It's all right to philosophize about key concepts in supply chain management, but sooner or later, we've got to figure out how to get organized to deliver the goods.
Art van Bodegraven was, among other roles, chief design officer for the DES Leadership Academy. He passed away on June 18, 2017. He will be greatly missed.
It's all right to philosophize about key concepts in supply chain management, but sooner or later, we've got to figure out how to get organized to deliver the goods. What kind of organization does it require to support, enable, and promote effective supply chain performance?
That depends on a number of factors: what kind of company you're in, for example, as well as the company's overarching strategy. It depends, too, on the organization's intrinsic culture, on precedent, on politics, and on the key players' personalities. And on how mature and progressive the company's supply chain vision is.
The debate often begins right at the top of the corporate hierarchy with the question of where supply chain management fits into the organization—a debate that sometimes takes what we consider to be some odd twists. We recently read a protracted discussion in a distinguished journal regarding the correct organizational placement and reporting level of supply chain management (SCM). The debate centered on two seemingly logical candidates: the chief information officer (CIO) and the chief financial officer (CFO).
We can scarcely imagine two worse reporting placements. One, the CIO, is in charge of acquiring, developing, and maintaining the information technology and tools—hardware and software—that enable and support operations, decision-making, and reporting throughout the enterprise. The CIO is no more qualified to lead SCM than a 911 operator is of heading a crime scene investigation.
The CFO may be marginally worse as a candidate. We need bean counters; we should respect creative bean counters. But in military service, the Inspector General does not get asked to lead troops into combat, and the CFO is in no better position to lead the supply chain.
Note the deliberate use of the term, "lead." SCM isn't about reporting or administration; and it certainly needs leadership more than it requires management. The supply chain is nothing less than the sum of a company's moving parts. And supply chain management is nothing less than strategy made real—delivering on marketing's representations, meeting sales' commitments, supporting customers' business requirements, solving problems (sometimes before they happen). In short, it's SCM that delivers on the "promise of the brand."
That alone argues for supply chain management to report to the top. If SCM isn't reporting to the president, something's wrong, either structurally or conceptually or both. And if SCM is called something other than SCM, like "logistics," or "physical distribution," there's trouble ahead there, too.
What is SCM anyway? Maybe part of the problem defining the SCM organization lies in defining SCM itself. There's one school that holds that much of what we call SCM today differs only semantically from what was done in the past. The thesis: traffic management became physical distribution became logistics became supply chain management—successive new names for the same thing.
We disagree, contending that traffic management became part of physical distribution became part of logistics became part of supply chain management. So, functions that were part of the old traffic management may still be found in today's supply chain management, but the two are not even remotely synonymous.
In our opinion, the Council of Supply Chain Management Professionals has it pretty close to right. Its definition of "supply chain management" includes not just logistics activities but also sourcing/procurement and conversion (manufacturing) along with responsibility for all coordination and collaboration with outside partners, including suppliers, customers, and third-party logistics service providers.
With that in mind, a case may be made that most everything but finance and accounting, sales and marketing, and IT is part of the SCM organization. One major consumer products manufacturer attempted just that in the early '90s, but we're not sure that the integrated SCM organization has survived successive mergers and acquisitions.
Plays well with others
Assuming everyone can agree on what falls under SCM, how, then, should the group be organized? One large and persuasive school of thinking holds that it's just not possible to sketch out an ideal SCM organization. Companies are too different from one another in culture and history, industry characteristics, strategic approaches to the role of SCM, understandings of the span and scope of supply chain management, and visions for what the future will look like.
We agree. In our experience, a variety of real-world considerations and specific local conditions inevitably drive how organizations are actually structured. And even in a company with an integrated SCM perspective, there may not be a singular command and control structure. There may be dotted lines to operating functions in various corporate divisions, or subsidiaries. There may also be dotted lines to SC functions that report elsewhere within the corporate structure.
In fact, it seems that the likelihood of success at the top of an SC organization increases exponentially for masters and mistresses of matrixed relationships— and diminishes disproportionately for those who can't live without tight structure, organizational discipline, and a recognized command position. As old-style, vertically hierarchical organization structures continue to re-form themselves for the 21st century, those of us in the supply chain business need to embrace flatter, high-communications, high-collaboration organizational models.
In its highest form, our organizational role in SCM includes the mandate to work and play well with others—in their sandboxes, not just our own. What's important is understanding how SCM functions and processes relate to core corporate functions and objectives—and then working to maximize the SCM contributions to organizational success.
We'll continue to have all the usual responsibilities—and pressures—for higher performance at lower cost. But we'll also have the freedom, and power, to move across and through organizational boundaries—working closely with sales on specific, and general, customer issues. Working with marketing on approaches to markets and channels. With R&D on product design and strategic advantages in time-to-market techniques. With finance and accounting. And with IT on the tools needed to enable best-in-class planning, decision-making, and execution in supply chain management.
A steep challenge
A pipe dream? Not really. A tall order? Certainly. But the secrets of success in SCM organization do not lie in lines and boxes on an organization chart that's pulled out of the file only when a visiting consultant asks to see it.
The keys to this particular kingdom are contained in the following:
An organizational setup that has senior SCM management reporting to the top.
An SCM vision shared by executive colleagues, and bought into by internal practitioners.
The comfortable ability, in all segments of the SCM organizations, to work with colleagues in other functional areas—on SC support for their problems.
Technical capability throughout all SCM functions.
Patience, on the part of SCM leadership, if organizational maturity lies a bit farther into the future.
A multi-tasking, matrixed mentality in all corners of the SCM world.
A shared vision for the integration of SCM strategies with corporate strategies—and a clear understanding of how one supports the other.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Two European companies are among the most recent firms to put autonomous last-mile delivery to the test with a project in Bern, Switzerland, that debuted this month.
Swiss transportation and logistics company Planzer has teamed up with fellow Swiss firm Loxo, which develops autonomous driving software solutions, for a two-year pilot project in which a Loxo-equipped, Planzer parcel delivery van will handle last-mile logistics in Bern’s city center.
The project coincides with Swiss regulations on autonomous driving that are expected to take effect next spring.
Referred to as “Planzer–Dynamic Micro-Hub w LOXO,” the project aims to address both sustainability issues and traffic congestion in urban areas.
The delivery vehicle, a Volkswagen ID. Buzz battery-electric minivan, will feature Loxo’s Level 4 Digital Driver navigation software, a highly automated solution that allows driverless operation. The van was retrofitted to include space for two swap boxes for parcel storage.
During the two-year pilot phase, Loxo’s Digital Driver will navigate a commercial vehicle several times a day from Planzer’s railway center to various logistics points in Bern's city center. There, the parcels will be reloaded onto small electric vehicles and delivered to end customers by Planzer’s parcel delivery staff.
Following the completion of the pilot phase, Planzer and Loxo will build on the program for rollout in other Swiss cities, the companies said.
The partners said the project addresses the increasing requirements of urban supply chains and aims to ensure the “scalability of their disruptive solution.” With largely emission-free delivery, it contributes to greater levels of sustainability for the city as a living space, they also said.
“The uniqueness of this project lies in the fact that it will have a direct impact on society,” Planzer’s CEO and Chairman Nils Planzer said in a statement announcing the project. “We didn't just want to integrate automated technology into existing systems, we wanted to develop a completely new concept and a new business model.”
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.