I think it’s important to be a theoretical, have the right theoretical background, both theory as well as practice. You need to get those people who’ve been doing it before and, also, the skill they have in different areas work close together.

 

How is agility related to this?

 

Agility is related by the fact that when we talk about moving or doing a new footprint, time is often respondent to what the idea of the company or, if you like to prove, the stakeholders about how much effort, how long a time it takes. Agility is, of course, if you need to do this several times, let’s say, in one calendar year, you need to have those A-teams out there that are actually skilled and do that all the time. That is, for me, sort of agility. If you like to see it as you can put together a team every time that don’t work well together, has no history, then it’s a lot of obstacles only to start up that thing. Since you like to say it’s a specific skill to be agile, have the agility skills, doing these moves. It’s profession, I would say.

 

Could you talk about how you find new tiers upstream?

 

Well, that’s a really good question, Dustin. First of all, when we started to talk about risk analysis, that is one area I would consider is underestimated, linked to risk analysis. One of the things as far as experience I have is to actually do the homework where you’re going to move in terms of infrastructure ability to find the right workforce.

Not only workforce, also supervisors, as well as possible plant-factory managers and so on. That should happen well ahead of the actual decision-making. One good thing is to also—well ahead of time as well—have people onsite before the decision is taken doing the pre-analysis and scenario planning, and then put it back into the decision to be taken, to move planning.

 

Can you provide a brief background of yourself?

 

I’m Glenn Rosenholmer. I’ve been doing work both in automotive, as well as telecom and personal and consumer goods for 25 years. A lot of the times, I work with both projects or initiatives, as I like to call it. One of the things I did very early in my career is working with helping companies to put lean into place, and that’s why I like to call it “initiative” and not a project, because it’s not a project; it’s a lifestyle.

 

Right now I’m in the middle of several types of business challenges, still working with helping out companies in the best ways I can to, as we spoke about risk analysis, taking the right decisions. That are my recommendations in day-to-day life.

 

Thanks again for sharing today, Glenn.

 

Thank you, Dustin. It was really nice to be on. I hope we can see each other in other issues or obstacles or, if you like to call it, challenges that we can all experience what’s out there. Have a good day, Dustin.

 

Thanks, you too.






About Glenn Rosenholmer

 

 

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Glenn Rosenholmer


Partner at MYSIGMA


LinkedIn Profile

I interviewed Vikram Gupta who discussed Logistics Trends.

 

 

 

 

 

 

Vikram, today I’m looking forward to hearing your views on logistics trends and some specific things regarding uncertainty in logistics. My first question is: Can you explain why there is so much uncertainty across the supply chain considering that we have so many tools available?

 

One of the reasons why there is so much uncertainty is the business cycle. While we have so many tools available, it’s the constant dynamism of business which is causing this impact. Everybody’s aware of what is going on in the world financial market. These small impacts can really cause a lot of divisions in supply chain because what happens is, as we all know, the U.S. is not the only country providing growth. The growth is coming from emerging markets, like China, India, et cetera.

 

These kinds of economic cycles in the Asian market are really starting to impact the Western world. The result of that is, Okay, I had planned for X. Now, because of this, I need to plan for  extremely volatile demand.. The result of  that demand fluctuation is is not always easy to plan because everybody wants to make sure that the customer gets the product from their vendor the quickest. The result is, it’s always in a hyperventilated mode that, okay, you and I had a plan; let’s execute it as soon as possible.

 

That is what is causing, I believe, is one of the factors why, even after so many tools, it’s always in a state of flux. It’s always trying to adjust, and it’s going to grow further, I believe, because of these external factors, which not everybody has control over.

 

Do you have any examples that you can share?

 

Yes. I cannot take  names of the customer because of confidentiality agreement , but, certainly, I can share customers’ examples. There are examples of retailers who always do that. We are  constantly working very closely with some retailers where what happens is the demand changes and the result of that is, okay, let me pick up the phone and order (insert a quantity here). Let me order Quantity B. The result of that is: The customer is happy but what is the impact on the logistics side, the demand side, and deliver side?

 

Those are the key factors. Sometimes those factors may not be the key decision makers because you don’t want to lose your market share. I’ve seen that in retailers.

 

Can you talk about how this uncertainty can be addressed?

 

Yes, this uncertainty can be addressed several ways. Firstly, I think the level of ownership—particularly on the supply chain side—has to increase. Cost of deploying solutions or the cost of managing has to reduce. By that, what I mean is that, let’s say you’re doing planning for two weeks out. You need to not sit on that plan; you need to constantly adjust that plan on a daily basis.

 

Yes, there are a lot of tools available, and I don’t want to get into specific tools and this tool is better than that. Every tool has its own pluses and minuses, but at the end of the day, whichever tool we’re

implementing, it’s only the value and ease of solution and analyzing the result, which is critical. That, I believe, is becoming complex day by day.

 

There are several factors which contribute to that. If somebody starts owning this problem and trying to analyze it on a daily basis, that one will become easier to manage. What that will result into is that you will have the ability to react in a positive manner instead of in an unplanned manner. In the real world you’re taking decisions on the fly. Of course, you had intentions to manage everything perfectly and, but will not be the best able to respect those intentions always.

 

In summary what i wanted to tell is that the business value of logistics is becoming extremely complicated because we don't work in a constrained world where resources are in scare supply.  We have a supply chain that is extremely congested. The example are available across all industry vertical starting from Oil & Gas to consumer goods too.  The business problem is not about optimizing the resources as before because they are in great supply . The result is to make sure the supply chain is not running into loss is to use the over supply of resources and use it optimally so that utilization is better and the information collected is useful to take better decision for the business.

 

Thank you for sharing today. Can you provide a brief background of yourself?

 

Yes, I am a senior enterprise architect). I’ve been doing this work—supply chain consulting—for the past 15 years. One of the key—and I’ve worked across various industry vertical  trying to address the core supply chain problems across all these industries to make sure these problems which I just spoke about are defined and addressed in a manner in which everybody’s happy. By that, I mean the customer is happy and the business value from a customer perspective is attained

 

 

Thanks again for sharing.

 

You’re welcome.

 

 

 

 

About Vikram Gupta


 

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Vikram Gupta


Enterprise Solution Architect at i2 Technologies


LinkedIn Profile