5 2 3 6 2 3 6 1 4 0 Ideas and innovations in supply chain and operations management APICS MAGAZINE INVENTORY MANAGEMENT CASE STUDIES/RELATIONSHIP-BUILDING STRATEGIES JULY/AUGUST 2012 A P I C S July/August 2012 Volume 22 | Number 4 Ideas and innovations in supply chain and operations management The secrets to lasting supplier relationships Exploring the global shift in consumer products demand
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8 7 5 2 3 60 2 3 6 1 4 0
Ideas and innovations in supply chain and operations management
APIC
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APICS July/August 2012 Volume 22 | Number 4
Ideas and innovations in supply chain and operations management
The secrets to lasting supplier relationshipsExploring the global shift in consumer products demand
Enabling Winners JDA ExpertiseCommitment to Success
Achieve peak supply chain alignment and integration
Exhibit at APICS 2012 Learn more by visiting apics.org/expo.
@Tweet_APICS
Stay up-to-date on the latest news and
information @Tweet_APICS. Use hashtag
#APICS2012
Visionary leaders join the APICS 2012 programAPICS 2012 general session speakers will discuss innovation and complexity and
how these concepts contribute to the performance of successful supply chains.
Douglas MerrillFormer Chief InformationOffi cer, GoogleCofounder and CEO,ZestCash.com
Eric BerlowTED Senior FellowFounder,TRU NORTH Labs
Attend the 2012 APICS International Conference & Expo Join us for the leading annual gathering of supply chain and operations
management professionals worldwide. Build your supply chain expertise,
network with experts and colleagues, and attend plant tours to experience the
application of concepts.
APICS 2012 Learning PathsAlignment to Demand
Enabling Technologies and Analytics
Foundations in Production and
Inventory Management
Integration Strategies Across the
Supply Chain
Optimizing Supply Chain and
Operations Processes
Professional Skills Development
Risk Management
Sustainability
October 14–16, 2012
Colorado Convention Center
Denver, Colorado, USA
Special team pricing is available.
Register today. apicsconference.org Save up to $400 by registering before
August 15.
2 July/August 2012 | APICS magazine
July/August 2012 Volume 22 | Number 4
APICS magazine
32
FEATURES
25 Building Stronger BondsThe APICS InterviewExplore the ways to maximize relationships in channel organizations.
38 New Landscapes and Emerging Opportunities
By Praveen Kishorepuria, Mark Quinn, and Adam MussomeliTap into markets in diverse environments and economies.
28 Build to BufferBy Mahesh Gupta and James F. Cox III, PhD, CFPIM, CIRMSee how one Indian shoe manufacturer boosted responsiveness and agility.
32 One-of-a-Kind Inventory ManagementBy Mark E. NeumanRecognize why your organization needs a cycle counting program.
34 Stack Up SolutionsBy Homayoun Taherian and Kristen Kravitz, CSCPUnderstand the benefi ts of using diff erent pallet layer confi gurations.
28 32 34
APICS magazine | July/August 2012 3
38
DEPARTMENTS
4 From the CEO
5 From the Editor
6 APICS Report
7 Membership Matters
8 Industry Watch
10 Ask APICS
12 Building Blocks
13 Working Green
14 Lean Culture
16 Management Perspective
17 Enterprise Insights
18 Executive View
20 Book Review
21 Relevant Research
56 Lessons Learned
Resources
42 Product Showcase
44 Supply Chain Management Directory
45 Index
46 Warehouse Management Systems Directory
47 APICS Annual Report
“An effective supply chain solution must ensure that each link in the chain, from raw materials supplier to consumer, recognizes its state of ideal performance.” page 29
APICS magazine (ISSN 1056-0017) is published bimonthly by APICS Th e Association for Operations Management, 8430 West Bryn
Mawr Ave., Suite 1000, Chicago, IL 60631-3439. Phone: (773) 867-1777. Canada Post International Publications Mail (Canadian Distribution)
Sales Agreement No. 571423. Periodicals postage paid at Chicago, IL, and additional mailing offi ces. Subscriptions: $65 per year U.S., $77
Send address changes to: APICS, 8430 West Bryn Mawr Ave., Suite 1000, Chicago, IL 60631-3439.
25
Supporting Supply Chain Talent Development
From the CEO
APICS magazine is published byAPICS The Association for Operations Management
8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 Phone: (800) 444-2742 or (773) 867-1777 Fax: (773) 409-5576 Email: [email protected] apics.org
Sharon L. RicePublisher
EditorialJennifer Proctor Elizabeth RennieEditor in Chief Managing Editor
APICS The Association for Operations Management8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 Phone: (800) 444-2742 or (773) 867-1777 Fax: (773) 409-5576 Email: [email protected] apics.org
From the Editor
APICS magazine | July/August 2012 5
Experts agree it can be difficult to decipher
the fishing boats that are operating legally
from the ones that aren’t.
The NPR story quotes Gavin Gibbons
of the National Fisheries Institute: “I don’t
think it’s that American fish companies
don’t want to go back to the boat level. But
what we’ve found is that the supply chain—
even the regulators who are in a position
to put regulations in place—are having real
trouble with it, and the companies are hav-
ing real trouble with it, as well.”
Rethinking business requirementsAs supply chain professionals, you
personally are experiencing the challenges
that come with the dynamic global
environment in which you practice.
Again, considering the fish example, in
the case of contamination, it is critical to
be able to trace and pull products from
the market anywhere in the world. Being
able to orchestrate this type of recall is a
requirement for supply chain professionals,
not an option.
More and more, creating sustainable
supply chains also is not optional.
Professionals in this field must consider
the triple bottom line of people, planet,
and profit. The people part of this equation
isn’t merely feel-good policies with no
substance. It’s about taking measures to
adequately ensure your company and
your company’s suppliers respect human
rights. That’s the only way human traffickers
like the ones who bought and sold Prum
will be put out of business.
Jennifer Proctor
Editor in Chief
6 July/August 2012 | APICS magazine
APICS Report
Learn, Network, and Advance Your Career
As we move into the second half of the
year, take a moment to reflect on your
goals for 2012 and determine the priorities
that are right for you. Attend an educa-
tional or networking event, read up on
the latest industry research, or seek out
the latest career trends with APICS tools
and opportunities.
Registration is open for APICS 2012APICS 2012 International
Conference & Expo
October 14–16, 2012
Colorado Convention Center
Denver, Colorado, USA
The theme for APICS 2012 is
“Elevate supply chain performance:
Value creation through market
alignment and integration.” As a
supply chain and operations manage-
ment professional, you are expected
to achieve maximum productivity,
meet consumer demand, and remain
agile amid instability and unpredict-
ability. At APICS 2012, access relevant
education, best practices, and thought
leadership to help you create a lasting
impact on your organization’s strategy
and success.
Educational sessions will focus on
finding solutions to the challenges you
face today and in the years to come.
Learn using a variety of methods,
including case studies, panel discus-
sions, workshops, and plant tours.
Learning paths
The learning paths for APICS 2012 are
Alignment to Demand
Enabling Technologies and
Analytics
Foundations in Production and
Inventory Management
Integration Strategies Across the
Supply Chain
Optimizing Supply Chain and
Operations Processes
Professional Skills Development
Risk Management
Sustainability.
Plant tours
Attend a plant tour to see best practices
and concepts from APICS 2012 edu-
cational sessions in action. Plant tours
will be offered by Celestial Seasonings,
MillerCoors, PTA Plastics, the US
Mint, and more.
APICS Leadership SummitThe APICS Leadership Summit is an
opportunity for APICS partner
leaders—including chapter officer,
district managers and support staff,
international associates, and autho-
rized education providers—to grow
their leadership skills and understanding
of best practices in chapter manage-
ment, professional development, and
instructional techniques. Sessions in
the APICS Leadership Summit enable
participants to
learn from experienced APICS
volunteers and staff members
network with industry leaders from
across the globe
study effective association manage-
ment strategies
discover how volunteer leader-
ship positively affects professional
development.
APICS 2012 Leadership Summit
October 13, 2012
Colorado Convention Center
Denver, Colorado, USA
To learn more or to register, visit
apicsconference.org.
Stay current with APICS researchEnhance your industry knowledge by
studying the latest industry research
and reports.
Assess risk, develop your organization’s
supply chain strategy, and understand
how to successfully implement or grow
your company’s sales and operational
planning (S&OP) process with APICS
folios. These downloadable compen-
diums offer a comprehensive under-
standing of relevant issues. Each contains
APICS research and findings, as well as
practical ways to apply the latest research
to your business.
APICS folios include
APICS Supply Chain Sustainability
Folio: Uncovering the Triple Bottom Line
APICS S&OP Folio: How to Be an
S&OP Champion
APICS Supply Chain Strategy Folio:
Make the Most of Supply Chain Strategy
APICS Supply Chain Risk Folio: Protect
your Business with Risk Management.
To learn more about the APICS folio
series or to purchase today, visit
apics.org/folios.
APICS members-only research reports
provide research you can’t find anywhere
else. Delve into critical topics, including
supply chain risk and strategy, S&OP,
sustainability, industry employment
trends, and more.
These reports are available exclusively
to APICS members. Many have accom-
panying folios—including recommenda-
tions, articles, and tools to enable you to
put APICS research to work.
APICS research reports include
APICS 2012 Sustainability Practices
and Challenges
APICS 2011 Supply Chain Strategy
Practices and Challenges
APICS 2011 Supply Chain Risk
Practices and Challenges
APICS 2011 S&OP Practices and
Challenges.
To learn more about APICS members-
only research reports or to download,
visit apics.org/research.
APICS magazine | July/August 2012 7
Hansen appreciated this opportu-
nity, but was understandably anxious
about all the new skills, knowledge,
and experience she would have
to acquire. “Luckily, I learned the
mechanics rather quickly,” she says,
“which is a good thing, because,
within a matter of three weeks, the
senior buyer who had trained me
moved on to other endeavors ... I was
suddenly the senior buyer on board.
My job rapidly developed into some-
thing that didn’t in any way resemble
what I had volunteered for.”
The events of September 11, 2001,
resulted in Hansen losing that job; but
she was hired by a new company just
one month later. “My new position
was a real eye-opener, as I migrated
from a low-[stockkeeping unit]
(SKU), fairly high-volume environ-
ment to a high-SKU, low-volume job
shop environment—and a brand new
enterprise resources planning system.”
Not long after, a group of cowork-
ers from different divisions decided
to sign up for the APICS Certified
Supply Chain Professional (CSCP)
certification. Hansen calls studying
for her exam “an enlightening look
into the brave new world of the
supply chain”—a concept that was
formerly unknown to her. “I began
to understand the puzzle and how all
the pieces fit together,” she explains.
“Planners are not enemy forces who
are out to get the buyers; and the
manufacturing group isn’t a disem-
bodied entity that just happens to reside
in a different area of the plant. Strange
and wonderful concepts like concurrent
engineering and partnership throughout
the supply chain came to life … I was
now part of the supply chain, a solid link
in the chain that makes it happen.”
A couple of challenging years later, her
company’s operations manager made it
clear that she should pursue her APICS
Certified in Production and Inventory
Management (CPIM) designation.
She identified both instructor-led and
online study courses and signed up.
Hansen says it wasn’t easy—and failing
one module did point out where she
had some weaknesses and gaps in
her experience. But not long after, she
earned her CPIM designation and now
believes strongly that APICS training
and certification are what led her from
buyer to supply chain career profes-
sional. “This is a realization that doesn’t
necessarily hit during the process of
certification,” she notes. “But it slowly
becomes part of who you are.”
Looking backHansen says what she does today in no
way resembles what she was doing 20
years ago—and she adds that she’s sure
“it won’t bear much resemblance to
what [she] will be doing in five years,”
noting, “This is one of the wonders and
pains of a supply chain career. It is a
mega-dynamic environment fraught
with obstacles and rewards.”
Hansen believes her affiliation with
APICS has revealed a fascinating
landscape of collaborative thinking and
sharing; a diverse experience, encom-
passing myriad cultures, processes, and
ideas; and education that helps her
innovate, succeed
and improve herself.
“I was fortunate
enough to work
for companies that
promoted education
and training,” she
says, “and I hope
to encourage individuals— especially
those who may become discouraged by
the rapid evolution in the field and the
challenges this can bring—to embrace
education and certification and elevate
their positions.”
Elizabeth Rennie is managing editor for APICS magazine. She may be contacted at [email protected].
An Exciting Journey to Supply Chain Success“Back in the Dark Ages—when cost and price were synonymous and manhandling a 5 percent discount out of a vendor was considered the pinnacle of negotiation—I had my first introduction to purchasing,” explains Denise Hansen, CPIM, CSCP. She began with her employer as an administrative assistant to the production manager, but volunteered to assist her company’s buyer on a part-time basis. “Three days later, I was congratulated and advised that I was the new junior buyer.”
Denise Hansen, CPIM, CSCP
Senior Buyer
Philips Lighting North America
APICS training and certification
are what led her from buyer to
supply chain career professional.
MembershipMatters
By Elizabeth Rennie
We encourage you to share your APICS stories. Visit apics.org/membershipmatters today.
8 July/August 2012 | APICS magazine
Industry Watch
AutomationOpto 22 unveils the Opto aPAC, an application for monitoring
and managing the company’s SNAP PAC System using mobile
devices running the Android operating system. The applica-
tion provides real-time access and information to authorized
automation professionals. It also is the first Android-based
mobile app for automation and control that requires no initial
configuration.
Cloud computingAccellos announces the latest version of AccellosOne
Workspace, its composite application framework that provides
the foundation for its current and future products. The frame-
work includes Microsoft technology, an embedded video train-
ing center, unlimited user-definable field extensions, externally
facing portal enhancements, integrated report management, and
distribution.
Camstar Systems Inc. has released a cloud-based solution—
the New Product Introduction (NPI) Accelerator—that helps
design, test, and quality professionals accelerate the innovation
and NPI processes. The solution provides access to critical-to-
quality data during product design and prototype stages, helping
avoid delays and risks associated with data from varied sources.
Mobile computingDRS Technologies Inc. has
added three mobile tablets
to its product portfolio.
The ARMOR X7et and the
ARMOR X7ad are thin,
lightweight tablets. The
seven-inch, multi-touch
tablets are designed to
make it easier for workers
to use mobile computing in
rugged environments.
Onset Computer Corporation has released the HOBO UX90
Motor On/Off Logger, a matchbox-sized, LCD-display data
logger for monitoring run times of motors, pumps, compres-
sors, and other equipment. The logger provides a simple and
convenient way to
record up to 340,000
equipment on/off
cycle changes and uses
powerful graphing and
analysis software to
convert the recorded
data into time- and
date-stamped graphs.
Wavelink Corporation has made available the Velocity mobile
enterprise browser to provide fast, reliable delivery of web-
based applications to rugged mobile devices. Velocity is engi-
neered to address key traditional browser shortcomings such
as poor performance, connection interruptions, lack of scanner
support, and narrow operating-system platform support.
Product life cycle managementInfor has integrated its Infor10 Product Lifecycle Management
Process and Lawson M3 ERP Enterprise using Infor10 ION
to seamlessly share data and information. Company leaders say
these tools bring new levels of speed and visibility to compa-
nies in process manufacturing industries and help customers
introduce products to market faster and at a lower cost while
ensuring compliance.
Eucon and Servigistics have launched the combined aftermar-
ket price optimization offering Pricing Manager. This offering
helps meet complex product management requirements with
its unique combination of proven pricing software and after-
market expertise. By combining Eucon’s research expertise with
Servigistics’s software, the tool is an innovative solution for the
automotive market.
Service managementIFS has acquired Metrix, a global vendor of advanced solu-
tions for service management and mobility. Metrix software is
used by customers worldwide to automate mobile field service,
streamline repair processes, improve customer service, and
increase profitability. The company has developed a mobile
framework that offers built-in industry expertise, out-of-the-
box use, and robust field force automation functionality.
Shop floorAnsell Limited relaunches its PowerFlex 80-813 Gloves with
improved increases. Workers who face the risk of arc flash
now have additional protection with the improved PowerFlex
80-813 gloves, which combine flame resistance, cut protection,
and ergonomics. The gloves also feature an exclusive cut-
resistant yarn to achieve protection in wet, oily, and dry work
environments.
Kelley has launched the
iFAN system, designed
to give facilities the
option of networking
their high-volume, low-
speed (HVLS) fans and
controlling them from a
centralized location. iFAN
was created to ensure
APICS magazine | July/August 2012 9
News items may be submitted to [email protected]. High-resolution, color photographs are encouraged.
maximum performance, functionality, and savings from large
HVLS fans. The fans are networked to a touch-screen com-
puter, complete with custom graphics representing the facil-
ity’s exact fan layout.
Laser Design
Inc. has unveiled
its most auto-
mated inspection-
grade, three-
dimensional (3D)
scanning system,
the SURVEYOR
Auto Gage 3D.
The tool com-
pletes high-speed
part inspections in minutes with minimal operator training,
is versatile enough for inspection and reverse-engineering
applications, and is fast enough for factory-floor verifi-
cation uses.
TechnologyConnected Nation has launched its improved broadband
mapping tool, My ConnectView, which offers unmatched
views of the technology landscape across multiple states.
The tool features more interactive data layers; additional
tools to explore data; and the ability to create, print, and
share custom maps.
MIR3 Inc. has released Intelligent Notification v3.0. This
version features a completely redesigned graphical user
interface, quick-launch, and three new product configura-
tions. The quick-launch feature enables administrators to
grant one-click access to users in order to compose and
launch notifications from a single screen. Usability has been
enhanced with a recommendation engine that will guide
through the notification process.
WarehousingAccuteX EDM introduces the SP-300iA 5-Axis CNC Wire
EDM. This machine features the latest microsparking
technology, the MST-II
function that provides
exceptional part fin-
ishes. The work-piece
mounting table is made
of hardened stainless
steel, offers easy acces-
sibility, and is designed
as a standard clamping
system.
Crown Equipment
Corporation unveils the
Crown WP 3000 Series
Walkie Pallet Truck. This
durable electric pallet jack
provides the maneuverability
and control vital for demand-
ing applications where pallet
trucks must maneuver in
tight spaces, withstand
impacts, deliver power on
demand, and give operators
controlled performance. The truck incorporates proven
technology such as AC traction and e-GEN braking.
Sapient Automation has released the ViperTilt tray
delivery system available
on the Viper Vertical
Lift Module. The solu-
tion provides ergonomic
order picking of parts
and items for better
ergonomics, accuracy,
and productivity in
operations in automated
storage and retrieval sys-
tems operations. The tilt tray design enables operators to
easily reach parts stored in the front and rear of the tray.
Ventyx has added three-dimensional visualization with
hot-pointing capabilities to its Ventyx LinkOne elec-
tronic parts catalog and maintenance manual. With this
new functionality, WebView 3.7 significantly enhances
the ability of maintenance managers and other end users
to graphically traverse a product assembly for faster,
more accurate parts ordering.
Wesley
International
introduces the
Battery Mule
battery station.
The Battery
Mule is an all-
in-one battery
changing, charging, and watering station in one complete,
mobile unit. It enables easy removal of a depleted bat-
tery pack from the electric vehicle. The battery station is
intended for use with stock chasers, burden carriers, tow
tractors, and personnel carriers.
10 July/August 2012 | APICS magazine
AskAPICS
By Jonathan Thatcher, CSCP
Send APICS your supply chain or operations management questions at [email protected].
Gaming the System Is your supply chain plagued by deception?
Reader S.Y. writes, “One of our suppliers suddenly is demanding higher prices, claiming an unavoidable shortage. We cannot see any clear reason for a shortage. What are our options?”
There are many possible reasons
for this situation. One avenue to
explore is a concept known as short-
age gaming.
Shortage gaming is the unethical
practice of limiting production to
force higher prices. It’s illegal in
many countries with regulations on
price fixing and production manipu-
lation. In normal markets, competition
should prevent this practice from
succeeding—indeed, in the long
term, competitive pressures tend to
ease the phenomenon. In the short
and middle terms, however, shortage
gaming is difficult to detect and can
appear without warning. It forces
purchasers to consider switching sup-
pliers, reevaluate make-buy decisions,
or find substitute materials not subject
to the shortage—all at significant cost.
While shortage gaming can occur
at any time, it is a greater tempta-
tion during difficult periods. In the
past 15 years, events such as natural
disasters, global economic down-
turns, market bubbles, debt crises,
and high-profile bankruptcies have
brought disarray to companies and
markets expecting stable demand and
supply. When a supplier engages in
shortage gaming, efforts to quickly
recognize and eliminate it are hindered
tern—2 appears more frequently than
3, 3 appears more frequently than 4,
and so on.
The principle is most useful across
numbers with large ranges of several
orders of magnitude. When values are
restricted or short-ranged, Benford’s
law does not apply, as in telephone
numbers, low-income wages, and
human heights. The types of data that
work best with Benford’s law include
populations, building heights, and
other similar statistics.
Fabricated numbers tend not to follow
Benford’s law. Instead, their digits
tend to be distributed uniformly.
Whether or not Benford’s law can
detect shortage gaming in a particular
circumstance, it is a strong auditing
practice to apply when encountering any
unusual results, and it can uncover
many forms of deception.
If you have good reasons to suspect
shortage gaming, either from the
application of Benford’s law or the
presence of other deceptive markers,
suggest to the supplier that the
short-term gains do not compare to
the long-term costs of the practice.
Remind them that trust and reputation
are critical at every point in the supply
chain, and they are easy to destroy
and slow to recover. However, strong
supply chain relationships are prime
strategic competitive advantages and
are very difficult for a competitor to
recreate.
Jonathan Thatcher, CSCP, is director of the APICS research department. He may be contacted at [email protected].
by the uncertainty and lack of vis-
ibility. Further, poorly understood or
unclear regulations can pave the way
for shortage gaming even in better
times.
The best way to avoid shortage
gaming is to engage in practices that
prevent it from occurring in the first
place. Strong selection criteria, trans-
parent relationships, and competitive
performance evaluations all are ways
to help ensure suppliers are trustworthy.
Communication and reporting can
quickly highlight unexpected changes
in supply and demand. If a supplier
reports an incident, trust first, but
follow up and verify later.
Benford’s lawIt is a challenge to prove that a par-
To comment on this article, send a message to [email protected] and Operations
PlanningTo comment on this article, send a message to [email protected].
By Bradley McCollum
Human Energy AlignmentExploring this powerful benefit of effective S&OP
Fast approaching is the fourth anniversary of Jarden Corporation’s executive sales and operations planning (S&OP) implementation and my eighth anniver-sary with the organization. Looking back over those years, our business—like so many others—has had opportunities to capture and challenges to overcome. Without question, our S&OP processes have helped us navigate those waters.
The work we’ve done has had lasting
impacts on a broad array of business
processes. We forecast differently, we plan
supply capacities differently, we make
decisions around warehousing and trans-
portation differently. Our investments
in S&OP have brought significant,
quantifiable returns. However, I would
submit that the most valuable change
has been to something far more quali-
tative, something most of us never even
talked about when we started: our very
culture. S&OP has brought about a sig-
nificant shift and enabled us to leverage
the power of aligned human energies.
The culture changePrior to the S&OP implementation, our
business had the usual functional silos:
sales, marketing, finance, supply chain,
and operations. Our process structure
provided no opportunity or forum to
discuss, understand, or certainly argue
about the quality or bias of our key inputs.
Therefore, each silo was left to make its
own calls, based on its own perspectives.
This translated into the familiar sand-
bagging and hedging, typically leaving
finance to make heads or tails out of what
was really going on.
The result was a business that was
difficult to predict and control—and thus
very challenging to optimize. Today,
however, our S&OP design not only
provides for that forum, but also makes
consensus a cross-functional priority and
monthly requirement. What began as a
somewhat uncomfortable process change
as part of our S&OP design developed
into a key cultural transformation.
I have identified three key aspects of
the S&OP implementation and ongoing
practice that facilitate this change:
1. Consensus around the data we use
to make decisions: A key step of S&OP
design starts with deciding what data are
going to be used each cycle. No longer is
it acceptable for each business function to
have its own data source. The cross-
functional team must agree to the data
inputs needed for each step, validate the
data, and support the inputs.
2. Disagreeing without being
disagreeable: Every time I introduce new
team members to our S&OP process, I
explain to them it’s not only acceptable
for them to disagree and argue their
perspectives in our meetings, but it’s
really their responsibility to do so as part
of the team. For some people, this can be
uncomfortable at first; but this mandate for
disagreement within the process eliminates
the unproductive passive aggression that
often otherwise results. That situation can
be divisive and serves no benefit to the task
at hand.
3. Focusing on the error: We know
we will never be exactly right with
our assumptions, so we stop arguing
about what the correct number is and
start understanding how wrong the
numbers could be. This change in
thinking completely refocuses the efforts
spent rescrubbing numbers, enables a
better understanding of error and risk
drivers, and lets the team more quickly
develop mitigations. Our responsibility as
an S&OP team is to ensure that we’re
successful as a business, not to point
fingers when we’re not.
S&OP can’t and certainly won’t by itself
solve the challenges that businesses face
every month, quarter, and
year. When implemented
correctly, however, it can
support a cultural change
that enables people to
have control and achieve
optimization. As a cross-
functional S&OP team,
you are able to make
decisions knowing that each perspec-
tive has been explored, challenged, and
understood as part of the solution. The
result is a broader understanding of over-
all business capabilities, opportunities,
and risks—and decisions made with that
understanding are more likely to be the
right ones.
Proof that this cultural change has
occurred will come in the form of a
visible shift in focus from individual
success within functions to success as an
integrated business. And at the end of the
day, that’s why we all get paid.
Bradley McCollum is the sales and operations planning manager for Jarden Corporation’s Leisure and Entertainment Group, which manufactures, markets, and distributes a broad line of consumer products. He may be contacted at [email protected].
Two Out of Three Ain’t GoodExamining the people and places of total economic viability
As globalization has become a fait accompli, supply chain and operations management has emerged at the forefront of the worldwide economic battle. Our competition isn’t just down the street or across the state line—it’s everywhere. And, as this struggle continues, it comes back to the three competitive dimensions of customer value: speed to market, cost, and quality.
For many years, customers have
compromised by subscribing to the well-
known phrase, “Quality, cost, delivery:
Pick any two.” However, this trend is
changing. Many manufacturers are
increasingly able to deliver all three, and
this capability is making a significant
difference as strategic thinkers consider
where to locate manufacturing facilities.
In the newsWhile globalization may be a done
deal, it has not necessarily caused the
majority of manufacturing jobs to leave
the United States, as was predicted
several years ago. For example, in July
2003, there was an article in the Wall
Street Journal by Clare Ansberry titled
“Why US Manufacturing Won’t Die.”
Therein, she posed the question, “What
role will US manufacturing play in the
national and global economies in the
coming years?” The gist of the story was
that less-skilled work would go to other
countries, while high-technology jobs
would stay here—at least until the skill
levels of people in developing countries
increased. At that time, those jobs could
go, too. Then, higher wages in devel-
oping countries would help to level the
competitive playing field. This prognosis
looked reasonably competitive for US
manufacturing, as innovation and tech-
nology would drive manufacturing job
growth while lower-skilled jobs would
indeed go away.
More recently, an April 2012 article
also in the Journal explained some of
the factors driving the resurgence of
manufacturing in South Carolina. “US
Manufacturing, Defying Naysayers,”
by John Bussey, discusses that state’s
commitment to manufacturing
development and workforce training
through colleges and universities.
He describes how South Carolina’s
growth as an international manufac-
turing hub mirrors the earlier and
equally successful economic training
and development made by the state of
Alabama. First, Alabama attracted the
Mercedes assembly plant, followed by
Honda; Hyundai; and hundreds, if not
thousands, of tier-one and tier-two
suppliers to the state’s automotive
industry. Other states have followed
suit, and the outcome of such col-
laborations between educators and
the manufacturing base translates into
higher productivity, better quality, and
more competitive costs. Bussey lists
other reasons for the resurgence, as
well, such as Mexico’s instability and
rising labor costs in China.
Perhaps the real secret is that—
when it comes to achieving speed,
cost, and quality—virtually all jobs
require higher skill levels to be com-
petitive. For those of us who spent
any time during the mid 1990s in
China, we observed a lot of well-
educated, highly motivated Chinese
people who were eager to learn (and
did learn) how to make high-quality
products efficiently and quickly. But,
despite the emergence of Chinese
manufactured products, many US
manufacturers have continued to be
competitive because of investments in
workforce training and development.
For example, states such as Alabama and
South Carolina have made it a prior-
ity for their workers to learn new skills
and have helped companies please their
customers with high-quality products at
competitive costs.
In the end, one thing is clear: When
certain types of products lend them-
selves to only two of the three dimen-
sions of customer value, it can open
the door for competition. That is why a
well-trained and motivated workforce
that knows how to achieve all three will
never go out of style.
John P. Collins, CFPIM, CSCP, is president of Sustainable Solutions. He may be contacted at [email protected].
Eric P. Jack, PhD, CFPIM, CSCP, is associate dean at the University of Alabama–Birmingham. He may be contacted at [email protected].
By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP
The Economics of Clean EnergyInvestments are slowed by financial uncertainty
With much of the developed world plagued by low- and no-growth econo-mies, last year’s 6.5 percent increase in worldwide spending on clean energy might appear to be the silver lining to an ominous financial cloud. However, the fact is that rate of growth is the lowest it’s been in the last eight years.
New data suggest that the usual
suspects—policy uncertainty in the United
States following the Great Recession and
questions about the long-term viability of
the European Union—are to blame. “There
is no sign of a rapid turnaround in either
of these regions in the next 12 months,”
says Michael Liebreich, chief executive
of Bloomberg New Energy Finance, a
market research firm focused on renew-
able energy. “Clean-energy technolo-
gies, particularly solar photovoltaics and
onshore wind, continue to fall in price and
approach competitiveness with fossil fuel
power, but politicians in many countries
appear to be ducking the decisions that
would ensure that the sector maintains its
growth trajectory.”
Perhaps the most important of the
ducked decisions involves the failure
to forge a global consensus on climate
change. Yvo de Boer, former executive sec-
retary for the United Nations Framework
Convention on Climate Change and
current global advisor on sustainability for
professional services giant KPMG, says,
“A global, legally binding agreement on
climate could provide a guarantee and a
level of confidence and certainty that could
foster an even bigger wave of investment in
renewable energy technologies and serious
efforts to cut greenhouse gases.”
Still, the 6.5 percent increase in clean-
energy investment in 2011 outpaced
overall growth in the G-20 countries,
whose combined spending on clean
energy accounted for more than 95 percent
of all investments worldwide. The United
States reclaimed the top position among
G-20 members, unseating China for
the first time since 2009, with an invest-
ment of $48 billion. Germany, Italy, the
United Kingdom, and India also attracted
significant private investment. In all, 2011
investments in clean-energy technologies
totaled $263 billion worldwide.
Solar technologies were the principle
beneficiary, attracting investments totaling
$128 billion, which accounted for more
than half of all clean-energy outlays made
by G-20 countries. That was a 44 percent
increase compared to the year before and
was driven by sharp drops in solar-module
prices. The spike in solar spending helped
offset declines of 15 percent in both wind
and energy-efficient investments.
The G-20 countries aren’t the only
nations influencing the clean-energy
movement. In fact, some of the smallest
countries on the planet are making bold
sustainability statements, motivated in part
by the desire to ensure their long-term
survival. The Tokelau Islands in the Pacific,
threatened by rising sea levels, are intently
focused on becoming carbon neutral.
Officials there say that a hybrid system of
solar energy and coconut oil will supply
enough energy for every resident by the
end of the year, while reducing energy
costs approximately $1 million annually.
Other islands are making similar
progress. Samoa and Tuvalu will derive
all of their electricity from renewable
sources by 2020. The Cook Islands plan
to convert to solar panels and wind
turbines for their energy. United Nations
studies have shown that imports of fossil
fuels represent up to 30 percent of the
gross internal product of some of these
island nations, due to the great distances
they need to travel. Survival, there-
fore, has both a physical and economic
dimension.
While global investments in clean
energy were down in 2011, the trend
over the last several years has been
positive. “Clean-energy investment,
excluding research and development,
has grown by 600 percent since 2004 on
the basis of effective national policies
that create market certainty,” says Phyllis
Cuttino, director
of Pew Charitable
Trusts’ clean-
energy program.
In that context,
it’s difficult to
imagine a more
effective policy
than a global, legally binding agreement
on climate. As de Boer of KPMG argues,
an agreement of that sort would level the
regulatory playing field to the benefit of
all businesses, which would be secure in
the knowledge that their rivals were
following the same rules.
The question is: How long can we
wait for such an agreement? Clearly, any
answer other than “no longer” is simply
too risky to consider.
Antonio Galvao, CSCP, is vice president supply chain—global I&L at Diversey, now part of Sealed Air. He may be contacted at [email protected].
It’s difficult to imagine a more
effective policy than a global, legally
binding agreement on climate.
14 July/August 2012 | APICS magazine
Author Name
LeanCulture
Now, I’d like to expand upon two of
these tools and explore how some real-
life organizations have used them in their
quests to bring about change.
The toolsPower tools correspond to the lower-left
quadrant of the matrix, a situation indi-
cating low agreement on both goals and
how to achieve them. Examples of power
tools include coercion, threats, fi at, role
defi nition, and hard-nosed negotiation.
Power tools can be eff ective in low-
agreement circumstances—but only if
leaders wield enough authority. One
instance of power tools in play occurred
during JPMorgan Chase’s merger with
Bank One in 2004. Th e CEO aggressively
drove technology changes, includ-
ing threatening to make all decisions
regarding a technology upgrade himself
if they were not performed in six weeks.
Th e same CEO also reconfi gured a quota
control system, endangering the jobs and
bonuses of the branch managers who
relied on those quotas.
Kaizen events are one strategy com-
panies use to quickly drive changes on
the shop fl oor. In my time working with
General Motors, I saw my colleagues
employ this technique as a power tool,
squeezing immediate price reductions
from suppliers, who understandably were
reluctant to change their business meth-
ods. However, the automotive giant had
the clout to de-source any vendor that
refused to participate. Th rough exten-
sive and rapid engineering changes, GM
was able to use the ultimate power tool
of physically changing work, rendering
it impossible to revert back to the old
ways.
Management tools, on the other
hand, relate to the lower-right quad-
rant—low agreement on business goals,
but high agreement on how to achieve
them. Th ese techniques include fi nan-
cial incentives; hiring and promotion;
training; standard operating procedures;
control systems; and measurement
systems, such as the balanced scorecard
and hoshin kanri, which is a method for
developing and implementing strategic
goals (also known as policy deploy-
ment). In the right circumstances,
measurement systems to drive change
can lead to amazing results.
Measurement systemsLet’s explore in detail two case stud-
ies in which measurement systems
played a large role in the journey toward
change. Both companies were similarly
sized, were privately owned, and shared
fi nancial information with employees—
in fact, both engaged in profi t sharing,
where employees could personally ben-
efi t from high performance.
At the fi rst company, a plant manager
was charged with moving metal-forming
equipment for use in construction sites
to another location. His team performed
careful time and motion studies, as well
as a rationalization analysis of how to
leverage lean techniques and achieve
fl exible assembly at the new site. Th e
goal was to produce 100 fi nished units
in a single eight-hour shift , a feat never
previously accomplished at the com-
pany. Studies indicated this was pos-
sible; however, months went by without
the goal becoming realized. Finally, the
plant manager installed a large, $2,000
monitor, which displayed in real time
the number of units remaining until the
target was met.
Within 12 days, the magic number of
100 units was reached for the fi rst time.
During the next month, this became a
routine occurrence; and two months
later the team hit 120 units. Th e plant
manager was ecstatic, and the monitor
paid for itself every week in increased
productivity. Best of all, no other actions
were necessary.
Th e second company, a manufacturer
of printed circuit boards, also was in the
process of adopting lean manufacturing.
During the implementation, managers
recognized that rework and corrections
comprised 35 percent of total costs.
Figure 1: Agreement matrix
Change Can Be EasyBringing about agreement to accomplish lasting transformation
In the last edition of “Lean Culture,” I introduced several concepts I gleaned from a Harvard Business Review article titled “Th e Tools of Cooperation and Change.” I invited readers to locate their companies on a matrix of four quadrants, with one axis representing the level of agreement on business goals throughout the organization and the other representing agreement on how to achieve those goals. (See Figure 1.) I also introduced four sets of change management tools—power, leadership, management, and culture, each corresponding to the quadrant of the matrix where it is most eff ective.
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In the end, what worked at the second
company was ratcheting up standard
work and preventive measures. The
engineering team served to force the
necessary changes with tightly dictated
work methods and more rigorous
inspection standards—which you may
recognize as power tools as opposed to
management tools.
Change the planThe authors of the Harvard Business
Review piece warn that without a
“modicum of agreement on both
dimensions of the matrix,” the tech-
niques they describe generally won’t
work. I believe this explains why
strategic plans often fail. If you find
that agreement is lacking in either axis
on the change management matrix,
this is a barrier to success that requires
action. A specific plan with clear
accountabilities can close the gaps and
enable a higher likelihood of success.
Ron Crabtree, CIRM CSCP, MLSSBB, is president of MetaOps and coauthor of four books on operational excellence. He also writes an online magazine; runs an online radio show; and teaches, presents, and consults. He may be contacted at [email protected].
Agility in the Social Media EraResponding quickly to customer desires
If you look around, it’s plain to see that sales and marketing are being transformed by the internet and social networking. One example can be found in Best Buy’s decision to downsize and close stores due to declining CD and DVD sales. Even Walmart and the automotive industry are feeling the impacts. Members of sales teams in diverse industries all carry iPads and chase customers on Facebook and Twitter. The internet clearly is changing every sales business.
But what does this mean for companies
and professionals in supply chain and
operations management? While there
is no simple checklist for surviving and
thriving in the internet age, the current
trends can begin to describe what issues
will be prevalent in the near term. For
starters, customers will express their likes
and dislikes and expect businesses to
respond. New designs might be rushed
into production, existing designs might
be modified, new versions might be
produced, and prices might go down.
Regardless, it means supply chain
and operations management profes-
sionals must be part of the dialogue:
sitting in on marketing meetings,
monitoring customer feedback, and
becoming involved in decisions
about how to respond.
What happens, then, when a customer
has more than a mere suggestion or
complaint, but a real quality problem?
A recent example of this is found in the
highly publicized Toyota recalls of 2009
and beyond. There had been rumors of
trouble, but they were not taken seriously
until an accident killed an entire family.
The challenge lies in how to monitor the
chatter from various channels, under-
stand what people are saying, and cor-
rectly prioritize issues so they get resolved
quickly. It requires looking at the orga-
nizational structure, evaluating who can
makedecisions, and reexamining reward
systems, to name a few essential steps.
Next, consider the fact that cus-
tomer communication is volatile and
can spike or dip with the success or
failure of a product. Contrast the mil-
lions of iPhone sales with the sharp
decline in demand for Blackberry
products. Supply chain and opera-
tions managers must fine-tune enter-
prise resources planning systems and
rethink facilities and suppliers to be
able to identify sales trends and react
quickly—within days or weeks, not
months or quarters.
Taking swift actionI recently read an article about how
Honda has made its auto factories
more flexible. Literally, a facility can
build one model one day and switch
to another the next. Honda accom-
plished this with careful thought and
at considerable expense, but the com-
pany now has the ability to change
with the market. How does your
organization compare? How fast can
you ramp up or down a product or
product mix? It depends on the speed
at which you can get data, analyze
them, and make a decision. It also
requires the ability to swiftly imple-
ment the decision with certainty.
It is crucial, when analyzing your
own processes, to document them
carefully and understand how they
work. Use devices such as flow charts,
and develop metrics that show how
agile your company can be. You must
have an understanding of how well
you perform and how fast you can do
things in response to customer input.
These reactions may seem unneces-
sary now, but look at which compa-
nies are going bankrupt and which
are thriving. Watch how automotive
dealers handle their customers pull-
ing up inventory and price data on
their smartphones and using this as
leverage in negotiations. The world
is changing. To put it simply, we are
going to have to adapt or die.
Philip E. Quigley, CFPIM, PMP, is a senior application portfolio manager for Computer Sciences Corporation. He teaches at Chapman University’s Argyros School of Business and Economics and California State University at Fullerton. He may be contacted at [email protected].
The challenge lies in how to monitor the chatter
from various channels, understand what people
are saying, and correctly prioritize issues so they
get resolved quickly.
APICS magazine | July/August 2012 17
By Dave Turbide, CFPIM, CIRM, CSCP, CMfgE
A Time-Tested Technique Studying the successes and shortcomings of material requirements planning
Material requirements planning (MRP) is the calculation of potential shortages and replenishment activity from the master schedule using the bill of material and inventory availability data. Developed in the early 1950s, the basic approach still is at the center of every enterprise resources planning (ERP) system more than half a century later.
Of course, MRP has in fact changed
over the years, benefiting from ever-
increasing computer capabilities and
the advent of new computational and
programming techniques. But the
world also has changed. In the 1950s
and 60s, demand outstripped capacity—a
company could release a new product,
put it on the market in great quantities,
and likely sell it. Today, it is more often
the case that capacity is greater than
demand, and competition is global and
relentless. Customers tell manufactur-
ers what they want, when they want it,
and how much they are willing to pay
for it. More variety, smaller individual
product volumes, short lead times and
product cycles, and intense pricing
pressure are the characteristics of
business.
For many people, MRP doesn’t
provide what they need. Alternatives
and additions continually emerge
to try to resolve this issue. Most
Another strategy is to develop ideas
and techniques to overcome MRP’s
limitations and make it more responsive
to today’s manufacturing realities.
Demand-driven MRP, documented in
the latest edition of Orlicky’s Material
Requirements Planning, is one such
approach. It incorporates traditional
MRP, lean, and the theory of con-
straints, replacing MRP’s push-oriented
approach with a “position and pull”
execution strategy.
Looking toward the futureAfter more than half a century of
extensive use around the world,
MRP still is the definitive solution
for manufacturing companies—new
approaches supplement the methodol-
ogy, but they do not replace it. On the
other hand, such initiatives emphasize
that MRP is not perfect.
The world continues to change,
providing challenges and opportuni-
ties for manufacturers, management
theorists, and software developers
alike. Today’s enhanced solutions aim
to address these challenges. As for
tomorrow, we’ll just have to see what
challenges emerge and how MRP
enhancements evolve to meet them.
Dave Turbide, CFPIM, CIRM, CSCP, CMfgE, is a New Hampshire-based independent consultant and freelance writer and president of the APICS Granite State chapter. He may be contacted at [email protected].
The Digital Value ChainDeveloping a comprehensive data distribution strategy
Whenever the question arises of which company has the best-performing supply chain, Apple inevitably is at the top of key lists and industry markers such as the Gartner Top 25. In the recent past, some questioned whether Apple had a true supply chain, pointing to how the tech giant has branched out from traditional computer hardware and consumer devices to areas such as e-commerce and digital content. Lately, however, many of its harshest critics have come to admire Apple’s supply chain capabilities, including its brilliant success in integrating new product design and launch, pricing strategy, consumer loyalty, and e-commerce infrastructure, as well as the total customer experience it provides.
Apple has the proven ability to not
only create products and services
people want, but also deliver a seam-
less customer experience, whether in
person or online. To any organization
grappling with the task of developing
a digital value chain, Apple serves as a
prime, powerful example of how to do
things right.
Let’s get digitalIn the early days of my career, the digital
value chain meant electronic data
interchange transactions—simple com-
munications between organizations that
shared inventory levels, demand data,
forecasts, replenishment amounts,
purchase order acknowledgements, and
the like. This sort of connectivity remains
powerful and necessary at many
companies, but it pales in comparison
to the complexity and value of today’s
data chains. For example, when systems
began to come about that provided the
ability to view and order products and
services online, it was both a novelty
and an inspiration. Many business
leaders struggled over the ensuing years
to define a viable e-commerce strategy,
having to determine the correct courses
of action without much in the way of
research: deciding whether to merely
display products and branding or to
offer the ability to place orders, how to
handle online pricing, and how to manage
fulfillment, among other concerns.
It is a sad truth, but, at many
organizations, e-commerce was an
afterthought or simply a mechanism
for brand and company awareness. The
worst offenders were late in developing
systems that could provide both strong
functionality and a viable customer
experience. At many companies,
e-commerce was seen as a technol-
ogy issue, so ownership was given to
ExecutiveView
By David Aquino, CPIM
APICS magazine | July/August 2012 19
years. These people have clear seats at
the development table, enabling them
to understand the ultimate product and
platform development strategy and
recognize the keys to revenue, profit-
ability, and longevity.
Supply and demand planningFor supply chain leaders who are
incorporating digital content as part
of their demand and supply planning
processes, it’s great that every item
distributed electronically is one fewer
piece of physical inventory. The challenge
is in effectively capturing the associated
data and connecting interdependencies.
It’s important to have answers to dif-
ficult questions such as: Does the fore-
cast consider digital cannibalization?
How much digital content should be
produced? What is the total projected
revenue for both physical and digital
material, considering different pricing
approaches?
For successful planning of digital
supply and demand, first define the
master data attributes for these items,
including product classes, pricing, life
cycles, versions, and connections to
physical product codes. Once a logical,
non-conflicting hierarchy is in place, it
is important to understand the unique
demand patterns for the digital products,
including base level, seasonal elements,
pricing sensitivity, and total life cycle.
In my experience, the assumption that
physical and digital products always
have similar demand patterns is erro-
neous. From a supply perspective, it is
easy to think that digital products don’t
require much work. However, as digital
increases its impact on the physical
supply chain, it is critical to create a
harmonious strategy: thinking ahead
for the decrease of physical products,
researching new manufacturing
methods, and improving network
design to accommodate smaller
inventories. Ultimately, the goal is to
adopt a model that supports both physical
and digital products.
Within the business process for
digital products, two key challenges
arise in the new product development
and launch arena: Customers are forced
to manage many different technology
platforms without much in the way of
guidance, and a lack of priority align-
ment means digital orders often become
lost during fulfillment. Mature organi-
zations focus greatly on rationalizing
platforms and structures and building
environments that can support multiple
platforms more readily.
Training and product knowledge
development are evolving, as systems
demand more technical proficiency,
striking a balance between the issues
of access and entitlement, bug manage-
ment, and core content. Additionally,
it takes reinforcement throughout the
business that digital content is not lower
in the fulfillment hierarchy. Eventually,
order controls and human resources
and management practices will shift to
increase focus on digital fulfillment.
Finally, what constitutes success-
ful fulfillment for a digital product
or platform? Is it when the product
becomes available? Whenever a
customer attempts to access a given
system? When a download or update
occurs? Organizations must not only
build new metrics beyond those of the
traditional physical supply chain that
accurately capture consumer desires,
but also integrate holistic metrics
wherever possible that represent sup-
ply chain performance across a mix of
products and services.
For fledgling digital value chain
organizations, a dearth of available
reporting and metrics can leave supply
chain leaders ignorant of situational
issues and customer frustrations until
they escalate beyond the boiling point.
Reporting and metrics must match the
significant expectations of the digital
world. This may enhance all metrics
surrounding demand and supply
planning, fill rate, and cost adherence
for the entire operation.
It is easy to dismiss the history of
e-commerce and the rise of digital
media as distractions, irrelevant to
other industries and supply chain
aspects. However, today’s digital market
strategies, management, and global
requirements are forcing even the most
reluctant supply chain leader to consider
how the digital value chain affects his or
her operations. By studying the short-
sightedness of the past, we can learn
from the mistakes of others and ensure
the integration of the physical and the
digital worlds is faster and less painful
than before.
David Aquino, CPIM, is vice president, operations strategy, planning, and performance, at Houghton Mifflin Harcourt. His career as a supply chain executive has spanned many global organizations within the consumer products industry, including PepsiCo, Scholastic, Foster Grant, and Aramark. He may be contacted at [email protected].
The New Edge in Knowledge: How Knowledge Management is Changing the Way We Do BusinessBy Carla O’Dell and Cindy Hubert Published in 2011John Wiley and Sons236 pages
The American Productivity and Quality Center is a nonprofit
research firm with almost 20 years of practice in knowledge
management, including benchmarking, best practices, and
implementation in organizations both large and small worldwide.
In this book, authors Carla O’Dell and Cindy Hubert share some
of the insights, ideas, and innovations they and others at the
organization have learned through its rich history.
Knowledge management—“a systematic effort to enable
information and knowledge to grow, flow, and create value”—is
just as critical in manufacturing as it is in other fields. In fact, it
may be more critical, as veteran manufacturing employees in
the baby boomer generation begin to retire from the workforce.
The danger is that these retiring boomers will take decades of
knowledge with them when they go. As the authors indicate, every
organization competes based on how much knowledge its people
possess. Companies lose sales, governments lose wars, and people
lose jobs when they don’t have the strategy and means to connect
the dots.
The New Edge in Knowledge attempts to connect those dots
in terms of knowledge management. Early on, the book creates
a foundation for key strategic concerns related to knowledge
management. Later, it details how to identify and focus attention
on the value propositions related to knowledge management,
followed by an examination on how to select the right approach
and build a business case for enterprise knowledge management.
Next is a look at the benefits, successes, and characteristics of
properly executed knowledge management strategies. Web 2.0 and
its impact on knowledge management are briefly touched upon,
followed by governance, building a knowledge-sharing culture,
and measuring the impact of knowledge management efforts.
The book ends with a call to “make best practices your practices.”
O’Dell and Hubert can help your company innovate, grow, and
share knowledge. The concepts presented in this book should be
enough to prod any manufacturing leadership into thinking more
seriously about its knowledge management practices.
Leading Effective Supply Chain Transformations: A Guide to Sustainable World-Class Capability and ResultsBy William B. Lee and Michael R. KatzorkePublished in 2010J. Ross Publishing260 pages
The authors of Leading Effective Supply Transformations pull no
punches, opening with a harsh statement: “This is a book that
recognizes the sorry state of the supply chains of many com-
panies—supply chains that are in dire need of transforma-
tion.” Unfortunately, for many organizations, this statement is
all too true, many supply chains are breaking down or operat-
ing under a great deal of strain.
This book addresses the complex human behavior challenges
associated with creating sustainable supply chain transformation.
The authors stress the nature of the leadership required to
make supply chain transformation possible. The first three
chapters examine the supply chain from a big-picture perspective.
While ostensibly aimed at the C-suite, this section provides
insights to all levels of the business into transformative supply
chain issues such as globalization, wealth transfer, the short-
term demands of Wall Street, innovation, and more.
The book addresses the details of the transformation
process, examining issues such as fixing material problems,
stemming escalating costs, creating a strategic plan, facilitating
collaborations among partners, and managing multiple supply
chains. The concepts are brought together by a discussion of
nine key initiatives organizations need for transformation.
Lee and Katzorke provide the background, tools, and ideas
that can help transform a poorly performing supply chain. If
you are looking for methods to improve processes, strengthen
people, and get the most out of partnerships, this book can
provide the tools you need.
Karl M. Kapp, EdD, CFPIM, CIRM, a professor at Bloomsburg University, is author of Gadgets, Games, and Gizmos for Learning and coauthor of Integrated Learning for ERP Success. He may be contacted at [email protected].
APICS magazine | July/August 2012 21
By Richard E. Crandall, PhD, CFPIM, CIRM, CSCP
RelevantResearch
Why would manufacturers be inter-
ested in providing services? Would that
not move them from their core compe-
tencies or shift their strategic objectives?
Actually, in many cases, adding services
not only strengthens core competencies,
but also helps the business focus on
strategic objectives. Following are
some of the reasons manufacturers
should add services to their product
portfolios.
Increase sales and profits. Perhaps
the most attractive reason for add-
ing services is the prospect of boosting
revenues and profits. “Post-sale service is
one area of the supply chain where profit
potential still remains untapped by many
manufacturers. But that may be changing
with mounting evidence of its impact on a
company’s bottom line” (Vigoroso 2011).
Increase product sales through sup-
port of customers. Many manufacturers
have found they can increase sales if they
provide added support to their custom-
ers, especially in the form of financing.
Thomas Edison, the founder of what
became General Electric, recognized this
opportunity early. His company invested
in small, private electric utilities to assure
there would
be a read-
ily available
supply of
electricity to
homeown-
ers, to whom
General
Electric wanted to sell electrical appli-
ances (Rothschild 2007). Today, as retail-
ers often are larger than their manufactur-
ers, the manufacturers have refocused
financing efforts upstream toward their
own suppliers.
Enhance relationships with
customers. Manufacturers are becoming
more customer-centric. As they move
from a “make and sell” to a “sense and
respond” strategy, they will enhance the
sale of their manufactured products and
solidify their position as a viable and con-
temporary business (Halleck 1999).
Now, consider the definition of supply
chain: “the global network used to deliver
products and services from raw materials
to end customers through an engineered
flow of information, physical distribution,
and cash” (Blackstone 2010). From this,
it is obvious that a supply chain spans all
the industries included in the NAICS.
The supply chain concept also offers an
opportunity for manufacturers to add
services to their operations.
There are two main categories of
customers for manufacturing compa-
nies: other businesses and individual
consumers. When selling to other busi-
nesses, manufacturers have a direct
connection. When selling to individual
consumers, manufacturers often go
through distribution companies such
as wholesalers and retailers. Therefore,
the link with consumers is less direct.
But this is changing as more manufac-
turers move to online sales of products,
with the subsequent direct link with
consumers.
Manufacturing is considered one
of 10 major divisions, or classifica-
tions, of businesses. While the first
two—Agriculture, Forestry, and
Fishing; and Mining—can be viewed
as extractive businesses, Construction
and Manufacturing are transforma-
tive. All the classifications listed after
Manufacturing can be grouped into a
broad category of services.
Manufacturing is “a series of inter-
related activities and operations
involving the design, material selection,
planning, production, quality assur-
ance, management, and marketing of
discrete consumer and durable goods”
(Blackstone 2010). It involves taking
the outputs from farms and mines and
transforming them into facilities or
products.
While manufacturing is concerned
with making a product, services focus
on enhancing the product’s use. This
involves making it more accessible and
more meaningful to the user, whether
that be another business or an indi-
vidual consumer. The APICS Dictionary
defines the service industry as “an
organization that provides an intan-
gible product (e.g., medical or legal
advice)” and “all organizations except
farming, mining, and manufacturing”
(Blackstone 2010).
Exploring Your OptionsWhy manufacturers should consider the service business
The North American Industry Classification System (NAICS) uses the following codes to classify businesses: 01-09—Agriculture, Forestry, and Fishing; 10-14—Mining; 15-17—Construction; 20-39—Manufacturing; 40-49—Transportation, Communications, Electric, Gas, and Sanitary Services; 50-51—Wholesale Trade; 52-59—Retail Trade; 60-67—Finance, Insurance, and Real Estate; 70-89—Services (professional, health care, education, accommodation, and entertainment); and 91-99—Public Administration (governments and nonprofit organizations).
Adding services not only strengthens
core competencies, but also helps the
business focus on strategic objectives.
22 July/August 2012 | APICS magazine
or expand revenues. The services on
the upper portion have been classified
as tier 1, tier 2, and tier 3 to indicate
different levels of attractiveness, with
tier 1 being the most attractive, tier 2
somewhat attractive, and tier 3 the least
attractive.
The service sectors are color-coded to
indicate potential attractiveness of the
specific service business. Green services
indicate a logical extension because
they are linked directly to the product.
Yellow services indicate reasonable
extensions if the manufacturer has
technically qualified people or a strong
financial position. Orange services
indicate the manufacturer should use
caution before entering; they represent
a real stretch. At the bottom of the
diagram, social services are coded in
red to indicate that most manufactur-
ers should leave these matters up to
nonprofit organizations and govern-
ments. The logistics functions also are
probably not a good area because of the
specialized nature of the process and
the highly competitive industry.
Evaluate product performance after
sale. Providing repair and maintenance
services to buyers of their equipment
enables manufacturers to evaluate how
well products perform in an industrial
setting. They can assess durability and
serviceability—and selling spare parts
adds to the manufacturers’ knowledge
about critical design points.
Search for new product opportunities.
Being closer to customers often provides
new product opportunities. Servicing
equipment implies a physical presence in
the customer’s facility. This enables the
manufacturer’s employees to cultivate
relationships with the customer’s staff,
perhaps leading to the early identification
of customer needs. It also makes it pos-
sible to observe a competitor’s equipment
and its strengths and weaknesses.
Search for additional profitable
business. As products reach the mature
stages of their life cycles, profit margins
decline because of increased competition
from other companies or new prod-
ucts. If a manufacturer doesn’t have a
continuing stream of new products,
it may find its income eroding. It is
tempting for management to look
for added business with higher
profit margins, sometimes found
in the service sectors. IBM saw its
manufactured product line erode as
small computers replaced the large
mainframe computers at which IBM
dominated. While it took an outsider,
Louis Gerstner, to lead the transition,
IBM transformed itself into an almost
completely service-oriented company,
with emphasis on consulting and
systems management.
Potential service businesses When manufacturers sell prod-
ucts to other organizations, they
can consider providing producer
services, such as repair, mainte-
nance, spare parts, and facility
management. When manufacturers
sell to individual consumers, they
can consider providing personal
services.
Figure 1 illustrates some of the
services that can be added to support
Third-party particpation—consulting
Figure 1: Service opportunities for manufacturing companies
Model of services provided to businesses
Government relations
Risk andinsurance
Legal services
Auditing and taxes
Tier 3 producer services
Extractiveagriculture mining
Inboundlogistics
Transformative -manufacturing
construction
Outboundlogistics
Distributivewholesaling
retailing
Homedelivery
Personalpost-sales
ongoing contact
Collect,dispose
Recoveryrecycling
remanufacture
Social services
Standards Health care LocationincentivesEducation Industry and
Richard E. Crandall, PhD, CFPIM, CIRM, CSCP, is a professor at Appalachian State University in Boone, North Carolina. He may be contacted at [email protected].
“The end customers drive the business; they are the ones that both manufacturer and channel partner have to woo and win. Without them, there is no reason for the relationship.”
APICS extra
REGISTER AT APICS.ORG/EXTRA.
APICS Extra Live: Creating Strong Relationships Between Manufacturers and DistributorsPresented by: George F. Brown Jr.Founder, Blue Canyon Partners
Date: August 9, 2012
Time:1:00 p.m.–2:00 p.m. CT
Where: Online
Attend APICS Extra Live to gain deeper insight into the July/August APICS magazine “APICS Interview” with George F. Brown Jr. This online webinar will explore how to achieve positive “CoDestiny” relationships between manufacturers and distributors, as well as other third-party channel organizations such as wholesalers, retailers, integrators, and contractors.
In this APICS Extra Live, you will learn toachieve proactive leadership and ongoing attention to collaboration and cooperation
identify and alleviate disagreements before they reach a negative critical mass
sustain healthy, profitable relationships.
28 July/August 2012 | APICS magazine
An Indian company overhauls inventory with the TOCBy Mahesh Gupta and James F. Cox III, PhD, CFPIM, CIRM
APICS magazine | July/August 2012 29
India is in the midst of a retail revolution. By 2015, it is set to
become one of the top fi ve retail markets in the world. Th e
country also is the second-largest global producer of footwear.
While international brands such as Gucci, Charles and Keith,
Nike, and Adidas have made their presence felt in higher-end
markets, domestic companies largely cater to the mass and
economy markets.
Liberty Shoes is one of those companies. Since opening in
1954, it has become one of the fi ve largest footwear manufac-
turers in the world and is the only Indian leather shoe brand.
It maintains a global presence, doing business in more than
25 diff erent countries, including Russia, Italy, and France,
as well as throughout the Middle East. Marketing at Liberty
Shoes includes a network of more than 70 distributors; 5,000
multi-brand outlets; and exclusive retailers, consisting of 148
showrooms and 54 Liberty-branded retail outlets.
Four years prior to undertaking a new distribution and
replenishment solution, Liberty’s sales were fl at and profi ts
were negligible. Market share was less than 2 percent, despite
its reputation as a top domestically produced Indian brand.
Even though sales were stagnant, the company introduced
many products each season under the assumption that new
fashion lines would increase sales.
Liberty planned for the two seasons of summer and winter
with a forecast horizon of six months. Its factories produced to
capacity. Production and distribution lead time was about 60
days. Distributors and exclusive shops were under pressure to
place orders for the next six months, and items were pushed as
close to consumers as possible (see Figure 1).
One challenge in the fashion industry is that forecasts oft en
are wrong, especially at the individual item and retailer levels.
Additionally, only about 15 percent of new designs turn out to
be winners, selling out in about six to eight weeks. Th ese facts,
along with a push distribution model, create a feedback loop
that produces stockouts; a limited range of new products; less
buying; high receivables; and large amounts of slow-moving
and buff er inventory everywhere, including at the central
company, distributors, and shops. Th e increased inventory
negatively aff ects growth, profi tability, and relationships with
shops and distributors.
Enter the theory of constraintsIn It’s Not Luck, Eli Goldratt proposed a distribution and
replenishment solution based on the theory of constraints
(TOC). In the simplest terms, the approach exploits the fact
that the cumulative forecast at the plant level is more accurate
than at individual links. Using heuristic models, replenishment
and emergency inventory levels at strategic supply chain links
are determined. It is a powerful tool, but relatively diffi cult to
implement: It fi rst requires that each supply chain link undergo
a paradigm shift in processes and thinking.
Common wisdom is that improvement occurs when fore-
casts improve, enterprise resources planning systems become
faster and more powerful, inventory visibility is raised, better
personnel are acquired, key performance indicators are modi-
fi ed, and the like. Instead, supply chain improvement comes
from establishing a distinctive competitive edge. An eff ective
supply chain solution must ensure that each link in the chain,
from raw materials supplier to consumer, recognizes its state of
ideal performance.
For distributors and showrooms, this state is to keep inven-
tory levels low but maintain high availability—to buy less of
each item, but with more variety and quick resupply of popular
items. For this to occur, replenishment lead times must drop
dramatically, boosting sales without raising fi xed cost. With
higher inventory turns, distributors and showrooms achieve
signifi cantly greater return on investment. With higher returns
on investments, it’s easier to attract new distributors. Th e
company can capitalize on these advantages, further broaden-
ing its reach and range. Meanwhile, the consumer fi nds the
perfect shoe. Every supply chain link benefi ts from the decisive
competitive edge.
With guidance from the Vector Consulting Group, Liberty
Shoes implemented a TOC initiative with the aim of raising
sales and, more importantly, profi tability. Th e implementation
took the form of the following six discrete steps.
Figure 1: Initial supply chain model at Liberty Shoes
5 factories 70 distributors5,000
multi-brand retailers
148 exclusive showrooms
54 Liberty stores
Consumers
Total supply chain inventory: 125 days
Total lead time: 60 days
Product introductions per year: 2
30 July/August 2012 | APICS magazine
Step 1: Establish a central warehouse. About 70 percent of
footwear is sold for more than six months—these are termed
replenishment items. Th e central warehouse carries replenish-
ment items up to a buff er target and acts as the aggregation
point for stocks to serve many diff erent distributors. One
immediate benefi t is that the central warehouse’s aggregated
forecasts are more accurate than at
the retailer level. Inventory is com-
municated daily to the factory, which
produces to buff er levels. In eff ect, the
central warehouse decouples produc-
tion lead time from replenishment
lead time, greatly reducing distributor
lead time from about 60 to 15 days.
Step 2: Implement a production priority system. Most items deplete
some amount of buff er every day.
As demonstrated in Figure 2, buff er
is divided into three zones: green,
which represents high inventory lev-
els; yellow, meaning adequate inven-
tory; and red, where there is a risk of
stockouts. (Not shown is a black level
of inventory exhaustion and poten-
tial lost sales.) At the factory, risky items are produced fi rst,
followed by items with more stock available. Facilities produce
to demand, and production lead times are further reduced.
ment practices at the retail level, coupled with high availability
at the central warehouse, ensure high availability and lower
inventory at distributors.
Step 4: Decouple production and raw materials lead times. If raw materials are unavailable for replenishment items in
time for orders, production lead times can increase. Hence, it
is critical to ensure availability of raw materials at all times. A
buff er replenishment system for raw materials similar to that
described previously can be implemented with suppliers. Each
week, suppliers receive buff er penetration reports along with
priorities, ensuring eff ective raw materials management.
Step 5: Identify fashion winners and losers quickly. When
products were introduced only twice
a year, distributors ordered for a six-
month horizon across a wide range of
styles, faced inaccurate forecasts, and
had limited capital. As they would
not be restocked within a season,
distributors were loath to take on risk
and bet on potential winners.
Th ere is a better way, and smart
buff er management is the key. If
an item is continually in the red, it
likely is a winner and buff er targets
increase. Likewise, green items are
losers and require less buff er. In this
model, sales trends can be tracked on
the fl y, generating product portfolios
for individual shops and the central
warehouse.
Step 6: Increase the number of new products. Th is has the
eff ect of smoothing production and cash requirements. Instead
of twice a year, Liberty now introduces products eight times
with smaller ranges in each introduction. Th e sellers can buy
in smaller quantities than before. Once a winner is identifi ed, it
becomes a replenishment item in the central warehouse, ensur-
ing that a wider range of products reaches, and is maintained
on, retail shelves.
Charting the outcomesFollowing implementation of the TOC distribution and replen-
ishment system at Liberty Shoes, replenishment frequency for
each item at each stocking point became greater. Th e forecast-
ing horizon is now about one month, compared to about six
Figure 2: Post-implementation supply chain model at Liberty Shoes
The daily, automatic replenishment of items prevents immeasurable
lost sales.
5 factories 101 distributors8,000
multi-brand retailers
85 exclusive showrooms
254 Liberty stores
Consumers
Total supply chain inventory reduced by 50 percent
Production lead time:15-20 days
Distribution lead time:5-15 days
Production introductions per year: 8
Finished goods availability:95-97 percent
Central warehouse
APICS magazine | July/August 2012 31
months previously. Th is prevents retail stores from getting
stuck with slow movers and enables continuous reordering of
winning items. Distributors and retailers have a much greater
return on investment and tripled inventory turns, and they can
more rapidly expand with fewer risks.
Additional benefi ts include the following:
Availability at the central warehouse is above 97 percent.
Overall inventories are down by about 50 percent.
Th ere now are 101 distributors, about 8,000 multi-brand
retailers, 85 exclusive showrooms, and 254 Liberty-branded
retailers.
Th e strike rate of new items—the frequency of sales per sales
opportunities—has increased from 15 percent to more than
60 percent.
Inventory liquidation sales are needed much less frequently.
More new retailers and distributors are coming to Liberty
Shoes—about two new stores have opened each week in the
past year.
Sales at exclusive showrooms and Liberty-branded retail
outlets are up about 30 percent.
Overall sales are up about 20 percent.
Finally, the daily, automatic replenishment of items prevents
immeasurable lost sales.
Perhaps most importantly, the thinking at Liberty Shoes
now is guided by TOC philosophies. Company leaders and
shop fl oor workers alike are better able to identify root causes
of problems, construct win-win solutions, and develop eff ective
implementation plans. Th e replenishment system responds
more quickly to demand changes. And the need for fi ghting
fi res has reduced signifi cantly, freeing up senior managers to
focus on other projects in order to ensure future growth.
Th e challenge in implementing the type of TOC distribu-
tion and replenishment model described in this article is that it
requires major evolution of the collective thinking of all parties
in the supply chain. It demands thinking holistically and means
that retailers must learn to devalue discount schemes and oper-
ate in a pull distribution mode, where supplies are based upon
consumption. It is a diffi cult transition for the entire business,
but with proper care in implementation, it will create a decisive
competitive edge.
Mahesh Gupta is a professor of management and entrepreneurship at the University of Louisville, specializing in management philosophies such as Just-in-Time, the theory of constraints, and quality management. He may be contacted at [email protected].
James F. Cox III, PhD, CFPIM, CIRM, is professor emeritus for the Terry College of Business at the University of Georgia. He may be contacted at [email protected].
As supply chain and operations management professionals, we
all are familiar with ABC analysis, Pareto’s law, and the 80-20
rule. When it comes to cycle counting, these basic principles
have their place—but a generic, cookie-cutter approach won’t
work every time. Take a step back from the most basic guide-
lines, and consider the following questions:
Does Pareto’s law really fi t your business? Are 80 percent
of your inventory dollars wrapped up in 20 percent of your
items (and vice versa)?
Does ABC analysis hold up at your company? How many
low-dollar, high-volume items such as screws, nuts, bolts,
and washers do you have?
What type of industry do you represent? Is your company a
job shop, a custom builder, a process or discrete manufacturer,
or something else? At what pace are you producing? Do you
deal with high or low volumes? Push systems or pull systems?
Many leaders don’t have a good sense of their organizations’
identities or have lost track of what they have become. Before
you can fully understand your business, you may have to do
some digging. Only then can you implement the right cycle
counting program to support your company.
Evaluate the current stateRegardless of the nature of your industry or your experience
level, a successful cycle counting program begins with the fol-
lowing steps.
Determine inventory mix. In other words, fi gure out what per-
centage of inventory dollars represents what proportion of items,
and vice versa. As this fi gure approaches 50-50, it makes more
sense to treat each item as having the same cycle time. But when
inventory begins to more closely resemble the 80-20 rule, classic
cycle times are more likely the best fi t: 4 weeks for A items, 8 weeks
for B items, and 26 weeks for C items. You may wish to tweak these
numbers further. As most enterprise resources planning (ERP)
packages include only a standard analysis, it may be necessary to
work closely with your information technology department to
modify the soft ware program’s input and reporting structures.
Count the number of locations and parts. Th is will aid in
determining the number of resources necessary to support
whatever cycle is necessary.
Examine material fl ow through the warehouse. Answer
questions such as: Do your items have dedicated storage bins?
Are the bins placed at random? Do some items stay in inven-
tory perpetually? Are there items with short lives due to only
custom demand? Th is will aid in deciding whether to focus on
locations, materials, or even materials within locations.
Set accuracy goals. Try not to get hung up on this step—just
pick a number. Once the program begins and you start seeing
accuracy data, you will know where you are and can update the
goal accordingly. All cycle counting systems should have lon-
ger- as well as shorter-term goals, usually annual with monthly
increments.
Defi ne the program’s purpose. Th is step actually is quite
easy. Th ere is only one purpose to cycle counting—to fi nd
out how errors occur and eliminate the practices that created
them. As you eliminate the root cause of the errors, inventory
accuracy rises. Th ose who say they cycle count to maintain
accuracy do not have the right focus.
My company, TSE Industries, is a Clearwater, Florida-based
manufacturer of custom-machined plastic parts, custom rub-
ber extrusions, compression-molded rubber, and cast urethane.
We maintain a job shop environment, and most manufacturing
is performed make-to-order. Additionally, there are a number
of specialty chemicals produced in a process environment,
sometimes make-to-stock and sometimes make-to-order.
As far as inventory mix goes, 60 percent of our inventory dol-
lars are wrapped up in 40 percent of goods, and vice versa. Th ere
are about 1,800 locations and 5,000 individual parts to deal with.
We use a random location system, as there’s not enough
room for dedicated bins. Th e number of parts per bin varies.
Bins are mixed and matched to ensure an even amount of work
each day. Th is enables counting to begin and end and research
into errors to be completed the same day. We examined how
items move through the warehouse to and from work in pro-
cess, subcontractors, and customers.
Eventually, aft er redefi ning the organization, we identifi ed a
cycle counting program that worked best for us.
One company’s systemOur lead times are relatively short, and we carry an average of
three months of inventory for the custom orders that represent
most of our volume. Th e majority of our materials have a simi-
lar ability to shut down production, and heavy investment in
inventory as with classic C items is undesirable. Th e 60/40 split
of our inventory further supports the notion that each item
deserves the same amount of attention. With these factors in
mind, it did not take much eff ort to fi gure out that a quarterly
cycle for the entire inventory was appropriate.
One-of-a-Kind Inventory ManagementDesigning the right cycle counting system for your businessBy Mark E. Neuman
APICS magazine | July/August 2012 33
To ensure the entire inventory is cycled through, we
assigned each of our 1,800 bin locations a count date. Aft er
a day’s locations are counted, they are tracked in a computer
database. It’s easy to refer back to the last date a bin was cycle
counted when an error occurs. Seven workers perform the
daily counts along with one data administrator. Th e counts are
performed blind—that is, the material handlers do not know
what is in the database when counting. If parts are found
in a location the system has not
accounted for, workers record this
information on a form, which later is
used to aid in reconciliation.
About 27 locations are counted per
day, with an average of 75 parts. Th e
best element of this system—assum-
ing the work is divided correctly—is
that it requires only about 30 minutes
of work for each material handler
and about three hours for the admin-
istrator. No extra people and no
overtime are necessary.
Once material handlers turn in
their count sheets, the administrative
work can begin. Counts are checked
against the system. If a discrepancy is
found, the administrator fi rst checks
for any pending updates that would
bring the quantities into sync. If that does not provide a match,
the area is recounted. If the recount doesn’t match, we perform
a root cause analysis. Most importantly, this evaluation begins
and ends on the same day—an absolute must for an eff ective
program.
Initially, the program was 93 to 95 percent accurate. We
attributed the high level of accuracy to existing discipline and
reconciliation programs. In subsequent years, we have raised
the bar, as our annual goals inch toward 100 percent. In the
last three years, we have maintained a consistent 99.5 to 100
percent accuracy.
When we discover an error, it becomes coded and tracked
among a range of issues. Our list of causes includes
material transferred incorrectly
material received incorrectly
information recorded incorrectly
material issued incorrectly
material shipped incorrectly
policy violation
unknown.
Of course, we consider the elusive “unknown” category to
be our nemesis. But its existence helps us focus on eliminating
it altogether. We maintain a laundry list of possible reasons for
unknowns, and we continue to chip away at them.
One way we’ve found to speed the process is to recognize
sealed containers from previous cycle
counts. As long as the container is
still properly sealed and unopened,
the count is taken directly from the
container. Units that continue to be
unused are moved to remote loca-
tions where the counting is done
even more quickly. Th ese materials
transfer to a slow-move candidate
list, and hopefully eventually out of
inventory altogether.
Despite the opinions of many,
cycle counting is not a process to
maintain accuracy; it is designed to
discover how errors occurred and
to eliminate the possibility of them
recurring. We are tremendously
satisfi ed with our program in keeping
track of the causes of errors and the
overall health of our inventory. Parts are available nearly 100
percent of the time, and there are very few occasions when
production is stopped or a customer is shorted due to an
inventory error. Finally, one of the greatest benefi ts is that our
people now believe in the inventory fi gures because they know
how the data were generated. Th is has instilled our workforce
with confi dence, pride, and boosted morale.
Mark E. Neuman is vice president of materials at TSE Industries, a global plastics, rubber, and specialty chemicals manufacturer. He has nearly 40 years of experience in materials management in the manufacturing arena, and he is a former member of the APICS board of directors and past president of the Florida West Coast chapter. He may be contacted at [email protected].
age, and more. Recently, we worked with a large commercial
cleaning products manufacturer to develop a model that could
capture each potential logistics impact and display the results
for fi ve scenarios for each SKU, ranging from a two-layer
reduction to a three-layer increase. We evaluated about 1,450
SKUs, excluding those with packaging that precluded addi-
tional layers, such as drums or totes. Th is model enabled us
to determine the optimal number of layers for each SKU and
packaging type based on logistics costs.
In building this model, we settled on the following steps for
conducting a layer evaluation project.
1. Defi ne the variables. Th ese include material costs such
as pallets and labor, the labor for essential warehousing tasks,
and basic constraints. It’s important to think about the relevant
constraints at work. Some of the constraints we imposed
included pallet stack height, trailer door height, and total
allowable trailer weight. Also bear in mind soft constraints,
which should be fl agged as problem areas but can be overcome
36 July/August 2012 | APICS magazine
with suffi cient will or investment.
Our soft constraints included the
warehouse rack opening and the
rack’s weight capacity.
2. Set the correct scope. Th ink
through all the activities that take
place, from the end of the manufac-
turing line through delivery to the
customer. Some are easy to model,
while others are more diffi cult or
impossible and should be avoided.
You also may want to take a close
look at each SKU and eliminate
those that can’t feasibly be changed
or are too slow-moving to warrant
consideration.
3. Clean up the data. Your project
model is only as accurate as your
data. Reliable productivity studies,
accurate samples of historical order
data, and precise dimensions and
weights for each SKU you wish to
model are essential.
4. Determine the right scenarios. You’ll need to know how aggressive
you can be in recommending changes,
as well as what degree of layer change
falls within your risk tolerance.
5. Model future behavior. Many
dynamics demand creative model
building and assumption making.
Some must be tackled on a case-by-
case basis, but looking at historical
patterns can help. One of the most
complex dynamics in our model was
determining how the number of layers aff ected case picking. We
wound up looking at a historical sample of orders and judging
how pallet layer changes would have aff ected them then.
6. Prioritize savings. We found that fl agging soft constraints
early on made it easier to see which cost savings were the
low-hanging fruit and which would not be easily attainable,
considering the investment required to implement them.
Some factors are not as easy to model and may require
expertise from other parts of the organization. For example,
we have never been able to discover a simple mathematical
function that predicts the cost eff ects of modifying pallet layers
up or down. However, we presented our data to the packag-
ing engineers, who processed them and suggested changes in
packaging and pallet layer confi gurations to accommodate the
new units per pallet. Th ey used our concrete data to determine
if investing in increased packaging strength would be a feasible
way to reduce logistics costs.
Aft er analysis of all our data, we found that only 55 percent
of SKUs showed savings for any of the fi ve layer change scenar-
ios. Initially, we estimated total savings at $437,000 annually.
Once we applied soft constraints, the amount we saved from
just the low-hanging fruit was still a healthy $200,000. A good
portion of that amount was repre-
sented in a relatively small number of
about 10 SKUs.
The whole enterprisePallet layer optimization seemingly
aff ects only a few business areas, but
this type of project has signifi cant
cross-functional potential. Upon
completing our analysis, we pre-
sented our recommendations to the
packaging and manufacturing teams.
Additionally, marketing and cus-
tomer service were brought into the
conversation. Ultimately, the project
had four distinct analytic phases:
logistics, packaging, manufactur-
ing, and customer. We ensured that
we listened to and addressed the con-
cerns of all stakeholders. Note that,
in order to ensure internal align-
ment, internal stakeholders were
addressed fi rst.
Despite being performed last,
customer analysis is vitally impor-
tant. Marketing and customer service
groups must work with the customer
base to ensure they can accept pal-
lets in the new confi gurations and
to encourage them to purchase in
the new full-pallet quantities. If,
for example, the units per pallet are
increasing for a fast-moving SKU, it
may be necessary to demonstrate how
customers will benefi t from improved
logistics to balance out increases in inventory carrying costs.
In the current economic landscape, costs are constantly put
under a microscope. Th rough examining the traditionally iso-
lated task of pallet confi guration design and examining it from
a new perspective, we were able to present our organization
with big cost reductions—without sacrifi cing customer value.
Homayoun Taherian is a senior consultant in the supply chain design and innovation group at UTi Worldwide, a global supply chain and logistics consulting fi rm. He has 10 years of experience in supply chain management and manufacturing across the automotive, chemical, and consumer goods industries. He may be contacted at [email protected].
Kristen Kravitz, CSCP, is a manager in UTi Worldwide’s supply chain design and innovation group. She has conducted supply chain optimization and strategy projects across a number of industries, including pharmaceuticals, chemicals, mining, defense, and consumer goods. She may be contacted at [email protected].
As an APICS magazine reader, you value the high-quality information, case studies, and best practices you access in these pages. Now is the time to share your knowledge and industry expertise by taking your involvement with APICS a step further and becoming an APICS magazine author.
The editors of APICS magazine and APICS Extra encourage you to submit an article for publication.
Visit apics.org/magazine to learn more about APICS author’s guidelines, feature article specifi cations, and editorial procedures.
Be an APICS Magazine Author
42 July/August 2012 | APICS magazine
WAM Supply Chain delivers research, analysis, best-prac-tices consulting, benchmarking and
advanced supply chain planning solutions to companies in the process industry, including chemicals, refining, phar-maceuticals, and process CPG. The WAM solution provides a broad set of visualization, decision support, and opti-mization tools that address the unique challenges found in managing complex process supply chains. For over 20 years, WAM has helped companies address a wide range of business processes including sales & operations planning, collaborative demand management, inventory optimiza-tion, distribution planning, production planning, schedul-ing, and procurement planning. For more information on WAM Supply Chain, please visit wamsupplychain.com.
Global Supply Chain Visibility, S&OP, Demand Planning, Scheduling, Inventory Optimization
Smoothie® is the industry standard solution for desktop and server-based sales and operations planning that’s used
by many of the best global companies. It is available in a range of editions, but all Smoothie solutions feature Pivot Forecasting® and Pivot Planning®, proprietary technologies that make it possible to seamlessly plan at any level of aggregation and along any dimension like product, channel or customer. Retire your spreadsheets and contact Demand Works for highly accurate fore-casts, collaboration, time-phased multilevel inventory planning, and S&OP.
Demand Works Co.PO Box 627West Chester, PA 19381PH: (484) 653-5345Email: [email protected]
Sales and Operations Planning Software
IFS delivers software to make enter-prises more agile by streamlining four core strategic processes: service & asset management, manufacturing, supply chain and projects. IFS devel-ops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS provides software solutions that serve manufacturing, project-based and asset-intensive industries. We thrive in complex environments and with businesses that strive to be agile.
IFS Applications is a pioneer in providing business soft-ware based on actual business processes. Companies can reconfigure the software on the fly, enabling them to adapt quickly to changing market conditions. And because IFS Applications is component-based, customers need only deploy the functionality they require and implement it step by step, adding new components as their business changes or expands.
IFS300 Park Blvd., Ste.555Itasca, IL 60143PH: (888) 437-4968 Email: [email protected]/us
Agile ERP for Complex, Demanding Industry
Arkieva (formerly Supply Chain Consultants) is a leading provider of supply chain planning software that helps manufacturers and distributors optimize
and better manage their supply chains. Arkieva software solutions are at work in more than 200 locations around the world, in industries that include chemicals, food processing, glass display screens, semiconductors, and industrial fabrics and fibers.
Arkieva software (formerly Zemeter) enhances the timeli-ness and effectiveness of the supply chain by enabling dynamic collaborative supply chain planning. It is also designed to adapt to the changing business needs over time. It is built around the Microsoft paradigm and sup-ports full integration to ERP and other data systems as well as the user’s desktop. The software modules include Demand Planner, Business Analyst, Inventory Planner, Optimization based Supply Planner, Rules based Replen-ishment Planner (MRP/DRP), Finite Scheduler and S&OP support tools including meeting manager and dash-boards. Visit us at www.arkieva.com.
Epicor enterprise resource planning (ERP) raises technology to a level that delivers unprecedented business management and control, supporting continuous performance through real-time, in-context business insight. More than 9,500
manufacturers and distributors worldwide have put Epicor’s powerful, yet easy-to-use manufacturing and distribution software to work in their business. All the functionality is embedded and works together to help take control of customer contacts, configurations, estimating, sales processing, planning, cost control, production scheduling, inventory, fulfillment, finance, and much more. Featuring Epicor True SOA™ and robust functionality for businesses globally and across industries, Epicor is redefining enterprise application software.
Epicor Software Corporation7683 Southfront Road Livermore, CA 94551 USA PH: (800) 999-1809 FX: (949) 585-4091 Email: [email protected]
Redefining ERP Software for Manufacturing and Distribution
The APICS Dictionary contains essential terms
for the global supply chain and operations
management profession.
Send us suggestions or changes you’d like to
see in the next edition of the APICS Dictionary.
To learn more, visit apics.org/dictionaryterms.
Submit a Term for the APICS Dictionary, 14th edition
ho form a supply chain to make and distribute a set of products. dynamic
anban—An alternative use of kanban methodology to create an automatic
unching of a purchase order to a supplier. Dynamic kanban is used as an
ement of the manufacturing execution system to allow for Just-in-Time
liveries to production. demand planning—Using forecasts and experience
estimate demand for various items at various points in a supply chain. Several
recasting techniques may be used during the planning process. Often, families
items are aggregated in doing this planning. Aggregation also may occur
y geographical region or by life cycle stage. Forecast demand is compared to
tual demand in order to measure and increase forecast accuracy. See: demand
anagement. inbound logistics—The group in charge of moving materials
om suppliers or vendors into production processes or storage facilities; or,
e actual movement of such material. key performance indicator (KPI)—a
nancial or nonfinancial measure, either tactical or strategic, that is linked to
ecific strategic goals and objectives. The movement of
ms from one point to another inside a facility or between facilities. strategic
riables—The most important variables that effect the business environment
d business strategy. These are typically the economic situation, population
mographics, changes in technology and government policies. triple bottom
ne (TBL)—Measuring the economic, social, and environmental consequences
a firm’s activities. visibility—The ability to view important information
roughout a facility or supply chain no matter where in the facility or supply
n the information is located. warehouse management system (WMS) A
em that manages all processes that a warehouse carries out. These processes
ude receiving, picking, and shipping.
A never-ending effort to expose and eliminate root causes of problems:
ll-step improvement as opposed to big-step improvement. Syn: continuous
rovement. See: kaizen. lean production—A philosophy of production that
hasizes the minimization of the amount of all the resources (including time)
d in the various activities of the enterprise. It involves identifying and eliminating
-value-adding activities in design, production, supply chain management, and
ing with customers. Lean producers employ teams of multiskilled workers at all
ls of the organization and use highly flexible, increasingly automated machines
roduce volumes of products in potentially enormous variety. It contains a set of
ciples and practices to reduce cost through the relentless removal of waste and
ugh the simplification of all manufacturing and support processes. Syn: lean,
manufacturing. (NOTE: “Lean” definition only says “Syn: lean production.”)
rations management—1) The planning, scheduling, and control of the activities
transform inputs into finished goods and services. 2) A field of study that
ses on the effective planning, scheduling, use, and control of a manufacturing
ervice organization through the study of concepts from design engineering,
ustrial engineering, management information systems, quality management,
The APICS
Dictionary contains the core terminology
and emerging
vocabulary you need
to speak the same
language across
your supply chain.
THIRTEENTH EDITION
APICS Dictionary
Advancing Productivity, Innovation, and Competitive Success
Not an APICS member? Join APICS today to begin
receiving valuable member benefi ts including the APICS Dictionary; APICS magazine; and more. Visit apics.org/join.
44 July/August 2012 | APICS magazine
Epicor Software Corporation7683 Southfront Road Livermore, CA 94551 USA PH: (800) 999-1809 FX: (949) 585-4091 Email: [email protected]
Epicor enterprise resource planning (ERP) raises technology to a level that delivers unprecedented business management and control, supporting continuous performance through real-time, in-context business insight. More than 9,500 manufacturers and distributors worldwide have put Epicor’s powerful, yet easy-to-use manufacturing and distribution software to work in their business. All the functionality is embedded and works together to help take control of customer contacts, configurations, estimating, sales processing, planning, cost control, production scheduling, inventory, fulfillment, finance, and much more. Featuring Epicor True SOA™ and robust functionality for businesses globally and across industries, Epicor is redefining enterprise application software.
SUPPLY CHAIN Directory
Demand Works Co.PO Box 627West Chester, PA 19381PH: (484) 653-5345Email: [email protected]
Product: Smoothie® is the industry standard solution for desktop and server-based sales and operations planning that’s used by many of the best global companies. It is available in a range of editions, but all Smoothie solutions feature Pivot Forecasting® and Pivot Planning®, pro-prietary technologies that make it possible to seamlessly plan at any level of aggregation and along any dimension like product, channel or customer. Retire your spreadsheets and contact Demand Works for highly accurate forecasts, collaboration, time-phased multilevel inventory planning, and S&OP.
Arkieva (formerly Supply Chain Consultants) is a leading provider of supply chain planning software that helps manufacturers and distributors optimize and better manage their supply chains. Arki-eva software solutions are at work in more than 200 locations around the world, in industries that include chemicals, food processing, glass display screens, semiconductors, and industrial fabrics and fibers.
Arkieva software (formerly Zemeter) enhances the timeliness and effectiveness of the supply chain by enabling dynamic collaborative supply chain planning. It is also designed to adapt to the changing business needs over time. It is built around the Microsoft paradigm and supports full integration to ERP and other data systems as well as the user’s desktop. The software modules include Demand Planner, Business Analyst, Inventory Planner, Optimization based Supply Planner, Rules based Replenishment Planner (MRP/DRP), Finite Scheduler and S&OP support tools including meeting manager and dashboards. Visit us at www.arkieva.com.
IFS 300 Park Blvd., Ste.555Itasca, IL 60143TF: (888) 437-4968 Email: [email protected]/us
Product: IFS delivers software to make enterprises more agile by streamlining four core strategic processes: service & asset management, manufacturing, supply chain and projects. IFS develops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS provides software solutions that serve manufacturing, project-based and asset-intensive industries. We thrive in complex environments and with businesses that strive to be agile.
IFS Applications is a pioneer in providing business software based on actual business processes. Companies can reconfigure the software on the fly, enabling them to adapt quickly to changing market conditions. And because IFS Applications is component-based, customers need only deploy the functionality they require and implement it step by step, adding new components as their business changes or expands.
WAM Supply Chain delivers research, analysis, best-practices consulting, benchmarking and advanced supply chain planning solutions to companies in the process industry, including chemicals, refining, pharmaceuticals, and process CPG. The WAM solution provides a broad set of visualization, decision support, and optimization tools that address the unique challenges found in managing complex process supply chains. For over 20 years, WAM has helped companies address a wide range of business processes including sales & operations planning, collaborative demand management, inventory optimization, distribution planning, production planning, scheduling, and procurement planning. For more information on WAM Supply Chain, please visit wamsupplychain.com.
Strengths: HighJump™ Warehouse Advantage offers advanced warehouse management functionality to manage even the most complex distribution environments. This powerful WMS helps to ensure fast, accurate fulfi llment through directed, optimized workfl ow, utilizing the most advanced wireless and bar code technologies, including RFID. The HighJump warehouse management system executes strategic processes such as receiving, put-away/fl ow-through, in-ventory management, order processing, replenishment/pick/pack, loading and shipping. And with its uniquely fl exible architecture, the system is easy to per-sonalize, without changing source code.
RapidTrak™ the low-priced, web en-abled, wireless material tracking system designed to provide basic warehousing, inventory tracking and logistics function-alities; a valuable tool for tracking MRO Items, tooling and die sets, and perishable materials consumed in manufacturing.
Highlights:RF portable data collection or PC-based data entryMobile application for fl eet inventoryEconomical barcode labels to reduce errorsHosted solution on dedicated and managed servers that are PCI Compliant, and SAS 70 certifi edMulti-language capableUser-defi ned Email Alerts Multilingual E-mail messages for alertUser-defi nable fi elds with validationIntegrates with Microsoft Dynamics GP
Features:Track inventory moves and transfersManage consumable inventoryTrack and verify additional product characteristics via user-defi ned fi eldsFind inventory by Warehouse, Location, Item Number, TrakID or UPCTrace inventory audit transactionsConvert multiple units of measurePutaway by HAZMAT or other groupingVerify TrakIDs at Warehouse/Location
Vormittag Associates, Inc. (VAI) 120 Comac StreetRonkonkoma, NY 11779 Contact: Maggie Kelleher, Business Development Phone: (631) 588-9500 Toll Free: (800) 824-7776 Fax: (631) 588-9771 Email: [email protected] vai.net
VAI S2K Warehouse Management Soft-ware offers a wide range of benefi ts for companies in the manufacturing, retail, food distribution and related service in-dustries. S2K Warehouse helps business-es enhance productivity, improve overall warehouse effi ciency, meet operational performance objectives, and increase customer satisfaction. S2K Warehouse will enable companies to cut costs while providing added value for customers with real-time enterprise integration. Additionally, it will enable accurate and effi cient end-to-end tracking of goods throughout the entire facility.
WAREHOUSE MANAGEMENT SYSTEMS Directory
2011ANNUAL REPORT
Mission StatementAPICS builds and validates knowledge in supply chain and operations management. We enable our community
global marketplace.
APICS The Association for Operations Management
Dear APICS members,
Last year, the organization was able to build on the momentum of a successful 2010. The current state of the economy presents a tremendous opportunity for APICS to demonstrate
education, and membership as organizations strive to remain competitive in this still volatile economic climate.
We are pleased to report that in 2011, APICS has proven that it can be a resilient organization
positive outcomes:
Membership GrowthMembership numbers exceeded the objective with overall membership growing by four
back-to-back years of membership growth.
Expanded EventsThe annual conference in Pittsburgh attracted more than 2,000 registrants, which resulted in revenue exceeding projections. In addition, APICS successfully hosted a conference in Asia, leading to additional conferences both domestically and abroad.
exceeded sales projections and had a record-setting year.
New Initiatives
succeed professionally. Products such as the newly released APICS Principles program
network, and improve performance at work.
We will continue to leverage the successes of 2011 to create new growth and opportunity for APICS, its members, and the global supply chain and operations management community.
Best regards,
Marc Harris, CPIM, CSCP Abe Eshkenazi, CSCP, CPA, CAE
Letter from APICS Leadership
Abe Eshkenazi, CSCP, CPA, CAE
Marc Harris, CPIM, CSCP
48 July/August 2012 | APICS magazine
s 2012 Projected p
2011 Actual Operating Revenue 2012 Projected Operating Revenue
2011 Actual Operating Expenses 2012 Projected Operating Expenses
Other
Training
Conference
Education Materials
Certification
Membership
Board, committee, andvolunteer activities
**Figures are estimates only
*Source of Financial Information
statements for the year 2011 only. An unqualified opinion was issued by Blackman Kallick, LLP, APICS’s independent auditors. For
21%
30%31%
5%4%
10%
31%
23%
29%
4%3%
27%
25%
25%
10%
7%
25%
24%
27%
10%
8%6% 6%
FinancialsAPICS has maintained its strong fi nancial position and continues to achieve its goal of growing revenue in support of its mission to serve our members and customers.
9%
APICS 2011–2012 Revenue and Projections
2011* 2012**
Total Revenue $24,400,000
Total Expenses $20,000,000 $21,400,000
NOI
APICS magazine | July/August 2012 49
APICS 2011—A Year of Growth and Innovation
APICS CSCP Program
important milestone—more than 10,000 individuals earned the APICS CSCP designation.
designation, the APICS CSCP designation is becoming the industry standard for excellence.
In addition, 2011 resulted in the highest sales in the history of the APICS CSCP program.
APICS CPIM Growth
The APICS CPIM program continued to show steady growth in 2011. As of December 2011, more
centers since 2007.
In addition, new APICS CPIM designees in North America increased 10 percent compared to 2010.
APICS Principles of Operations Management Program
program that will replace the APICS Fundamentals program. These courses are classroom-based and instructor-facilitated to meet the needs of professionals new to the materials and
mini-courses or can be combined with other Principles course sessions to create a customized learning experience.
APICS Membership Gains Strength
In addition, membership increased in the student, joint international, enterprise, young professional, and international e-member categories.
Global Success with Leading Corporations
APICS enhanced its collaboration with corporations this year and enhanced international growth and relationships.New relationships were established with dozens of top, global organizations including Coca-Cola, Ingersoll Rand, PwC, and Schneider Electric. Existing relationships were bolstered with established companies including Aramco Services, BASF, Cooper Industries, DuPont, IBM, Intel, Novartis, Tetra Pak, and Unilever. APICS corporate expansion demonstrates that APICS is being embraced as the standard for excellence worldwide.
APICS growth in 2011 was largely due to strong educational and certifi cation sales. The APICS CPIM and CSCP program grew through the efforts of our channel partners and corporate services department.
50 July/August 2012 | APICS magazine
Industry Collaboration
Manufacturing Skill Certifi cation Partnership with the National Association of Manufacturers’ Manufacturing Institute
APICS partnered with the Manufacturing Institute to support
brings together leading certifying organizations to ensure the high-quality education and advanced skills that are critical to success are available to individuals interested in going into manufacturing. This NAM-Endorsed Manufacturing Skills
manufacturing jobs. The APICS CPIM and CSCP programs will
APICS in the News
CNBC and USA Today
and in December 2.
APICS CEO Abe Eshkenazi weighed in on the effect of
store,” focused on challenges faced by small businesses.
APICS Events Across the GlobeAttendance at APICS events across to globe exceeded expectations in 2011 and included a new event in Singapore—APICS’s fi rst event in Asia.
2011 APICS Events
2011 Asia Supply Chain & Operations | Singapore
APICS and IBF present Best of the Best S&OP | Chicago, Illinois, USA
2011 APICS International Conference & Expo | Pittsburgh, Pennsylvania, USA
2012 APICS Events
2012 APICS Asia Supply Chain & Operations | Shanghai, China
APICS and IBF present Best of the Best S&OP May 10–11, 2012 | London, England
| Chicago, Illinois, USA
2012 APICS International Conference & Expo | Denver, Colorado, USA
APICS North American Seminar SeriesTopics include
Strategic SourcingRisk ManagementDemand-Driven Material Requirements Planning
The 2012 APICS International Conference & Expo
Denver, Colorado, USA, will host the 2012 APICS International Conference & Expo. This event is the largest annual gathering of supply chain and operations management professionals worldwide. Attendees will focus on achieving maximum productivity, meeting consumer demand, and remaining agile amid instability and unpredict-ability. Educational sessions will connect the APICS body of knowledge to strategies and tactics to meet and overcome the challenges companies face in the changing landscape of supply chain and operations management.
APICS magazine | July/August 2012 51
APICS Career Packs
APICS unveiled career packs in 2011. They offer career path, competencies, and job
organizations interested in establishing required competencies for the workforce.
APICS Research Reports
reports are the product of surveys conducted by APICS to gather information about the experiences of supply chain and operations management professionals. Members can use this research, along with practical how-to steps and best practices, to improve operations in their organizations and gain insights about industry best practices.
APICS Folios
The APICS folios were introduced in 2011. The folios highlight APICS research and provide members with practical applications. Folios include research reports, summaries, relevant applications, and articles from the awarding-winning magazine.
Leading the Way with Innovative Research and Industry ContentAPICS released new products in 2011 focused on industry research and career advancement for the supply chain and operations management fi elds. APICS research reports, folios, and career packs provide insights into trends and practices that are key to delivering the highest level of organizational and individual performance.
52 July/August 2012 | APICS magazine
The New APICS Website
APICS launched its newly redesigned website in January 2012. The new apics.org offers a more streamlined, content-rich web experience for professionals in the
enhanced industry content, including magazine and research sections.
APICS Supply Chain Channel
The APICS Supply Chain Channel is an exciting new feature of apics.org. The channel
community. Members have access to a global membership directory as well as
APICS Magazine
A new interface for magazine was introduced with the launch of the new apics.org. This user-friendly portal enables magazine subscribers and members to download and access the newest issue of magazine and archived articles and to search for relevant content. magazine introduced an interactive element, enabling users to comment on articles online.
APICS on Social Networks
APICS continues to grow its presence on various social media networks. At the end
New ways to connect with APICSIn 2011, a variety of new avenues were introduced to connect the APICS community with APICS. The launch of a new website, interactive APICS magazine articles, and the launch of the APICS Supply Chain Channel position APICS for growth and increased brand awareness.
APICS magazine | July/August 2012 53
2012 APICS Board of Directors
Marc Harris, CPIM, CSCPChair
Robert Boyle, CFPIM, CIRM, CSCPChair-Elect
Mondher Ben-Hamida, CPIM, CSCPSecretary-Treasurer
Director, Terra Grande District
William BickertDirector-at-Large
Norman Carmichael, CPIM, CSCPDirector, Southwest District
Bintong Chen, PhDDirector-at-Large
Rick Donahoue, CPIM, CSCPDirector, Mid-Atlantic District
Paul HowattDirector, Canadian District
Vadim KapustinDirector-at-Large
Jerry Kilty, CFPIM, CIRM, CSCPDirector, Southeast District
Al KueblerDirector-at-Large
Merri Rich, CPIM
Dana Riess, CPIMDirector-at-Large
David Rivers, CFPIM, CIRM, CSCPDirector, Northeast District
Jason Wheeler, CPIM, CSCPDirector, Great Lakes District
Tammy Williams, CPIM, CIRM, CSCPDirector, Heartland District
APICS Professional Staff Leadership
Abe Eshkenazi, CSCP, CPA, CAE
Sharon RiceExecutive Vice President
Dean MartinezSenior Vice President / General Counsel
Core Values
TrustMake Data-Driven DecisionsFocus on InnovationDemonstrate TeamworkPersonally MeaningfulFocus on Customer SatisfactionAccountability
54 July/August 2012 | APICS magazine
Master and implement supply chain best practices with the APICS Certifi ed Supply Chain Professional (CSCP) program.Demonstrate your ability to add value across the supply chain to your current and prospective employers. The 2012 APICS CSCP Learning System will help you leverage the strategies and best practices that can enhance your organization’s bottom line and improve your earning potential.
Now is the time to earn the APICS CSCP designation. Discover fl exible learning options and try a free demo of the APICS CSCP Learning System at apics.org/cscp.
The 2012 APICS CSCP Learning System has been updated and reorganized to offer deeper integration of day-to-day best practices, techniques, and technologies, enabling you to maximize your organization’s effi ciency and boost the bottom line. Learning system modules focus on
APICS Fundamentals of Supply Chain Management
APICS Supply Chain Strategy, Design, and Compliance
APICS Implementation and Operations.
Enhance Your Value with Supply Chain Expertise
According to the Operations Management Employment Outlook, APICS CSCP designees earn an average 11 percent more than their uncertifi ed counterparts. Source: apics.org/research.
APICS CSCP Exam and Learning SystemUpdated for 2012
That’s the Spirit!Some unusual advice to motivate young workers
I recently was the professional develop-
ment speaker for an APICS chapter and
found myself sharing a table with several
students. Many of them asked what
counsel I had for people just starting
to enter the workforce. Not wanting to
tell them a bunch of things they already
knew, I off ered two pieces of advice they
probably had not heard before.
1. Never doubt the validity of what
you were taught. Th is will not be a
problem if you are lucky enough to land
a job at a company where processes are
under control and procedures and disci-
plines are woven into the very fabric of
the organization. But such organizations
usually promote from within, as lower-
level employees are already indoctrinated
in the culture. Chances are, you will be
hired by a business that has lots of prob-
lems—the idea being that you can help
sort out a few of them. Th is will not be
easy; aft er all, the people who hire you
likely are the very reasons things are out
of control.
Remember: Th e buck stops at the top.
When a high-level executive does not
insist upon processes and procedures,
does not enforce disciplines, and tolerates
unachievable delivery promises and
lots of panic expediting, this attitude
tends to replicate through the ranks.
Th e attitude “do what’s necessary today
and don’t worry about tomorrow” will
get a few hot orders out the door on
time, but also will result in late ship-
ments for the majority and encourage a
culture of chaos. Again, remember what
you learned. Establish and enforce
procedures and disciplines to achieve a
profi table and sustainable operation.
2. Understand what engages your
boss. Don’t assume that just because
your boss has many areas of respon-
sibility, he affords each
of them equal attention.
Learn what excites and
interests your boss and
what does not. My first
white-collar job after
college was in 1969 as a
personnel manager. My
new company was grow-
ing fast, and it was dif-
ficult to keep up with the
necessary hiring. This was
aggravated by the fact that
the shop supervisors had
final say over who worked
for them.
It quickly became apparent that
the supervisors did not care about
the state laws on hiring practices.
Soon enough, the state employment
agency contacted me. They had sent
job seekers our way and kept records
of whom we hired and who we did
not—and those records were damn-
ing, indeed. The agency intended to
write a letter to the company presi-
dent demanding our hiring practices
be brought in sync with the law. But
I knew he would not respond well to
such a threat.
Instead, I suggested they just annoy
him. I wrote the letter for them under
their letterhead, and the head of the
agency signed it. It calmly laid out the
facts and insisted on a series of face-
to-face meetings with him to dis-
cuss the situation. I counted on our
president cringing at the thought of
meeting with young, socially liberal
bureaucrats, who would criticize him
for tolerating illegal hiring practices.
A few days later, the letter arrived,
and I was summoned to his office. He
asked whether the allegations were
true, and I confirmed they were and
reminded him that most manufactur-
ers avoided these troubles by giving
the personnel manager final hiring
authority. He did, and six months
later, my new hires brought our
minority employment in line.
I was just 23 years old, but managed
to successfully orchestrate a resolu-
tion because I knew my boss did not
want to engage in thorny personnel
issues and would fight if confronted.
I was also certain that, if irritated
just a bit, he would look for the
quickest way out.
Randall Schaefer, CPIM, is an industrial
philosopher and independent consultant.
He may be contacted at randallschaefer@
att.net.
Do you have an anecdote that teaches, enlightens, or amuses? Consider sharing it with the readers of APICS magazine. Stories should be approximately 700 words. Email submissions to “Lessons Learned” editor Randall Schaefer at [email protected].
Illu
stra
tio
n b
y T
erry
Co
lon
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