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2015

I interviewed Bill Michels who discussed Megatrends in Supply Chain.

 

 

 

 

 

 

 

Bill, I’m looking forward today to hearing your views on megatrends in supply chain. It wil be interesting to hear your views on what will happen to the supply chain in the future. Can you first provide a brief background of yourself?

 

 

Sure. My name is Bill Michels, and currently I’m the CEO of Airpark Consulting. Prior to that, I was the President of ISM Services, ADR North America and ADRSM China, and prior to that I

ran ADR North America for a number of years and had a full career in supply chain and purchasing and several corporations.

 

Thank you. And my first question is, what are the industry changes that are taking place currently?

 

Well, from my perspective, there’s been quite an evolution in purchasing over the last ten years. And I think, you know, if I look at the 1990’s, I saw really a focus on price management. Around 1995, I think people really started focusing on material, labor, overhead and the cost components. And then as we hit 2000, we started thinking about how are we going to move into some strategic sources, and how are we really going to get strategic and look at global sourcing and low cost country sourcing or in-country sourcing and outsourcing? So it really started to get strategic around it. And then in 2010, we started to move into how can we manage whole categories of programs and category management?


And as I look to the future, I think that we’ve identified the cost management side and the price management side, and we’re getting transparency with our suppliers, and at some point we still need sustainable suppliers so we know what their margins are. And we’ve got to look beyond the price and the cost and really start to look for what value are the suppliers going to bring in the supply chain? So I think we’re moving away a focus on cost to more of a focus on value. Speed to the market, R&D and new product development and innovation, integration in business systems and transparency. So I think there’s going to be a change. So I’ve seen it move from really a focus on price and cost and now a focus on incremental value from the supply chain.

 

And can you talk about some of the trends and what will the impacts be?

 

Oh, sure. You know, one of the things, I was looking at the megatrends from Ernst & Young. And one of the things that was really interesting is that there’s really a lot of disruption in the industry based on the digital age. So we’re seeing things like Internet of Things, and that Internet of Things is really kind of driving transparency and automation across the supply chain. In fact, in that survey, E&Y said that more and more, humans will be displaced by software and hardware. And as I start to look at some of the business systems we’re seeing, we’re starting to see systems evolve with artificial intelligence. I was talking to Joe Yukur about this the other day, and there are systems that are going to be able to go out, scan the internet, find suppliers, do an RFI, sort the RFI’s out, do an RFP and then hand a recommendation to a person, and a lot of that work will be automated.


The other thing that I think is happening is we’re seeing a change in demographics. So we’re now looking at a workforce where Millennials are 50 percent of the workforce. So that’s a major change and a different way of working. Customers are demanding more value, sustainability and corporate, social responsibility are becoming more and more important. And we’ve moved to a global economy. It’s no longer regional, local or domestic, it’s global. And what I think is going to happen as we look to the future is that we’re going to have exclusive tied supply chains. And when I think about those supply chains, if I look now, Apple has a very good, exclusive tied supply chain that brings it value, innovation.


The suppliers are all integrated, they work together. If I look at the automotive industry in the U.S., we get to see there’s really a Japanese supply chain, a Korean supply chain, a European supply chain and a domestic supply chain starting to form. So I’m starting to see people move into more and more exclusive tied supply chains, which will impact us. Industries are consolidating, and that’s forcing more and more of the opportunities for integrated tied supply chains. We’re seeing increased regulation across the globe, and we’re also seeing increased demand for sustainability. So we’re seeing all those things occur.

 

What is the most critical change coming?

 

I think the most critical change is the one where the supply chains are starting to integrate. So more and more people are going into a rapid, integrated supply chain with business information passed along the supply chain and then value points identified across the supply chain as well. So we will have a supply chain that distributes value and the suppliers along that supply chain will get paid on that value. And it’ll operate as a competing unit against other supply chains.

 

Well thanks, Bill, for sharing your views on these megatrends.

 

Oh, great. Nice talking to you, Dustin.

 

Business Email:Support@vananservices.com , Support@quicktranscription.com

Website:www.vananservices.com, www.quicktranscription.com

Phone Number: 866-221-38433



About Bill Michels

 

 

 

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Bill Michels

 

CEO at Aripart Consulting

 

LinkedIn Profile

I interviewed Daniel Ekwall who discussed Cargo Theft at Non-Secure Parking Locations.

 

 

 

 

 

 

 

 

 

And I’m looking forward today to hearing your views on cargo theft at non-secure parking locations.

 

Yeah, thank you, Dustin. Thank you. Very nice for you to offer this opportunity. Always nice to talk to you.

 

Yes. And can you talk a little bit about cargo theft at these locations? What is the problem that you see?

 

When it comes to cargo theft in general, it’s a problem. It’s quite easy to find incident reports just to make the quick indoor check, type “cargo theft” in Google and you will dramatically see a number of incidents reported there. Which means that there is a problem? Also it’s an EU report based on the EU from 2007, if I remember correct; pointing out that the potential losses in EU due to cargo theft is from 8.2 billion euros annually.


So we’re talking about a large amount of money. And to that we should also add reports stating different numbers from U.S. and for East Asia, but we can clearly point out a large amount of money. What is interesting with the non-secure parking is that normally it’s put forward, especially in EU, that there is a security gap in non-secure parking because there aren’t a few secure parkings in Europe. There have been a few EU projects looking into this feature, but not really the research behind to point forward that there are specific problems with cargo theft at non-secure parkings. So with thanks to TAPA EMEA and their excellent database on incidents, my colleague Bjorn Elance at Chalmers University of Technology and myself calculated and looked into this field.


And find, and not surprisingly, that there are big problems with thefts linked to non-secure parking. But it is more a volume problem than an impact problem. With that, I mean quite clearly that the average losses due to theft in non-secure parking are of a lesser value than the mean value for losses. And the frequency or the likelihood that it happens is higher than the average to all different locations that define the TAPA EMEA database. It doesn’t mean that we should look into them less as a volume crime, but we should understand that it is a volume crime, which means that the preventive effects needs to be linked to that.

 

How can this problem be addressed?

 

Quite, it’s several different actions that need to go together. The most obvious response to this, which is also the response that comes from the EU project looking into secure parkings, is to create parking spaces that are considered secure. Now that may sound simple and straightforward, and yes, it is simple and straightforward and it solves lots of problems. Then comes into the question, what is actually a parking space that is considered secure? How high need the fence be? Do we need to have guards? Do we need to have cameras and all these other things? Can we link this to other facilities and truck drivers need, which means toilets, restaurants, fuel stations and so on? Normally, this problem falls back to the cost, because nobody really wants to pay for it.


Normally put forward on the EU is ten euros a night to stop these non-secure parking places. Which means that you need to in a risk management firm compare the certain cost of ten euros a night against the uncertain costs for loss, which is also shared with the insurance companies and all that? So it’s, that is a straightforward. What we also can do, is to avoid having soft trailers, which means to go to hard trailers, which means it becomes slightly more difficult from a pure technical point of view for a thief to break into the truck. That’s the first step. We can also go into ideas like scheduling transports so when you have interesting cargo loaded on a truck, you make sure that you utilize the driving hours the right way so you don’t need to stop. You can use dual drivers so they can just change driver and have goods continue moving, and thereby not having the possibility or need to stop at any places. So there are a few things you can do, but normally it comes back to the actual risk compared to the actual cost.

 

Where have you seen some success?

 

There are initiatives popping up, different organizations in the EU, primarily logistics service providers are linking their movement of goods to locations that they consider secure. We also have initiatives which looks into these types of secure parking places and says, well here you should stop and so on. There are ranking systems. I think the label ranking system is the most well known. It doesn’t say it’s good, but it’s well known. It’s a classification saying that if you have this type of security, you have this ranking on security. But it’s a different, creates a wall, as I said in the beginning, a fence around, does it mean that it’s one meter high? Does it mean three meters high with barbed wire on top? It’s not clear, so sometimes it put forwards that what is stated as being a fence, if you visit the parking place, well, it’s something that you can just step over with no problem. So it’s not really a secure parking place in that sense. On the other hand, we also just don’t need to focus only on the fence occurring at the non-secure parking, because this is not, they are planning shipments anyway so thieves actually can attack them. They’re using the stops due to the increased road transport in EU. You can see from EU statistics that we have increased the rates for transportation in Europe for road transport. Also, you’re seeing in the cost or what people are willing to pay for road transport in the EU is going slightly down per ten kilometers, which means that we will see more movement of goods to road transport from other modes, which will increase this problem because we will have more available cargo actually to attack in more places than in non-secure parking places.

 

Do you have any final recommendations?

 

Quite simple. Understand what you’re shipping, where you’re shipping. Because there are, in the paper we are not looking into the geographical differences in threat level, because the data doesn’t really allow us to do that. But I know from previous experience and also from lots of discussions with security experts in the field that there are big differences in EU where cargo thefts occur, and how they occur and so on. You can find really interesting reports from different organizations about this topic. I think that Freight Watch is one of the most detailed of this available, and it’s published annually. Which means that we need to understand the localized part of the threat, which also is leaning to what is actually is interesting to steal. Because not all products are interesting to steal in all places in EU. Which means that we need to understand where and what we’re transporting, and thereby we can actually have the right level of security. Because we need to realize in the end of the day that security costs and nobody is really wanting an increased transportation cost.

 

Well thank you, Daniel, for sharing today.

 

Thank you very much. It’s always interesting to talk to you and to present something that you think you know something about.

 

Business Email: Support@vananservices.com , Support@quicktranscription.com

Website: www.vananservices.com, www.quicktranscription.com

Phone Number: 866-221-38434

 

About Daniel Ekwall

 

 

 

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Daniel Ekwall

 

Associate Professor In Supply Chain Management at Hanken

 

LinkedIn Profile

I interviewed Glenn Rosenholmer who discussed How to Create Customer Integrated S&OP.

 

 

 

 

 

 

 

 

 

How can S&OP help reduce lead times?

 

Well, you seem to face an operation effort and being really into getting alignment between the functions. There will be enormous effect, and especially if everybody can assign both responsibility and accountability into getting one number that we will follow and agree on in the master plan as well as scheduling activities we’re going to do to attain what we have been discussing in the meeting we have with sales, production, distribution, agree to want them.

 

How can you improve delivery performance and reduce WIP?

 

The thing about improving delivery performance and we have to use working capital is always a struggle. I’ve been working with this in several cases where we find that the delivery performance is not always what should be the focus. You focus on work in progress, and that will give you a better delivery performance, because production, for instance, is not stuck with the wrong product produced in the wrong time. So the answer in that question is to actually work really, really hard to have only orders that is produced to customers, and not speculate and going ahead to produce before you have actually an order.

 

Where have you seen success?

 

The success we have seen is that a lot of company is not putting enough effort into the meeting. They are not prepared and they are not working and seeing this as a key issue, the key to success. They have different agendas, but they’re still coming to the series and operation plan meeting. Where we’ve been seeing success is that everybody’s prepared, they’ve been questioned numbers, when to produce what, that finally they can get all the questions marked out and that’s again to make sure the silos, or if you like to call it functions, understand that the need to do the best for the flow, not for the function.

 

What are your recommendations for getting started?

 

Recommendations for getting started is one really, really important question, because we all know a good start is giving us the right path down the road normally. And one mindset that we always talk about when we started an initiative, that is to make sure that everybody understands that we are now going to transparency. Transparency, forget your function, and make sure we everybody takes off the different hats. Take off your sales hat, take off your production hat, take off your distribution hat, and make sure as a team to get that master plan that we agree on, and start working on one plan and align to it, rely to it, and make sure that when you leave the room, if it’s a room, everybody agreed and have a handshake and not a false handshake but a true handshake for what’s going to be happening up to the next phase in operation planning.

 

Well, thank you Glenn for sharing your views today on How to Create Customer Integrated S&OP.

 

Well, thanks, Dustin. I enjoyed to be on again. And we have a very important seminar coming up where we can have both people coming to listen and are new to series and operation planning, but I’m sure when it happens out of December here in Stockholm there will also be people that is interested that have been failing, but they can learn from where a client talks is presenting all the good success they have had to actually go from twelve weeks to two, three weeks in lead time, which is enormous in potential and improvement. So thank you very much. Take care now, Dustin.

 

Business Email: Support@vananservices.com, Support@quicktranscription.com

Website: www.vananservices.com, www.quicktranscription.com

Phone Number: 866-221-38431

 

About Glenn Rosenholmer

 

 

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Glenn Rosenholmer

Partner at MYSIGMA

LinkedIn Profile

I interviewed Ashok Muttin who discussed Future of Healthcare Supply Chain.

 

 

 

 

 

 

Hi again, Ashok, I’m looking forward to hearing your views on the future of the healthcare supply chain and I have a few question regarding this topic and the first one is, how does one build a 2.0 version of the healthcare supply chain?   For example, what is the future look like and what are challenges and then the first question is about data integrity. Can you talk about this issue regarding data integrity?

 

Dustin thank you very much for another opportunity to speak to you and it’s a pleasure to have this discussion.  Data integrity is the foundation on which you build your entire future of the supply chain or call it as the 2.0 of the supply chain.  As we see today, most hospitals and health systems have this data problem.  What that means is, they have not invested sufficiently in standardizing their product's descriptions, how the products come in, the data comes in for the recall and the replacements.  Then there is the data that is required to do any kind of analysis to understand their spend behavior, spend versus targets or the budgets, whatever there maybe.

 

There needs to be a very conscious investment in building this foundation of the data.  Once you build the data right at the item master level, then when the data goes through multiple transformations i.e. from the requisition to various levels of approval, the purchase orders are created, the invoices are received,and then there is the whole data that is buried in the inventory and the warehouse management system.  All of this comes together to provide a clearer picture and this foundation can be used in multiple ways for organizations to build the 2.0 version of the supply chain.  Think about it as a Swiss army knife.  The investments in data are going to be used in multiple ways just like a Swiss knife is going to used and unless and until the health care systems makes a conscious decision to invest in this, it’s going to be very difficult to build and run the next generation of the health care supply chain management.

 

What about cloud computing and open source?

 

That’s a very interesting question.  Health care systems again have not really invested a lot in the cloud, in the SaaS, in open source and some of these newer technologies that are out there.  Traditionally health care systems have been run by old ERP systems or behind the firewall systems that were originally developed, custom developed for these organizations and then, they have some layer of business intelligence that is sitting on top of these old systems.  Today, they spend enormous amounts of dollars in maintaining and supporting these various, decade old systems but at the same, they are hampered by not being able to extract the data from a lot of the systems, be that to analyze the data to get a holistic view.  Our suggestion in SupplyCopia is that you have to invest in the SaaS and cloud computing to be able to build the future of the supply chain.

 

One way to start is, to look at someone like SupplyCopia where we have highly integrated platform that can actually help them to optimize their current investments in the ERP systems but at the same time, be able to get a lot of benefits from what we have already developed and obviously, they could look at open source as one way to improve upon their performance.  There is a huge open source community out there that is developing some of these applications, developing some of this code.  Codes are developed by thousands of people all over the world using some of the best practices coming from not only healthcare but also outside of healthcare that can be leveraged by the health systems in order to build this the next version of the healthcare supply chain system.  What that means is, if they are willing to adapt some of these standards, some of these newer technologies, they will end up spending a lot more on getting there instead of being buried in just maintaining these age old systems that never go away.

 

Can you talk about predictive intelligence?

 

Sure.  As we talked about the foundation which is the data and again, the data is the core to the predictive intelligence and the analytics.  There is a huge momentum happening now with reference to the big data analytics and predictive intelligence and in my opinion and based on the experience that I’ve had in the last 18 months to two years, healthcare supply chain and the management systems totally lag behind the rest of the industry.  For example, manufacturing and services and dealers and distributors, if you look at those industries, they go to extreme lengths to analyze the data, understand the buying behavior and look at cost optimization.  If you look at a manufacturing industry, traditionally manufacturing industry, they will go to extreme lengths to suck out a nickel cost of a hexagonal nut for example.  We don’t see that sort of behavior in the healthcare systems yet.

 

What they could do is, they could leverage tremendous amount of data that is buried in their systems. Because of the lack of the data foundation and them being married to these old ERP systems, they are unable to extract this data, be able to analyze it and build a predictive model.  The way the current model works is that it’s almost like somebody driving a car looking at the rearview mirror.  What that means is, you are constantly going to be driving the car very slowly, suboptimal or constantly looking at the rearview mirror.  You are going to crash somewhere, either of those options are not ideal options.  We suggest that you utilize the data that is buried in your organizational systems, be that your ERP systems, your accounts payable systems, inventory management systems, order management systems, requisition, so on and so forth and then, build analytics to actually predict the future.

 

What that means is, this intelligence is delivered to the user at the point of consumption 24X7 without somebody having to actually ask for that information.  What we propose in SupplyCopia, spend analysis and predictive intelligence, we deliver actionable intelligence to every decision maker, down and up this ladder of the supply chain at their point of consumption so that by utilizing that analytics, utilizing that knowledge, they can actually predict their outcomes and act upon those outcomes and mitigate any risks therein even before those risk have actually happened.

 

Thank you.  My final question is, how can someone invest in these things, has your company done anything interesting?

 

Sure, One example that I’m giving to you is, we were working with a healthcare system here in the Northeast.  That organization had roughly $3.5 billion worth of spend and by analyzing the data buried in various of their systems, we were able to bring all of the data into a centralized warehouse, be able to analyze that data, we were able to show them roughly 20 to 22% cost savings in their purchased services and anywhere 10 to 12% of savings in the med-surg spend and the biggest result that we saw was with reference to the physician preference items.

 

We analyze the physician preference items very minutely married that with patient outcomes, we’re able to show them a 28 to 30% cost savings in the physician preference items.  What we have done is created SupplyCopia cloud that consists of the order management, the spend analysis, the requisition management, broadcasting mechanism, collaboration and an RFP engine that allows an organization to work with their existing ERP systems but at the same time, be able to identify opportunities in the first 90 days and be able to leverage those opportunities.


Well, thank you Ashok for sharing your views today and the future of health care supply chains.


Thank you very much Dustin, it’s always a pleasure to talk to you.

 

 

 

 

About Ashok Muttin

 

 

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Ashok Muttin

 

Purpose Driven Entrepreneur Reinventing Healthcare Supply Chain

 

LinkedIn Profile

I interviewed Amanjeet Singh Sethi who discussed Supplier Relationship Management.

 

 

 

 

 

 

We’re looking forward today to hear your views on this topic of supply and relationship management.  My first question is what is the main problem with supply or relationship management today and how can the problem be addressed?

 

Sure Dustin.  It’s a pleasure talking to you as well. To answer your first question about the main problem, with supplier relationship management today: most organizations struggle to manage their relationships with the suppliers systematically. The main reason behind this is the lack of a clear framework with aligned guidelines on supplier management.

 

In traditional supply relationship management, the interaction between different functions of a company and its supplier can be described as being more transactional and tactical rather than being strategic. So as a result, relationships are lacking information sharing, transparency, not only from an external perspective, but also with respect to internal governance and ownership of the relationships. In traditional supply relationships, also, what has been seen is the interaction between different functions of the company causes lack of communication with the suppliers and the actual information flow isn’t very effective which actually causes the relationship to deter and the full benefits of an effective supply relationship management which we call SRM are not there in place.

 

The actual pool of a supplier relationship management should be to deliver sustainable commercial excellence through managing the organization’s value chain to deliver world-class services at the lowest possible cost, what we call as value performance.

 

To address this problem, coming back to your second question, to address this problem, companies should look at supply relationship management as a two-way mutually beneficial relationship.  It should be really collaborative and focused on building the activities targeted at the most strategic and critical supply partners that deliver great added value to the firm. For example, the values could be in terms of sustained competitive advantage or it could be innovation with the suppliers.

 

Therefore, the SRM activities are additional and complementary to supplier performance and contact management activities as it has been traditionally dealt with are over and above these relationships.  So before I go into further details of how these problems can be addressed, I think it’s beneficial to talk about some of the benefits of SRM and then we cover how we get those benefits and how SRM can benefit the organization these days by addressing the current situation problem. Some of the benefits that SRM if done properly would deliver is reduce costs and increase efficiency beyond the traditional sourcing and category management efforts by setting up long-term relationships and establishing communication processes. Manage supply risk and compliances is another key benefit, by global transparency and visibility of key relationships.

 

It will also help them drive supply performance in a transparent and sustainable manner, it’s strategic supplies and collaborative partners and enables continuous improvement of operation throughout relationships again.  Finally, which we’ll be briefly touching about is about innovation.  If innovation is done jointly by the company and the suppliers, it’s a long way to go in terms of identifying the problems and coming up with innovative solutions that helps improve go-to market time and overall quality of the output of the organization.  Some of the key initiatives organizations can take to correct the problem and build a very healthy supplier relationship management, is basically a set of criteria which the organization need to identify starting from their internal governance which is the SRM governance.  What that mean is establishing effective governance especially for strategic suppliers.

 

A prerequisite of this is alignment within the organization obviously so that the internal functions are aligned and the governance process is clearly assigned, the ownerships are clearly identified within the organization.  And then accordingly, the ownership of the relationship with the supplier is assigned to a particular function that’s one key piece.  The second key piece is monitoring and assisting supply and that basically, it’s essentially going to, setting up Supplier Scorecard which will not only include the Organizations' goals but also some of the financial goals, the operational goals, maybe implementation goals about contract and compliance, communication targets and other supply and relationship KPIs like quality of service, supplier performance, ease of conducting business, etc.  These basically are the key elements.

 

And then from quantitative and qualitative perspective, a few examples would be from quantitative piece tracking and realizing the savings and the benefits, reviewing the expenditure with preferred and non-preferred supplier’-s, cross check with contract's database and match against supply usage, data etc. . The other qualitative monitoring that could be done is conduct interviews, assess user satisfaction, contract, -supply queries, etc. . That helps with the performance. But another piece which is missing in quite a few organization is segmenting the suppliers into various categories and then dealing with them accordingly. By what I mean by segmentation is maybe three to four levels of segmentation the key one being the strategic one, followed by the preferred [ph], followed by approved and then the last one being transactional.

 

 

Each one has its own features and qualifications. Let me quickly touch upon the few attributes of each. Strategic would be the suppliers which have high business criticality, complexity and high supply chain risk, and very high collaborative opportunities. In that case the approach, would be a little different which will be engaging in SRM and performance and contract management and executive level engagement is needed in such cases. The next one is preferred which again, has high business criticality but relationship dependencies exist. In this, business leaders should engage. The third one being approved wherein medium business criticality is there, low collaborative opportunities are there.

 

 

For this traditional performance contract management, is good enough. Last piece being transactional which has low criticality, and low impact on switching suppliers, that can be managed as an exception. If organizations follow these pieces, I believe there is a lot of scope of improvement in SRM.

 

 

Do you have any success stories or examples?

 

 

I’ll briefly walk through an example where lead management was covered through SRM and how the lead time was time was reduced and overall output was increased dramatically because of that. And then I would also like to briefly touch points upon certain roadblocks while implementing these. Actually, first let me go through the roadblocks so that once I get the sample, I can hit upon which roadblocks were covered so that will give more perspective to the audience. One key roadblock is commitment from the leadership. Usually when implementing SRM, though the companies try to role it out. But if there’s limited engagement from the top leaders and sponsors, the program is not implemented the way it should and then that’s what this lack of commitment from these business owners, that’s a key roadblock and it has to be top-driven from the CXO level.

 

 

Sometimes, there’s also conflict of interest which is too much focused on cost instead of the value on the buyer side. That should never happen in SRM specifically for the strategic partnerships. Also, organizational alignment which we briefly talked about, internal alignment is a key. And then sometimes, there’s lack of trust in terms of sharing information within functions and also with the supply partners. For strategic partners, that level of trust needs to be there so that if, we are planning to come up with innovative solutions, there should be full transparency of data. Now, let me give a brief example of a manufacturing company who was transferring products to customers at shortest possible lead time, was the key goal. But unfortunately, there were drastic delays in the lead time and that was being in the competitive landscape that they were, that was affecting their performance and sales in- return.

 

 

There were many reasons for this delay, but the first stage of Supply Chain which is SRM. Focusing on the long lead time was the critical problem that they identified. And then they basically led this SRM initiative with the aim of reducing the lead time using SRM approach. The two key reasons, when they dived deep into the data, what they found was two key reasons of long lead time were,-poor communication between the procurement department of the company and the suppliers and within the procurement department, communication itself as well. The key pieces that we talked about earlier also was lack of communication internally as well as externally and the lack of trust.

 

 

Here is what, they did- so they categorized it, it applies into the four categories we talked about. Each group was assigned a separate SRM adviser to improve the communication and manage the relationship according to the category that each supplier belonged to and these SRM advisers would train SRM experts. This was followed up with meetings, close relationships with suppliers for the first two categories especially which is the strategic and the preferred ones.

 

 

An internet supply portal was also deployed for faster and easier communication of data and information. The results were astonishing with just the SRM piece. The lead time was reduced by five days. This was approximately about 33% reduction in the lead time, from a period of 10 to 15 days, to 5 to 10 days. This literally shows all the benefits to what extent SRM CAN GO AND this one classic example in a manufacturing sector.

 

 

Thanks. Can you provide a brief background of yourself?

 

 

Sure. I’m basically a mechanical engineer and an MBA in supply chain and operations. I’ve been working for overall, 10 plus years in consulting and industry across various functions of that strategy development, operations management, supply chain management, process improvement, vendor management, client relationship management and a lot of global transformations as well. I also have experience in setting up functions, business units, developing end to end strategy and then executing it. includes P&L management, business development and people management across industries such as e-commerce, retail, pharmaceutical and medical devices in Asian and North American geographies.



Thank you again for sharing today.

 

 

Sure.  It was my pleasure Dustin.  Thank you.

 

 

Thank you.

 


About Amanjeet Singh Sethi


 

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Amanjeet Singh Sethi


AVP (Head), Studios Strategy & Operations @ Pepperfry, Ex Deloitte -Management Consulting

LinkedIn Profile

I interviewed Julio Franca who discussed Total Cost of Ownership in Practise.

 

 

 

 

 

What’s the Total Cost of Ownership?

 

Total Cost of Ownership, TCO, is not a new concept.  It’s basically a mapping, identifying, calculating and taking into consideration all costs involved in a project, in an acquisition of something, yeah?  It can be a material, a service, a production line, whatever you buy is not purely taken into consideration the acquisition cost as sometimes some companies do when procurement for example go to the market to run RFP for a new product.

 

But instead of that, it’s actually taking acquisition cost and adding all various, different costs for example, inventory carrying cost, obsolescence, transportation cost in terms of if you are transporting it by air often because your supplier is far away on your production site, that should be taken in consideration as well.  The cost that you lose or the opportunity cost when you don’t sell your product and that goes over in and out so there are different levels of sophistication.

 

Can you provide an example of TCO?

 

I like being simple.  One of the best and very simple examples I have is buying a car, yeah?  Buying a car.  When you buy a car, you can buy purely based on the cost that you find in the dealer which is the acquisition cost which is one way of buying a car.  But the TCO applied to that scenario would be to buy the car based on the lifecycle of that car, so it would be the car, the cost of insurance, the maintenance, the fuel consumption and all the different elements that you, all the different cost elements that you carry over the life of your car.

 

That can be very easily extrapolated to production line and then to a material that your company buys or to a packaging or to service your company buys.  But the car example is one of the easiest ones to make it happen.  I think some time in life, each of us have a bought a car or you a buy a car or have seen anyone buying a car, yeah?  That’s why I always use this example.

 

Why TCO is so important?

 

Well I think it comes back a little bit back to question one.  It’s Total Cost of Ownership so you get full visibility of the hidden cost.  Think about an imagery of an iceberg, when you buy only based on the acquisition cost, you’re only seeing the top of the iceberg outside the sea.  Underneath, you see there are many different costs, very important costs, sometimes even bigger than the top of the iceberg that are hidden and not necessarily considered on a structure base and not often bases has a decision-making to.

 

And again, those costs can be cause of obsolescence, insurance, extra freight [ph] when you send your goods via air rather than the traditional ocean or road.  Cost of losing the sale, pillage and so forth.  It can go well beyond in terms of sophistication.

 

How those TCO uncover hidden cost?

 

It’s quite simple.  You need to identify, look at what you buy.  Identify what are the flow and the network of source, where you buy, how often do you buy, what’s your MOQ, the minimum order quantity, MBQ, minimum batch quantities, what are the lead times, what are the logistics, the inbound and outbound, the logistics for new suppliers for your site.  And then once you identified that, then you create the visibility to a clearer picture than that and then you start to calculate on the various different elements of the cost.

 

It doesn’t need to be precisely right, yet it can’t be precisely wrong, necessarily wrong.  The idea is to have a good idea, a good estimate of all those different elements so by then, we finally work with the various teams and the supplier and internally, for example, finance is a typical team that works together with procurement and supply chain while developing TCO appropriate.

 

What else TCO can tell you?

 

Once you’ve done that, once you identify your network and your flow as a consequence, total cost of ownership will clearly show you which are the inefficiencies that you have in your supply chain or in your chain through, from your supplier to your own site or to your third party.  That can go all around high inventory levels, bad service levels, your own lead times, obsolescence, wrong placement of the supplier, wrong type of supplier and so forth.

 

How to implement TCO in practice?

 

I’ve been doing this for quite a while, yeah, and then as most of the things in life, there’s not always one size fits all approach.  My recommendation based on the rework experiences just started small. I worked with a multifunctional team, get people onboard, be flexible in terms of how you model your TCO.  Build a VCO version 0 spreadsheet and be flexible to evolve and take in perspective and in consideration different ways of mapping or calculating your total cost.

 

Typically, the key areas here are definitely [ph] procurement and planning but also finance and sometimes logistics.  Focus on the ones, if you have your model, you have your team, you have the buying and then you need to start small, then I like to start to three main different streams.  One is to fix existing problems so put together a list of top offenders and then that can be done very quantitatively so we try to, once you’re carrying high inventories, you’re losing sales in terms of bear to that service, higher costs and so forth so that’s the top offenders and that has a more fixing approach.

 

Then the second element I like to look at is new negotiations, new RFPs wherever you run a new RFP, then it’s quite worthwhile to bring TCO new decision variable to decide out of the RFP, who are going to be your suppliers so that it’s more presentable so it’s avoiding to create new problems in your chain.  And then similarly to that, it’s a new product plan, number three is new product launch whenever you launch new products, new innovation products, it also uses TCO as the decision-making variable to decide where you buy the elements, the components of your product in total perspective or total cost ownership way.

 

How to start running a TCO program?

 

I think here, you need to first create this case, the business case for the change and then quite easily comes from identifying very bad scenario of poor service and the inventory and then can be hopefully not on an end to end view of the business or throughout your business, but it can be quite easily in that proper category or a specific factory or a specific portfolio of products.  Manufacture internally or even externally.

 

I like always to look at the approach from a top-down perspective being recommended or mandated by these new leaders but also building the program from bottom up, having people, the key stakeholder’s information a few times playing in procurement, finance, logistics, well-engaged in the program, well aware what each one of them and what are the contributions.  I think the combination of top-down and bottom up works fine, works quite well.

 

And then again, implementing not throughout the business, but really try to be selective [ph] in terms as where to implement, where are the most considerable low hanging fruits which will deliver a robust pilot and these robust pilots then can build the credibility to be the void [ph] across the business wherever it make sense and then demonstrate success and deploy it for them.

 

How to overcome resistance?

 

I think that’s a good point.  Usually, you get some pushback from, as always, you go to a change process in any case.  I think in terms of TCO, resistance can come from few angles, so one is procurement.  Who quite wrongly sometimes, these are measured, performance by, through a simple and single view of acquisition cost.  It’s the typical how I can get the lowest possible acquisition cost.  But then once that’s implemented, then you get extra cost, hidden cost of the TCO you identified.

 

Really, to overcome that resistances, you need to work with procurement quite closely.  And to show the business and that’s not only procurement to show the whole business worth and the size of the price, say what’s the pertinent size if we move from TCO, from an acquisition cost to a TCO perspective for decision-making.  The other thing is in planning and supply chain planning, then the typical resistance here is they don’t have the time to provide the right variables or they are not very interested in thinking medium and long term.  They focus on the short-term view of things and that you need to show them how to overcome resistance, what’s in for them in terms of overcoming, avoiding future crises, getting a much better visibility and control of the supply chain, having their partners, their suppliers placed at the right location and serving them with the right lead times and the right minimum, maximum and variable batch.  Then also I think for that point is work with partners as an independent entity to calculate with credibility, what’s the real total cost of ownership and making the bridge between supply chain planning and procurement.  And then base decisions on facts, hard facts and how qualitative, quantitative and qualitative the variables.

 

Then it makes for the typical individuals involved in this environment supply chain and procurement when you talk numbers, when you talk facts, decisions are quite easily taking, the right decision is quite easy to take.  And then once all of that is done, then clearly, you need to ensure that the implementation is right and then need to prove a clear governance in terms of bringing that to life with clear targets for each of the parties involved and all part of the targets need to be cross-functionally [ph] aligned and also linked back to, career progression and et cetera.  That I think is a good way to overcome resistance.

 

And building a strong team, we have a transparency and not as then [ph] but we altogether as representing the business.  Thanks for that.  It has been a pleasure Dustin for having meeting you again.  I hope that helps you and your public.  By all means, reach me out if you need any help in terms of how to run TCO program in the future.  My contact details, you can find there, but it’s anyway, julio.franca@spinconsulting.net.

 

A little bit about myself, I am an engineer as a background.  I worked over 20 years in supply chain.  I run a company corps, a consulting niche boutique company called Spin Consulting.  We are very much focused on the short-term assignments, result measurable projects, working in the supply chain procurement logistics and all end to end business projects.  We can do of course strategy development but we are very hands-on operationally-oriented, so we work very close with our clients that you can find some of them in our website, www.spinconsulting.net where we work very closely then to get things done, get things implemented and again, get results in their PNL and balance sheet so that’s a bit about us.

 

Well, Thank you again Julio for sharing today and I look forward to interviewing you again in the near future.

 

 

About Julio Franca

 

 

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Julio Franca

Director at Spin Consulting

LinkedIn Profile

I interviewed Irina Rosca who discussed Supplier Relationship Management Strategies- the need for Collaboration and Transparency.

 

 

 

 

 

 

 

Can you talk about the sate of the idea of collaborating with suppliers? What's going on now and what is happening in the market?

 

I think that over the past few years, we’ve seen a lot of hype around customer relationship management, right?  There’s a big hype on CRMs and a lot of companies are gathering a lot of information from their customers.  But from my personal experience, I’ve worked with a lot of wholesale companies, manufacturers, those types of things.  And so what I’ve seen is a lot of companies really like to put a lot of stain on their upstream partners for longer payment structures, for shorter delivery times.

 

But there’s not really a collaborative approach to this and so I think that we really need to start, as an industry, right, I guess as a profession supply chain managers, we need to start thinking about building better relationships with our upstream partners because that’s really the best way to continue to ensure that you’re bringing the best service and you’re creating the most value for your customers.

 

At this particular point in time, I think that there’s a little bit of thought around the subject and a lot of companies are starting to gather more data from their supply chain which in turn is kind of bringing that collaborative mindset to the forefront.  But I do believe that we need to pay a little bit more attention to building those stronger relationships and adding value to all of our supply chain partners.

 

Can you talk about how things can be improved?

 

Yeah.  I have a couple of examples in mind from a supply chain financial perspective for example, I mentioned that we do put a lot of strain on our upstream suppliers to have different payment terms, right?  So then what we want as companies is to have more working capital and so if we’re not, if we receive an invoice from a supplier and we have usually a 90-day or a 60-day to 90-day payment term, there’s been a lot of push lately to extend that to maybe 120 days.  And we fail to recognize that just as much as we need that cash to maybe invest in R&D or bring the products to the market or whatever that may be, our suppliers do as well.

 

And so we really need to think about, thinking about our financial management and our supply chain a little bit better.  Also, there’s also a lot going on, there’s a lot of globalization and supply chains and so we really need to have a little bit better relationships with our 3PLs and our transportation partners because disruptions happen everywhere and we’ve all seen what happen at the port of Los Angeles last year and therefore, how that spread to all of the West Coast ports in the United States and that really disturbed a lot of the retail markets especially during the holiday season in the United States.  And so if we did have a better communication and more visibility that we created through these stronger partnerships with our suppliers and our vendors and our service providers, then that really would offer us a much better opportunity to service our customers in a more timely manner to become more transparent and to actually gain that knowledge as to what’s actually going on within our whole network.

 

Do you have any success stories that you could share?

 

I think that there’s, a couple come to mind.  I recently attended a conference and there was a lot of discussion around this.  And so actually, Colgate-Palmolive did a really good presentation and I think that they, I’ve been following the company for a while and they have a huge global supply chain and they have great inventory management, great relationships with their suppliers and the way that they do that is through a complete end to end visibility within their supply chain.

 

What happens is that they actually align their operational goals and objectives with those of their suppliers. And so it becomes a vested [ph] interest for every single member of that group to make sure that Colgate-Palmolive is successful and they reach and exceed their metrics and really actually work as a cohesive team throughout the whole network.  I think that they do a fantastic job from that perspective.  And they take very well advantage of all of the technology and software that’s come along over the past couple of years to create that visibility on a platform that everybody has access to.  And everybody understands the risks that different markets are exposed to.

 

I guess another one that would come to mind, there’s so many but Kellogg for example does a very good job at that as well and they’ve taken advantage and just recently of implementing predictive analytics into their support chain management.  And so they work very closely with their suppliers and they’ve actually brought these representatives to the table in decision-making.  And again, it’s the idea of everybody having a vested interest in each other’s success.  It’s aligning all of the strategic and tactical goals of the whole network. I think that those two, I would definitely suggest that they are leaders in this particular field.

 

Thank you.  Can you provide a brief background of yourself?

 

Yes.  I’m very passionate about supply chain management.  At the moment, I am working with small and medium size companies and trying to help them think about this a little bit better by creating supply chain visibility within their networks.  A lot of small and medium size companies in the United States actually don’t have an integrated business management system and so not only do they not have information in what’s going on globally but they fail to really gather the information from within their actual organizations.  At the moment, I am helping them upgrade their management systems.  I come from a background of consumer package goods and textile industry, wholesale primarily and from an operations and supply chain strategic planning approach.

 

Thank you for sharing today.

 

Thank you so much for having me. I look forward to participating again.

 

Yup.  I look forward to talking again in the near future.

 

Thanks so much Dustin.

 

 

 

 

About Irina Rosca

 

 

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Irina Rosca

 

Director Global

Supply Chain at SKLZ

 

LinkedIn Profile

I interviewed Imaad Rashid who discussed Using the SCOR Framework as a Practical Framework to Benchmark and Improve Supply Chain Structures.

 

 

 

 

 

 

Looking forward today to hearing your views on using the SCOR framework as a practical framework for the benchmark in improved supply chain structures.  My first question is can you explain what is the SCOR framework?

 

The SCOR framework is basically a kind of skeletal structure that works across any goods and services industry and it’s basically been put together by a group of corporations and defined really and it’s run, and the iterations [ph] are improved by the Supply Chain Council, the SCC which is now part of APICS of course and they’ve merged now.  My understanding of a SCOR or my appreciation of SCOR is that it’s basically, a lot of the times within corporations, the review of how supply chain is structured or should be structure for their industry can be fairly subjective.  And they don’t necessarily have a frame of reference to go to and say, “Okay guys, how do we structure our organization or how do we structure our processes?  What are the matrix that we need to do?”  They would, usually the extent to the benchmarking that they will go to is they will look at other corporations operating in the industry that they’re working on and try and leverage off the best examples of success that they can see there.

 

There was a lack and a need for something that would run across industries as a general framework for what could define success for your supply chain department and it wouldn’t necessarily mean that something that works well in the electronics industry would work well in the manufacturing industry would work well in the financial services industry.  But they work on the general principle that the, on how processes should be structured, on how performance should be structured, on people and on practices.

 

It’s a skeletally structure that you have to refer to in relation to how your organization works so it’s not a shopping list, it’s not something that you go to and pick out while do everything that’s in SCOR, you basically have to map out your processes, your business structure and then SCOR is something that you can reference to to improve on that and to use that to benchmark in that on iterations that would make sense, so yeah.  And then we are fusing [ph] that of course.  It’s a very powerful application, heavy tool.  I had the privilege of using it in a number of companies now.  Personally, I’m a real believer that it’s a very useful tool for developing the supply to an organization.

 

Can you talk more about how it can help?

 

Basically, there are many different ways of using SCOR.  Traditionally, when the Supply Chain Council certifies you for, as a SCOR professional on their own formal courses, they tend to do a very high level process called the SCOR project and that would be driven more down from the C suite level on how the company strategy, its different supply chains need to be aligned.  There’s a definite top down way of looking at your organization and basically, the way that would work is you would start off by looking at the SCOR metrics, so SCOR has four or five key and they call them attributes, the agility, responsiveness, reliability, the asset management and cost.

 

Basically, the idea around SCOR is that you would target what is the level of excellence that I need within each of these attributes?  Am I okay with being mid of the range, median [ph] in terms of agility but what I want my company is that the reliability and responsiveness needs to be really high?  And then you work backwards from there to see, okay, if my reliability and responsiveness needs to be top of class, what do I need to do in terms of practices, in terms of processes and SCOR gives you a really strong structure to do that so it’s a tool that you can use to strategize, how the company should be structured top down.  It can also be used at the absolute tactical level where I can go to SCOR and I’m using this within my current company as well where for example, I have, I am setting up and looking at process we’re engineering for my import warehousing.

 

And the import warehousing process at the moment will change dramatically because of the infra investment that we are anticipating.  Because of the automation that would come in, the process will change and then the, or the practices will change and I’m using SCOR to help define the individual steps of the business process map and I’ll gain, there’s an entire toolkit on how you do this within SCOR.  For example, SCOR can give you what is possible inputs and outputs into a process and you could look at your process step and see, well, this particular process step relates to a similar process step within SCOR.  It could potentially have these inputs and these outputs.  Am I missing out on certain due diligence or checks that I need to do prior to that activity and is there some output from that that I could use to measure the process that I’m not doing?  From the absolute tactical level to the absolutely strategic level, SCOR gives you a very diverse toolkit on how to work on your supply chain structures.

 

Where have you seen some success?

 

For example again, this is more at the tactical level in terms of process reengineering.  I was part of MNC [ph] operating out of Australia where they were restructuring certain operations and we’re looking to outsource some of the source inflections to Indonesia.  And a big part of that success in how those processes change was driven by SCOR.  If they had simply translated the processes as they were in Australia, you’d say, okay, we just pick up these activities and ship them off to Indonesia.

 

The process would have been a lot less rigorous than when they said, “Okay, these are our assets.  This is the idea of state as defined by SCOR and this is the future state as we can possibly bring it to immediate thought [ph] and then maybe we can push it towards the ideal state in the future.”  And so with SCOR, it would give a much more diverse checklist on what the individual process steps you’ll have [ph] taken into account.  What are the KPIs that you could potentially measure for those processes?  And so it has a much more holistic cross-industry benchmarking input [ph] into defining a specific business process and that’s an absolute tactical example.  But the decision to, for example change from Australia to Indonesia in terms of the sourcing of certain products and the manufacturing of certain products could be driven at the most strategic level setting at the regional hub [ph].

 

They could, for example, use SCOR to say, okay, I need more reliability and responsiveness so how does my overall supply chain look at the global level if these are really [indiscernible 0:08:56] for me, that means I maybe need to take a best practice out of SCOR and that’s maybe, reason [ph] of manufacturing or maybe I need to do manufacturing somewhere.  And out of that thought [ph] process would come certain decisions.  The idea is that it could drive to strategic decisions that lead to big changes in how the organization works and on the tactical level on how those are actually implemented or work well.  SCOR has defined a more structured way of approaching how the process is reengineered as well.

 

Do you have any final recommendations?

 

I think the big part with corporates is, or corporations is usually, very often, you could have a lot of in-house standard and they would come across with a recommendation.  If the same thing was to come across from an external construction [ph], unfortunately the external consultant [ph], because you’re paying him quite a bit, he comes with a lot of pedigree [ph], sometimes, it could be the same thing but because it has a greater ring [ph] of credibility to it, you would go along and say, “Okay, yeah, that works well.”  At the department level or a country level, to convince your regional board, or from a regional board to convince the global HQ, sometimes, when you’re working on something as well on [indiscernible 0:10:34] the SCOR to define your process of [indiscernible 0:10:36] structuring the process.  This way, because these are …

 

The final recommendation would be to use SCOR primarily as a way of, a kind of well-defined, well-reputed credible source for defining critical changes in your company’s supply chain structures or processes for the simple reason that individuals within the company’s record [ph] recommend certain changes but they wouldn’t come across with the same ring [ph] of credibility as an external consultant company like Boston [indiscernible 0:00:45] for example coming across and telling you this is what you need to do because they simply have a greater pedigree [ph] in advising for those changes and SCOR has that pedigree to it in terms of skeletal structure that works well for different businesses that have implemented SCOR and SCOR implementations have been a big part of differentiating those companies and usually, that is seen translating the business results.

 

The SCC usually publishes three companies that would have implemented SCOR well and have used their digital significant successes.  In Pakistan, we had a SCOR implementation by Pakistan Tobacco around 2005 or ’06, a decade back almost.  And that interestingly has, is of similar time period to when they’ve pretty much taken over the tobacco industry in Pakistan.  The implementation of SCOR seems to coincide with a significant improvement in their business results.

 

Not only does it seem to have a proven track record when companies that have implemented it well, but it also is a better way of structuring your processes or organization because when you are selling it to the board or selling it upwards to the C suite, it comes across with a greater ring of credibility.  And of course, there’s the branding opportunity for the company if they are affiliated with the SCC and proven to be, have one of the more neutrally recognized qualities of lighting structure [ph].  There’s a lot of opportunities in implementing SCOR but rather than the glory, I would focus on the fact that it actually works.  It’s application-centric and it is going to take a lot less effort for supply chain managers to convince their organizational hierarchy that, “Guys, these are the changes we need to make to be equipped for the future.”

 

Thank you.  Can you, my last question is can you provide a brief background of yourself?

 

I’m basically a supply chain professional.  I’ve worked across a number of industries.  I’m not actually, by professional, I’m a mechanical engineer but my passion is definitely now supply chain.  I work in the agrichemical industry with a Swiss corporation Syngenta.  I have spent some time working within tobacco, with a company called Philip Morris and I’ve had the opportunity to be based in various parts of the world with them particularly in Australia and Pakistan.  I currently work for the [indiscernible 0:03:53] group and I represent the ground handling [ph] company, the [indiscernible 0:03:58] in Pakistan and I look after their supply chain operations here.  I’m also SCORP-certified [ph] from my time in Australia. 

 

I happen to be a very rare breed in Pakistan so I’m working with a lot of the local institutes in trying to develop a greater use of SCOR not only in corporations here but also to try and set up an [indiscernible 0:04:25] SCOR certifications here, but that’s a longer term process.  And there’s been a lot of interest in that.  I’ve done a few guest speaker sessions with some of the universities here.  Normally, it’s not a very well-known subject here but there are a few companies that have done SCOR implementations and it seems to have a marked improvement in their business processes because the supply chain, rather than becoming only the links in the organization chain, they really do dig the heart, the concept of THE supply chain, capital THE, and the fact that you have to have a gross cutting view of your supply chain from end to end.

 

That needs to define how the entire process works rather than based on how the commercial and operation elements need to run and are driving the rest of the process.  I think that approach or that change in perspective has a significant improvement in success so I am a big believer in what SCOR can do for your organizations.

 

Thank you again for sharing today.

 

Absolute pleasure.  Thank you for having me Dustin [ph].

 

 

About Imaad Rashid


 

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Imaad Rashid


Experienced Supply Chain Professional

 

LinkedIn Profile

I interviewed Heather Holst-Knudsen Stanton, a manufacturing veteran who discussed KidBacker and encouraging your kids to become entrepreneurs.

 

 

 

 

 

 

It’s great to speak with you today Heather.  This is going to be an interesting interview today and I know you have a startup company called KidBacker.  So, my first question is what is KidBacker?

 

KidBacker is an online virtual innovation hub for students ages 13 and older.  And you also have a complimentary 501c3 we just launched called KidBacker Foundation Entrepreneurship.


Well that’s interesting.  Well, why did you start the company?

 

Well, it’s actually, the story is, I like to call it peeling the onion.  You know, one is just personal.  I really have always loved inspiring entrepreneurship and young kids …I was a little entrepreneur myself.  But my daughter one day, when we were out for brunch here, we live in Florida, in Sarasota and we’re out for brunch and she said to me, mom, I want to get a job and she was eight at that time.  And I started laughing, saying, you don’t need a job.  What are you going to do?

 

And she said, well, I want a job because I want to help paying for college.  And again, I said well, I have that covered, don’t worry.  And my husband looked at me and said, you know, you're really, actually not really doing the right thing right now.

 

Why aren’t you encouraging her to learn about what it means to make money?  And I thought about it and I thought back to when I was younger and I, you know, did pretty much anything and everything to make money, everything from washing cars to working at the Deli when I was 14 years old to, you know, through college I had four jobs.  I just always and I love doing it actually.  It wasn’t because I had to, just I wanted my own independence.

 

So she and I sat down, walked through a plan to host a lemonade stand across the street from the beach.  And I just realized how much fun I had as an adult teacher her everything from, you know, how to price out your product and your budget and how to find, you know, the right place to get traffic.  And I just said, why aren’t other parents doing this?  And that corresponded to where I was at that time which I was president of a group called the Manufacturing Leadership Council.

 

We had a group of very saleable executives in manufacturing supply chain operations, CIOs, CEOs and COOs across, you know, around the world. And no matter what this discussion we started, whether it was integrating your supply chain into operations or big data and analytics, it always boiled down to a real big pinpoint they have, you know, I had at that time, continued to have is the skills gap.

 

The skills gap isn’t only about stem and about the idea of how do we get kids interested in manufacturing but also this entrepreneurial mindset. You know, today’s global economy and the way the world operates, you know, there is no longer this singular linear job.  It’s a job that co-requires with I think creativity.  So I looked at those two elements and said we absolutely need a new way to engage young people and entrepreneurship that’s exciting, that’s virtual, that allows them to actually do what they want to do instead of simulating it and that’s how KidBacker got started.

 

Okay.  What challenges did you face?

 

Oh boy [laughs].  A ton.  So, you know, one, I actually … gave a speech on this to some women who were looking to get into entrepreneurship.  I think the biggest challenge for me was going from being an intrapreneur, i.e. someone who works for somebody else but is highly entrepreneurial that is, you know, how I … that’s me to actually being an extraprenuer, i.e. outside of a company doing it on your own.

 

I was a phenomenal delegator and I could create strategy and say, okay, you guys do this and you do that and we got it done.  When you do it, when you're an entrepreneur doing a startup, you're doing it completely by yourself.  And it takes actually some time to learn how to not want to delegate.  So, I got burned quite a few times delegating to vendors.  I’ve learned how to do things on my own, filling in skills gaps.

 

So that was, you know, one big learning for me.  I think the other one was pivoting.  And I've always been very flexible and been able to, you know, understand when we’re making mistake and, you know, turn that mistake into a, you know, positive solution.  But when you're doing a startup and I've been self-funding this until recently.  Your pivoting is, it’s a very scary thing.  I put all this money into this already.

 

If I move and I changed direction, what’s going to happen?  And you just have to just do it.  And so I've been learning how to pivot and we pivot everyday in small ways but it’s actually part of it and what’s scary is now very exciting.  And I would say the other part that I learned is, you know, it’s petrifying to go out on your own and no paycheck, you're and then again taking all your savings and to trying to create something great.  I think learning how to deal with that anxiety and fear at my age which is I'm 46 was a challenge.  So I just try not to think about it.

 

And do you have any recommendations for parents?

 

Parents, I think that, you know, one of the big things that people don’t realize is that this generation and, you know, the linger was Gen Z, it’s the kids who were not yet in college but will be very soon.  And then what I call the tail and the millennial generation, who are, those are the kids who are in college right now.  This is going to be the largest, biggest, most significant generation of entrepreneurs the world has ever seen.

 

Entrepreneurship for these kids is the new hero sport.  They are doing it already.  You see them on YouTube, you see them developing gaming apps and selling them, you see them developing, make appliance and products.  It’s just, it’s phenomenal and it’s just going to continue to increase.

 

So I think for parents, one thing is let them do it and find ways to encourage them.  And if you don’t know and you're not an entrepreneur and most parents aren’t, find places or forms in which your kid can actually get engaged.

 

There are so many ways for them to explore that.  I think the other thing is if your kid has an opportunity to get an internship, that internship is so important, you do it and it’s not school comes first, school is now merging into learning how to work, collaborate, be part of a team.  So those are two big recommendations I have.

 

Thanks.  And can you provide a brief background of yourself?

 

So, I was born and raised in the New York, New Jersey area.  I actually came from a family of B2B publishers.  Thomas Publishing Company was founded by my great-grandfather in 1898, still family-owned.  So I grew up with this media background and love for manufacturing, by the way.

 

I went to Georgetown, graduated, lived abroad in Spain, worked there.  But I always, you know, had this urge to do my own thing.  I ended up going back to the family business in 2000 and over the course of a decade and a half, ran and launched and founded multiple business units for Thomas in the art of manufacturing and technology, managing on a mission, Manufacturing Enterprise Communications, TechMATCH, Manufacturing Leadership Council.

 

So that is my daily work.  So KidBacker is leveraging a lot of my skills including a network that I have, the understanding of how media works, audience segregation, community development and how to, you know, this idea that content is a huge way to engage and educate.  So that’s my background.

 

All right.  And thanks for sharing today, Heather and I think this will be of interest to the supply chain community.

 

Well, thank you so much and I know the supply chain community well.  So, it’s a real delight to be a part of it today.

 

 

 

About Heather Holst-Knudsen Stanton


 

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Heather Holst-Knudsen Stanton


CEO & Founder, KidBacker/Senior Advisor at Chief Executive Network

 

 

LinkedIn Profile

I interviewed Leonard Merari Situmeang who discussed Warehousing in the Retail Industry.

 

 

 

 

 

 

Please provide a brief background of yourself.


First of all, I would like to say thank you for inviting me and for interviewing me about supply chain spesific on Distribution Center operation in the retail Industry.

 

I have few years working experience in logistics role as a Distribution Center Operation, Logistics Business Analyst, and the last few years as a Consultant, Trainer and Associate for Consulting and Training Firm.

 

I am founder of Excelogic Consulting and Training, a Consulting and Training Firm based in Jakarta-Indonesia, we provide consultation and training on Logistics and Supply Chain Management, Quality Health and Safety Environment Management and Business Management.

 

My past experience help me to understand Business from Supply Chain perspective , how the flow of goods, information and financial movefrom raw material to end customer. I am Certified in Supply Chain Professional (CISCP) and currently Master Degree Candidate majoring Production Management.

 

I have passion to do Consultation and Training, also i enjoy role as a Teacher or Lecturer. I love to watching football and travelling. I think that is a quick brief regarding my background and my current activity.

 

What problems do you see with warehousing/Distribution Center in the retail industry?


Before we speak further about Distribution Center Operation in retail industry, let us focus on the retail industry that has high complexity, let’s say retail industry with more than 200 outlets and handle thousands of SKU.

 

to support this type of retail industry needs a dynamic Distribution Center, they receive dozens even hundreds of suppliers at their inbound area and also do consolidation of the items before they delivered to hundreds of their outlets with the various order quantity per outlet.

 

There are 3 primary activities in Distribution Center :

 

1. How to manage flow of physical goods. They receive large volume from dozens of suppliers, doing put away on their storage and deliver goods to hundreds of outlets daily or at least twice in three days. They manage this flow day to day with high speed operation

2. How to manage demand from the outlets and supply from supplier, so that they have an optimum inventory level and adequate storage space.

3. How to manage dozens of trucks(whether own or rent) and also how to manage drivers.

From these activities there are some problems that may occur in Distribution Center Operation such as : inventory loss, mis-delivery, space shortage, not on time in delivery, and high stress level of employees

 

What are the causes? 

 

In my opinion the problems can be occur because lack of control, deep analysis, action and improvement to anticipate indicative or symptom of problems.

 

For example lack of space availability in Distribution Center storage area, which is cause they start to put products on aisle or gang way, then they start to hard to doing stock opname or cycle count, as the result they have inaccurate inventory data.

 

In that example , Management should understand the indicative or symptom, they need to do deep analysis and lead a corrective action to improve the situation such as : negotiate to reducing suppliers lead time, write off some slow moving products, adding more temporary storage or even build a new space to anticipate long term volume growth.

 

Other cause of problems on Distribution Center operation is a some of traditional management perspective. They reluctant to invest on technology, information systems or device to increase performance of Distribution Center. They still consider Distribution Center as a support function in a company and high investment on this area would not give short term impact for the Company

 

Where have you involve in a project for solving the problems?


I involved in a few projects to do an optimization and improvement on Distribution Center Operation.

 

First I involved in a project team to do an analysis in developing a new model of Distribution Center that running with high number of workers and manual working method. We do an analysis and propose to use new technology and devices such as handheld, conveyor belt, pick/put to light method and forklift monitor. This new Distribution Center model reduce workers around 100-150 people and also increase productivity significantly.

 

Other project that i involved was in designing blueprint Warehouse Management Systems application that directly impact to simplify daily operation. The key feature in this Warehouse Management Systems applications the connection between the application with handheld devices that use to operational activity such as receiving, picking, issuing, stock opname. It is increase speed and data accuracy, promptness in operational, simplicity in issuing and receiving, also easiness in doing stock opname in warehouse

 

Both of these projects are an example of my involvement in projects to minimize the problems in Distribution Center for retail industry. In my opinion the Distribution Center Operation in retail industry must capable to operate in high speed and large volume of product, reliable to operate almost every days,seven days a week and three hundred sixty five days a year.






About Leonard Merari Situmeang

 

 

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Leonard Merari Situmeang


Consultant and Trainer


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