Author Archives: cmintrieri

DEMAND-DRIVEN LOGISTICS

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Adopting demand-driven logistics can increase visibility, drive supply chain efficiency, and offset any market advantage your competitors might have.

Shippers in today’s economic climate face myriad challenges over which they have little or no control: consumer behavior, fluctuating fuel costs, supply chain disruptions, and capacity and labor availability. Many of these variables are, at best, difficult to predict. Consequently, they force supply chains to function reactively.

But companies don’t have to follow the herd. As much as market volatility breeds complacency and risk-averse decision-making, it also raises the stakes for shippers to seize control of their supply chains where there are opportunities to do so—to identify, anticipate, manipulate, and manage change, and leverage this demand responsiveness as a competitive differentiator.

Adapting demand-driven logistics principles empowers shippers to drive collaboration across different functional areas; engage customers, suppliers, and third-party intermediaries more closely; and broadly drive out costs and inefficiencies within their supply chains.

By controlling decision-making and dictating actions downstream from origin, companies grow more responsive to demand and nimble to change. It allows them the structure to optimize what is known, and the flexibility to adapt to countless unknowns. Visibility is a key enabler in this paradigm shift. Yet it also remains a sticking point.

Typically, the first pain point shippers face is visibility to control their inventory and react to different situations. The secondary consideration is cost.

When companies don’t have visibility to inbound flows, or can’t align supply to demand signals, costs can quickly spiral out of control.

Transportation management systems (TMS) and supply chain visibility tools provide shippers with a common platform to share information and manage transportation and logistics processes throughout the network. Having data in one repository that feeds upstream planning and analysis helps facilitate demand-driven logistics. While companies are using technology to move in this direction, control remains elusive for many businesses.

Demand-driven logistics has not yet been widely adopted. Shippers may manage only certain subsets of inbound materials procurement.

Without a true demand-driven vibe coursing through the supply chain, shippers are likely to adapt parts, rather than optimize the whole. Companies struggle when individual functions aren’t in sync—a lack of alignment creates slack in the form of additional inventory, time, and cost.

Most companies successfully manage outbound transportation and distribution processes, largely because they directly impact the end customer. When something goes awry, there is an immediate and obvious consequence. With a demand-driven logistics approach, impacts are more subtle, and build gradually over the entire order cycle. That’s why it requires a holistic perspective, and often a paradigm shift within the organization—one that likely doesn’t occur without executive mandate or a push from 3PLs.

The Power of Pull

Sometimes the ability to successfully run a demand-driven operation depends on whether a strong enough stake exists within the enterprise to control the inbound supply line. If the top of the organization isn’t interested in inbound logistics or procurement, it becomes a moot point. Once you get past that obstacle, it comes down to having the technology to evaluate how best to create visibility and control.

Transportation is an obvious flash point for companies that struggle with supply chain visibility, simply because transport costs have a tendency to creep. By contrast, when shippers are able to accurately forecast demand farther out, they have more flexibility to mix and match transportation options to meet their need.

For shippers and consignees sourcing globally, failing to communicate with upstream partners can create any number of inefficiencies and costs. That’s why companies are driven to reach deeper into the supply chain and work more closely with suppliers and manufacturers to fine-tune production systems and make sure they are in lockstep with downstream processes.

Do you have a true sense of urgency?

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Do you and/or your company have a true sense of urgency?

In our rapidly changing world, and with Daily Continuous Improvement initiatives, isn’t a true sense of urgency very important?

When you have a sense of urgency, you feel and think that opportunities and hazards are everywhere. You have a powerful desire to move and win, now.

With a sense of urgency, you create action which is alert, fast moving, and focused externally (Voice of the Customer) on the important issues. Irrelevant issues are purged to provide time for the important issues (priority planning).

Complacency and a false sense of urgency have to be eliminated, as we move forward on Daily Continuous Improvement.

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It is easier to Consult than it is to look for Consulting work!

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Even a very experienced Supply Chain Optimization Consultant/Third Party Logistics (3PL) Consultant, Assured Cost and Inventory Reduction Consultant (Value Engineer), Process Improvement Consultant, Warehouse/Distribution 5S, LEAN, Six Sigma Consultant,  Cycle Counting Implementation Consultant, ERP Project Consultant, International Purchasing and Importing Consultant, Terms and Conditions Specialist and many other Consulting topics/issues, has a hard time finding Consultant work in Orange County, CA.

Even if you look for work, while you are being retained by a current client, these unpleasant ”Consulting Gaps” seem to occur. Looking for Consulting work is, in fact, harder than being retained as a Consultant, meeting the client’s metrics and Key Performance Indicators (KPIs).

Common sense use of today's new business concepts

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In the 60′s-70′s we used simplier terms for today’s biggest business concepts:

5S-Always keep it clean and orderly: it is everyone’s job to maintain and control this process

MRP:

What do you want to make? (Master Schedule) What does it take to make it? (Bills of Material) What do you have? (Inventory and Inventory Records Accuracy via daily cycle counting) What do you have to get? (Purchases and Manufacturing orders using offset leadtimes from the Item Master): Close the loop with feedback to the first question.

Six Sigma: Zero Defects programs using SPC (Statitical Process Control) and AQL (Acceptable QualityLevels)

LEAN: Increase Inventory turns, pull system versus pull systems, Ship -to-use programs

What are the traits of a good Consultant?

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Being a Consultant with a lot of experiece, here are traits I think are important:

You must listen, listen and listen to your client before offering suggestions or solutions to a problem or issue.

You have to be open and honest at all times.

You have to be credible and proactive: if you give a date, or a date is on the Project Plan, you have to meet it, or explain why you can’t meet the date, proactively.

Remember that each company you Consult in will be different. Learn the new culture first before proceeding.

Look for your next Consulting job while working, if you can, because you just never know when the end will come with your current client.

Your fees can never exceed your proposed fees, unless you get permission from your client in writing. If there is an agreed upon change of fee structure, always confirm the change in writing.

Present a weekly detailed, confidential report to your client on a weekly basis, and meet with him/her, one-on-one to review your weekly findings and where you are, to agreed upon Project goals.

You should supply information to your client on the project at hand or any other applicable data.

If your client asks you for your confidentiality, be confidential at all times.

Stay out of company “politics.” This can defintely get you in trouble with your client.

Don’t get too close or personal with the person( s) you are in contact with on a daily basis.

Education and trainiing are vital to any project. Always educate first before you start a project. Never assume that the group you are working with understands the goals of the project. Continue education as you implement a concept or project. Ask questions to see that the goals are understood by all concerned.

Always be professional. Do not stoop to be unprofessional if provoked by anyome in the firm. Stand your ground if necessary.

Occassionally, it is a good idea to bring “goodies” into your client, like donuts or bakery goods. Ths helps morale, and they can see that you are invested in the client.

If things are not going well, and this will happen, use negative reinforcement to make your point, and get back on track with a positive attitude.

Thank the client each and every time you get a new retainer check based on your fee structure and retainer contract.

Using DMAIC aside from Six Sigma:

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You can use DMAIC for other than Six Sigma:

D-Define; M-Measure; A-Analyze: I-Improve; C-Control

Let’s take Daily Cycle Counting for 98-100% Inventory Records Accuracy as the project at hand:

Define what our goal is: 98-100% Daily Inventory Records Accuracy

Measure where we are now: Take a sample Cycle Count of a mixture of A,B, C and D items

Divide the Total Count into the Amount Correct: Let’s say 10 items were counted and six (6) were correct=60% Inventory Records Accuracy for this trial count. This is far from good enough.

Analyze: Why were four (4) counts wrong? Analyze the transaction detail in the Warehouse Management System (WMS) to find the root causes for the four (4) variances: warehouse counts to computer counts.

Improve: Improve through Daily Cycle Counting of A,B,C and D items throughout the Warehouse. As you find root cause errors, do a root cause error frequency distribution and eliminate these root causes by writing Standard Operating Procedures (S.O.P.s).

You should be holding steady at 98-100%  Daily Inventory Records Accuracy if you follow this proven system.

The key now is C=CONTROL. You must Maintain and Control this 98-100% Inventory Records Accuracy Level through Daily Cycle Counting and root cause analysis. This Control step is the most critical step. You can reach this point, but it has to be maintained and controlled.

When you do control this level of Inventory Records Accuracy, you can consider eliminating the Physical inventory.

We used DMAIC to implement and manage this Inventory Records Accuracy Program.