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2016

I interviewed Chris Arnold who discussed 'Should the Chief Procurement Officer be a Board Level Position?'

 

 

 

 

Chris, can please tell us briefly about your business and your involvement with the Supply Chain community.

 

Thanks Dustin, Annona Search is an executive search business, and a business line of the global integrated engineering services company Fluor Corporation. We help our internal and external customers identify, assess and attract leaders and future leaders in Supply Chain & Procurement, Manufacturing and Engineering functions. Our customers are typically multinational companies with physical supply chains often with highly capital intensive process or production centric operations. Over recent years we’ve been supporting many customers which are transforming operations to become more integrated and strategic within their businesses, which has, unsurprisingly, included a lot work with procurement organisations.

 

What are the trends that you see in the Procurement world?

 

That’s a good question Dustin. I turned my attention to Procurement as head hunter as a result of the financial crisis in 2008. It seems that a lot of companies back then were also turning their attention to the function for survival critical savings and the industry of Procurement grabbed the opportunity. Fast forward to today and the profile of the procurement function is on the rise with many businesses elevating the level of the Chief Procurement officer or CPO to the executive board.

 

Should the CPO be a board level position?

 

That’s not a question that can be easily answered, as board level appointments come with a complex array of factors. However if we wanted to simplify the view for the purpose of providing an answer I would say that there are two key considerations.

 

The first being the characteristics of the individual and the alignment with the characteristics of the specific board. Each company will compile a board with the people they need to create a productive team. Communication and leadership style are often key considerations and the procurement career path hasn’t been producing an abundance of c-suite potential candidates historically – partly because it hasn’t been attracting enough fresh talent into the function.

 

Secondly, the question is about the value that the procurement function is bringing to the business at a level that contributes to the thinking at the executive level. Commercially the value of the procurement agenda is supported by the executive and performance can significantly impact profitability, however the influence at board level needs to come through intelligent abstract from the data procurement gains through profound integration across the business and an advanced market/supplier perspective. Without company-wide strategic relationships between procurement and business stakeholders as well as progressive techniques such as supplier enabled innovation and supplier relationship management, SRM, it’s a challenge to justify the elevation of the CPO to the exec.

 

And when these two perspectives are combined there are sometimes consequences to the incumbent CPO. We’ve seen a few examples recently where the procurement function has reached an advanced maturity, the CPO position has been elevated to the board yet the individual in that seat has been replaced by someone else – possibly someone nurtured over a long-period for such an opportunity.

 

What advice would you give a CPO today with ambition for a board-level appointment?

 

Again there’s no straightforward answer, however if we consider the answer to the previous question there are two key strategies.

 

The first is one of personal development. Many leaders, including many top CEOs, have mentors or coaches. Find someone who can help you develop your communication and style to be more like the members of your board, and practice these in the engagements with the executive committee. The more you think, talk and act like them the easier it will be for them to see you as a peer.

Additionally gaining perspective from outside of Procurement can help. A secondment into another department or role in the business can help you understand how procurement is perceived and develop your empathy with other leaders. This might also open up other opportunities on the board such as COO and give you the personal elevation sooner than the procurement role could.

 

Secondly the investment in people, systems and processes within the procurement organisation is key. Building capability and bringing the benefits to business as a whole are important factors in every board level position.

 

Through your contributions strategically to the board level thinking, progressing your company’s competitive advantage, and communicating in a way aligned to the style of the executive will plant the seeds of thought that you warrant consideration as a future member of their community.

 

Thank you, Dustin.

 

 

 

 

 

About Chris Arnold

 

 

Chris Arnold.jpg

 

Chris Arnold

Helping great companies identify and attract leaders and

future leaders in Engineering, Supply Chain and Manufacturing

LinkedIn Profile

I interviewed Abby Mayer who discussed Using Financial Metrics in Your Supply Chain

 

 

 

 

Hi. Thank you, Dustin. My name is Abby Mayer, and I am currently at DSC Logistics, working as a senior supply chain analyst in the Solutions Group. I'll start first by telling you a little bit about myself and my background and really sort of how I got into supply chain.

 

So, during the summer of 2010, I was working at an internship for a company in the powder [inaudible 00:00:30] in Gillette Wyoming at a coal mining company. I went out to lunch one day with a co-worker, and he informed me that it was a big day at work. We had just signed a large contract with a group of Indian power plants, and we would now be supplying coal to India.

 

And this was one of the coolest things I had ever heard. So, I tried to ask him more to understand the process, and he didn't know much about it, but he explained that we were mining the coal in Wyoming. We put it on the rail. It went up to the port at Vancouver, and then it would go across to India. And to me, it was so interesting to think about the fact that that was the most cost effective way to obtain electricity in India was coming out of rural Wyoming.

 

So, out of that experience, I didn't know what that was called at that point, but I knew that that's what I want the to do. So, I did some research. I ended up applying for... I was accepted for a master’s program in the UK. So, I did a 12-month masters in supply chain management from over in England. Then I worked for about two and half years as a research associate with a company called Supply Chain Insight, and I've been with the DSC now in the Solutions Group for about a year and a half.

 

So, that's a little bit about who I am, where I've been, and how I really got into supply chain.

 

I think today we really wanted to focus on understanding the metrics, and this is something that I've worked a lot with in both of my jobs, both at Supply Chain Insights and at the DSC. So, I'll talk a little bit about how I've used them in those two different roles and organizations.

 

At Supply Chain Insights, we were developing something called the supply chain index. And this was our attempt... We wanted to understand how we could measure supply chains using financial metrics. So, looking at financial metrics, in an annual report, you might find... From a pure financial perspective, looking at return on investment, return on invested capital, there's the inventory, you have the payables. And current ratio... So, really, finance-focused metrics.And we wanted to understand if we could compare companies' supply chains based on those financial metrics.

 

And so, there was a lot of learning involved in this process, something that really had never been done before. But we were looking at these metrics, and then we were trying to see if there was a correlation to market capitalization, and then trying to understand how we could compare.

 

So, a lot of time was spent trying to delineate, first of all, the right metrics, the meaningful metrics. And then, second of all, the right comparison. So, finding... Proctor and Gamble might be a company. And Proctor and Gamble, we needed to have the right peers, so we needed to look at Unilever or Colgate. So, a company that had a similar background, a similar product mix, a similar size, and try to make those right comparisons, to be able to do an apples to apples comparison.

 

So, that was really how I was using financial metrics at Supply Chain Insights, primarily the development of the supply chain index.

 

At DSC, I'm using metrics a little bit differently. So, within the Solutions Group, there are two main projects that we work on. One of those would be network modeling, and the other would be RSP. And so, DSC, we operate about 62 warehouses spread around the US, and we're constantly bidding on new business for companies that are trying to outsource either their warehousing or their transportation component of their business.

 

And so, as a part of working on those RSPs, we'll develop a solution, we'll develop the pricing, the operational profile, and then we need to do internal gut checks to make sure that we have the right solution designed. And so, we might use some productivity benchmarks to understand if this profile is coming in 100% pallet, and then being put away, what is the right productivity to assume that's going to help us get to the head count, that's going to help us get to the price for that operation.

 

And so, that's really how we're using metrics within DSC.

 

I think another piece, a smaller project that I'm involved in is sustainability at DSC. And so, we'll also use metrics there. We track five metrics for each warehouse. Electricity, natural gas, propane, water, and waste tonnage.And so, trying to drive continuous improvement every year, that we're replacing light bulbs, that we're using less electricity, or we're making better decisions about landscaping, and so we're reducing our water consumption. So, that's another piece of where I'm really using metrics in my current role.

 

In terms of why do I think metrics are important, I think so often, it's really important to first of all measure what's going on in the supply chain. And then second of all, it's important to have a comparison point. If you look at a company, and maybe they're focused on, let's say, inventory management. And so, they start a new project. They have dated inventory at 25 on hand. And through rationalization, through changing ordering patterns, there are able to reduce that down to 12. And that's a pretty drastic improvement.

 

So, from the outside, that might look like a clear home run. We reduced our inventory by half. We freed up cash within our supply chain. But the thing is, that company may want to compare to what are their competitors holding in terms of inventory? Because if all of the other competitors are holding something closer to 20, and they're having less split orders, they're better able to fulfill those orders when they come in because they have a little more inventory on hand, actually that reduction to 12 is sort of a liability.

 

And so I really think that it's important to use metrics not only for internal measurement and to track improvement, but also for external benchmarking purposes and comparison. So, it's not just about measuring within a vacuum. You first have to measure and then you have to have a comparison.

 

In terms of where I've seen the best results, I think in both of my roles, so at both Supply Chain Insights and at DSC, you really have to get that comparison point right. And so, what I mean by that is, for example, and maybe I'll use days of payables here. A lot of companies have been focused recently on the cash to cash cycle. And so, this pre-levers that you can really use to affect your cash-to-cash cycle would be days of inventory, days of payables, and days of receivables. And the larger days of inventory that is, that increases your cash to cash. Some with days of receivables.And days of payables works in the opposite way.

 

So, if you can get the days of payables longer, you're actually reducing your cash to cash. You're holding on to cash longer, because you're not paying your suppliers.

 

And so that is important to understand and it can also be dangerous, because it feels like holding payment too long... If you're going from 60 to 75 to 90 days, you're really squeezing your supplies. And especially if they're smaller organizations who don't have a lot of access to liquidity, you're making it difficult for them to do business.

 

So, if you're only focused on what can I do to improve my cash to cash versus what can I do to improve my supply chain... Because sometimes that might mean holding a lower days of payables and understand that that improves the health of all of your suppliers.

 

So, I think it's really understand the holistic look, and it's also understanding, like I've mentioned before, I think I'll just say it again, but having the right comparison point. So, if you are a healthcare company, and medical device company, that's doing a lot of case pick in the operation, a lot of each pick in the operation, sending out small LTL and parcel packages, we would never try to compare that operational profile to a food manufacturer that's supplying distribution centers and that's 100% pallet in and 100% pallet out.

 

So, finding that right comparison point is equally as important as making the measurement.So, tracking the metrics.

 

I think finally I would just say that I think metrics are very important. Like I said, in both of my roles I've used them a lot. It's a constant process of refining the measurements, making sure everyone is on the same page. So, I think... I was telling a coworker a couple of days ago, when we all use the word inventory turns, we assume that everyone is seeing the same thing, but actually sometimes people have different understandings. So, really the first step is getting on the same page.

 

So, starting with a pretty basic conversation of, "This is what I mean when I say this word. What do you mean?" Then, starting that measuring.So, starting to measure performance.And then finally the third level really is being able to use those metrics for comparison purposes against applicable peer groups.

 

I just want to thank you again for inviting me on to participate. And again, my name is Abby Mayer. I'm a senior analyst in the Solutions Group at DSC Logistics. Thank you very much. Bye-bye.

 

 

About Abby Mayer

 

 

Abby Mayer.jpg

 

 

Abby Mayer

Senior Analyst, Supply Chain Solutions

LinkedIn Profile

I interviewed Blake Shumate who discussed Predictions on Commoditization.

 

 

 

Good day everyone, I am Blake Shumate and I have been in the shipping industry closing in on 17 years now.  Currently, I am the General Manager for American Global Logistics.  My role is to buffer the services between our customers, sales, operations, and IT staff.  Ten years ago, my job focused solely on customer service and operations.  Today, I am overwhelmingly on the IT side of the business.  That may sound a bit strange, but that is also in line with I wanted to talk about today - which is commoditization of our industry.

 

Through the late 90’s and early 2000’s, customer service was a big component of the logistics market. Landing accounts and finding good long-term partnerships was the focus.  The pricing provided by NVO’s was based on service levels.  Over the last five years, we have seen this market change dramatically.  Now, more importers/exporters are less concerned about service and more concerned about the pricing.  

 

The driving factors behind these elements are pretty simple.  The cost for shipping has increased and in order to sustain competitive pricing the importer/exporter must cut out as much overhead as possible.  For a client whose inventory is heavily supported by imports or exports, logistics is likely to be one of the top (if not the top) expenditure - ergo we are seeing the mentality of “find the lowest cost because anyone can move freight."

 

How does this mentality shape our future?  The reality is that we are only going to see our industry become more and more commoditized over the next five to 10 years.  We have seen carriers consolidate global offices into single points of contact. Now, we are seeing carriers merge and work to streamline their vessel strings. This is basically a sign that major carriers are supporting this outlook.

 

Therefore, to change this bleak future, we need to do one of two things:

   1. Consolidate our own organization and become as “pass-through” as possible.  This helps to ensure that labor costs are down and margins are sustainable.  Use the new technology to automate as many things (or everything) possible!!!

       1. I will say this philosophy is more like giving up in my book… Which is why I like option 2

   2. Option 2, we can differentiate.  What do I mean by this?  Well, customer service may not be a focus, but it is still a requirement.  The streamlining and cutting down of the carriers means there is a growing gap between importers/exporters and customer service.  This is why one of my focuses is on understanding those gaps and developing technology that is customized to 1) fill the gap and 2) restore customer service as a priority.  The target is to be a solution provider instead of a commodity based carrier.

 

Any way you look at it, logistics is a staple of organizations ability to compete in any given market place.  We either play no part and drive down costs or create a role that impacts clients in more ways than the bottom line.

 

 

 

About Blake Shumate

 

 

Blake Shumate.jpg

 

 

Blake Shumate

General Manager at American Global Logistics, LLC

LinkedIn Profile

I interviewed Leona Charles who discussed Root Cause and How You Can Use It to Lift Your Organization to a Whole New Level.

 

 

 

Hi, Dustin, this is Leona Charles from SPC Business Consulting. Thank you for having me.

 

A little bit about me... I've been doing program management and compliance for about 15 years. I started in the UK in England, and I am now in the Washington, D.C. metro area. Again, thank you for having me.

 

Our topic is root cause. The first thing to understand root cause is that it is the reason why a challenge or situation is occurring. It's not blame. It's not identifying personal causation. What it is, is identifying process or organizational causation. What I mean by causation is identifying what part of your process is breaking down, in essence, that it's hindering a desired outcome by your organization.

 

So, root cause is essentially the why behind whatever is happening. If an organization has a vendor delivery problem or a procurement problem, root cause is the why that situation exists. It's not finger pointing. It's not blaming. It's just defining specifically and measurably why the circumstance is occurring.

 

Root cause is important because you can't improve you don't know what's going on. You have to know what you don't know. Generally, root cause comes to the forefront when there's a pain point in an organization or there's a pain point in a project. These pain points are important because they call attention to things that could be going a lot more efficiently, could be running smoother, could be running at less expense. And generally you don't know these items are occurring until there's a hiccough.

 

So, root cause helps you identify errors that are not anomalies and not one-offs. Root cause helps you identify prolonged or long-term challenges and long-term pain points. And this is something that organizations have to understand, that root cause is not something that you're going to say, "This is what's going on," and never have the problem again. Root cause helps you identify processes that your organization is using long term that are creating eithersort-term or long-term outcomes.

 

So, how is it used?

 

Well, it's used in a variety of ways. But the most common way root cause is utilized is when a business... Let's a say a project-based business is running behind. Either they're over budget, they're over scheduled, their resources allocation is out of sync, and there's a mass panic or a [inaudible 00:03:17] going on. This is where root cause kind of shines. This is where it becomes one of the best tools in your project management or organizational management toolbox.

 

What happens is you simple sit down and simply ask why. Don't ask who. Don't ask how much. Don't ask what department is to blame for this. Just simply ask why. "Why is this happening?"

 

Say you have a driver who is consistently 10 minutes late. Ask, "Why is this driver 10 minutes late?" Then the answer is maybe it's the route. Maybe he's unfamiliar with the customer. Maybe he's unfamiliar with the sign-in regulations that's causing him to be tardy. Maybe he is unfamiliar with the parcel he's delivering, and he's unprepared.

 

So, you get your first set of "Why." Then, say we've established he doesn't know that route. Well, why doesn't he know the route? Well, there could be a variety of reasons. It could be the trainer never told him. It could be his direct supervisor didn't direct him to the most desirable route. It could be traffic. It could be he got caught behind a school bus. It could be delayed because he needed fuel.

 

So, then the next step is to identify which one of those is actually occurring. Then you say why again. Why? Why didn't he have time to get fuel? Maybe the schedule is just cut too close. So, you need to go back to his direct supervisor and address the issue of scheduling. How are you scheduling the drivers? Where are they scheduled to get fuel? Who does the fuel? How long does it take to get the fuel? Is that taken into consideration when the schedule was made?

 

So, root to circle back. All root cause does is cause you to utilize critical thinking within your organization. And it forces the first line supervisors all and way up to the C-suite to understand why something is occurring, how often it is occurring, and where that pain point can be eased. Once you do that, you're fully engaged in root cause. You're fully engaged in not blaming. You're fully engaged in not making knee-jerk reactions or emotional responses to being over deadline, over budget. You're fully engaged in using information and metrics to understand why a situation is occurring, to understand what the best solution is for that situation, and to understand in very factual, guided method, how to create a solution that's going to work for your organization.

 

Once that's done, then root cause really shines. It completely changes the way organizations think. It completely changes the way problems are solved. And at the end of the day, that's all it is. It's a problem-solving tool. When you're a manager, when you're an executive, you're always putting out fires. Root cause is one of these tools that allows you to permanently put out the fire — not just put a Band-Aid on it, but to permanently put it out. And to permanently empower your employees or your first-level staff, your first-level supervisor to create a solution that has a realistic application to whatever department they're working in. And that is the beauty of root cause.

 

It's a wonderful tool. It's something that, once you learn, you will use forever. And the best thing about it is it's constantly evolving. So, as your business grows, as your organization matures, your root cause will mature organically because you'll start asking questions that are more specific to situations. And you'll start taking those solutions and applying them to your whole strategy, your whole growth strategy. And that synchronization between first line and the C-suite's strategic plans are what make root cause the strongest tool in your management toolbox.

 

Dustin, thank you very, very much for having me explain root cause. It's something that I'm very, very passionate about. But it's also something that particular small businesses should get a handle on and use because it saves you time, money, and effort, which is something that's always in short demand where businesses are concerned, particular small businesses.

 

So, if there are any questions about root cause, I'm always available. You can see me at SPCBusinessConsulting.com. Or if you have any questions, you can shoot me an email at info@SPCConsulting.org, and I will answer them as well.

 

Thanks a lot.

 

 

 

About Leona Charles

 

 

leona charles.jpg

 

Leona Charles

Owner, SPC Business Consulting LLC.

LinkedIn Profile

I interviewed Chris Gopal who discussed The Intelligent Supply Chain.

 

 

 

 

I have nearly 35 years of experience in operations and supply chain. I've been involved in the industry as an executive with companies such as Dell computer, as a VP in Worldwide Operations. I've also been involved in management consulting, where I used to run Ernst & Young's Global Supply Chain and Operations Consulting Group, and with Unisys. My background has crossed both consulting and industry. So, I bring both perspectives.

 

Can you talk about what is intelligence in supply chain?

 

Yes, Let's talk about supply chain intelligence and its characteristics. The intelligent supply chain essentially manages, at high speed, all the various product and information movements, risks and events that occur in the global supply chain.

 

So, for instance, it's collecting information from a wide variety of sources, everything from customers to suppliers and everything in between. It's dashboards to understand very quickly what's going on. It's analytics to figure out not only what went on and what is happening at the present,but what will go on. And then lastly, it's talent management and the capabilities of the people to interpret this and to manage the supply chain.

 

So, intelligence involves information, data, analytics, response, strategy, and people.

 

What does intelligent supply chain mean?

 

What it essentially means is that it's a supply chain from the customers from suppliers' point of supply to the end customer and back, that anticipates what's going to happen, then reacts to things that are happening and have happened very quickly, that makes the best decisions and tradeoffs in achieving the supply chain's ultimate goals, which are satisfying customers and managing the brand equity, generating cash, and maintaining a cost structure that's very competitive, all while mitigating the risks inherent in the environment.

 

Where is the intelligent supply chain going?

 

It's going very quickly into a supply chain that consists of two different levels. The first level at the bottom is automation of decisions based on information coming from a variety of sources, structured and unstructured. At a higher level, it's high capabilities in the people who manage the supply chain to set the direction and respond to changes.

 

So, intelligent supply chain is not just information, analytics, big data and the internet of things, but it is layered over by high capability people. And that last is what talent management is all about.

 

Do you have any recommendations?

 

I think there are two here. The first is to look at the people and this requires skills assessment, very good executive and managerial education and training in new technologies and new ways of doing things.

 

The second involves managing data along the supply chain, looking at, for instance, what’s called the internet of things and Manufacturing 4.0. Some people call it the internet of everything. But pretty much everything is connected today. Collecting the data, providing the dashboard and information and metrics that tell people where it's going, what's going to happen, and then providing the analytics and cognitive computing that predict what's going to happen; that predict what the consequences in the supply chain will be; and that allows you to do scenario planning and what-if analysis on the various decisions that are being made. At a higher level, it can make the decisions that don’t really require human intervention.

 

Three pieces. It’s information with insight, and talent management.

 

 

 

 

About Chris Gopal

 

 

Chris gopal.jpg

 

 

Chris Gopal

Global Supply Chain & Operations Consultant and Educator

LinkedIn Profile

I interviewed Andrew Deitz who discussed Supply Chain Climate Risk Solution.

 

 

 

 

Please introduce yourself

 

I am an entrepreneur, technologist, and sustainability thought leader. I am fascinated by the business challenges of meeting society's demand for water, energy and food at the right price in a changing climate

 

I cofounded Climate Earth, which develops systems to quantify and visualize environmental impacts at both the product and enterprise level. In my seven years as VP of Business Development, I worked with companies such as f500 to deliver systems to quantify and reduce their environmental footprint. I worked with leaders from those companies to understand how to systematize natural capital valuations, automate the development of environmental product declarations and evaluate the risks imposed on their business do to climate change into decision making.

 

Since exiting Climate Earth I have worked as an independent sustainability expert with a variety of companies. In this capacity, I have helped companies reimagine the technology infrastructure for carbon credits, and worked with a major retailer to build stores for deconstruction and assist executives to define sustainability and CSR practices.

 

Currently I am particularly interested in helping companies develop sustainable supply chains, and increase stakeholder transparency.

 

Tell me about the Concept paper introducing the Carbon Impact Factor (CIF) that was presented in Paris at COP21

 

At COP21 we introduced the Carbon Impact Factor (CIF) – it is A family of financial instruments to differentiate and reward carbon efficiency in commodity production

 

We found CIF is an elegant solution for consumers, and multinationals who seek validate low carbon products. Plus for Investors who see carbon intensive products as a financial risk CIF provides a verified mechanism to shift capital to more carbonefficient assets.

 

Can you provide some background on current approaches to measure corporate environmental footprint

 

Sure I agree Before we can talk about the CIF it is important to understand the two foundational challenges we identified

 

First We are in the early stages of untangling vast complex global supply chains. The current methods to measure total corporate footprints is cumbersome.

 

For companies that sell something you can touch 75% 95% of their environmental impact occurs in the supply chain and mostly at the commodity level. A company has an operational footprint which is what happens inside their walls and a supply chain footprint. The supply chain footprint includes the upstream energy, carbon, water, labor etc that it takes to make the product and the downstream footprint which is all those resources it takes to use the product by turning it on, driving it, washing it or throwing it out. Most global efforts to understand the carbon footprint of corporate supply chains has been focused on untangling these vast supply chain. For our conversation today we will talk about upstream footprint.

 

For example Wal Mart has the equivalent of 7 SF of indoor retail space, they use lots of energy for the lights, refrigerators, air conditioning to serve the million of customers who walk in thier doors. Yet if we compare the operational footprint which is the sum of all that it takes to run the stores the supply chain footprint is 95% of the company’s footprint

 

The predominant method to assess corporate supply chain carbon footprint is a fragmented certification system and supplier surveys which yields self reported estimates of reduction The first generation of programs to understand total corporate footprint such as CDP’s or Walmart sustainability index has done a good job increasing awareness and the need for greater transparency. The next step for these approaches is to provide greater scale and verified claims of reduction.

 

I think the second is much more straightforward. The majority of carbon footprint for most products occurs at the commodity. If we want greener products we need methods to pay the people at the base of the supply chain to produce cleaner commodities. These are industrially grown agricultural products, use high amounts of power in production of chemicals and synthetic materials or are mined. Commodities are sold on price and are not differentiated by other attributes

 

There is a fundamental disconnect in that commodity producers control the footprint but are rewarded for production by price not environmental attributes like carbon footprint. The CIF is a method to get the farmer, and all other commodity producers paid for making a greener commodity

 

This sounds like another certification process. Why build another way to measure impact

 

Certification solutions are rapidly evolving. The current market for solutions is fragmented and relies too much on a manual processes. The right solution will be a cost effect scalable approach to measure impact and create trusted benchmark/best practice data.

 

The development of a mechanism such as CIF to measures the environmental intensity meets the needs of suppliers, buyers and investors. The measure can be viewed as packaged and verified claims. Suppliers are financially rewarded for the production of low carbon, buyers can make verified claim, and investors can gain greater supply chain visibility to interpret risk

 

How is your approach different

 

Our approach is different in that we are creating a mechanism that will directly pay commodity producers to produce products with greater environmental efficiency. The current system has too many manual steps and does not provide sufficient financial rewards for producers to change their method of production.

 

Combining proven existing systems we can measure on a global scale the efficiency of each commodity impact independent from the specific corporate supply chain it ends up in. The key factors that make this possible are

 

  • the proliferation cellphone which can be used for communication on a global scale
  • GPS/seattle data to provide reliable location information
  • technology advancement in blockchain to enable a trusted transparent system
  • big data to unlock previously siloed data

 

In place of untangling gnarly supply chains it is more straightforward to measure impacts generated from the commodities at the base of the supply chain independent from the specific corporate supply chain the commodities ends up. For example, with this approach we can connect the carbon impact from each agricultural commodity from the 570 million farms on the planet to the market they are sold at. This is still hard but because there are relatively few supply chain inputs it is not too hard.

 

There is a gap in information and efficiently matching supply with demand. Commodity markets, in general, trade assets that are undifferentiated. Low carbon commodity producers from sustainable farms recycled oil, green concrete to come to market in a differentiated way.

 

http://cifsystem.com/

 

Introducing the Carbon Impact Factor - JEI

 

 

 

 

About Andrew Deitz

 

 

andrew deitz.jpg

 

Andrew Deitz

Sustainable Business Solutions & Climate Change Expert

LinkedIn Profile

I interviewed Jerry Horton who discussed Importance of Business Systems for Mid Sized Businesses.

 

 

 

Can you provide a brief background of yourself?

 

Certainly. The vast majority of my background is with a major aerospace company, General Electric, which is all about the engines for aerospace. I spent most of my career with GE, then left and opened up a consultancy, and basically, I'm engaged in continuous improvement and specifically instituting business systems for medium to small businesses.

 

My first question is can you talk about why it's important to have a business system?

 

Indeed. Business systems are very common. They have been around for a long time. What I'm talking about here is Twin, a production system, and many others and many other names, usually very unique to the company. Like, if you put two next to each other, they wouldn't look was much alike in the overall sense.Business systems are usually unique to that very business, and within corporations, the businesses could be radically different from one plant to the next, depending on what that plant did.

 

These systems basically capture what happens every day. What I mean by that is making sure that your activities on the floor all coincide with your goals at the top, the whole focus being on taking care of the customer and the right amount of time and the right amount of cost effectiveness, if you will.

 

So, a lot of medium and small companies find out about these business systems through consultants and just general knowledge of the genre, if you will. And they basically consist of a reporting system that flows from the floor up, and that's generally done by the day. It's a reporting system that says, "If we achieve X throughput in our tiny little cell here, that is what's needed for the overall business collectively in the overall business to be successful for, say, a week." As opposed to doing the monthly review every month with senior management team and looking backwards about how you did last month. This kind of precludes all that, and you have an opportunity to solve any problems that may arise of the day that it arises. And you can look from one day to the next looking back on the day you just did and said, "Did we get there? Did we do enough in our little portion of the business here in order to feed the bigger part of the business, which needs X-amount of throughput in order to be successful?"

 

That's pretty much what I mean by business systems.

 

Are there simple measurements that companies can do are their business?

 

Absolutely. If you look at a business, all businesses are made up of processes. As a matter of fact, everything is made up of processes, and it really doesn't matter what you do, whether it's banking or pharmaceutical or even healthcare, given that... It's a matter of being able to look at the process and say to yourself, "How would I break my plant down to where I could measure so I could get some sense of what success looks like?"

 

In my world, if you were to take an engine, a lot of parts, when an engine is torn down, are torn down into modules, and they're basically categorized to some part – the front part of the engine, and fan area, the turbine area, and then the exhaust, just for an example. But when an engine is come in for repair, for instance, there will be a determination on whether they're good or not. Good meaning, are they acceptable to reinstall. And if they're not, then they either go out, repair, or replace them with something new.

 

In that scenario, there are many little processes going on in every business. And it's important that you understand and look at every day how did they do. What that will do are you is to drive you to fixing things much faster and the ability to predict how you're going to end up against what your customers’ needs are. For instance, it's this basic. The metrics in these smaller cells... The example that I use and start out with in my consulting work is safety, quality, delivery, inventory, and cost. SQDIC.

 

SQDIC is something that I didn't invent. It certainly has been around for quite a long time. It's a very valuable, five little measurements that will tell you pretty quickly where you stand in your little small cell within the bigger cell called the company.

 

Safety is always number one. It's the biggest threat to success. You don't want anybody to ever get hurt. But certainly if that happens, it can really bring a business to its knees.

 

So, quality needs to be on everybody's mind at the first five minutes of work, in my opinion. Quality is did I get anything that was not properly processed to work with today. In other words, did another processing cell deliver a part to me that wasn't really where it needed to be? Conversely, have I passed anything on past our cell that downstream is not going to work? So, those are another good measure.

 

Delivery. Did I deliver today what we agreed I needed to deliver? If I didn't, what's the mitigating plan? What's the plan for me to be able to catch up with that in order to be successful for the business to be successful? It takes a little brainwork there to make sure delivery is right. If one day you find that you didn't deliver correctly, and that's Monday. You've got Tuesday, Wednesday, Thursday, and Friday. But solve that problem within the week. In other words, don't let it go by two weeks. Don't let it build up and become a problem for the overall business. So, it drives that cell leader to think a little bit more futuristic, if you will, about the things they may have run out on, the things that are in short supply, the things that never really got there. That sort of thing is what that delivery metric is all about.

 

Inventory. Inventory is do I have enough inventory within my tiny little cell here to be successful. Conversely, do I have too much inventory? Do I have stacks of things all over the place that our people are tripping over? As that team leader within that cell, I need to know do I have too much, or do I have too little. And if I have too little, how am I going to procure it? If I have too much, what's my plan? How much do I need really, in my tiny cell here in order to be successful?

 

The last thing is cost. If you look at every little cell in the business and say how much cost is allocated to this cell so that I can be successful and not overrun, if you will. In other words, I don't want to buy too much raw material. I don't want to buy too much labor, blah, blah. You kind of run it and look at those cost numbers and work with management around the cost number. And you don't want to exceed it. It's not something you're going to stop the world over, but it certainly is something you want to keep in control.

 

So, once again, safely, quality, delivery, inventory, and cost are the metrics that every cell that I work with, I start there. Now, are there other metrics? Of course, there are. Many, many, many, many more, depending on how the folks in the cell think that they need to respond to those triggers in order to be successful in the day. Does that help?

 

Yes. My last question is about cross-training. Can you define what that is and discuss how it's important for your business plan?

 

Certainly.Cross-training is one of those things that I feel is somewhat overlooked in the overall scheme of things. Cross-training– and I have different names for what cross-training is, but think of it this way. The most valuable resource any business has is its people. You can start right there. If managers don't realize that, then they're missing the boat, for sure. The smart way, the best way I've ever explored this topic was a time that we were in a position where I was working at the time, that we didn't have the luxury of hiring, and we certainly didn't have the luxury of laying people off. So, we were kind of in this middle area, which is really the sweet spot for a business.

 

And the only way to improve that resource for my and any other cell leader at the time was to go to those work cells that weren't as busy, say, as my work cell, or vice versa, and grab a few of their folks and get them up to my cell and start the process of training those folks on the skills that happened in my cell. By doing that, I always had a ready-base of people that if something in [inaudible 00:10:02] happened, I had resources regardless outside of the plant that I could go and get and switch around.

 

I think that everybody kind of glosses over the cross-training idea, but the bottom line is that it's probably the biggest, fastest, smartest way if you're a shop floor person or a department head, it's the quickest way for you to solve a resource problem, as opposed to going to a meeting, sitting down, and saying, "I can't meet demand. I have five people. Three are on vacation, one is sick. I just need some more people." And so manager, making a decision to go hire some temps or whatever, which is starting below ground zero. In order to be efficient, it will take you weeks and weeksand weeks.

 

So, I really push this concept everywhere I go, about supplementing your workforce. That's what I call it. Supplementing the workforce, an element of that is cross-training. It's the most important skill, I think, that supervisors, leads, or anybody can have within a process cell that will guarantee that if you run into that emergency, if there's some reason that you've got to improve your throughput, that if you activate cross-training/supplementing workforce, you're going to be successful.

 

Thanks, Jerry, for sharing today on these important issues regarding business systems.

 

Certainly. I appreciate the opportunity to share my thinking about this. The entire world, I think, is going to find out that business systems are going to be the standards very soon, because it's just a more efficient way to operate. And I look forward to helping them get there.

 

 

About Jerry Horton

 

 

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Jerry Horton

Growth Strategist, Lean Deployment,SixSigma,

Coach, Trainer, TPS Practitioner

LinkedIn Profile

I interviewed Richard Sharpe who discussed Realizing True Value Out of Analytics.

 

 

 

 

Can you provide a brief background of yourself?

 

Certainly. My formal training is in Operations Research Industrial Engineering, and I have been involved with analytics for 27 years. I started after my graduate work at Georgia Tech to work for AT&T Western Electric, then moved down to what was to become BellSouth, the regulated Bell Operating Companies for the Southeast part of the U.S..My assignment was in the area of analytics and creating supply chain systems for supply chain operations for the company, I then left that assignment to became president of CAPS Logistics. CAPS was the forerunner for Supply Chain Optimization.

 

At CAPS we began the application world of looking at different ways that people could redesign their networks and be more efficient for companies like Coca-Cola, Waste Management, and other companies. So, I've been in the field for quite a long time.

 

Competitive Insights is now focused on taking analytics to a higher level, and truly trying to make them part of everyday decisions in a company.

 

How should supply chain data be used effectively?

 

That's a great question. Supply chain data has a wealth of information. It's truly a gold mine if it can be used correctly. If you think about products that are being sourced or manufactured anywhere in the world, through all the ways that they traverse the operating network and move into each of the regions where they are being sold, there's a lot of data associated with the movement of those products and the other activities associated with operating the supply chain network, until finally they get to the actual delivery to the end customer.

 

So, being about to effectively handle that data, to look at ways to better manage the business, and especially in new and growing fields like e-commerce is going to be the difference between winning and losing for a lot of companies.

 

So, supply chain data is a great source of that information if you can use it effectively in the various forms of analytics that are appropriate for your business.

 

Why isn't it being done?

 

Another great question. If you think about the operation of any company, generally speaking, that operation has a variety of different systems that are involved. You'll have your point of sales systems, you'll have, obviously, your transportation systems, third parties that are involved in helping you run your supply chain, and then all of your warehouse management and other systems. So, there's a whole host of systems. And even when companies have ERP systems, Enterprise Resource Planning Systems, it's very rare that all of the data that is associated with that operation is in that one system.

 

So, we find silos of data. Especially if the company has been built through acquisition, they may have different versions of software. And people have found it to be difficult get that kind of significant value because of the fact that the data is siloed.

 

The second big issue is a handicap in the process of gaining consensus on the data. Even if a company has a way to tie the data together and be able to create that one version of the truth, getting the organization to have consensus that the information is correct is another major hurdle.

 

It's one thing to be able to have all the data together. It's another to make sure that people are going to trust the information. Because if they don't trust the information, then it's really not actionable because people will question the decisions that are being made. And you'll find yourself being in somewhat of a stalled pattern, if you will.

 

So, those are two major obstacles that are handicaps but can certainly be overcome if you put your focus on those efforts.

 

Can you share where you have seen some success?

 

Absolutely. What we've seen with regard to really getting value out of analytics is across multiple industries. I'll site two.

 

One is in specialty apparel. When you think about how fast the actual products can change in specialty apparel, and the fact that they have very extended supply chains. Specialty apparel has to manage the sourcing of the cloth, cutting centers, etc., as it goes through the actual finish good process in addition to the other supply chain consideration. It is a very complex supply chain. And being able the have the visibility of understanding the cost components associated with all of those by every product that you're actually bringing to the market can be a huge gain. Understanding not only how performance is working in one channel versus another from a profit or financial perspective, but also thinking to the future with regard to if we make certain changes, what can they anticipate seeing in a particular style or a particular channel's performance.So, specialty apparel has been a really big area to adopt this.

 

Another one is specialty pharma. It's a completely different type of supply chain. You have cold chain. You have a variety of different requirements in order to be able to handle pharmaceutical products. But again, the same thing about having visibility when it goes across channels, being able to use the data from a variety of different sources. And then being really smart about making decisions with regard to how to increase the service for customers while also increasing profitability.

 

Another big area that I'm sure that a lot of people would be interested in is e-commerce. As we all know, that is rapidly growing area for most businesses. And a lot of people are trying to think through how to get their hands around e-commerce, how to actually make money at e-commerce. So having this type of visibility and using the appropriate analytics to help answer the questions is a huge advantage of companies to embrace that and take advantage of that.

 

Well, thank you for sharing today, Richard. I look forward to staying in touch for if you have other topics that we could share with the community.

 

Thank you, Dustin. I'd be more than happy to do that. I do appreciate your time.

 

 

 

About Richard Sharpe

 

 

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Richard Sharpe

CEO at Competitive Insights, LLC

LinkedIn Profile

I interviewed Hannah Kain who discussed Supplier/Buyer Collaboration.

 

 

 

 

My name is Hannah Kain.

 

I was originally born in Denmark, and I started my career in manufacturing and supply chain back in Denmark before even the discipline supply chain was known. In 1990 I immigrated to the US, and in 1997 I started Alom Global Supply Chain management company. We work with the technology companies or companies that have heavy technology in their product or in the supply chain. We are headquartered in Silicon Valley in northern California, and we ship out of 17 locations for our Fortune 100 customers and work in the technology sector, automotive, medical, and a number of other sectors.

 

One of the things I've noticed over time is how there are a number of new trends in the supply chain industry. The supply chain industry, of course, is relatively new. And one of the areas where changes are happening really fast is in the supplier or vendor, buyer relationship.

 

What happened some years ago, all of a sudden you could do exchanges online. And you could do bidding, and everything was considered a commodity. The interesting thing that happened here was that while you drive the unit price down, you may drive other costs up.

 

Unit price has just gone down and down and down. Unit price for manufacturing.But all the supply chain costs -- the compliance cost, the risk management cost, the cross water cost, the customs, the taxes, and of course, especially the logistics costs have gone up and up.

 

So, the weak spot in the entire idea about driving unit cost down is that unit cost is the most important aspect of purchasing. And what actually has turned out, and a number of researchers have certainly confirmed this, is that driving unit costs down is not going to give you a competitive advantage. It's not going to make you the lowest cost provider, necessarily. It's not going to give you what you really need.

 

The new trend in relationships between industrial customers, business customers, and suppliers is that the customer looks for who can provide the most value at the end of the day. In a way, of course, it's not new because that's what we used to do in the very old days. But the transparency of the unit cost has just over written what we used to do, which was looking at who can give me a competitive advantage. Who can collaborate with me?

 

So, we are talking a lot about the supply chain being a competitive advantage, being flexible, being agile, being able to meet customer demands, which keep going up as more flexibility, agility, customization becomes available.

 

Consequently, having supply chain partners that can deliver that type of flexibility and that are dedicated is really a key factor in competitiveness. I think intuitively, we all know that when we deal with somebody and we treat them very fairly, we don't necessarily overpay them, but we're fair in all our dealings and we have a give and take relationship, we get a better outcome in many ways.

 

I am reminded of one of my acquaintances who kept negotiating down and down and down with the people who cleaned her house, and finally, they just decided that they could not do it anymore. And she was left doing her own cleaning. It's the same in supply chain and in supplier of relationships. If you are not treating your suppliers fairly, they may service you until they find a better customer. And all of a sudden, you're left without the supplier that really could leverage things are you.

 

The other issue is when you need an extra favor, you need that extra production lot expedited, you need something done out of the ordinary. Having that relationship where everybody is committed, they know you have done your best to not put anybody in that situation, and yet you are asking for it, and so they are happy to deliver.

 

In the end, it's about relationships. It's about how are your suppliers are being treated and how do they feel treated by the customers.

 

So, we have customers we want to go through the hoops for. And we've got customers where we feel that they have really pushed us to the limit where we are asking ourselves whether we are better off or worse off having them as customers.

 

The interesting thing about supply chain and the next decade is that there's going to be a deficit of staff members. We're going to have about two million unfilled jobs in supply chain in the US alone over the next decade. And consequently, it's really important to be able to outsource to suppliers that one can rely on. Instead of hiring internally, maybe somebody out there can be outsourced to and relieve some of the pressure to hire internally.

 

But that only works if one has the relationship that allows one to be the customer of choice. And I think that's new thinking about how to become the customer of choice, and how do you get the first mind share among your suppliers.

 

The other interesting trend that I've been following is the trend about compliance management. Of course, we are all spending more and more time doing compliance management, trying to figure out what's happening earlier in the supply chain. Have the minerals been mined from a conflict mineral mine? Has child labor been used? Indentured labor? Was everybody treated fairly, etc., etc.?

 

There's only so much you can do in auditing, though. In the end, the best way to ensure that you have alignment is to make sure that you have control alignment, management alignment throughout the supply chain.

 

So, instead of just looking at unit cost, the most visionary companies out there are looking at whether the suppliers they sign on are culturally and business-wise aligned with them. And then they're looking at whether they then also have suppliers that align with the supplier.

 

So, therefore, you get an alignment towards the supply chain and consequently, you can cut back on the auditing, because now, instead of just doing auditing, you have the commitment from top management and all the way down to ensure that everybody is doing the right thing. And it becomes part of the DNA in that supply chain.

 

It's an interesting trend that some companies have made it their business to ensure before they sign supplier on that this alignment is taking place. It means that it's more difficult to become a supplier there, but it also means that there's a lot of loyalty and a lot of visibility and trust in that supply chain. And as we all know, once you've got trust, you can do business much faster.

 

I'm a big proponent of trading the trust, both on a senior management level and on an operational level among everybody in the supply chain. I feel this is a much more productive way of working than focusing so much on unit cost. In the end, this means that everybody is looking out for everybody else, trying to build a bigger cake and making sure that everybody gets a fair share of the cake based on what they bring to the table.

 

I'm really excited about these new trends, and I think that they're going to be pervasive, especially among the high end brands that really value their customers and that really are going to win in the success in the supply chain flexibility, agility area.

 

Thank you.

 

 

 

About Hannah Kain

 

 

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Hannah Kain

CEO of ALOM

LinkedIn Profile

I interviewed Tom Lee, Jr. who discussed State of Readiness With OEMs To Migrate into E-Commerce.

 

 

 

 

Can you first provide a brief background of yourself?

 

I'm with Great Northern Products. I've been running that sales and marketing agency for the last 20 years, and we've migrated from territorial sales into building our own e-commerce initiatives. So, we primarily don't everything online now for ourselves, buying and reselling.

 

And then the other initiative we just founded is CloudWorks. We take the technology and experience we've gotten from our past decade of migrating online and we're teaching other companies to do the same things for themselves.

 

Can you share some of the problems you see with OEMs and their readiness to adopt e-commerce?

 

I think the biggest problems we see from an OEM perspective, is they're all about manufacturing because they – rightfully so in many ways – have relied on regional, physical channels of distribution. And the requirements about packing things up to the shipping dock and sending them off for distribution, doesn't put a lot of pressure on them to respond to the wide variety of things that come down the pipe when you put yourself out there online.

 

So, they're very singular, very linear, I would say, is probably the biggest issues. And most of them are that way by choice and also by necessity, because in a lot of instance, they don't want to migrate into e-commerce because they don't want to upset the regional, physical chains of distribution, which is completely understood. However doing nothing certainly isn't a solution.

 

How can the problems be addressed effectively?

 

Well, from where we sit, it's not an either or proposition. I think that's why there's a lot of inaction with some of the OEMs and fabricators out there, because they are tied to their current customer base.

 

What we've always advocated is not ‘either or,’ but rather ‘in additional to’– to put into play a start point where you can migrate some of your efforts online so you can start building the experience, the knowledge, and the backend systems to properly handle them.

 

So, it really isn't a choice of having to abandon one system in order to go to the other, which too often is what's presented as the only option for these folks. And that's just not correct. They want to leverage their existing system, but they also want to get on board while they can and put themselves under the same pressure and scrutiny that everybody else has. Otherwise,their distributors who are very successful are going to ahead and sell online for them. And in many instances, that's not a bad proposition either.

 

Where are you seeing some good result?

 

Well, where we've seen some good results are in the specialty product industries, where their products are so specialized, they haven't been about to bring their products to the attention of the large distribution chains. So, as niche, specialty products, they've had to defend for themselves. So, these smaller, almost mom-and-pop manufacturers or fabricators, have actually had more success out of necessity and have developed more flexibility in terms of having to respond to the various options that are in front of them, because they could never penetrate the big stocking distribution chain.

 

Thank you, Tom, for sharing today. Did we cover all the points you wanted to make?

 

I think from my perspective. I'm not at the 30,000 foot view of the supply chain. We only see it from our little corner of the world. But I think a lot of times, people need to drill down. There's an awful lot of bits and pieces that make up the supply chain. And sometimes doing a drill down can expose an awful lot of the bottlenecks and gaps that need to be addressed.

 

 

 

About Tom Lee, Jr.

 

 

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Tom Lee, Jr.

B2B Developer | Digital Advisor

LinkedIn Profile