The Google of Supply Chains? [POV]

Yesterday, I attended a presentation that shattered my dreams. Have you ever felt like you had this brilliant idea that no one ever thought of. Your idea is in fact so cutting-edge and your knowledge so incomplete that you decide to wait a few years before actually starting to implement it. You think there is this perfect amalgamation of  vision and practicality that will certainly make your idea a great success – only to discover that someone has already implemented the idea – YOUR IDEA on a much larger, grander scale and is a few years ahead in practice than your vision itself. These were my exact emotions at the presentation yesterday. Ask me why?
THE CLOUD: Cloud computing is a concept that has captured my imagination. Not having been at the cusp of the internet’s beginning years, there aren’t as many primitive systems that I’ve faced (when I was 15, I was using Windows XP and a lot of the programs I was using then didn’t have stability issues). When I used the internet, I started with IE6 but ended up using Firefox after a month. Today, I use Google Chrome. I pride myself in using the most advanced technology available to me.
Given this backdrop, cloud computing seemed to be a natural extension to everyday computing. It seemed to be but natural that all your data and information would go where you go. You would be able to turn your data on or off with a single click and it would be available wherever you go. Like many people in my generation, I took to cloud computing services (like Google Docs, Dropbox, Evernote – you get the idea) to help me complete my everyday tasks with ease.
For the past few months however, I began pondering the idea of supply chains residing in the cloud. By this I don’t mean the actual physical supply chain (obviously) but the data that supply chains are made of. The data that has the ability to make or break supply chains. The data visibility that many companies are trying so hard to achieve at the back end without sacrificing their competitive advantage and (in this economic climate) without sacrificing too many resources. Cloud computing could be the panacea for this issue. The whole idea of cloud computing revolves around a single concept – DATA IS UBIQUITOUS. This concept is true in supply chains as well. Data and its visibility are of paramount importance. Even today, supply chain managers are struggling with the Bull-Whip effect. The use of a cloud computing infrastructure that took POS data and shared it with the entire supply chain for a particular product line would put an end to the entire concept of forecasting and would enable supply chains to be entirely demand-driven. Suppliers would be able to work with actual sales data and not forecasted data. And if this is true for the entire supply chain, the whole notion of the Bull-Whip effect would not exist.
ONE NETWORK: Well, yesterday I found a company that does just that (thus effectively shattering my dream of being the first one to have thought of such a concept). One Network Enterprises is a SaaS provider that helps make supply chains better – in the cloud. The entire software is plug-and-play. You pay a subscription fee and you’re hooked onto the network immediately. I like the term “Community Supply Chain Management” too because that is telling it like it is. It is basically a huge network that companies hook onto along with their suppliers and use actual data to drive their supply chain and collaborate with one another. I was also able to look at a few screenshots of the software (could not see the actual demo because of some security issues) and the software looks extremely intuitive and natural to use. Like Mark Skoda – who was the presenter yesterday – put it,

“Anyone who knows how to draw stick figures and play tic-tac-toe can use our software.”

A pretty convincing sales pitch, I must say. Let me make it clear here that neither am I endorsing the product in any manner, nor am I writing this article for money. I am truly astonished to see an idea that I had, being implemented so thoroughly. I can plainly see that this company is doing with supply chains what Google is doing with the enterprise – moving data to the cloud. Mark likes to call One Network the iPhone of Supply Chains. But from a holistic view, they certainly are “The Google of Supply Chains”.
This whole experience has humbled me (All my fingernails are gone. Food for thought I guess!!). Watch me walk into the sunset in solitude… having buried my idea, I now search for something new.

Blog Redesign – Is it needed? [Opinion]

For a while now, I have been thinking of giving the SCM Blog website a facelift. In light of this, I would like the readers’ opinion about this. For this purpose, I’ve created a poll which is the first item to the right of this article. Feel free to vote or use the “Email the author” link at the end of this article. Any template suggestions are also most welcome. I want to involve my audience to the fullest extent possible.

It will certainly take a while for me to get the new design tested and working. In the meanwhile, the content that you enjoy on this blog will keep coming.

The Green Supply Chain – Fact or Fiction??

Are supply chains moving towards becoming proponents of the whole Green initiative many people are calling a sham? Today, lets take a look at why it is in the interest of supply chains to go green and how a lot of companies are seeing a real value in this.

COPENHAGEN AND DAVOS: Two places where a lot of people met (albeit without taking any significant decisions) to decide the future ‘green’ direction that the world needs to take. Copenhagen was one huge event what with the heads of many countries meeting to try and figure how they should share the responsibility that ‘going green’ has become. I look to Reuters to tell me the exact impact of the summit at Copenhagen.

More than 50 nations including major greenhouse gas emitters have outlined plans for fighting climate change under a January 31 deadline set in December's low-ambition "Copenhagen Accord.

The countries, accounting for more than two-thirds of world greenhouse gas emissions and led by China and the United States, have mostly reiterated existing goals for curbing emissions after the summit of more than 190 nations in the Danish capital.

Most have formally asked to be "associated" with the accord, by a January 31 deadline. China and India, however, have stressed most allegiance to the 1992 U.N. Climate Convention.

The accord seeks to limit a rise in global temperatures to below 2 degrees Celsius above pre-industrial levels and sets a goal of $100 billion a year in aid for developing nations from 2020 to help confront climate change.

Source: Reuters Article

Significant. Especially if you consider the bickering that has been going on in the past decade about taking responsibility for the carbon mess we’re in. And now – I mean right now, the summit at Davos is going on. What started as being an Economic Forum has now panned out to focus on ‘green’ issues as well. Why? To put it in plain language, many economies of the world are going to be spending a lot on trying to clear up this mess. That’s why!!

WHY SUPPLY CHAINS? Because its a perfect match – perfect to the point that it inspires poetry.

Picture a world-class supply chain of a large retailer. Imagine trucks moving from town to town around the clock.

Picture a 3PL logistics provider’s supply chain (more of a vehicle chain really). Imagine trucks, planes, trains – but mainly ships moving from dock to dock.

Picture the supply chain of a computer manufacturer. Imagine moving zillions of small chips and other parts to the manufacturing facility – moving the product from the DC to store or home – and then having a computer sitting around that still has a carbon footprint of its own.

The scope of reducing emissions in supply chains is enormous. That’s why numerous companies all around the world are looking to reduce carbon in their supply chains. That said, it has become something of a fad.  Consider this fact. Over 91% of the 44 consumer facing companies surveyed in Carbon Disclosure Project said they have a board-level executive responsible for climate change. If that’s not disturbing enough, 56% say they expect to deselect some suppliers in the future for failing to meet carbon management criteria. This is an increase from just 6%. (Source: businessgreen.com). All this goes to signify that a lot of upper C-level attention is being focused on managing the carbon footprint of companies.

WHY SUPPLIERS? Because they form the crux of the supply chain. Although suppliers do not come under the direct control of the companies that are buying from them, the carbon practices of suppliers are certainly an area of concern for them. A lot of companies are now including carbon footprint (disguised in the form of many other terms including environmental rating) as a criteria in RFPs and RFIs. But is climate change really a procurement concern? An article with the same name caught my attention recently.

  The video below talks about the same idea and puts it into perspective. Its over an hour long. So watch it when you have time.

When you come to think of it, it is the procurement organization that has the most direct impact on the bottom-line of the company as a whole (remember the fact that it takes three times as much in sales to match a cost savings in procurement or sourcing). Going by the same logic, the procurement organization also has a direct impact on the carbon footprint of the supply chain – they can make or break the carbon footprint of organizations by selecting the right suppliers. More procurement organizations are beginning to focus on the Total Cost of Ownership (TCO) while selecting suppliers.

I think we need to use a new metric for selecting suppliers in this context. I’m going to call this the TOTAL IMPACT OF OWNERSHIP (TIO).

This metric will include the cost benefits of partnering a certain supplier over an extended period (just like TCO). But in addition, it will also assign importance to the level of carbon management that the firm has, best practices in manufacturing (lean manufacturing and quality levels), and also the positive impact of publicly associating with the supplier (this parameter best applies to larger, more public suppliers).

THE CASE FOR GREEN: I think that a valid case has been made for introducing the ‘green supply chain’ concept in modern businesses. Focusing on the carbon footprint not only gives companies bragging rights (and loads of marketing material), it also enables companies to remain more agile and efficient. This is because most of the improvements that make a company greener will also, by default, make the company more efficient due to adopting best practices. The initial cost of doing this may be high. But the ‘Total Impact’ will be realized for a long time to come. What do you think?