by Fronetics | Jul 14, 2015 | Blog, Logistics, Manufacturing & Distribution, Strategy, Supply Chain
To see lean perfected – study the NASCAR pit. In a matter of seconds, the pit crew has changed tires, wiped down the windshield, filled up fuel, and given the driver a drink of water. Everything is in the right place at the right time. If only every distribution center would run that smoothly. What’s clear is that mastering inventory levels is central to the equation of eliminating waste, but inventory management is becoming a vexing problem for some organizations – compounded by multi-channel distribution, inadequate demand forecasting, and a lack of communication among appropriate parties.
Taking a closer look at the experiences of forerunner companies in their quests to master lean inventory management might just help your company avoid these top three snags.
Failure to Adapt Business Processes
In an effort to reduce merchandise sitting around on warehouse racks, some organizations take lean too far. The problem, in this case, is one of business process rather than software. While management sees the financial impact of cutting inventory, they tend to pay less attention to how it will affect operations. The heads of distribution quite frequently are not even invited to take part in the decision and find out only when fewer cases and pallets show up at receiving. Adapting business processes to involve the managers of procurement, finance, operations, and sales and marketing, is key to maximizing efficiency. In other words, open up the silo by building it in to your formal and informal processes.
Failure to Collaborate
Even with sophisticated demand forecasting models on hand, input from all parties is needed for an accurate assessment of inventory levels. And although demand forecasting can help an organization plan around high-level “what if” scenarios, it may not always be able to break it down on a granular level or take into account the increasing number of variables associated with multi-channel distribution. Collaboration is crucial.
Failure to Align Objectives
Sometimes the answer to the issue of inventory levels is counterintuitive. Even with lean as the driving force, the notion of optimization cannot be left out. In some instances, it makes sense to increase rather than minimize inventory if it will contribute to lowering your overall supply chain costs. Your business and inventory strategies need to align.
Despite the fact that in recent years the lean revolution has hit manufacturing, many organizations, especially retailers and wholesalers, have yet to apply lean principals. And among those who do dabble in lean, the focus tends to be on suppliers upstream rather than adding value to the end customer. As more and more businesses seek to tighten the management of their inventory in order to increase efficiencies, opportunities to address end customer value will emerge. Paul A. Myerson, professor in supply chain management, identifies store- and distribution operations as prime candidates since that’s where the most waste can be cut. He writes:
Distribution is all about optimizing the trade-offs between handling costs and warehousing costs, and maximizing the warehouse’s total cube—utilizing its full volume, while maintaining low materials handling costs and minimizing travel time.
Mastery of lean management principals will come for companies that are both successful in identifying new efficiency opportunities within their existing supply chain and navigating around the pitfalls of businesses that have instituted similar inventory management techniques.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Elizabeth Hines | Jul 13, 2015 | Big Data, Blog, Data/Analytics, Strategy, Supply Chain
Analytics is good for business — as long as you can make sense of it.
Does your business suffer from a case of data overload? Or do you steer clear of new investments in supply chain analytics because you are afraid they could yield more data than your business can handle? You are in good company.
Several recent surveys indicate companies either are wary of advanced analytics tools or say they have failed to leverage the technology. The issue does not seem to be a lack of knowledge of its existence or potential impact — end users are generally well informed — but how to absorb the data effectively and apply it across the entire organization.
According to a Telematics Update, for example, vendors would be wise to spend less time on their sales pitch and more time presenting the data in a digestible format, ensuring compatibility with the end user’s legacy systems, and aligning the solution with the end-user’s key performance indicators.
The challenge is also captured in an Accenture survey in which only one in five companies said they are “very satisfied” with the returns they have received from analytics. And it’s not for lack of trying. Two-thirds of companies have appointed a chief data officer in the last 18 months to oversee data management and analytics, while 71 percent of those who have not created such a position plan to do so in the near future.
This passage from Accenture’s survey report hits the nail on the head:
Companies wanting to compete more aggressively with analytics will move rapidly to industrialize the discipline on an enterprise-wide scale, redesigning how fact-based insights get embedded into key processes, leading to smarter decisions and better business outcomes.
Most organizations measure too many things that don’t matter, and don’t put sufficient focus on those things that do, establishing a large set of metrics, but often lacking a causal mapping of the key drivers of their business.
As the survey suggests, the move away from an isolated approach to an integrated cross-functional model may be the key to squeezing the most out of supply chain analytics. According to Deloitte, the key to delivering strategic insights is creating asingle authoritative data set from which all business units can draw information.
However, only 33% of the Accenture survey respondents said they are “aggressively using analytics across the entire enterprise.” Instead, highly customized data is often collected for units within the organization. A spending forecast by procurement may look nothing like its counterpart coming out of logistics. The inconsistency in reporting makes it hard to share the knowledge, and that takes us back to square one: lots of data and little useful information.
Jerry O’Dwyer, a principal with Deloitte Consulting, summed it up this way in a 2012 post:
If you are performing analytics in different areas of the supply chain — for example, spend analytics or demand planning — you may be missing opportunities that an expansive approach can yield. For companies of all kinds, in-depth supply chain analysis offers an opportunity to create increased value throughout their operations.
Let’s hear it: What do you think companies need to do to put analytics to effective use?
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jul 6, 2015 | Big Data, Blog, Data/Analytics, Internet of Things, Logistics, Marketing, Strategy, Supply Chain
The battle for competitiveness in the cloud.
In this age of radical transformation for supply chains, top companies are tying together prevailing concepts, like big data and the Internet of Things (IoT), with cloud-based computing. Supply chains are being reimagined as digital networks that track not only physical goods, but also people, data, and money. As such, global technology giants continue to invest heavily in cloud computing.
The Chinese e-commerce company Alibaba Group Holding, Ltd. recently announced that it is launching its first international venture – a cloud computing hub in Silicon Valley, proving the fierce competition for market share is stiffening both globally and on the home turf. Notably, all five top-ranked companies listed by the 2013 Strategy & Global Information, Communications and Technology 50 study bet their future on cloud technologies. The companies (IBM, Microsoft, SAP, Oracle, and Cisco Systems) could not, until recently, be perceived as direct competitors, and now they all wield cloud-based portfolios as their competitive weapon of choice.
Analysts note:
The industry leaders are seeking dominant positions, wanting to become the kings of the cloud. As a group, they are putting distance between themselves and the second tier of followers.
For further proof data analytics is driving competition for cloud customers, we can look to a new report by Market & Research that shows data analytics and cloud computing are expected to record a combined growth of 26% annually over the next five years. The implication is that demand is hardly going to lessen as an increasing number of organizations need cloud solutions to manage and store the huge amounts of data that they use to transform manufacturing processes, fine-tune supply chains, forecast customer behavior, and optimize inventories – to name a fraction of potential applications.
And cloud-based computing is even moving the needle of interest in industries that seem inherently averse to making data and information more easily accessible. For example, concerns about data encryption, auditing controls, and transparency have stymied the adoption of cloud-based computing in the financial industry. According to a report by the Cloud Security Alliance, only 28% of American financial institutions have a cloud-based strategy in place, but as a sponsor of the report, Dr. Chenxi Wang, vice president of Cloud Security and Strategy at CipherCloud points out:
Cloud has made solid inroads in this industry with many firms looking to harnessing the power of cloud. There’s plenty of room for growth, particularly for providers who can fill the void for the auditing and data protection controls that are at the top of respondents’ cloud wish list.
Meanwhile, the public cloud services market alone could grow into a $100 billion industry by 2017, according to researcher IDC. Is your business prepared to leverage cloud computing for its supply chain activities? It’s coming, ready or not.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jun 23, 2015 | Blog, Logistics, Marketing, Social Media, Strategy, Supply Chain, Transportation & Trucking
Drew McElroy, founder of the start-up Transfix, is no newcomer to the trucking industry. McElroy was born into the business; his parents owned and operated the freight brokerage Andrew’s Express, affectionately naming it after McElroy.
“I remember listening to my father structure deals. As a kid, it was all utterly confusing to me,” recalls McElroy. “I finally started to get my head around the economics of the business in my teens. From that point on, I became increasingly aware of the industry’s inefficiencies.”
Not long after McElroy graduated college, his father passed away unexpectedly. McElroy, already working for the family business, took over as president. In that time, McElroy successfully increased annual revenues from $4 million to $12 million. While impressive, McElroy still struggled with how the industry traditionally operated. “It was clear that our family business wouldn’t be the platform for world domination,” laughs McElroy. “But I believed that, fundamentally, there was a better way to get things done.”
Determined to build a new foundation based on his belief in “a better way,” McElroy left the family business and set out for San Francisco. He would spend the next year and a half couch surfing and networking in order to gain the expert business and tech insight he needed to plan what would become Transfix. “I knew logistics and I knew trucking, but I knew nothing about venture capital, or how to move from idea to implementation,” says McElroy. “I decided I should try – and try big. If I fail, I fail, but at least I tried.”
In 2013, McElroy was introduced to Jonathan Salama. Salama was among Gilt’s early engineers, and was pivotal in building the flash sale giant’s infrastructure and inventory software. McElroy knew Salama would be key in taking his idea to the next level; Transfix had claimed its co-founders, and its recipe for industry-leading success.
Transfix is a fully automated marketplace that is all about getting things from one place to another. What sets Transfix apart is the company’s platform and approach is vastly more efficient than the traditional approach, and it is much more user-friendly.
Transfix takes the industry’s inefficiencies head on. Transfix is a digital on-demand freight marketplace. It provides industry-leading mobile technologies and location-based jobs offers for independent over-the-road truck drivers, as well as cloud-based management platforms for small carriers and shippers
Here’s how it works:
A customer logs into the Transfix TMS and enters a new shipment. The platform automatically identifies the best driver depending on location, size of truck, etc., sending a load offer alert to the driver or company dispatcher by mobile SMS message or email. The load is accepted by electronic signature, at which point the customer receives automatic notification and the driver becomes fully visible within the customer’s real-time dashboard. Load management from that point on becomes “as simple as Tinder.” Transfix geofences the driver with a five mile radius, immediately alerting Transfix of any issues. Once the load is delivered, the driver is paid within 24 to 48 hours, significantly faster than the industry standard.
Transfix just launched an app (iOS and Android) that is focused on truck drivers. Transfix’s app integrates with the company’s digital marketplace and is driver-centric. The app gives drivers the ability to manage loads, map their itinerary, and manage payments. The app also provides truck drivers with trip planning essentials including the location of showers, ATMs, weigh stations, fuel prices, and weather. The app is free and can be used by anyone with a valid motor carrier number – the driver does not have to associated with Transfix. “Developing this app and making it freely available to all drivers is just the right thing to do,” says McElroy. “Without drivers, this industry would not exist. We need to do right by drivers by making their lives easier.”
Things are moving fast for McElroy and Transfix. Within 15 minutes of updating his LinkedIn profile, McElroy got a call from a logistics Manager at Barnes & Noble and, before he hung up, had freight loads to manage. Fast forward a few months – with Transfix, Barnes & Noble has realized improvements in their processes and has seen their deadhead runs (times driving without cargo) cut by at least 50%.
Transfix has raised close to $2.5 million to date and is already generating several thousand a month in revenue.
McElroy and Transfix are poised for world domination – mind you, a win-win benevolent hegemony – a la Uber.
Fronetics Strategic Advisors is a leading management consulting firm. Our firm works with companies to identify and execute strategies for growth and value creation.
Whether it is a wholesale food distributor seeking guidance on how to define and execute corporate strategy; a telematics firm needing high quality content on a consistent basis; a real estate firm looking for a marketing partner; or a supply chain firm in need of interim management, our clients rely on Fronetics to help them navigate through critical junctures, meet their toughest challenges, and take advantage of opportunities. We deliver high-impact results.
We advise and work with companies on their most critical issues and opportunities: strategy, marketing, organization, talent acquisition, performance management, and M&A support.
We have deep expertise and a proven track record in a broad range of industries including: supply chain, real estate, software, and logistics.
by Fronetics | Jun 1, 2015 | Blog, Strategy, Supply Chain, Talent
Don Firth discusses women in the supply chain
The supply chain needs women and women could benefit from the many, interesting, well-paying jobs in the field. However, the number of women working in the field is lower than ever. To dig deeper into the current state of women in logistics, Fronetics turned to industry expert, Don Firth, CEO of job boards including: Jobsinlogistics.com, JobsInManufacturing.com, JobsInTrucks.com and other influential niche job boards. Firth has over forty years’ experience in the field, including positions as SVP Logistics for Pathmark Supermarkets, and Partner of the logistics consulting practice of Deloitte, among others. He was the editor and chief author of the bestselling book, Profitable Logistics Management.
Firth provides history, context, and suggestions for women in the supply chain.
You’ve had a long, successful career in business. Can you talk a bit about this history, and your view of women working in the supply chain, or in business in general?
The profitability of an entire company relies on the supply chain. It’s a huge and often a neglected opportunity for companies.
As far as who chooses a career in the supply chain— it’s not a profession like medicine or law. Not many women think, “I must be in logistics, or in the supply chain.” It’s not a career most women think of, and it’s not a career men think of either.
Traditionally, most people in the supply chain started from the bottom and worked their way up. They may have gotten an entry job as a selector or forklift driver and worked their way up to supervisor, warehouse manager and then executive positions within logistics. But all that is changing. Many colleges are offering degrees in supply chain management or including logistics and supply chain courses in their curriculum, more and more men and women are choosing this as a career choice.
One barrier, for some women, is that many jobs in distribution centers require candidates to have the ability to lift 50 lbs. For example, in the food industry there are very large, bulky cases. Some women are very strong so they might apply. If you’re lifting 50lb cases multiple times an hour, that’s a lot. Some women could do it, but some women can’t. Some men can do it, and some men can’t.
Women make up 38% of the visitors to Firth’s website Jobsinlogistics.com and 32% of the visitors on his website Jobsintrucks.com. These numbers seem high compared to the amount of women in the field, perhaps because some spouses use the websites to find jobs for their husbands.
If I had to guess how many women were in logistics, I would say 20% to 30%. Whereas women working in warehouses may be as low as 10%, other positions such as business development, administrative, freight agents, dispatchers, inventory management, purchasing and supply chain analysts are significantly higher. These help women with lots of talent rise to the top.
So can we correlate that one reason why there might not be a lot of women in the supply chain is because women might not apply for lower level positions, and therefore don’t get an opportunity to rise up through the ranks to middle-management or upper- management?
Perhaps. This may be so for positions such as warehouse associates, maintenance workers, mechanics and drivers. These have traditionally been considered a “man’s world.” For these positions there may even be a bias, a reluctance to hire too many women because most of the people working in the field are men. It will take some time to change. But the times they are a changing for these traditional roles. I just returned from New York on a plane where the pilot was female. We are seeing a growing number of women getting their Class A driver licenses and we have many husband and wife teams registered on JobsInTrucks.com
Are there specific things you feel women can bring to the logistics field?
I have met many women who hold higher level positions in the supply chain. The one key factor they all have is the desire to succeed. They are able to look at the bigger picture of the supply chain and analyze the trade-offs related to different strategies. Those that are on the business development side of the business have great client relationship and social networking skills.
Is there a specific way you currently promote women, or could do so on your websites?
We want to encourage more women to enter the supply chain profession. We send out logistics bulletins to our registered passive and active candidates to provide them with information on how best to find their next career move. We encourage women to participate on our Facebook pages. For JobsInLogistics.com, 40% of the ‘likes’ come from women, yet only 17% on JobsInTrucks.com.
At the recent Mid-American Trucking Show, we were pleased to see significantly more women drivers visiting the JobsInTrucks.com booth. We list 28,000 open driver positions on our website Jobsintrucks.com. Everyone is looking for drivers.
This can be a taxing career role for women, especially on long haul routes, where drivers can be away from home for two to six weeks at a time. Often we see women drivers as part of a husband and wife team. Once people have children this profession can be hard. Family life impacts women and men, both, in this field. Single, young men see trucking as an adventure at age 21, but once they reach age 29 and have children, they want to spend more time with their families, thus contributing to a shortage of drivers.
There was a lawsuit in 1964, Weeks vs. Southern Bell, in which a female employee was suing because she was told she couldn’t apply for a higher paying job within the company. Mrs. Weeks was told the job went to men only because it required heavy lifting and women weren’t allowed to lift more than 30 lbs on the job. Do you see similar things happening in the logistics field, even today?
Wow that was over 50 years ago. Well, the laws have changed but I think the bias is still there. However it still falls back on the physical ability of both men and women to work on jobs that require heavy lifting or strenuous activity.
Do you still see a lot of prejudice against women in logistics?
Many companies are advertising for women in all areas. They’re being careful about hiring processes because of discrimination laws. In reality, I’m sure there is some bias for the heavy-lifting jobs. If people are looking at resumes and they see a female applying and a male applying for a heavy-lifting position, unfortunately I think they’ll interview the man first. On the supervisory level, it doesn’t matter if you can lift things or not. For other positions, I believe it’s a level playing field.
National statistics report that “in 2013, women who worked full time in wage and salary jobs had median usual weekly earnings of $706, which represented 82% of men’s median weekly earnings ($860),” which is in line with what is happening in logistics management. According to the Logistics Management report, “women still lag behind – earning a median salary of $86,370, while men with similar job descriptions pull in more than $100,000.” What do you think it will take to equalize the gender gap?
I don’t know what to think of the accuracy of these statistics, because there can be many factors that skew statistics, such as which companies are being compared, what type of jobs, where are the jobs located, what’s the career history, etc. However, I know that someone should not be looking at a woman with the same skillset as a man and say, “Ok I’m going to pay her less because she’s a woman.” Whereas I’m sure it happens, it’s just wrong.
What do you think about the future of women in the supply chain?
I think there’s going to be slow growth on the manufacturing floor, warehouse operations and in transportation. But I think the high level positions are very open for women. It requires a very analytical mind. Women are especially good at thinking through the many complex pieces of the supply chain. One of the best things about this work is that it’s not repetitive. Things change every day. I think people, men and women alike, will get hooked on logistics! Opportunities are there.
Females should be looking at the business schools that have supply chain courses. Once you have that degree you’re going to be starting at a managerial level. This can lead to salaries anywhere from $85k to $150k for leading supply chain professionals, with some earning more than $225k. Supply Chain salaries are going up tremendously because companies are realizing that supply chain is the key to profitability.
