Lack of Posting.. will "Step it up" in 2011

As many return readers have noticed, I have not posted much in a while.  Call it the "holday spirit" and understand I have been swamped both with work and with preparing for the holidays.  No excuse, it just is what it is.  I will be aggressively posting in 2011 with both longer "in depth" posts about subjects and also short "link" type posts as well.

My belief for 2011 for the logisitics' industry is that it will be a year of "blocking and tackling".  This means cost cutting will continue to be paramount along with using logistics as a "wrapper" around a product to become the competitive differentiator.  As I have said before, many products have worked their way to commodities and the way companies will truly differentiate themselves is through logistics.

But, this is not "fancy" logistics. It is the basic blocking and tackling.  Make the order management system very efficient, have availability (my belief is have high availability on a tighter number of SKUS v. having thousands of SKUS which all suffer in some availability), have a lightening fast delivery system, and have the billing and invoicing system be flawless. It is the things of Amazon.com and we all know how successful they have become. (although I will admit they have figured out how to have great availability on huge number of SKUs which really differentiates them).

As 2011 develops we will see if I have to move off my "playbook" but for now that is how I intend to work through the year.  Let's see how we do!!

Have a happy Holiday Season and a very happy New Year!!

Kevin

UPS: We ♥ Logistics Commercial

While a great ad for UPS it also says it all about why I love logistics!

Supply Chains Used As An Extension of The Brand - Part 1

This week I am going to put some thoughts down about whether companies use their supply chain as an extension of their brand or just as an evil necessity that they would rather do without.  I have personally been involved in many companies and I have seen it done many ways.

Here are some characteristics of supply chains when used in the following manner:

1) Used as an extension

• Company does not separate the product from the acquisition experience for the customer. They are intertwined.
• Company puts protection of brand above all else (including cost).
• Company probably does not do a lot of outsourcing in supply chain (Do you want your brand in another person's hands?).
• Company cross trains between marketing, sales, product development and supply chain.
• Company is most likely not "stovepiped". In other words they are not organized around functional silos but rather around products, categories of products or channels / customers.
  

2) Not used as an extension

• The reverse of everything above.
• The customer gets additional feeling of benefiting when dealing with the supply chain. 
• Service is matched to the brand experience the company is going after
• Supply Chain is seen as a cost to be cut. 
• The big one:  When people in the commercial side of the business refer to themselves uniquely as "the business" and the supply chain is just something to execute at the lowest cost imaginable. 

This is just a short list and as I develop my thoughts further I am sure this list will be adjusted and added to.

Can anyone think of a company that makes their supply chain experience part of the brand v other companies which make it just a back office function?

Supply Chain Teams Should Consider Hiring Industrial Engineers

The article below discusses why supply chain teams should consider hiring industrial engineers. I could not agree more. I have a number of them on my team and they are fantastic even beyond the "normal" IE work. Just really good thinkers. The article below describes why.

Supply Chain Teams Should Consider Hiring Industrial Engineers

Thoughts on Cost....

All of us who have been in the industry for a while know the drill.  The expectation is logistics cost as a % of revenue will decrease year over year. This makes a lot of sense especially when you think of leveraging fixed assets.  Obviously, your costs for "back room" type activities should not go up in a linear relationship with your revenue.  If it did then what is the point?

But on the other hand we have to ask ourselves at what point can logistics' services add add to the revenue of the company?  And I do not mean just getting money from shared services (which is all the rage today) but I mean an equation which states that better service leads to higher customer satisfaction which leads to increased sales and higher revenue.  As products become commodities at faster rates than ever before perhaps leading companies should be thinking about the packaging of services around the product as a value add and revenue generator instead of a cost to be cut.

A quick example would be Amazon.com.  Why do you shop there? Do you shop there because they have better products or different products?  The answer is clearly no. They have what everyone else has.  What they have that virtually no one else has is a very convenient and easy order entry, an incredible delivery mechanism, easy returns and real time tracking.  The advantage of Amazon.com is not the products but the services around the products.

What is becoming clearer to me everyday is companies need to be looking at logistics and supply chain as THE competitive advantage.  Unless they have a product that is absolutely unique or not able to be copied due to patents or unique technology, a company needs to look at the services around the product for competitive advantage.

One way NOT to do this is to only ask those who manage those services to cut costs.

Trucking Firms Have Value in Tow

A very good article on the financial situation in the trucking industry from Morningstar.

Trucking Firms Have Value in Tow

Trucking news: Ceridian-UCLA Pulse of Commerce Index down 0.5 percent in September - Article from Logistics Management

Trucking news: Ceridian-UCLA Pulse of Commerce Index down 0.5 percent in September - Article from Logistics Management

Unfortunately, it appears my predictions have been right. As the article states, it looks like inventory has "stalled" on the superhighways. Watching trucking is a great way to get to know what is happening in the economy and it clearly is a leading indicator of things to come. Trucking always picks up early and dies fast which tells you what end of the business cycle we are on.

Some of this cannot be just compared to historical norms as intermodal freight has taken market share from trucks. However, trucking still is the predominant way to move freight especially from DC to store; the true measure of what the customer is pulling through consumption.

Keep an eye on December to determine if the holiday sales take off as planned. If they do not, we are in for a long and cold winter.

Blackberry Storm 2, Motorola Cliq: The Critics Weigh In

For those of you who may be thinking about the Storm 2 blackberry for a business phone forget it. The phone is a disaster. Battery life is horrible and the touch screen is a disaster. Further, the system locks up and is very slow. I cannot believe that I can out type a touch screen phone. I have to wait for it to catch up to me.

Forget the phone... it appears it is a "toy" for those who cannot afford either a Droid X or an iPhone. Putting this phone on the market is an insult to all consumers.

Blackberry Storm 2, Motorola Cliq: The Critics Weigh In

Transportation Capacity is Loosening

Pretty clear from a variety of metrics the capacity crunch of the summer for transportation capacity is over.  I have said many times the inbound volumes for logistics in general have been far bigger than the outbound volumes. This translates into a building of inventory which ultimately ends in the problem we see today:  The transportation network will shutdown.

We are starting to see this slowdown and if the Christmas retail season is slow, we will see a full blown shutdown IMHO.