Saturday, November 20, 2010

UPS: We ♥ Logistics Commercial

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


Sunday, November 14, 2010

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

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

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

1) Used as an extension

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

  • The reverse of everything above.
  • The customer gets additional feeling of benefiting when dealing with the supply chain. 
  • Service is matched to the brand experience the company is going after
  • Supply Chain is seen as a cost to be cut. 
  • The big one:  When people in the commercial side of the business refer to themselves uniquely as "the business" and the supply chain is just something to execute at the lowest cost imaginable. 
This is just a short list and as I develop my thoughts further I am sure this list will be adjusted and added to.

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

Monday, November 1, 2010

Supply Chain Teams Should Consider Hiring Industrial Engineers

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

Supply Chain Teams Should Consider Hiring Industrial Engineers

Thoughts on Cost....

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

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

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

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

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