Bullwhips and Beer: Why Supply Chain Management is so Difficult « Forio Business Simulations This article was originally published in 2006. The simulation referenced runs on an older version of Forio’s platform, which is no longer actively supported. Play the Near Beer Game The basic concept behind supply chain management is simple: customers order products from you; you keep track of what you’re selling, and you order enough raw materials from your suppliers to meet your customers’ demand. The problem turns out to be one of coordination. This lack of coordination coupled with the ability to influence while being influenced by others leads to what Stanford’s Hau Lee refers to as the Bullwhip Effect. The bullwhip effect is illustrated by a story Prof. Cisco faced a similar problem last year that resulted in a $2.2 billion inventory write-down. Delays Wreak Havoc But coordination isn’t just about communication. Thousands have felt the frustration of supply chain management in a simulation developed at MIT’s Sloan School of Management called the beer game. Sounds easy right?
3ff347f4-88ff-11e3-9997-12313d2f5560-original What’s the Cost of Voices Unheard? – Part II of II « Know Experience Necessary [This is Part II in a two-part series.] In my last post, I “came out of the closet” about my childhood stuttering. It’s not like it was a big secret. But most of the people who know me today may not realize I stuttered terribly as a child. Over time, I came to realize the impact that stuttering had on my life in business, as a manager, a leader, a facilitator, a mentor, a teacher. On Which Side of the Table Are You? I’d like to share an experience with you that changed the way I see group interaction. introverted person at the other end. No Surprise, There Were Surprises Once we settled into our positions at the table, we all stood there and looked around the room. At the opposite and “introvert” end of the table stood our Purchasing Manager, a loyal, quiet, and diligent leader who is content to observe, plan and execute her responsibilities with the least possible fanfare. I stood smack-dab at the half-way point, with the extroverts to my left and the introverts to my right. Like this:
Identifying RFID's Biggest Threats Longstanding principles regarding the design of RFID chips are currently under attack, and could undermine all of the hard work put into RFID standards to date, as well as the future rapid adoption of radio frequency identification. I'm talking about practices that defy the concept that the Unique Item Identifier (UII) or Electronic Product Code (EPC) must be monomorphic—that is, having a single form or structural pattern—and be assigned by the tag's manufacturer or end user only as a birth record, then locked into tag memory location (Memory Bank 1; the UII memory bank), as specified by the EPC Gen 2 and ISO 18000-6C standards for passive ultrahigh-frequency (UHF) RFID tags. If my warning sounds ominous, well… it just might be, since communication and misunderstanding are at the root of the problem. Let me build the case slowly, and solve the communication-of-terms issue first. Now imagine you are in the Alps and you try the famous mountain echo.
Change Is Hardest in the Middle - Rosabeth Moss Kanter by Rosabeth Moss Kanter | 5:13 PM August 12, 2009 It’s no surprise that moods are sagging in mid-2009. The capital markets are stalling, the banks are barely lending, the federal government stimulus is not stimulating enough, and job losses are mounting. Incumbent politicians promise that things are getting better, but not in your city, where the powers-that-be are shutting down the zoo and raising public transportation fares, making subway rides so expensive that cars still clog the roads. Even optimists feel anxiety. Welcome to the miserable middles of change. I hit upon this law of management (and life) after observing hundreds of major changes slide into lethargy following the pep rallies and press conferences, as grand promises gave way to the tough challenges of implementation. All new initiatives – big new government directions, business turnarounds, new venture start-ups, new products, or internal process changes – can run into trouble before reaching fruition.
Apple details supply chain in responsibility report Apple's supply chain is one of the more closely guarded secrets in the tech world; even simply confirming you have the Cupertino company in your order book has been enough to see some companies lose contracts. However Apple itself has spilled the beans on the rolodex it flips through when it needs a new iPhone screen or iPad radio, detailing the firms [pdf link] which together account for 97-percent of procurement expenditures for materials, manufacturing and assembly of products worldwide. The disclosure is part of Apple's annual Supplier Responsibility Program, with the company releasing today its progress report for 2011. "We uncovered some violations" Apple says, "and worked with our suppliers to correct the issues." Meanwhile, Apple found no underage workers, at its final assembly suppliers at least, and has apparently enrolled over 60,000 workers in business and entrepreneurship classes, lessons to improve computer skills, or to learn English. [via Chronic]
Transportation Forecasting based on actual data « Supply Chain Movement During Logicon on 3rd February 2011, in Amsterdam, Terra Technology – not to be confused with Teradata – presented its newest solution to the European market: Transportation Forecasting. “Most transportation management solutions are based on historical data. Our transportation forecasting tool focuses on what’s going on now”, comments Robert Byrne, CEO of Terra Technology. Terra’s Transportation Forecasting has been designed specifically for producers of consumer goods. Promotions are visible in advance and it creates the opportunity for proactive transportation planning and reserving capacity as needed, rather than waiting until orders arrive. When asked whether or not they feel like the new kids on the block when it comes to supply chain solutions, the CEO with his MBA in Operations Research laughed and commented: “I suppose we are! Procter & Gamble, Unilever, Kraft Foods and Campbell’s Soup are just a few of Terra Technology’s clients. www.terratechnology.com
Visibility of complexity « Supply Chain Movement According to Professor David Simchi-Levi from MIT in Boston, there are six trends that are challenging current thinking on supply chain management: globalisation, the increasing cost of logistics, higher levels of risk in the chain, increasing cost of labour in developing countries, the focus on sustainability and the fluctuation of the cost of raw materials. One important thing that these six trends imply is the need for transparency in the supply chain. Simchi-Levi sees three different levels of transparency: where my products are in the chain, having access to the suppliers’ production schedules and track & trace using sensors on the products, pallets or packaging. These six trends make supply chain management even more complex. I read an interesting chapter about managing product, organisational and process complexity in the annual release of ‘Winning in Turbulence’ from the ‘Memo to the CEO’ series. Reducing complexity in a supply chain that just keeps on growing is a must.
Benchmark study compares forecasting performance results « Supply Chain Movement In 2010, the volume of promotions was 77 per cent greater than in 2009 – that is just one of the findings from the extensive forecasting benchmark study conducted by Terra Technology amongst manufacturers and suppliers in the consumer goods sector. Rather than wait for the supply-chain solutions provider to officially present its findings in late June 2011, Supply Chain Movement met up with Terra Technology’s CEO, Robert Byrne, on 14 June 2011 during the Supply Chain Logistics Europe event in Berlin (Germany). The study, which included input from the likes of Procter & Gamble, Unilever, Kraft Foods, Kimberly Clark and Campbell Soup, provides insights into the forecasting performance of organisations within the consumer products industry. According to Byrne, it is the only study where the results are truly comparable across all companies. A forecast error of between 45 and 50 per cent is often meaningless because it depends on how it has been measured.
Supply Chain and Finance share the same vision « Supply Chain Movement In most Dutch enterprises’ supply chains, there is some kind of relationship between corporate strategy and inventory level targets. The supply chain and finance departments generally tend to agree on who should be determining optimum stock levels. Yet while these two departments consult regularly on this matter within most companies, only forty percent of them have formalised this in a Sales & Operations Planning (S&OP) process. Financial performance The study has shown that Key Performance Indicators for supply chain and financial performance are to some extent interlinked. Determining optimal stock levels Jointly, but led by the Supply Chain department 62% Jointly, but led by the Finance department 17% Supply Chain department has carte blanche 15% Finance department determines maximum levels 6% Source: S&V, ConQuaestor & Supply Chain Movement (2011)
Importance of Packaging Innovation to Supply Chains I recently interviewed Michael Rada who discussed the realization of supply chain optimization through innovative packaging. Michael Rada works for the third largest corporation of Japan. He lives in Czech Republic and works Sumisho Global Logistics Europe, which is a bit unusual. One of Sumisho Global Logistics’ achievements is in their packaging. They are currently concentrating on electronics manufacturers, which is one of their major clients. Packaging is one of the big issues they address. Some people in Czechoslovakia are concerned about seeking consultation from Japanese companies. Future of Packaging Michael sees the future in returnable packaging and the extension of the life of current packaging units. The same process can be applied to cardboard and other materials, which at least in Eastern Europe very quickly end up in a dump. Obstacles to making changes to supply chain packaging Last year’s return on investment was one year. About Michael Rada Project Manager
W.P. Carey School’s supply-chain programs rank among top 5 in nation | Phoenix Business Journal Staff Phoenix Business Journal The supply-chain management programs at the W.P. Carey School of Business at Arizona State University have been recognized with some prestigious new rankings, placing them again among the best in the nation.\ The rankings from Gartner Inc., an information-technology research and advisory company, looked at how today’s university programs are meeting the needs of employers in the area of supply chain. “We were among the first schools to establish a program in this fast-growing field, and we consistently have a stellar career-placement rate for supply chain. Less than two months after graduation this year, the school already has a 92-percent employment rate for its full-time MBA supply chain students, ASU reported. The Gartner rankings involve a survey of 400 industry leaders, who each revealed which programs they recruit from and which program they believe is best. U.S.