The most requested article in the 10-year history of Supply Chain Management Review was one that appeared in our very first issue in the spring of 1997. Written by experts from the respected Logistics practice of Andersen Consulting (now Accenture), “The Seven Principles of Supply Chain Management,” layed out a clear and compelling case for excellence in supply chain management. The insights provided here remain remarkably fresh ten years later.
By David L. Anderson, Frank F. Britt, and Donavon J. Favre -- Supply Chain Management Review, 4/1/2007
*Principle 1: Segment customers based on the service needs of distinct groups and adapt the supply chain to serve these segments profitably.
*Principle 2: Customize the logistics network to the service requirements and profitability of customer segments.
*Principle 3: Listen to market signals and align demand planning accordingly across the supply chain, ensuring consistent forecasts and optimal resource allocation.
*Principle 4: Differentiate product closer to the customer and speed conversion across the supply chain.
*Principle 5: Manage sources of supply strategically to reduce the total cost of owning materials and services.
*Principle 6: Develop a supply chain-wide technology strategy that supports multiple levels of decision making and gives a clear view of the flow of products, services, and information.
*Principle 7: Adopt channel-spanning performance measures to gauge collective success in reaching the end-user effectively and efficiently.
Translating Principles into Practice
Reaping the Rewards
Managers increasingly find themselves assigned the role of the rope in a very real tug of war—pulled one way by customers' mounting demands and the opposite way by the company's need for growth and profitability. Many have discovered that they can keep the rope from snapping and, in fact, achieve profitable growth by treating supply chain management as a strategic variable.
These savvy managers recognize two important things:
1.
They think about the supply chain as a whole—all the links involved in managing the flow of products, services, and information from their suppliers' suppliers to their customers' customers (that is, channel customers, such as distributors and retailers).
2.
They pursue tangible outcomes—focused on revenue growth, asset utilization, and cost.
Rejecting the traditional view of a company and its component parts as distinct functional entities, these managers realize that the real measure of success is how well activities coordinate across the supply chain to create value for customers, while increasing the profitability of every link in the chain.
Our analysis of initiatives to improve supply chain management by more than 100 manufacturers, distributors, and retailers shows many making great progress, while others fail dismally. The successful initiatives that have contributed to profitable growth share several themes. They are typically broad efforts, combining both strategic and tactical change. They also reflect a holistic approach, viewing the supply chain from end to end and orchestrating efforts so that the whole improvement achieved—in revenue, costs, and asset utilization—is greater than the sum of its parts.
Unsuccessful efforts likewise have a consistent profile. They tend to be functionally defined and narrowly focused, and they lack sustaining infrastructure. Uncoordinated change activity erupts in every department and function and puts the company in grave danger of “dying the death of a thousand initiatives.” The source of failure is seldom management's difficulty identifying what needs fixing. The issue is determining how to develop and execute a supply chain transformation plan that can move multiple, complex operating entities (both internal and external) in the same direction.
To view the rest of the article, please click here.
For more information on how Midwest Warehouse and meet your supply chain needs, please visit our website or our Chicago third party logistics, food distribution and paper converting machine company pages.
Wednesday, February 17, 2010
Monday, January 18, 2010
Vote Midwest Warehouse for Inbound Logistics' Top 3PL!!
Vote Now for Midwest Warehouse & Distribution!
From Inbound Logistic's 3PL Excellence Survey's webpage:
“Each year, in its July issue, Inbound Logistics publishes the most definitive resource on third-party logistics and the outsourced logistics market. If you are already a subscriber, you know that we ask our readers which third-party logistics companies provide excellent service, and publish the results. If you are not yet a subscriber, you can get a list of this year's Excellence Survey winners, as well as the Top 100 third-party companies in the world, by checking the box below.
We're now conducting next year's 3PL Excellence Survey. The results will be presented in the July 2010 3PL issue. Give us your input and we'll express our appreciation by entering you in a drawing for a free 18-carat gold Parker pen, which includes a coupon for free engraving."
From Inbound Logistic's 3PL Excellence Survey's webpage:
“Each year, in its July issue, Inbound Logistics publishes the most definitive resource on third-party logistics and the outsourced logistics market. If you are already a subscriber, you know that we ask our readers which third-party logistics companies provide excellent service, and publish the results. If you are not yet a subscriber, you can get a list of this year's Excellence Survey winners, as well as the Top 100 third-party companies in the world, by checking the box below.
We're now conducting next year's 3PL Excellence Survey. The results will be presented in the July 2010 3PL issue. Give us your input and we'll express our appreciation by entering you in a drawing for a free 18-carat gold Parker pen, which includes a coupon for free engraving."
Friday, December 11, 2009
Midwest's Services
For best-in-class logistics services, check us out at Midwest Warehouse and Distribution System. We provide a wide range of logistics offerings that are available as stand-alone services or bundled together as an full specturm solution. We understand your supply chain needs. With our friendly, experienced staff that puts people first, we are able to provide unbeatable service and deliver exceptional results that save time, money and stress.
Services:
Thursday, November 12, 2009
Outsourcing and Respect
The idea of outsourcing often comes about when the CEO, controller, or another member of senior management reads an article—or has been speaking with a 3PL—about saving a minimum of 10 percent or more of their logistics costs by turning to a third party. However, I've found that these “savings opportunities” are often purely theoretical and are only supported by management due to their lack of logistics knowledge or their lack of confidence in the ability of its logistics team to efficiently manage its processes.
Of course, there are other times when the outsourcing conversation is sparked by the urgent need to reduce headcount.
The transportation teams that feel especially threatened are those that lack the experience, leadership, talent, knowledge, process excellence, and contingency strategies to guide their companies through today's global market. They often fail to anticipate and prepare themselves for tomorrow's challenges. And it often takes just one unpleasant and costly surprise to jumpstart the outsourcing movement in teams like these.
When I hear transportation leaders tell me that their companies keep reminding them that they're just another cost center, I tell them that it's their fault that management doesn't see them as a value-add to the organization. This tends to lead into the question: How do I get some respect?
The answer is simple. It's all about education and managing expectations—neither of which start in the middle of a crisis. Earning respect starts with your knowledge and command of the marketplace and your transportation governance, and it ends with programs that you have created to educate senior management and other organizations on a regular basis. As a quick reminder, I define transportation governance as “the direction and control associated with creation, administration, oversight, and enforcement of your company and supply chain's policies, regulations, and procedures related to the legal, safe, efficient, and service-effective movement of freight it controls either directly or indirectly.”
Transportation governance has both direct and indirect aspects. Direct governance includes: your carrier criteria and operating protocol/guidelines; selection and management of your carrier base; carrier due diligence evaluations, contract models and supporting documents; process with defined/flows/inputs-outputs; metrics and measures and dashboards; carrier performance reviews and process improvements; a carrier council to streamline processes and improve carrier and company productivity; greenfield projects and process improvements; and, of course, audits and benchmarking. Indirect governance, on the other hand, includes your command of the transportation industry including regulatory and political issues as well as a comparison of your approach to industry challenges versus that of your peers.
Read the rest of the logisticsmgmt.com article here.
Of course, there are other times when the outsourcing conversation is sparked by the urgent need to reduce headcount.
The transportation teams that feel especially threatened are those that lack the experience, leadership, talent, knowledge, process excellence, and contingency strategies to guide their companies through today's global market. They often fail to anticipate and prepare themselves for tomorrow's challenges. And it often takes just one unpleasant and costly surprise to jumpstart the outsourcing movement in teams like these.
When I hear transportation leaders tell me that their companies keep reminding them that they're just another cost center, I tell them that it's their fault that management doesn't see them as a value-add to the organization. This tends to lead into the question: How do I get some respect?
The answer is simple. It's all about education and managing expectations—neither of which start in the middle of a crisis. Earning respect starts with your knowledge and command of the marketplace and your transportation governance, and it ends with programs that you have created to educate senior management and other organizations on a regular basis. As a quick reminder, I define transportation governance as “the direction and control associated with creation, administration, oversight, and enforcement of your company and supply chain's policies, regulations, and procedures related to the legal, safe, efficient, and service-effective movement of freight it controls either directly or indirectly.”
Transportation governance has both direct and indirect aspects. Direct governance includes: your carrier criteria and operating protocol/guidelines; selection and management of your carrier base; carrier due diligence evaluations, contract models and supporting documents; process with defined/flows/inputs-outputs; metrics and measures and dashboards; carrier performance reviews and process improvements; a carrier council to streamline processes and improve carrier and company productivity; greenfield projects and process improvements; and, of course, audits and benchmarking. Indirect governance, on the other hand, includes your command of the transportation industry including regulatory and political issues as well as a comparison of your approach to industry challenges versus that of your peers.
Read the rest of the logisticsmgmt.com article here.
Friday, October 16, 2009
New Study Highlights Role of Third-Party Logistics Providers in Helping Shippers Adapt to Economic Challenges
The fourteenth Annual Third Party Logistics (3PL) Study examining the current global market for logistics outsourcing was recently released. The study surveyed shippers and logistics service providers in North America, Europe, Asia Pacific and Latin America. Key findings included:
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
* The economic downturn has created significant challenges for both shippers and third-party logistics providers (3PLs) – 82% of shippers are employing cost-cutting tactics and 60% are rethinking their supply chains and relationships with 3PLs
* 88% of shippers feel that IT-based logistics services are important, but only 42% are satisfied with the capabilities of their provider – as a result of this IT capability gap, shipper respondents reported a lack of the key performance indicators, alerts and visibility required for an adaptive supply chain and 3PLs reported similar difficulties in getting the data and commitment they need from shippers
* There are significant differences between how 3PLs evaluate their role in the supply chain and how they are viewed by shippers – 59% of shippers feel their use of 3PLs has a positive effect on customer service compared to 88% of 3PL respondents
* Shipper respondents devote an average of between 47% (in North America) and 66% (in Europe) of their total logistics expenditures to outsourcing and this is expected to increase in the next five years.
“Shipper-3PL relationships are being impacted significantly by the prevailing uncertainty and economic volatility in global markets,” said Dr. C. John Langley Jr., Professor of Supply Chain Management, Georgia Institute of Technology. “It is very important for 3PLs to mitigate or reduce any financial risk or service level impact that this may cause.”
Economic uncertainty and the use of 3PLs
Economic volatility has challenged shippers and 3PLs alike to contend with factors such as unpredictable demand, instability in fuel costs and currency valuation, and excess inventory. In response, not only are shippers attempting to cut costs, 77% are also seeking to improve forecasting and inventory management.
Cost reduction and improved reliability in services are the main factors likely to increase shipper respondents’ use of 3PLs. This includes converting fixed to variable costs (59%), expanding to new markets or offering new products (56%), and restructuring the supply chain network to improve financial performance (48%).
Read the rest of the mhia.org article here.
Thursday, September 17, 2009
Midwest Warehouse - Northlake creates 50,000 Square Feet of Customs Bonded Space
Northlake, IL (August 1, 2009) – Due to customer demands Midwest Warehouse & Distribution is pleased to announce the creation of 50,000 square feet of customs bonded space in our Northlake, IL. facility. This value added service will no doubt grow due to the current economy and the location of the Northlake facility in relation to the Chicago rail ramps. Midwest Warehouse currently operates 4.5 million square feet of warehouse space in 18 facilities throughout the US with over 2.7 million square feet in the Chicago area.
Monday, August 17, 2009
Logistics and business manufacturing: Signs are positive but economic recovery needs time
While some economic indicators paint an optimistic picture for recovery, supply chain and freight transportation industry experts maintain it will be a while before the recession truly abates.
On the optimistic front are: the Bureau of Economic Analysis’s (BEA) recent release on the second quarter’s 1.0 percent GDP decline, ahead of the first quarter’s 6.4 percent loss; the BEA also reported that real exports of goods and services were down 7.0 percent on the second quarter, compared to 29.9 percent in the first quarter; the Institute of Supply Management’s PMI (formerly known as the Purchasing Managers Index) hit 48.9 in July, representing the seventh consecutive month of growth (an index of 50 or higher typically means the economy is not in decline); the Commerce Department’s report that orders for U.S. durable goods—except for automobiles and aircraft—were up 1.1 percent in June, the biggest gain in three months; and the Cass Information Systems Freight Index down 15.3 percent in July compared to 20 percent and 21.4 percent dips in June and May, respectively.
But despite these signs, there are other data points that suggest the economy is still stuck in neutral and remains at “the bottom.” Among these data points are: June truck tonnage down 13.6 percent year-over-year, according to the American Trucking Associations; cargo container volume decreases at the Ports of Long Beach and Los Angeles still hovering around 30 percent; and a recent report from the Federal Reserve’s “Beige Book,” indicating economic activity is weak heading into the summer, although the overall pace of decline has stabilized albeit at a low level.
“While some numbers are encouraging, I would not get too excited just yet,” said Eric Starks, president of freight transportation forecasting consultancy FTR Associates. “But they do tell us that economic conditions did not deteriorate at the same level in the second quarter as the first. It appears that the ‘bleeding’ has stopped or is coming to an end, and that the long healing process has begun.”
Starks noted that the current economic situation is not something many shippers have previously experienced, with shippers anxious for an uptick in demand heading into 2010 to chip away at excess inventories and subsequently force increased manufacturing output.
Other things to keep an eye on are rises in home starts and sales, according to Tim Feemster, senior vice president and director of global logistics at Grubb & Ellis Company. Feemster’s sentiment is supported by recent signs of stabilizing prices with a composite index of home prices in 20 major U.S. cities being flat, according to the Case-Shiller Price Index, compiled by Standard & Poor’s, which was reported by the New York Times, and followed reports that sales of existing home sales have been up for three straight months, with June being the largest percentage increase in eight years.
And Josh Green, CEO of Panjiva, an online search engine with detailed information on global suppliers and manufacturers, said the consensus regarding the economy seems to be that the bottom has been reached, but what happens from here is anyone’s guess.
“Whatever recovery we see is likely to be slow and steady, rather than a quick ramp up back to pre-recession levels,” said Green. “I think the thing nobody wants to talk about is that the fear that the growth we are seeing now is more of a hiccup and that there is risk of a further downturn. When [certain] indices come out, it does seem like we are moving in right direction, but we are still very vulnerable to any kind of external shocks to the system that could send things down and put the economy back on a downward stretch.”
Recent Panjiva data indicated that from June to July the number of global manufacturers shipping to the U.S. rose by 7 percent, which was consistent with the 6 percent gain seen during the same timeframe last year. Panjiva also reported that the 2008 increase preceded the freefall in global trade from July 2008 to February 2009. Even though the month-to-month increase was up 7 percent, Panjiva said that the overall number of companies currently shipping to the U.S. is down roughly 10 percent year-over-year.
From May to June, the number of global manufacturers shipping to the U.S. was flat, following increases of 2 percent from April to May, 8 percent from March to April, and 2 percent from February to March.
“We are basically following the seasonal path of last year, which is good news in this economic environment,” said Green. “It feels like the [economic momentum] is positive right now. At this time last year, it was a bit more uneasy and when things got worse the economy went into a tailspin. Now, it feels like it is going in the other direction, as we have seen some encouraging signs and may be regaining our footing. There is no question we are still vulnerable to additional shocks, though.”
Read the rest of the scmr.com article here.
On the optimistic front are: the Bureau of Economic Analysis’s (BEA) recent release on the second quarter’s 1.0 percent GDP decline, ahead of the first quarter’s 6.4 percent loss; the BEA also reported that real exports of goods and services were down 7.0 percent on the second quarter, compared to 29.9 percent in the first quarter; the Institute of Supply Management’s PMI (formerly known as the Purchasing Managers Index) hit 48.9 in July, representing the seventh consecutive month of growth (an index of 50 or higher typically means the economy is not in decline); the Commerce Department’s report that orders for U.S. durable goods—except for automobiles and aircraft—were up 1.1 percent in June, the biggest gain in three months; and the Cass Information Systems Freight Index down 15.3 percent in July compared to 20 percent and 21.4 percent dips in June and May, respectively.
But despite these signs, there are other data points that suggest the economy is still stuck in neutral and remains at “the bottom.” Among these data points are: June truck tonnage down 13.6 percent year-over-year, according to the American Trucking Associations; cargo container volume decreases at the Ports of Long Beach and Los Angeles still hovering around 30 percent; and a recent report from the Federal Reserve’s “Beige Book,” indicating economic activity is weak heading into the summer, although the overall pace of decline has stabilized albeit at a low level.
“While some numbers are encouraging, I would not get too excited just yet,” said Eric Starks, president of freight transportation forecasting consultancy FTR Associates. “But they do tell us that economic conditions did not deteriorate at the same level in the second quarter as the first. It appears that the ‘bleeding’ has stopped or is coming to an end, and that the long healing process has begun.”
Starks noted that the current economic situation is not something many shippers have previously experienced, with shippers anxious for an uptick in demand heading into 2010 to chip away at excess inventories and subsequently force increased manufacturing output.
Other things to keep an eye on are rises in home starts and sales, according to Tim Feemster, senior vice president and director of global logistics at Grubb & Ellis Company. Feemster’s sentiment is supported by recent signs of stabilizing prices with a composite index of home prices in 20 major U.S. cities being flat, according to the Case-Shiller Price Index, compiled by Standard & Poor’s, which was reported by the New York Times, and followed reports that sales of existing home sales have been up for three straight months, with June being the largest percentage increase in eight years.
And Josh Green, CEO of Panjiva, an online search engine with detailed information on global suppliers and manufacturers, said the consensus regarding the economy seems to be that the bottom has been reached, but what happens from here is anyone’s guess.
“Whatever recovery we see is likely to be slow and steady, rather than a quick ramp up back to pre-recession levels,” said Green. “I think the thing nobody wants to talk about is that the fear that the growth we are seeing now is more of a hiccup and that there is risk of a further downturn. When [certain] indices come out, it does seem like we are moving in right direction, but we are still very vulnerable to any kind of external shocks to the system that could send things down and put the economy back on a downward stretch.”
Recent Panjiva data indicated that from June to July the number of global manufacturers shipping to the U.S. rose by 7 percent, which was consistent with the 6 percent gain seen during the same timeframe last year. Panjiva also reported that the 2008 increase preceded the freefall in global trade from July 2008 to February 2009. Even though the month-to-month increase was up 7 percent, Panjiva said that the overall number of companies currently shipping to the U.S. is down roughly 10 percent year-over-year.
From May to June, the number of global manufacturers shipping to the U.S. was flat, following increases of 2 percent from April to May, 8 percent from March to April, and 2 percent from February to March.
“We are basically following the seasonal path of last year, which is good news in this economic environment,” said Green. “It feels like the [economic momentum] is positive right now. At this time last year, it was a bit more uneasy and when things got worse the economy went into a tailspin. Now, it feels like it is going in the other direction, as we have seen some encouraging signs and may be regaining our footing. There is no question we are still vulnerable to additional shocks, though.”
Read the rest of the scmr.com article here.
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