Though effectiveness of a Supply Chain depends on many factor
,mainly of course, on a company's own current situation and
strategies, but there are at least ten parameters that need to
be seen for assessing the effectiveness of any supply chain and
The list is based primarily on an assessment of the relative
“pain to gain” ratios that most companies seem to experience
when pursuing each category.
1. E-Auctions: Use of technology tools to drive on-line contract
bidding for a growing array of both indirect and indirect
materials. Pain: one band-aid. Gain: five dollar signs (both out
of five - see the full report). As we write in the report, why
wouldn't this work? It sure does for companies like Rubbermaid
2. Labor Management Systems in Distribution: A combination of
software, engineering and mindset change to improve logistics
productivity. Labor management systems are typically built on
discrete, engineered standards for specific tasks in a
distribution center, plus detailed reporting at the individual
operator level against the resulting dynamic goal time
calculations for the day’s work.
Pain: two band-aids. Gain: four
dollar signs. One of the first things we'd do in any decent size
3. Spend Management Visibility: Software that provides greatly
improved visibility to what a company actually spends, where,
and with what vendors. Pain: three band-aids. Gain: five dollar
signs. It works at home, why not in companies ?
4. Demand Management / S&OP: A process, generally supported by
some level of technology tools, of aligning the sell side and
the supply side of the company around a unified financial and
While many companies have nominal sales and
operations planning processes in place, the consistent feedback
is that most are far from optimally effective. In parallel with
the growth of S&OP is the concept of demand management, in which
sales, marketing, finance and the supply chain work together to
drive demand and sales that maximize profitability, rather than
simply reacting to forecast demand.
Pain: four band-aids. Gain:
five dollar signs. Faster reaction to opportunities and
organizational alignment are essential today.
Supplier Portals: The technology has existed for some time
now to relatively easily integrate suppliers through
increasingly functional web portals. The scope of activities is
very broad, from purchase order management, to providing demand
visibility, to advance ship notice and bar code label
generation, to generating dynamic inbound shipment requirements.
Pain: two band-aids. Gain: three dollar signs. We see know
reason for companies not to be doing this.
6. Network Optimization: Use of network optimization software to
find the optimal balance between costs and service in the
configuration of a company’s supply chain network.
these tools are being used more tactically than in the past,
supporting global sourcing strategies, more short term inventory
planning decisions, new product introductions, and even sales
and operations planning. Pain: four band-aids. Gain: five dollar
signs. A variety of factors is making this a hot category right
now, and the use cases are changing.
7. Transportation Management Systems (TMS): Software systems
that enable shippers to automate planning and execution, connect
electronically with carriers, and reduce freight costs though
optimal mode selection, optimal carrier assignment, shipment
consolidation, and use of continuous moves. Pain: two band-aids.
Gain: three dollar signs, but can be larger for companies with
big freight spend.
8. Strategic/Global Sourcing: Use of a more integrated,
consolidated approach to supplier selection and procurement,
including evaluating total supply chain costs, and consolidating
Rapidly, strategic sourcing is also tightly
tied to off shoring and global sourcing strategies. We probably
could have moved this up on the list, but the opportunities vary
dramatically company to company. Pain: three band-aids. Gain:
four dollar signs. Obviously a hot strategy now, though many
having early trouble getting the results they expect.
9. Wireless in the Warehouse: While use of radio
frequency/wireless terminals in distribution centers is at one
level a highly penetrated and mature market, we continue to be
amazed at the number of even fairly large companies that are
still using paper-based systems in their DCs. Pain: one
band-aid. Gain: two dollar signs. This is becoming very easy to
10. Yard Management Systems (YMS) and Dock Door Scheduling:
Software tools, implemented either stand-alone or in conjunction
with a WMS or TMS, that provide visibility into yard inventory
and optimize appointment scheduling and execution on inbound and
outbound dock doors.
The category has enjoyed substantial growth
in the past two years. Pain: one band-aid. Gain: two dollar
signs. Environmental changes making these systems increasingly
easy to justify.
So that's our list. We strongly considered a few other areas
that just didn’t make this year’s list. These include:
- Voice picking in the warehouse
- Carrier bid optimization
- Technology that helps optimize trailer loading to decrease total