Thursday, 31 March 2016

How can capabilities across the supply chain be aligned to meet end customer demand?

Quick response QR – JIT/QR relationship
Quick response logistics are another application of lean thinking and Just-In-Time. It is an approach that is designed to meet the demands of the customer by supplying the right quality, variety and quantity at the right time and place for the right price. The quick res ponse shares many principles as just-in-time. Making only to demand is applied to multiple parts of the supply network.

The pull principle is applied to the front end process of the distribution management that exists between the retailer and the supplier. Just-in-time applies the same principle to the entire supply network, whereas in QR, the items are supplied to the retailer based on the demand from the consumer. The deliveries arrive just in time for them to be sold to the consumers and the delivery is what triggers the supplier to produce another item.

Role of enabling technologies
Information technology is used to enable QR by grocery markets and clothing markets. This is because there is a lot of variability in these markets. The technologies that are used involved electronic data interchange and using uniform product codes. Merchandise information is collected at the point of sale from the bar code. The information is then sent via EDI to the supplier and there they compare the information with the inventory model for the store . When necessary, the production of more items that need restocking is ordered and once they have been made, packed and delivered to the store the cycle is complete.

Wednesday, 30 March 2016

What are some potential problems in setting up a VMI system?

There are a few problems in setting up a VMI system.

·         Not wanting to share data Some retailers are reluctant to share data as they want to keep their marketing plans and the product strategies for themselves and not give this information over to manufacturers. This is one of the main problems in the UK as many of the supermarkets are in direct competition with manufacturers. If the retailers don’t share this data the suppliers will not be able to respond quickly and prevent stockouts.

·         Seasonal products Fashion and seasonal products have problems with VMI. Suppliers have to make pre-season forecasts and these have little scope for manufacturing in season. The forecast is naturally at odds with demand and so products can become over or understocked.

·         Restructuring and Investment Costs The customer and the supplier both have high investment costs when adopting the VMI approach. Time and effort are also required in order to establish the processes and the procedures. In order to benefit from cost reductions the customer has to close their materials management function and the supplier needs to create the capability so they can take over the function.

·         Vulnerable Retailers The retailer becomes more dependent on the supplier as they will be outsourcing material management to them.

·         No Standard Procedures VMI procedures and practices are no t always transferable from one customer to another. The different customers might want bespoke or alternative labeling or tagging.

·         Maintaining the System Errors can occur in the inventory records and so it is important that the records are maintained using manual processes, stock counts for example.

Tuesday, 29 March 2016

How can suppliers help to reduce waste in the customer’s process?

Vendor managed inventory (VMI)

Vendor managed inventory (VMI), is when the management and replenishment of the inventory is the responsibility of the supplier and not the customer.  It is used to reduce the waste in the customer’s process. The supplier is the one who has to monitor the inventory and the sales and they use this information to make the replenishment orders. So it is the suppliers who have the responsibility.

Suppliers track the sales and the inventory level of the customer and they then send the goods when the stock levels drop. This goes against the tradition of the customer making the replenishment order to the supplier. The supplier makes the decision to replenish based on whether the current level of inventory will be able to meet the demand of the market, but they also have to take into account the lead time to resupply.

VMI needs teamwork between the manufacturer and the retailer in order to work. Both the retailer and the manufacturer benefit from the system providing they use appropriate performance measures. The main measure is the product being available to the retailer in order to avoid losing sales and to benefit from creating customer buying habits while having minimum inventories. Real time demand information is also required to make VMI work. EDI is what is mostly used to share demand data from the customer to the supplier.

Monday, 28 March 2016

What are the benefits of electronic collaboration?

Those who have begun using electronic collaborations claim that there are significant advantages to be gained. The advantages include:
  • Improvements in the availability of products for the consumers, increasing sales.
  • The entire service benefits from the improvements and the costs are reduced in all areas, including waste, resources and inventory.
  • Capabilities are reduced thanks to reducing the level of uncertainty.
  • Processes that use more companies become integrated on a deeper level, making them simpler, quicker and more certain.
  • Information is shared quickly and in a more structured way. The data is transparent across the supply chain to all those who have been authorised to see the information. The authorized users know exactly where to find the information they require.
  • Audit trails can be made and information showed when amendments were made to the information.
  • Email prompts provide updates to the users regarding progress and variance and also give confirmations for authorisations.
  • Data stored in the system can be used for evaluation and monitoring.
  • Trading partners are more committed to the combined plans and the objectives. Any changes that are made are visible to all involved and therefore any changes are made carefully.
  • Process times speed up and don’t cost as much.

Saturday, 26 March 2016

Chit Chat: 2016 Restaurant Trends

Here are the top 10 restaurant trends that research from consultants and expects expect to see take off during 2016.
  1. Bragging right meals. Customers love to show off their food and meals will continue to be developed with Instagram and Twitter in mind. Social media is worth taking note off and can create a buzz that helps to promote the business and gives the customers an extra experience.
  2. Customers can expect to see shorter menus, smaller dining areas and reduced staff as they continue to be replaced by technology.
  3. Shrinking sit-down market. Casual eating, fast food and more healthy vending options and pop up dining experiences are going to damage the market of the traditional sit down menu. Consumer demands are changing and the industry needs to evolve to keep up with them.
  4. Beverages are expected to really take off. Restaurants will want a slice of the Starbucks market by focusing on their own beverage options.
  5. Increase in Asian food options. Think Korean, Vietnamese food that will joined the already popular Japanese and Chinese food market.
  6. Customers are starting to adore bitter flavours, it’s a taste that is developing movement.
  7. Healthy choices are more important to customers. They are personalising their own diets, so pick and choose options are going to become more of a thing in order to meet the dietary needs of the customers.
  8. Locavores – those who eat locally – are on the rise. Customers want to support sustainable and environmentally friendly local businesses.
  9. Increases in minimum wage will have an effect on the menus.
  10. Generation Z need marketing towards. Catching their attention will require new marketing techniques that will appeal to this young up and coming generation.

Friday, 25 March 2016

How can collaboration be extended to strategic and operational levels?

Collaborating between buyer and supplier to improve customer service and manage inventory efficiently is the purpose of collaborative planning, forecasting and replenishment (CPFR). The CPFR can have an impact on the bottom line of businesses. Implantation takes a lot of time and negotiation of goals and objectives, the frequency of plan updates, key performance measures and exception criteria. At the end the information is published, showing all relevant issues for all of the organisations. There is a 9 step business model that gives insight into the level of effort that is needed by the supplier and the customer.

  1. Development of the front-end agreement
  2. Creation of joint business plans
  3. Creation of individual sales forecasts
  4. Identify any exceptions to the sales forecast
  5. Collaborate and resolve on the exceptions
  6. Develop the order forecast
  7. Identify the exceptions to the order forecast
  8. Collaborate/resolve the exception items
  9. Generate the orders
Both the supply and demand are forecast in CPFR along with the projections from the supplier and the customer, which are synchronised.  Extensive supports of internet products are required and this can cause changes in the key business process.

Thursday, 24 March 2016

How can collaboration be extended across the supply chain to focus on meeting consumer demand? – Part 2

Efficient Consumer Response ECR

Category Management

Demand management principles are increasingly more important in the supply chain initiatives and as a result, the category management process is now more popular. The purpose is to stop stocking outs as well as improving the relations between the suppliers and retailers. It is used to balance the product volume for the retailers and the variety objectives.  There are several activities in category management, including the capture and use of knowledge of the consumers’ attitudes and their choices.  Category management, along with the measuring of promotional efficiency means that ECR can be used by businesses to use their joint resources, reduce the supply chain inventory levels, use cross-docking, and streamline the product flows.

Continuous Replenishment

The use of continuous replenishments gives suppliers and retailers a way of efficiently managing their inventories. There are 6 stages in the process of product replenishment:

*           Integrated suppliers
*           Synchronized production
*           Continuous replenishment
*           Automated store ordering
*           Reliable operations
*           Cross docking

Development is required in joint inventory management, cross docking, continuous replenishment, effective logistics strategies, product flows and quick response in order to build effective replenishment strategies.

Enabling Technologies

The enabling technologies drive ECR. They include the scanning of data, data mining and data warehousing, which all help us to understand the requirements of the customer.  ECR allows data trading throughout the supply chain before doing business and transmitting forecasting data back up the supply chain. The capabilities required to implement ECR include:

*           Sharing information effectively
*           Automating order generation
*           Scanning technology such as bar-coding

Data should also include the demand, consumption and sales information, cash flow, delivery and output status and the stocks of WIP and finished goods.

Wednesday, 23 March 2016

How can collaboration be extended across the supply chain to focus on meeting consumer demand? – Part 1

Efficient Consumer Response (ECR) has been created to rationalize and integrate product assortment, product development, replenishment and promotion across the entire supply chain. 

The aim of ECR is to fulfil the demands and requirements of the end customer by collaborating together all of the members of the supply chain. As a result the effectiveness of merchandising, inventory flow and the admin of the supply chain are enhanced. It’s a system that has been established in the grocery industry and has increased industrial awareness of non-value added supply chain costs.

ECR is focused on integrating the supply chain management with demand management. This integration requires collaboration between the supplier and the retailer . The demand and category management leads to a holistic view on the supply chain. It has also increased collaboration for other key areas, including EDI, continuous replenishment and cross-docking.

Tuesday, 22 March 2016

About electronic integration in the supply chain

The fast moving consumer goods sector between retailers and manufacturers is where most of the pioneering work for electronic integration has taken place. Electronic data exchange has been traditionally used way of exchanging orders and the delivery information, but the EDI systems used are frequently incompatible with each other. Another problem is the EDI systems are expensive to develop and install. The system can be improved using Internet based technologies, which provide easier access and worldwide connectivity.

Visibility in business has become a necessity and this includes in the supply chain. Internet technology and the power of the personal computer means businesses are able to integrate their information systems over the supply chain without spending as much.

Internet technology provides a way of using a platform independent communications network. It can be used as an interface and permits electronic commerce. This results in efficient, cooperative relationships between the supply network, the manufacturers, distributors and suppliers.

Trading partners are also able to integrate electronically, for transactions, for collaborations and sharing information.

Monday, 21 March 2016

About inter-company integration in the supply chain: a manual approach

External integration potential increases when internal integration improvements are made.  Budget constraints are one of the common issues that face businesses who are hoping to make the buyer-supplier relationship more effective. In order to achieve this more people are required and not all businesses are in the position to expand their workforce. Bose Corporation is one of the firms dealing with this problem. They came up with the JIT2 concept as a result.

The JIT2 Concept goes one step further than the Just in Time concept. It eliminates the buyer and the salesman from the customer-supplier relationship, improving the relationship between the two. The principle of the JIT2 concept is that an employee of the supplier works full time in the customer’s purchasing office, replacing the buyer and supplier. The supplier in plant is able to use the scheduling system of the customer to place orders with their own company. They also do the material planning for the materials that are being supplied to his company. Additionally, the supplier in plant becomes part of the production planning process.

As a result, the demand uncertainty is reduced and the whole system streamlined. Bose experienced multiple benefits thanks to their concept, including:

*           50% improvement of on time deliveries, damage and shortages
*           6% reduced material costs
*           26% improved equipment utilization
*           Reductions in inventory holdings

Saturday, 19 March 2016

Chit Chat: 2016 Customer Service Trends According to Experts

Here are some of the top trends that have been predicted for 2016 by industry experts.

All the Channels, All of the Time

Omni-channel support is being used by companies as a result of customers turning towards mobile technology. Firms have to realise that Omni-channel retail is the future of ecommerce and is already present. Aligning and combining customer services and experiences across social platforms, mobile, physical, call centres and so on is a must. You need to be where your customers are where they choose to use your service.

Use Data

Many businesses already collect data, but many fail to actually make use of it. Data can be used to analyse customer behaviour allowing the business to adapt to their patterns and personalise conversations with customers. Using the data is a challenge for many but there are many tools and services that can be utilised.


Mobile and web-users are now used to having instant access to information. Customer self-service experience needs to be provided to customers in order to increase customer confidence and increase sales.

Friday, 18 March 2016

About internal integration: function to function in the supply chain

200 Businesses in the United States were surveyed about the integration between marketing and logistic functions. The survey showed that the performances were improved and interdepartmental effectiveness improved with more frequent integration between the two departments. The improvements were seen in the reduction of cycle times, improved in-stock performance, increased product availability levels and order to delivery times. The logistics performance was stronger than those in businesses with less internal integration.

Those firms with the higher value service elements, such as reliable deliveries, saw a significant difference in performance. They were able to meet the needs of the customer more successfully, meet special requests and new product introductions. The business benefited from improved customer perception. The same positive responses have been seen in multiple surveys and businesses should continue to improve on their internal integration.

The internal integration is a solid starting point for building broader integration over the entire supply chain. Many firms find it easier to integrate with their competitors than within their own organisation, but if internal integration isn’t achieved, how can the firm expect to successfully integrate externally?

Thursday, 17 March 2016

What drives integration in the supply chain?

The desire to meet the end needs of the customer is what drives the supply chain. This begins at the point of sale and works backward, so the correct product is sent to the right place, with the right quantities at the right time.

Integration is required, internally and externally, in order to coordinate the supply chain in order to meet the goals. The materials and the information needed to flow and this would be impossible to achieve without coordination. Some of the principles of the supply chain that require integration include:
  • Being able to communicate with the suppliers in real time.
  • Producing each product that has to be produced daily through the short cycle production
  • Collecting demand data closest to the end customer, the cash register for example.
  • Collaborating with all of the supply chain partners, aligning metrics that are focused on delivering to the end customer.
Evidence shows that integration results in improved supply chain performance overall and significant improvements can be made when the broadest integration strategies are used.

Wednesday, 16 March 2016

What are the agile practices that help to underpin the agile supply chain?

The agile practices that work to underpin an agile supply chain are as follows:
  1. Understand the cause and sources of uncertainty in demand and take the necessary steps to benefit from any uncertainty. One of the easiest options is high volume with little variation for low demand uncertainty. Agility works to improve the response rate to uncertainty and volatility.
  2. Develop capabilities that are able to cope with the reduced time windows for customer fulfilment. Create upstream time sensitivity is an enabler as the speed of replenishment is normally far more efficient downstream than upstream.
  3. Investing in flexible processes that service the ‘market segment of one’. Use modularity at the process and product level along with capabilities that are able to support information and knowledge of the products and services. Some of the practices are capturing customer voice, ensuring metrics are aligned with the real needs of the customers and establishing supply chain governance that gives central support but allows for decentralised actions, and coordinating SOP tables.

Tuesday, 15 March 2016

What is agility, and how does it contribute to the competitiveness of the supply network?

Agility aligns organisational structures, logistic processes, information systems and mind sets; it’s a supply chain wide capability. Agility will use the knowledge of the market along with a responsive supply chain in order to make use of opportunities in volatile marketplaces.  The agile supple chain focuses on developing capabilities to benefit from the market places where the product life cycles are getting shorter and variety is increasing, while the demand forecasting abilities reduce.

The elimination of waste is one of the primary concerns of lean thinking. Cost and quality order winners are supported by lean thinking. Agility is primarily concerned with supporting the order winners of flexible and fast response times. Leanness requires time compression, but this is only one enabler of agility.

One of the main differences in the supply strategy is the lean thinking concentrates on placing upstream orders for the products that have a regular flow movement, while agile strategy concentrates on assigning capacity so products can be made quickly to meet the demand that is ha rd to forecast accurately.

Monday, 14 March 2016

How boundary spanning SOP can improve process integration in an agile supply chain?

SOP is the sales and operational planning that is used to set sales forecasts and use them to come up with operations plans via the master production schedule. Internal integration is required for SOP, especially necessary between the sales and operations.

There are three noteworthy aspects for boundary spanning SOP to the internal integration and support process.
  • Make the forecasts of the market and not the business unit.  Avoid variation problems caused by many businesses supply the same market, creating their own forecasts created from their singular view.  Use a comprehensive view of the market to avoid variations.
  • Source-make-deliver coordination. Translate the forecasts into the factory production runs and what is needed to be sourced along with what to expect of the business in order to integrate across the entire process and not just select points.
  • Link forecasts to the improvement goals. Make forecasting more relevant by linking them to the business goals. Map short term and long term goals.
The basic rules of holding successful and effective SOP meetings are:
  • Ensuring all of the key functions of the business attend the meeting.
  • Everyone needs to attend the meeting with authority when it comes to decision making.
  • Diagnosing errors in the forecasting need to be included in the agenda in order to discuss trade-offs and to learn for the future forecasts.
  • Create a structured agenda and a set of measures used for the meeting.

Sunday, 13 March 2016

Lean supply vs agile supply characteristics

Logistics focus
Eliminate waste
Customers and markets
Long term, stable
Fluid clusters
Key measures
Output measures like productivity and cost
Measure capabilities and focus on customer satisfaction
Process focus
Work standardization, conformance to standards
Focus on operator self management to maximize autonomy
Logistics planning
Stable, fixed periods
Instantaneous response

Source: Mason-Jones et al.(1999)

Saturday, 12 March 2016

Chit Chat: 2016 Generation Z Trends

Generation Z is starting to get attention, the techy teens are showing their potential and as a result more interest is being given to this generation. The Gen Z's now range between the ages of 6 and 20 and they present new challenges to marketers. 

Understanding the generation is essential, but what are the trends to look for in 2016?

  1. Generation Z is approaching adulthood, but already many acts like adults from the early age of 10. They have their own technology and growing up faster than generations before them. Those turning 20 will be working or nearly graduating, entering work and operation 100% digitally.
  2. Gen Z only takes 4 seconds to filter information sent to them, making it hard for marketers to get seen and attention. There is a need to get to the point quickly or get lost.
  3. Phone Separation Anxiety - Gen Z use their phones for everything, they see the world through this gadget. Many experience emotional distress when away from smartphones, and this could mean problems for those entering employment or college.
  4. Those over 18 will be voting for the Presidential Elections for the first time. Gen Z cares about global issues and social equality. They're exposed to events around the world and as a result, they are progressive when it comes to social change, they are politically liberal.
  5. Gen Z is full of current and future entrepreneurs. They want to start their own businesses becoming ZEOs and not CEOs. This generation is learning how to create, promote and transact both on and offline. They're getting head starts are launching their own small businesses, small organisations and applying their skills to turn passion into success.

Friday, 11 March 2016

How shared goals can improve virtual integration in an agile supply chain?

Agility enables companies to respond to the opportunities created by the local market demands.  Companies still should focus energies on employing skills and capabilities over all of the regions where they're operational.

To do this there needs to be shared goals across the regions to create a virtual integration, while the local operations remain in place and there's a focus on local customer service.

In most cases, companies focus on either the local responsiveness or to global standardisation. It's more beneficial to find a balance to avoid duplication of efforts and work together to find revenue opportunities in the supply chain. A governance approach can be used that will focus on initiatives across the entire enterprise, requires senior participation, using divisional budgets to fund initiatives and driving the development of initiatives using divisional sponsorship. This approach can be used to prevent the use of a corporate centre. Companies are able to become more agile but ensuring that local procedures remain local so global initiatives that aren't beneficial to local markets are not introduced to the local market.

Thursday, 10 March 2016

How to develop measures that put the end customer first in the agile supply chain

Customer service is included in the performance measurements of all companies.  Most firms will operationalise the customer service measurement internally, which results in misguided responsiveness that isn't focused where it needs to be. The misguided measurements limit the integration of the network.  Most companies measure the delivery service in multiple or a single way that is based on the firms' definition of success.

The measurements focus on the speed of the company's deliveries and how fast the company responds against their own timetable that has been put forward.

The problem is the timetable may not be aligned with the needs of the end customer. It's far more beneficial to ask the customers about their desired delivery window and measure the execution against what the customer considers to be a success. Often, when asked, the customers say that the performance isn't as good as what the company's internal measurement system suggests.

Span measurement is a measurement system that is based around the range of delivery around the requested due dates set out by the customer.

Measurements are based on how close the company is to the requested delivery date when they place an order. Other ways to improve agility measurements include:
  • Sharing the measurement dashboard with the customers
  • Make the entire supply chain accountable against how the customers define the measure of success
  • Not measuring against own measurement of success

Wednesday, 9 March 2016

Joint Decision to Making Improve External Network Integration in the Agile Supply Chain

Joint decision to integrate and improve the network begins with decisions being made around the needs of the customer. 

There are lots of challenges with customer satisfaction on how they can be measured. Some examples of the challenges that are being faced include:
  • Failing to have clear implications for service
  • How value for individual responses are averaged out
  • Recognising the different voices of the customers
  • What are the strategies and opinions behind the subjective measures?
  • The extremes being hidden by average scoring
Voice of the customer processes have been developed to deal with these challenges. The aim is to exceed customer satisfaction measurement using a comprehensive customer exchange, using features such as:
  • Using senior to senior meetings to establish commitment, elevate conversations and stop the exchange being left in situations caused by stressed revenues
  • Interactions being expanded to an ongoing exchange so measurements are not limited to points in time.
  • Establishing initiatives with joint improvements so the exchange is more than just listening to the customers.
  • Adding functions such as engineering and logistics so the exchange is able to offer directional learning and alignment opportunities.

Tuesday, 8 March 2016

What are the agile drivers and practices?

Agile practices can be used to benefit from marketplace fluctuations and turbulence. Five of the external drives that create a requirement for an agile supply chain are as follows:

1.     Outsourcing
2.     Global supply chain
3.     Increasing customer requirements
4.     Product proliferation
5.     Shortening life cycles of products

The need for an agile supply chain can be driven by opportunity and risk, used in a way that helps the company cope with challenges in the marketplace to profit from opportunities. 

Global outsourcing and sourcing is an area that does affect the need for companies to have agile capabilities. They require the managers of the supply chain to deal with longer supply chains that include external parties, making supply chain management more complex. These drivers, along with increasing customer requirements are seen as net opportunities, positive factors in the marketplace.  Product proliferation and shortening product cycles are both drivers for an agile supply chain that is able to respond in a volatile market.

Monday, 7 March 2016

What are the preconditions for successful agile practice? - Part 2


Forecasting is used to reduce the need for last minute crises. Fast response is important, but organisations are unable to make all operational decisions in response to events that are happening in real time. Planning and preparation is still a requirement when dealing with a crisis. This is why forecasting is still used in agile supply chains.

A demand forecast is created by assessing the market potential of existing and new products, services and promotions. The demand forecast is then used to prepare and provide input into multiple internal forecasts.  The financial forecast will be affected by the demand forecast along with the asset utilisation and capacity planning. The capacity plan will be used for mid and short term plan. The asset forecast is the mid to long term plan that helps establish the capacity that's needed for the supply chain to deal with the volume and nature of demand.

An accurate demand forecast is a must to enable the company to prepare for demand in advance. This reduces the cost for last minute responses and reduces costs that are incurred by preparing for demand that doesn't happen.

The following approaches can be used to improve the accuracy of demand
  • Forecasting should be business relevant
  • Ensure forecast accountability
  • Use a single process
  • The 'one' forecast approach which allows the "big picture" to be developed. It also resolves local forecast differences.

Sunday, 6 March 2016

Lean vs Agile Supply Comparison

Distinguishing attributes
Lean Supply
Agile Supply
Typical products
Fashion goods
Marketplace demand
Product variety
Product life cycle
Customer drivers
Profit margin
Dominant costs
Physical costs
Marketability costs
Stockout penalties
Long term contractual
Immediate and volatile
Purchasing policy
Buy materials
Assign capacity
Information enrichment
Highly desirable
Forecasting mechanism

Source: mason-jones et al.(1999)