August 9, 2011

Supply Chain – Measuring for Success: 1

Filed under: supplyline — Tags: , , — admin @ 2:03 pm

This series “Measuring for Success” is taken from a presentation I gave at the SCL Conference in Toronto on 10th May 2011:

Well used and well constructed measures are a feature of successful supply chains, but what does success look like? To answer this question let’s look at who can legitimately call “success” in a supply chain.
Customers can of course and we must take the opportunity to listen to a customer at each link in our supply chain.
To do this we simply measure the effectiveness of our processes whenever one link hands over to the next, all the way through to the final customer.
Each link will typically signify the end of one process and the beginning of another and it is here where supply chains either succeed or require corrective action.
Measures are usually reported from a Customer Perspective and on a day-to-day basis our customers, operators and sales team will want visibility into them particularly with regard to process timeliness and process accuracy.
Other internal stakeholders will be interested in the Customer Perspective too. These stakeholders will also want a wider view of the business and of its people. For example, your CFO will want to know about costs and revenues, your HR team may want to see measures of employee turnover and employee engagement and your employees themselves will want to know about the operations safety record and progess towards incentive payments.
“Success” therefore is defined by all customers and by all organisational stakeholders.
It should be self evident when we look at our KPIs whether we have succeeded or not. The KPIs should tell us how our supply chain is performing against customer and stakeholder expectations by comparing “How am I doing?” with “Customer and stakeholder expectations”.
Our choice of KPIs will give messages to our customers, stakeholders and employees about which aspects of the supply chain we regard as the most important, we must remember to engage with them, to listen and respond to them and involve them as much as is sensible, this will encourage them to have a stake in the success of the supply chain and ultimately work towards common goals.
At this juncture it’s crucial to recognise that part of our responsibility as supply chain professionals is to manage customer and stakeholder expectations, to ensure they are realistically set for the given situation and timeframe. In this context it is vital that all parties agree on a common set of measures and there are commonly agreed expectations.
Third Party Logistics companies (3PLs) often have success strictly defined in contractual agreements with their clients and for them success may mean more than simply achieving the desired supply chain outcomes. The 3PL could be incentivised to attain certain “success” targets and in the future success may well result in the renewal of the contract. For the V.P. Supply Chain who drove the outsourcing, success will combine a vindication of that decision along with a whole bunch of satisfied customers and stakeholders.

Next in this series of articles I’ll continue by looking at how to set up a measurement and reporting system and how to get the most from it so that your customers and stakeholders are happy to declare “success”.

April 3, 2011

From a Supplyline: 4

Filed under: supplyline — Tags: , — admin @ 6:12 pm

Today I have a little time on my hands. I’ve been enjoying some solitude in the forest adjacent to our castella. From here I can still hear the sounds of our legionaries and cavalry as they come and go from the fort. It’s not true solitude but such as it is, I find it most welcome.
I am sitting on my mess blanket enjoying a jug of wine and find myself wondering about the evolution of Roman supply lines over the decades.
It seems to me that our supply lines started because of the army, we exist because the legions exist. As the army grew and our empire expanded, supply lines grew to support our soldiers and citizens in the provinces.
I find it interesting that now some of the army exist because of us, the supplylines.
I estimate that at least half of the soldiers in our castella are there to work in and protect my supply line. The auxiliary and cavalry travel with each supply convoy as equipment, food and other supplies are moved through.
On return journeys I have the convoys transport our wounded soldiers back for medical treatment or take others home on leave. The convoy also carries military equipment going back to our larger castra murata (walled forts) where they will be repaired by one of our skilled craftsmen.
If we have found rich pasture and foraging the return convoys will carry these provisions back to where they are needed. Along the way the soldiers will fill empty amphorae with water for use back at the castra murata.
I hope you can see that our supply line is very efficient. Whenever I can, I make sure our carts, mules and oxen are carrying loads on each journey they make.
I love my job, planning and organising our supply columns and serving in our army.
I must say, this solitude and wine have been good too, but now I must re-direct my thoughts and make my way back to the castella. I still have some arrangements to make for the supply convoy leaving tomorrow morning, not least because I must go with it and meet up with my general at his camp.

January 17, 2011

Distribution Centre Operations Start-up: 3

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Your conceptual designs will give you: how large a building you need, the materials handling methodologies and equipment you’ll employ, and the size and main features of the site. Now it’s time to turn these conceptual designs into reality.

I’m going to assume you have already successfully presented the business case for your new Distribution Centre (DC) and have obtained business and financial approval to proceed.

In getting project approval you’ll have examined all the potential locations for your facility and using a number of criteria you’ll have chosen the site that best matches your business needs. This choice of site will very likely give you the developer you’ll be working with and perhaps the main building contractor too. You can also develop a proposal and use it to help you differentiate and choose between potential contractors. The partnerships with your developer and main contractor, and your working relationships with them, will go a long way towards defining the success of your project.

Inherent in your choice of site is how to situate the building(s) on the plot of land, the overall site design and the placement of expansion areas.

Your architect will work with the contractor to produce structural, mechanical and electrical drawings which will be used to tender for the construction work and to obtain the permits you’ll need before you can proceed with construction.

Your own team should undertake a detailed review of the drawings before you give your final sign off. As soon as the permits are obtained and the construction partners are chosen the construction work can begin.

Make sure that you’ve given firm guidance on the specifications for items such as column spacing, the warehouse floor, electrical, refrigeration and insulation values, docks and dock equipment, grading, the roof, offices and computer rooms, employee facilities, site and building security, energy management systems, emergency power supply, ceiling heights, fire prevention, heating and ventilation (HVAC) and yard paving.

How long the construction phase lasts will depend on: how much has already been done to load the land and prepare it for construction, the order lead-time for major build components, the season you’re starting to build in, the weather you encounter and other items along the way.

Your project manager should work closely with everyone to ensure that the project is delivered on time, on budget and to the agreed specifications.

If you’ve engaged a company to audit the construction process and specifications your project manager should spend time with them to review the materials they produce. As each construction phase is completed a list of deficiencies will be produced and resolved and payment can be made. As you sign off your acceptance make sure you’ve covered off all the deficiencies and the finished building meets with the approval of your operations groups.

Before operating in the facility you’ll need to obtain the occupancy permit.

While construction is happening you’ll be working in parallel on the many other aspects needed to successfully open and operate your new DC, I’ll tell you more about these in subsequent articles.

December 12, 2010

From a Supplyline: 3

Filed under: supplyline — Tags: , — admin @ 1:38 pm

My master’s military campaigns are meticulously planned, my role is to plan the routes, time the journeys and keep my customers fully replenished with food and other goods. In this I am ultimately responsible to my Emperor, he pays the soldiers and deducts the cost of supplies from each soldier’s pay. The amount does fluctuate according to the mood of the Emperor and his relationship with the legions, but I have known this levy to be as high as two-thirds of their daily pay.

In large campaigns my supply line relies on 2 main sources. The primary source is the land and surroundings we are moving through and here I obtain food and other supplies from the local people and traders.

For my secondary source I contract with Roman merchants who supply me with goods from many other parts of our empire. These arrive by land, river and sea, some of them before our campaign starts and the remiander through shipping arrangements I make at various points in our campaign.

As I plan the supplies I need at each stage in the campaign I research the potential routes I have been given by my general and find out as much as I can about the geography and conditions of the territories we will travel across. Wherever possible I talk to people who have travelled in these areas to understand the weather patterns, the main crops and the growing and ripening seasons. Our army will go hungry unless we time our marches to coincide as much as possible with crop harvesting seasons.

I have a team of researchers who task it is to find out this information for all parts of our empire and for the lands which surround ours. Enemy spies are everywhere, even in Rome, by having a wide field of interest I hope not to give away any secrets about upcoming events.

Of course, an army on the move doesn’t stay a secret for long. One advantage for me is that word soon spreads among the trading community and enterprising merchants set up supply lines and approach me to buy from them on future contracts.

As we move through different regions our provincial officials and the local people are a vital source. Farmers and traders come to us to sell their crops, they provide fodder for our animals and offer services such the grinding of corn and baking of bread.

You may be surprised to learn that at times during a campaign as much as 70% of the food and supplies our army consumes comes from the large merchants I have already mentioned. These individuals are extremely influential, they are well connected with the Emperor and with the most powerful families in Rome. These large merchants have very well developed supply chains and have established relationships with other merchants and provincial officials throughout our empire.

Extraordinary isn’t it that my supply chain reaches into most parts of the known world.

There are another group of merchants we call “lixae”, these merchants make their living by following the army and selling goods to anyone they can. I find them something of a nuisance and have often suspected that some of them steal my supplies and sell them back to me for a tidy profit! Other than keep my eye out for such practices I find myself unable to do much about them as they have “permission” to travel and trade with us, I can only imagine how much they are indebted to certain individuals in order to receive their permission.

When we are in a hostile area my supply line is always stretched. Supply trains are attacked and the goods they carry can be lost or damaged, our pack animals can be targeted and killed in order to slow us down and with the hope of having our soldiers go hungry. My general may wish to move faster through certain territories and we all go onto short rations to conserve our supplies.

Our progress can be impeded by bad weather, heavy snowfall or rains can maroon us in one area for many days, depleting our food and severely lowering our morale. If the area is sparsely wooded it is particularly bad and the cold gets deep into our bones through the lack of wood for fires to cook food and to keep warm. On such days I find myself longing for the intense summer heat we get at home in the hills close to Rome.

December 4, 2010

Distribution Centre Operations Start-up: 2

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Designing and constructing a Distribution Centre is a process that could take you 3 years or more to bring to conclusion.

As supply chain people, when we talk about design we refer to the internal design of the distribution centre, the design of storage and materials handling media and the sizing of the building.

The design will be based on a multitude of factors, all to do with the operations you want to have in the premises. Typically designs are said to be mechanical or non-mechanical.

Mechanical designs include items such as conveyors, sortation systems and automated materials handling while non-mechanical designs are a more manual process involving the use of powered equipment to move product around the DC.

You can expect a mechanical design to cost significantly more to set-up, a complex mech solution can cost many millions of dollars more than a non-mech solution, the investment being justified by lower operating costs over the life-time of the operation.

In addition to your materials handling solution, the size or “footprint” of your distribution centre will also be driven by: how much product storage you require; how accessible you want the product to be; and by how you choose to store your product.

The amount of product stored can be all over the map, I’ve worked with companies who have no more than 1 day of inventory in their DCs to companies at the other end of the spectrum who average 100 days of inventory on hand. These companies had different businesses of course and can’t be compared to each other and judged as “good” or “bad”.

How accessible do you need some of your inventory to be? If you require items to be constantly accessible they will take up more space then items which don’t need to be regularly accessed. Pick locations fall into this category, they contain items which you want your staff to have consistent access to.

How large a footprint these storage and pick locations use depends on how much product you choose to put into each location and whether you put the locations on the floor or make use of the building cube and some of them in the air, in pallet racking and pick towers for example.

There is a further “design” we talk about, that’s the design of the site your DC will sit on, taken together,  your site and building design will tell you how much land you will need to purchase.

Site design elements include space (land) for: site entries and gatehouses; roadways; truck & trailer parking; vehicle maintenance and washing; external storage areas; employee access and parking; and, perhaps, room for future expansion of the building.

The city or municipality will ask you to provide land for items such as storm water drainage and storage, landscaping and berms to reduce noise pollution.

Once you have your outline designs finalised you will be ready to start the process of acquiring land and building your new distribution centre.

November 21, 2010

From a Supplyline: 2

Filed under: supplyline — Tags: , — admin @ 1:34 pm

I keep my general’s army supplied with food, weapons and other items wherever they go. This isn’t an easy task, our army can cover up to 10 miles a day when they are travelling on our Roman roads and at the end of the day they are tired, hungry and have little tolerance for any breakdown in their supply lines.

I use several modes of road transport in my supply line. The first is the soldiers themselves, they are responsible for their immediate food ration and depending on the circumstances they may be carrying enough grain and other food to last them 3 days together with enough water to last them each a day and a night.

Circumstances in the field can be extreme to say the least, the climate and terrain we are travelling in may substantially alter the design of the supply line and seasonal changes in weather patterns will alter the quantity of food and water we need.

Other modes of road transport available to me are pack mules and oxen teams. Both of these are capable of carrying much larger loads than individual soldiers, and in all truth they have greatly contributed to the success of many of our campaigns. Probably like your transportation assets they come with their own challenges, the biggest of these is their speed, or rather their lack of it when compared to the soldiers.

Roughly speaking the oxen teams can only travel at one quarter of the speed of the contubernium, although that differential is reduced if the soldiers are using pack mule teams to carry their tents and weapons.

A second challenge for us is maintaining these assets. They have their own needs for food and water and can also break down and need replacing.

When I first started to work in supply line the speed differential greatly puzzled me, how could we possibly keep the army adequately supplied when an army cover perhaps 10 miles a day when they are marching and the baggage team could only cover around 3 miles? Surely a recipe for disaster?

Disaster isn’t allowed, it would be the death of me, literally! The answer to running a successful supply line lies in making detailed plans and executing them well and on a timely basis.

I would expect in the decades and centuries to come that these principles will continue to hold good. Those of you reading this journal in some future age will be able to judge the accuracy of my statement, and you may, as you read on, find other similarities between my supply line and yours. I’d certainly like to believe so.

November 15, 2010

Distribution Centre Operations Start-up: 1

Filed under: supplyline — Tags: , , , , — admin @ 11:31 pm

Starting up a distribution centre operation is always a challenge, always exciting, having done a few of them in both new and existing buildings I can tell you there’s nothing like experience to get you through those start-up challenges and successfully through your operating ramp-up.

Managing your start-up using project methodology and rigour is time-consuming and can at times be tedious, but it’s a good investment.

To get going, appoint a project manager, form the start-up team and establish a steering committee. The project manager and the team should agree a project charter with your executives and once this is done the team can write a detailed project plan using the charter and their own expertise to guide them. Expect your project manager to establish regular meetings to update and get feedback from the team, the steering committee and other stakeholders.

Recognise that communications and change management must be high on the team’s agenda. These aren’t exclusively for the team to look after though, everyone I’ve already mentioned should play their role.

As the project unwinds there will be a number of distinct project areas for your team to manage and deliver, these will include: distribution centre and site design; fitting out and equipping the operation; financial processes; operations including transportation; human resources; systems and information technology; loss prevention and security.

Decent planning and project management will give you a foundation for success. However, the key to a great start-up is in executing well, taking care of your customer and delivering on time and under budget.

I’ll visit the start-up process again and give you more detail on the things I’ve outlined above, if you need help before I’m able to get to the next article feel free to contact me.

November 12, 2010

From a Supply Line: 1

Filed under: supplyline — Tags: , — admin @ 4:39 am

My customers are unforgiving, they are not the kind of people to be messed with, they want their supply line to give them what they want, where they want it and at the time they want it.

Product availability  is the key to my success  and ultimately to that of my superior, in fact it may be a matter of life and death, his and mine! The supply line, which I’m in charge of, must be meticulously planned, preferably months in advance, although sometimes I’m only given a few weeks or days notice. Change happens on the fly, the number of customers can be very different from one day to the next and the delivery point can be miles away from where I was told it would be.

The products I procure are a mix of seasonal and standard stock items, my suppliers may be local or overseas and it’s important for my team to recognize that even my local suppliers must change from one month to the next. Procurement is a constant headache and my buyers spend most of their time on the road.

There is no I.T. software to assist me and my transportation assets seem to have a mind of their own!

You see, I am responsible for procurement and logistics for my master who is a most distinguished, successful and capable Roman general. Whether we are in barracks or out on a field campaign I must ensure that our soldiers are adequately supplied and fed, as I mentioned earlier, to fail in my task would not be acceptable, it is a matter of life and death. I hope that you return to these pages soon, I will be sharing some of my supply line stories with you.

November 7, 2010

Supplyline Logistics: What’s in a name?

Filed under: supplyline — Tags: — admin @ 7:48 pm

Let me introduce myself, my name is Steve Loveday and I operate as an independent supply chain consultant under my company name, Supplyline Logistics Inc.

Bit of a long name that, Supplyline Logistics, how did I end up with that? Well, the Supplyline bit came because I wanted the name to reflect the industry sector that I’m in and to acknowledge the historical context of supply chain. I like history.

Off I went on my domain name search for “Supplyline” only to find that I’d been beaten to the punch, by quite a few years apparently, “Supplyline dot com” was already taken.

I really liked the name Supplyline and wanted to use it, I could have tried throwing money at the owner of the domain name but I didn’t (no big surprise there!) instead, I decided to add a bit more to the name.

I toyed with Supplyline Supply Chain Inc., for about 3 milliseconds, ugly isn’t it? Next came Supplyline Distribution Inc., not so bad, but I already had the historical piece sewn up and the term “Distribution” isn’t so widely used these days.

Then came Supplyline Logistics Inc., I liked it, the “dot com” domain was there for the taking, and hey, my initials are SL so tell me it wasn’t meant to be!

Supplyline Logistics Inc. was born.

Thanks, Steve

October 31, 2010

A Career in Supply Chain?

Filed under: supplyline — Tags: — admin @ 4:52 pm

Is a career in supply chain for me? That’s a question I’ve been asked many times by students I’ve taught.
What can I tell you? It’s been great for me, I’ve lived and worked in some lovely places, I’ve had the opportunity to travel on business and see some of the world along the way and I’ve worked with some really good people.
If you’re wondering what to do or you’re thinking supply chain is a possibility for you, my advice is to go for it, try it and see what you think. Don’t look back in a few years and say “I wonder what would have happened if?”
Supply chain has been around for thousands of years and it’s not about to go away, nearly every company in the world has logistics to deal with, they have “stuff” to purchase and move around, as do government and non-government organizations.
You’ll find roles in larger companies tend to be more specialized, simply because larger organizations have a higher volume of “stuff”, giving high work content in relatively narrowly defined areas when compared to smaller companies. In a smaller company you’ll probably find yourself dealing with a wider range of tasks and you’ll probably become multi-skilled faster than people who work in large enterprises.
The pure geography of your logistics career can be a plus factor, you can target the industry sectors and companies to fit the geographic profile you want, whether you want to roam the world or stay close to home, supply chain can be a fit. I know people who’ve built rewarding careers staying in a tight geographic area and others who have successfully leveraged their opportunities to land global roles and assignments.
There are a wide variety of supply chain roles, ones to suit all personalities and styles. Do you prefer to work alone or in teams? Are you technical? Do you excel at analytical work? Are you a leader? Can you see yourself in marketing or sales?
If your answer to any of these questions is “yes” then a supply chain career is open to you.
So, what do you think?