s olume 22 | number 4 july/august 2012 v api

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5 2 3 6 2 3 6 1 4 0 Ideas and innovations in supply chain and operations management APICS MAGAZINE INVENTORY MANAGEMENT CASE STUDIES/RELATIONSHIP-BUILDING STRATEGIES JULY/AUGUST 2012 A P I C S July/August 2012 Volume 22 | Number 4 Ideas and innovations in supply chain and operations management The secrets to lasting supplier relationships Exploring the global shift in consumer products demand

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Page 1: S olume 22 | Number 4 July/August 2012 V API

8 7 5 2 3 60 2 3 6 1 4 0

Ideas and innovations in supply chain and operations management

APIC

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GA

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INV

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JULY

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ST 2012

APICS July/August 2012 Volume 22 | Number 4

Ideas and innovations in supply chain and operations management

The secrets to lasting supplier relationshipsExploring the global shift in consumer products demand

Page 2: S olume 22 | Number 4 July/August 2012 V API

Enabling Winners JDA ExpertiseCommitment to Success

JDA offers the most complete, integrated suite of

supply chain planning and optimization solutions

* Top 100: The Consumer Goods Registry, 2011

** Top 100 Retailers, STORES, 2011

Visit jda.com

Materials ConsumerRetail DistributionShippingProduction

Page 3: S olume 22 | Number 4 July/August 2012 V API

Achieve peak supply chain alignment and integration

Exhibit at APICS 2012 Learn more by visiting apics.org/expo.

@Tweet_APICS

Stay up-to-date on the latest news and

information @Tweet_APICS. Use hashtag

#APICS2012

Visionary leaders join the APICS 2012 programAPICS 2012 general session speakers will discuss innovation and complexity and

how these concepts contribute to the performance of successful supply chains.

Douglas MerrillFormer Chief InformationOffi cer, GoogleCofounder and CEO,ZestCash.com

Eric BerlowTED Senior FellowFounder,TRU NORTH Labs

Attend the 2012 APICS International Conference & Expo Join us for the leading annual gathering of supply chain and operations

management professionals worldwide. Build your supply chain expertise,

network with experts and colleagues, and attend plant tours to experience the

application of concepts.

APICS 2012 Learning PathsAlignment to Demand

Enabling Technologies and Analytics

Foundations in Production and

Inventory Management

Integration Strategies Across the

Supply Chain

Optimizing Supply Chain and

Operations Processes

Professional Skills Development

Risk Management

Sustainability

October 14–16, 2012

Colorado Convention Center

Denver, Colorado, USA

Special team pricing is available.

Register today. apicsconference.org Save up to $400 by registering before

August 15.

Page 4: S olume 22 | Number 4 July/August 2012 V API

2 July/August 2012 | APICS magazine

July/August 2012 Volume 22 | Number 4

APICS magazine

32

FEATURES

25 Building Stronger BondsThe APICS InterviewExplore the ways to maximize relationships in channel organizations.

38 New Landscapes and Emerging Opportunities

By Praveen Kishorepuria, Mark Quinn, and Adam MussomeliTap into markets in diverse environments and economies.

28 Build to BufferBy Mahesh Gupta and James F. Cox III, PhD, CFPIM, CIRMSee how one Indian shoe manufacturer boosted responsiveness and agility.

32 One-of-a-Kind Inventory ManagementBy Mark E. NeumanRecognize why your organization needs a cycle counting program.

34 Stack Up SolutionsBy Homayoun Taherian and Kristen Kravitz, CSCPUnderstand the benefi ts of using diff erent pallet layer confi gurations.

28 32 34

Page 5: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 3

38

DEPARTMENTS

4 From the CEO

5 From the Editor

6 APICS Report

7 Membership Matters

8 Industry Watch

10 Ask APICS

12 Building Blocks

13 Working Green

14 Lean Culture

16 Management Perspective

17 Enterprise Insights

18 Executive View

20 Book Review

21 Relevant Research

56 Lessons Learned

Resources

42 Product Showcase

44 Supply Chain Management Directory

45 Index

46 Warehouse Management Systems Directory

47 APICS Annual Report

“An effective supply chain solution must ensure that each link in the chain, from raw materials supplier to consumer, recognizes its state of ideal performance.” page 29

APICS magazine (ISSN 1056-0017) is published bimonthly by APICS Th e Association for Operations Management, 8430 West Bryn

Mawr Ave., Suite 1000, Chicago, IL 60631-3439. Phone: (773) 867-1777. Canada Post International Publications Mail (Canadian Distribution)

Sales Agreement No. 571423. Periodicals postage paid at Chicago, IL, and additional mailing offi ces. Subscriptions: $65 per year U.S., $77

Canada/Mexico, $93 elsewhere. Copyright © 2012 by APICS. All rights reserved. Printed in the United States of America. POSTMASTER:

Send address changes to: APICS, 8430 West Bryn Mawr Ave., Suite 1000, Chicago, IL 60631-3439.

25

Page 6: S olume 22 | Number 4 July/August 2012 V API

Supporting Supply Chain Talent Development

From the CEO

APICS magazine is published byAPICS The Association for Operations Management

8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 Phone: (800) 444-2742 or (773) 867-1777 Fax: (773) 409-5576 Email: [email protected] apics.org

Sharon L. RicePublisher

EditorialJennifer Proctor Elizabeth RennieEditor in Chief Managing Editor

Christopher Jablonski Staff Editor

DesignEmma Castañeda Hwa KimArt Director Designer

Lara Kocab Designer

AdvertisingTom Lasch [email protected] (440) 247-1060

Editorial Advisory BoardRichard E. Crandall, PhD, CFPIM,CIRM, CSCPAppalachian State University

Philip E. Quigley, CFPIM, PMPComputer Science Corporation

Randall Schaefer, CPIMRandall Schaefer Consulting

Publication in APICS magazine does not constitute

an endorsement of any product, service, or material

referred to, nor does publication of an advertisement

represent an endorsement by APICS or the magazine.

All articles represent the viewpoints of the authors

and are not necessarily those of the magazine or the

publisher. Letters to the editor will be published at the

discretion of the editor.

Canada Post International Publications Mail Product

(Canadian Distribution) Sales Agreement No. 1220055.

Subscriptions: APICS magazine is circulated to all

members of APICS as part of their membership fee.

For all others, the subscription rate is $65 annually ($77

in Canada and Mexico, $93 for other international or

overseas delivery). To subscribe, call APICS customer

service at (800) 444-2742 or (773) 867-1777.

Single copies within the US are $8, outside the US,

$12 (payable in U.S. currency). Contact APICS

Customer Service, (800) 444-2742 or (773) 867-1777.

Printed in the United States of America.

From the CEO

4 July/August 2012 | APICS magazine

choice. At colleges and universities, like-

wise, students must have access to training

that builds the foundational knowledge

and experience necessary to manage the

diverse aspects of the profession.

Companies have the responsibility to

offer career paths and rotational oppor-

tunities for individuals so they can get

exposure to the various job functions and

responsibilities that span their organi-

zations, both horizontally and vertically.

Based on a recent study, employer-

provided training results in a positive and

significant effect on job satisfaction. On

average, this effect is equivalent to a 17.7

percent increase in labor earnings.

Complementing the formal education

is association membership and training.

Organizations such as APICS provide

members with guidance and direction,

enable them to make connections within

their communities, and build and validate

our members’ knowledge through industry

certifications such as APICS Certified in

Production and Inventory Management

(CPIM) and APICS Certified Supply

Chain Professional (CSCP). Various

studies indicate that certified individuals

achieve greater recognition in their orga-

nizations, are qualified for more job roles,

and earn more than non-certified peers.

Supply chain and operations management

talent development is an ongoing issue. We

at APICS remain devoted to building the

profession and enhancing the careers of our

members. There are numerous initiatives

in the works, and I look forward to sharing

them with you as they come to fruition.

Abe Eshkenazi, , CSCP, CPA, CAE

Chief Executive Officer

There is no question that there is a grow-

ing awareness of the supply chain and

operations management profession. Recent,

high-profile news stories affecting the field

include the supply disruptions from the

2011 Japanese earthquake and tsunami,

Apple CEO Tim Cook’s supply chain

background, and the trend of reshoring

production to domestic locations.

Additionally, supply chain is increasingly

becoming recognized as a competitive

differentiator from the perspective of the

C-suite and the boardroom.

Even as the field achieves greater aware-

ness, it faces new and emerging challenges.

One area in particular that is critical to the

future of the profession is that of workforce

development and talent management.

Skills needed It takes knowledge and applied skill

to analyze supply chain situations and

take appropriate actions. Consider the

characteristics of individuals who are

necessary to accomplish this—they must

be agile, adept at problem solving,

globally minded, and strong communica-

tors—both with partners outside the firm

and interdepartmentally, especially with

people not well-versed in the language of

supply chain. Many businesses also desire

candidates with real-world experience in

these areas. Unfortunately, it’s getting more

difficult to find the right people for these

positions; and, adding to the challenge,

many human resources managers aren’t

aware of just what it takes to be a supply

chain professional.

Addressing these issues and creating

a healthy supply chain and operations

management workforce begins in the

high schools and secondary education

institutions. Students first need to become

aware of supply chain as a discipline; then

they must begin to see it as a viable career

Page 7: S olume 22 | Number 4 July/August 2012 V API

It’s a tale of intrigue, corruption, guns,

and slavery. It spans from the South

China Sea to the seafood aisle at your

local grocery store. And it’s a true story

with supply chains at its heart. A few

days ago, I heard a piece on National

Public Radio’s Morning Edition, and it

enabled me to truly comprehend that

increasingly global and complex supply

chains come with the potential for

serious risk to humans.

NPR told the story of Vannak Prum,

a Cambodian who was lured to Thailand

by the promise of a good job. Instead,

a labor broker forced him to work on a

Thai fishing boat from 2005 to 2009 in

terrible conditions without pay. During

this time he was mistreated, starved,

and tortured. Prum escaped with

another fisherman by jumping off the

boat and swimming four kilometers to

shore when the boat was anchored off

Malaysian Borneo.

That wasn’t the end of his torment,

though. According to his account, Prum

then was sold by corrupt officials to a

palm oil plantation, where he was forced

to work for several months.

In June, the US State Department

honored Prum for his work to raise

awareness of human trafficking and

labor exploitation in the Thai fishing

industry through a series of drawings

that recreate his experience.

NPR reports that Thai fishing boats

catch about 1 in 5 pounds of mackerel

and sardines that end up in the United

States. They also catch a good portion

of American anchovies. But fishermen

in Thailand are increasingly hard to

hire—boats can be short up to 60,000

spots each year. Some of these open

positions are filled legally by men

from other countries, but human

traffickers also seize this opportunity.

Clearing Up Murky Supply ChainsAPICS Board of Directors

Chair of the BoardMarc Harris, CPIM, CSCP

Chair-ElectRobert Boyle, CFPIM, CIRM, CSCP

Secretary-TreasurerMondher Ben-Hamida, CPIM, CSCP

DirectorsLuis Barcon, CPIM, CIRM, CSCPDistrict Director, Terra Grande District

William BickertDirector-at-Large

Norman Carmichael, CPIM, CSCPDirector Southwest District

Bintong Chen, Ph.D.Director-at-Large

Rick Donahoue, CPIM, CSCPDistrict Director, Mid-Atlantic District

Paul HowattDistrict Director, Canadian District

Vadim KapustinDirector-at-Large

Jerry Kilty, CFPIM, CIRM, CSCPDistrict Director, Southeast District

Al KueblerDirector-at-Large

Merri Rich, CPIMDistrict Director, Pacific Western District

Dana Riess, CPIMDirector-at-Large

David Rivers, CFPIM, CIRM, CSCPDistrict Director, Northeast District

Jason Wheeler, CPIM, CSCPDistrict Director, Great Lakes District

Tammy Williams, CPIM, CIRM, CSCPDistrict Director, Heartland District

APICS CorporateChief Executive OfficerAbe Eshkenazi, CSCP, CPA, CAE

Magazine ContactJennifer Proctor

APICS The Association for Operations Management8430 West Bryn Mawr Avenue Suite 1000 Chicago, IL 60631-3439 Phone: (800) 444-2742 or (773) 867-1777 Fax: (773) 409-5576 Email: [email protected] apics.org

From the Editor

APICS magazine | July/August 2012 5

Experts agree it can be difficult to decipher

the fishing boats that are operating legally

from the ones that aren’t.

The NPR story quotes Gavin Gibbons

of the National Fisheries Institute: “I don’t

think it’s that American fish companies

don’t want to go back to the boat level. But

what we’ve found is that the supply chain—

even the regulators who are in a position

to put regulations in place—are having real

trouble with it, and the companies are hav-

ing real trouble with it, as well.”

Rethinking business requirementsAs supply chain professionals, you

personally are experiencing the challenges

that come with the dynamic global

environment in which you practice.

Again, considering the fish example, in

the case of contamination, it is critical to

be able to trace and pull products from

the market anywhere in the world. Being

able to orchestrate this type of recall is a

requirement for supply chain professionals,

not an option.

More and more, creating sustainable

supply chains also is not optional.

Professionals in this field must consider

the triple bottom line of people, planet,

and profit. The people part of this equation

isn’t merely feel-good policies with no

substance. It’s about taking measures to

adequately ensure your company and

your company’s suppliers respect human

rights. That’s the only way human traffickers

like the ones who bought and sold Prum

will be put out of business.

Jennifer Proctor

Editor in Chief

Page 8: S olume 22 | Number 4 July/August 2012 V API

6 July/August 2012 | APICS magazine

APICS Report

Learn, Network, and Advance Your Career

As we move into the second half of the

year, take a moment to reflect on your

goals for 2012 and determine the priorities

that are right for you. Attend an educa-

tional or networking event, read up on

the latest industry research, or seek out

the latest career trends with APICS tools

and opportunities.

Registration is open for APICS 2012APICS 2012 International

Conference & Expo

October 14–16, 2012

Colorado Convention Center

Denver, Colorado, USA

The theme for APICS 2012 is

“Elevate supply chain performance:

Value creation through market

alignment and integration.” As a

supply chain and operations manage-

ment professional, you are expected

to achieve maximum productivity,

meet consumer demand, and remain

agile amid instability and unpredict-

ability. At APICS 2012, access relevant

education, best practices, and thought

leadership to help you create a lasting

impact on your organization’s strategy

and success.

Educational sessions will focus on

finding solutions to the challenges you

face today and in the years to come.

Learn using a variety of methods,

including case studies, panel discus-

sions, workshops, and plant tours.

Learning paths

The learning paths for APICS 2012 are

Alignment to Demand

Enabling Technologies and

Analytics

Foundations in Production and

Inventory Management

Integration Strategies Across the

Supply Chain

Optimizing Supply Chain and

Operations Processes

Professional Skills Development

Risk Management

Sustainability.

Plant tours

Attend a plant tour to see best practices

and concepts from APICS 2012 edu-

cational sessions in action. Plant tours

will be offered by Celestial Seasonings,

MillerCoors, PTA Plastics, the US

Mint, and more.

APICS Leadership SummitThe APICS Leadership Summit is an

opportunity for APICS partner

leaders—including chapter officer,

district managers and support staff,

international associates, and autho-

rized education providers—to grow

their leadership skills and understanding

of best practices in chapter manage-

ment, professional development, and

instructional techniques. Sessions in

the APICS Leadership Summit enable

participants to

learn from experienced APICS

volunteers and staff members

network with industry leaders from

across the globe

study effective association manage-

ment strategies

discover how volunteer leader-

ship positively affects professional

development.

APICS 2012 Leadership Summit

October 13, 2012

Colorado Convention Center

Denver, Colorado, USA

To learn more or to register, visit

apicsconference.org.

Stay current with APICS researchEnhance your industry knowledge by

studying the latest industry research

and reports.

Assess risk, develop your organization’s

supply chain strategy, and understand

how to successfully implement or grow

your company’s sales and operational

planning (S&OP) process with APICS

folios. These downloadable compen-

diums offer a comprehensive under-

standing of relevant issues. Each contains

APICS research and findings, as well as

practical ways to apply the latest research

to your business.

APICS folios include

APICS Supply Chain Sustainability

Folio: Uncovering the Triple Bottom Line

APICS S&OP Folio: How to Be an

S&OP Champion

APICS Supply Chain Strategy Folio:

Make the Most of Supply Chain Strategy

APICS Supply Chain Risk Folio: Protect

your Business with Risk Management.

To learn more about the APICS folio

series or to purchase today, visit

apics.org/folios.

APICS members-only research reports

provide research you can’t find anywhere

else. Delve into critical topics, including

supply chain risk and strategy, S&OP,

sustainability, industry employment

trends, and more.

These reports are available exclusively

to APICS members. Many have accom-

panying folios—including recommenda-

tions, articles, and tools to enable you to

put APICS research to work.

APICS research reports include

APICS 2012 Sustainability Practices

and Challenges

APICS 2011 Supply Chain Strategy

Practices and Challenges

APICS 2011 Supply Chain Risk

Practices and Challenges

APICS 2011 S&OP Practices and

Challenges.

To learn more about APICS members-

only research reports or to download,

visit apics.org/research.

Page 9: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 7

Hansen appreciated this opportu-

nity, but was understandably anxious

about all the new skills, knowledge,

and experience she would have

to acquire. “Luckily, I learned the

mechanics rather quickly,” she says,

“which is a good thing, because,

within a matter of three weeks, the

senior buyer who had trained me

moved on to other endeavors ... I was

suddenly the senior buyer on board.

My job rapidly developed into some-

thing that didn’t in any way resemble

what I had volunteered for.”

The events of September 11, 2001,

resulted in Hansen losing that job; but

she was hired by a new company just

one month later. “My new position

was a real eye-opener, as I migrated

from a low-[stockkeeping unit]

(SKU), fairly high-volume environ-

ment to a high-SKU, low-volume job

shop environment—and a brand new

enterprise resources planning system.”

Not long after, a group of cowork-

ers from different divisions decided

to sign up for the APICS Certified

Supply Chain Professional (CSCP)

certification. Hansen calls studying

for her exam “an enlightening look

into the brave new world of the

supply chain”—a concept that was

formerly unknown to her. “I began

to understand the puzzle and how all

the pieces fit together,” she explains.

“Planners are not enemy forces who

are out to get the buyers; and the

manufacturing group isn’t a disem-

bodied entity that just happens to reside

in a different area of the plant. Strange

and wonderful concepts like concurrent

engineering and partnership throughout

the supply chain came to life … I was

now part of the supply chain, a solid link

in the chain that makes it happen.”

A couple of challenging years later, her

company’s operations manager made it

clear that she should pursue her APICS

Certified in Production and Inventory

Management (CPIM) designation.

She identified both instructor-led and

online study courses and signed up.

Hansen says it wasn’t easy—and failing

one module did point out where she

had some weaknesses and gaps in

her experience. But not long after, she

earned her CPIM designation and now

believes strongly that APICS training

and certification are what led her from

buyer to supply chain career profes-

sional. “This is a realization that doesn’t

necessarily hit during the process of

certification,” she notes. “But it slowly

becomes part of who you are.”

Looking backHansen says what she does today in no

way resembles what she was doing 20

years ago—and she adds that she’s sure

“it won’t bear much resemblance to

what [she] will be doing in five years,”

noting, “This is one of the wonders and

pains of a supply chain career. It is a

mega-dynamic environment fraught

with obstacles and rewards.”

Hansen believes her affiliation with

APICS has revealed a fascinating

landscape of collaborative thinking and

sharing; a diverse experience, encom-

passing myriad cultures, processes, and

ideas; and education that helps her

innovate, succeed

and improve herself.

“I was fortunate

enough to work

for companies that

promoted education

and training,” she

says, “and I hope

to encourage individuals— especially

those who may become discouraged by

the rapid evolution in the field and the

challenges this can bring—to embrace

education and certification and elevate

their positions.”

Elizabeth Rennie is managing editor for APICS magazine. She may be contacted at [email protected].

An Exciting Journey to Supply Chain Success“Back in the Dark Ages—when cost and price were synonymous and manhandling a 5 percent discount out of a vendor was considered the pinnacle of negotiation—I had my first introduction to purchasing,” explains Denise Hansen, CPIM, CSCP. She began with her employer as an administrative assistant to the production manager, but volunteered to assist her company’s buyer on a part-time basis. “Three days later, I was congratulated and advised that I was the new junior buyer.”

Denise Hansen, CPIM, CSCP

Senior Buyer

Philips Lighting North America

APICS training and certification

are what led her from buyer to

supply chain career professional.

MembershipMatters

By Elizabeth Rennie

We encourage you to share your APICS stories. Visit apics.org/membershipmatters today.

Page 10: S olume 22 | Number 4 July/August 2012 V API

8 July/August 2012 | APICS magazine

Industry Watch

AutomationOpto 22 unveils the Opto aPAC, an application for monitoring

and managing the company’s SNAP PAC System using mobile

devices running the Android operating system. The applica-

tion provides real-time access and information to authorized

automation professionals. It also is the first Android-based

mobile app for automation and control that requires no initial

configuration.

Cloud computingAccellos announces the latest version of AccellosOne

Workspace, its composite application framework that provides

the foundation for its current and future products. The frame-

work includes Microsoft technology, an embedded video train-

ing center, unlimited user-definable field extensions, externally

facing portal enhancements, integrated report management, and

distribution.

Camstar Systems Inc. has released a cloud-based solution—

the New Product Introduction (NPI) Accelerator—that helps

design, test, and quality professionals accelerate the innovation

and NPI processes. The solution provides access to critical-to-

quality data during product design and prototype stages, helping

avoid delays and risks associated with data from varied sources.

Mobile computingDRS Technologies Inc. has

added three mobile tablets

to its product portfolio.

The ARMOR X7et and the

ARMOR X7ad are thin,

lightweight tablets. The

seven-inch, multi-touch

tablets are designed to

make it easier for workers

to use mobile computing in

rugged environments.

Onset Computer Corporation has released the HOBO UX90

Motor On/Off Logger, a matchbox-sized, LCD-display data

logger for monitoring run times of motors, pumps, compres-

sors, and other equipment. The logger provides a simple and

convenient way to

record up to 340,000

equipment on/off

cycle changes and uses

powerful graphing and

analysis software to

convert the recorded

data into time- and

date-stamped graphs.

Wavelink Corporation has made available the Velocity mobile

enterprise browser to provide fast, reliable delivery of web-

based applications to rugged mobile devices. Velocity is engi-

neered to address key traditional browser shortcomings such

as poor performance, connection interruptions, lack of scanner

support, and narrow operating-system platform support.

Product life cycle managementInfor has integrated its Infor10 Product Lifecycle Management

Process and Lawson M3 ERP Enterprise using Infor10 ION

to seamlessly share data and information. Company leaders say

these tools bring new levels of speed and visibility to compa-

nies in process manufacturing industries and help customers

introduce products to market faster and at a lower cost while

ensuring compliance.

Eucon and Servigistics have launched the combined aftermar-

ket price optimization offering Pricing Manager. This offering

helps meet complex product management requirements with

its unique combination of proven pricing software and after-

market expertise. By combining Eucon’s research expertise with

Servigistics’s software, the tool is an innovative solution for the

automotive market.

Service managementIFS has acquired Metrix, a global vendor of advanced solu-

tions for service management and mobility. Metrix software is

used by customers worldwide to automate mobile field service,

streamline repair processes, improve customer service, and

increase profitability. The company has developed a mobile

framework that offers built-in industry expertise, out-of-the-

box use, and robust field force automation functionality.

Shop floorAnsell Limited relaunches its PowerFlex 80-813 Gloves with

improved increases. Workers who face the risk of arc flash

now have additional protection with the improved PowerFlex

80-813 gloves, which combine flame resistance, cut protection,

and ergonomics. The gloves also feature an exclusive cut-

resistant yarn to achieve protection in wet, oily, and dry work

environments.

Kelley has launched the

iFAN system, designed

to give facilities the

option of networking

their high-volume, low-

speed (HVLS) fans and

controlling them from a

centralized location. iFAN

was created to ensure

Page 11: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 9

News items may be submitted to [email protected]. High-resolution, color photographs are encouraged.

maximum performance, functionality, and savings from large

HVLS fans. The fans are networked to a touch-screen com-

puter, complete with custom graphics representing the facil-

ity’s exact fan layout.

Laser Design

Inc. has unveiled

its most auto-

mated inspection-

grade, three-

dimensional (3D)

scanning system,

the SURVEYOR

Auto Gage 3D.

The tool com-

pletes high-speed

part inspections in minutes with minimal operator training,

is versatile enough for inspection and reverse-engineering

applications, and is fast enough for factory-floor verifi-

cation uses.

TechnologyConnected Nation has launched its improved broadband

mapping tool, My ConnectView, which offers unmatched

views of the technology landscape across multiple states.

The tool features more interactive data layers; additional

tools to explore data; and the ability to create, print, and

share custom maps.

MIR3 Inc. has released Intelligent Notification v3.0. This

version features a completely redesigned graphical user

interface, quick-launch, and three new product configura-

tions. The quick-launch feature enables administrators to

grant one-click access to users in order to compose and

launch notifications from a single screen. Usability has been

enhanced with a recommendation engine that will guide

through the notification process.

WarehousingAccuteX EDM introduces the SP-300iA 5-Axis CNC Wire

EDM. This machine features the latest microsparking

technology, the MST-II

function that provides

exceptional part fin-

ishes. The work-piece

mounting table is made

of hardened stainless

steel, offers easy acces-

sibility, and is designed

as a standard clamping

system.

Crown Equipment

Corporation unveils the

Crown WP 3000 Series

Walkie Pallet Truck. This

durable electric pallet jack

provides the maneuverability

and control vital for demand-

ing applications where pallet

trucks must maneuver in

tight spaces, withstand

impacts, deliver power on

demand, and give operators

controlled performance. The truck incorporates proven

technology such as AC traction and e-GEN braking.

Sapient Automation has released the ViperTilt tray

delivery system available

on the Viper Vertical

Lift Module. The solu-

tion provides ergonomic

order picking of parts

and items for better

ergonomics, accuracy,

and productivity in

operations in automated

storage and retrieval sys-

tems operations. The tilt tray design enables operators to

easily reach parts stored in the front and rear of the tray.

Ventyx has added three-dimensional visualization with

hot-pointing capabilities to its Ventyx LinkOne elec-

tronic parts catalog and maintenance manual. With this

new functionality, WebView 3.7 significantly enhances

the ability of maintenance managers and other end users

to graphically traverse a product assembly for faster,

more accurate parts ordering.

Wesley

International

introduces the

Battery Mule

battery station.

The Battery

Mule is an all-

in-one battery

changing, charging, and watering station in one complete,

mobile unit. It enables easy removal of a depleted bat-

tery pack from the electric vehicle. The battery station is

intended for use with stock chasers, burden carriers, tow

tractors, and personnel carriers.

Page 12: S olume 22 | Number 4 July/August 2012 V API

10 July/August 2012 | APICS magazine

AskAPICS

By Jonathan Thatcher, CSCP

Send APICS your supply chain or operations management questions at [email protected].

Gaming the System Is your supply chain plagued by deception?

Reader S.Y. writes, “One of our suppliers suddenly is demanding higher prices, claiming an unavoidable shortage. We cannot see any clear reason for a shortage. What are our options?”

There are many possible reasons

for this situation. One avenue to

explore is a concept known as short-

age gaming.

Shortage gaming is the unethical

practice of limiting production to

force higher prices. It’s illegal in

many countries with regulations on

price fixing and production manipu-

lation. In normal markets, competition

should prevent this practice from

succeeding—indeed, in the long

term, competitive pressures tend to

ease the phenomenon. In the short

and middle terms, however, shortage

gaming is difficult to detect and can

appear without warning. It forces

purchasers to consider switching sup-

pliers, reevaluate make-buy decisions,

or find substitute materials not subject

to the shortage—all at significant cost.

While shortage gaming can occur

at any time, it is a greater tempta-

tion during difficult periods. In the

past 15 years, events such as natural

disasters, global economic down-

turns, market bubbles, debt crises,

and high-profile bankruptcies have

brought disarray to companies and

markets expecting stable demand and

supply. When a supplier engages in

shortage gaming, efforts to quickly

recognize and eliminate it are hindered

tern—2 appears more frequently than

3, 3 appears more frequently than 4,

and so on.

The principle is most useful across

numbers with large ranges of several

orders of magnitude. When values are

restricted or short-ranged, Benford’s

law does not apply, as in telephone

numbers, low-income wages, and

human heights. The types of data that

work best with Benford’s law include

populations, building heights, and

other similar statistics.

Fabricated numbers tend not to follow

Benford’s law. Instead, their digits

tend to be distributed uniformly.

Whether or not Benford’s law can

detect shortage gaming in a particular

circumstance, it is a strong auditing

practice to apply when encountering any

unusual results, and it can uncover

many forms of deception.

If you have good reasons to suspect

shortage gaming, either from the

application of Benford’s law or the

presence of other deceptive markers,

suggest to the supplier that the

short-term gains do not compare to

the long-term costs of the practice.

Remind them that trust and reputation

are critical at every point in the supply

chain, and they are easy to destroy

and slow to recover. However, strong

supply chain relationships are prime

strategic competitive advantages and

are very difficult for a competitor to

recreate.

Jonathan Thatcher, CSCP, is director of the APICS research department. He may be contacted at [email protected].

by the uncertainty and lack of vis-

ibility. Further, poorly understood or

unclear regulations can pave the way

for shortage gaming even in better

times.

The best way to avoid shortage

gaming is to engage in practices that

prevent it from occurring in the first

place. Strong selection criteria, trans-

parent relationships, and competitive

performance evaluations all are ways

to help ensure suppliers are trustworthy.

Communication and reporting can

quickly highlight unexpected changes

in supply and demand. If a supplier

reports an incident, trust first, but

follow up and verify later.

Benford’s lawIt is a challenge to prove that a par-

ticular supplier is actively engaging in

shortage gaming. There are perfectly

ethical reasons why a company might

reduce output or raise prices—to offset

increasing risk, for example. Or perhaps

the supplier is in the middle of dealing

with a bullwhip effect in its production.

One method

that can strongly

suggest the pres-

ence of shortage

gaming or another

form of unethical

data manipulation

is Benford’s law, sometimes called

the first-digit law. It states: In lists of

numbers from certain sources, “1”

is the most frequent leading digit,

appearing about 30 percent of the

time. Larger digits follow the pat-

If a supplier reports an incident,

trust first, but follow up and

verify later. For further reading on the topic of

building and enhancing relationships,

the author recommends The Speed of

Trust by Steven M.R. Covey.

Page 13: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 11

To comment on this article, send a message to [email protected].

To comment on this article, send a message to [email protected] and Operations

PlanningTo comment on this article, send a message to [email protected].

By Bradley McCollum

Human Energy AlignmentExploring this powerful benefit of effective S&OP

Fast approaching is the fourth anniversary of Jarden Corporation’s executive sales and operations planning (S&OP) implementation and my eighth anniver-sary with the organization. Looking back over those years, our business—like so many others—has had opportunities to capture and challenges to overcome. Without question, our S&OP processes have helped us navigate those waters.

The work we’ve done has had lasting

impacts on a broad array of business

processes. We forecast differently, we plan

supply capacities differently, we make

decisions around warehousing and trans-

portation differently. Our investments

in S&OP have brought significant,

quantifiable returns. However, I would

submit that the most valuable change

has been to something far more quali-

tative, something most of us never even

talked about when we started: our very

culture. S&OP has brought about a sig-

nificant shift and enabled us to leverage

the power of aligned human energies.

The culture changePrior to the S&OP implementation, our

business had the usual functional silos:

sales, marketing, finance, supply chain,

and operations. Our process structure

provided no opportunity or forum to

discuss, understand, or certainly argue

about the quality or bias of our key inputs.

Therefore, each silo was left to make its

own calls, based on its own perspectives.

This translated into the familiar sand-

bagging and hedging, typically leaving

finance to make heads or tails out of what

was really going on.

The result was a business that was

difficult to predict and control—and thus

very challenging to optimize. Today,

however, our S&OP design not only

provides for that forum, but also makes

consensus a cross-functional priority and

monthly requirement. What began as a

somewhat uncomfortable process change

as part of our S&OP design developed

into a key cultural transformation.

I have identified three key aspects of

the S&OP implementation and ongoing

practice that facilitate this change:

1. Consensus around the data we use

to make decisions: A key step of S&OP

design starts with deciding what data are

going to be used each cycle. No longer is

it acceptable for each business function to

have its own data source. The cross-

functional team must agree to the data

inputs needed for each step, validate the

data, and support the inputs.

2. Disagreeing without being

disagreeable: Every time I introduce new

team members to our S&OP process, I

explain to them it’s not only acceptable

for them to disagree and argue their

perspectives in our meetings, but it’s

really their responsibility to do so as part

of the team. For some people, this can be

uncomfortable at first; but this mandate for

disagreement within the process eliminates

the unproductive passive aggression that

often otherwise results. That situation can

be divisive and serves no benefit to the task

at hand.

3. Focusing on the error: We know

we will never be exactly right with

our assumptions, so we stop arguing

about what the correct number is and

start understanding how wrong the

numbers could be. This change in

thinking completely refocuses the efforts

spent rescrubbing numbers, enables a

better understanding of error and risk

drivers, and lets the team more quickly

develop mitigations. Our responsibility as

an S&OP team is to ensure that we’re

successful as a business, not to point

fingers when we’re not.

S&OP can’t and certainly won’t by itself

solve the challenges that businesses face

every month, quarter, and

year. When implemented

correctly, however, it can

support a cultural change

that enables people to

have control and achieve

optimization. As a cross-

functional S&OP team,

you are able to make

decisions knowing that each perspec-

tive has been explored, challenged, and

understood as part of the solution. The

result is a broader understanding of over-

all business capabilities, opportunities,

and risks—and decisions made with that

understanding are more likely to be the

right ones.

Proof that this cultural change has

occurred will come in the form of a

visible shift in focus from individual

success within functions to success as an

integrated business. And at the end of the

day, that’s why we all get paid.

Bradley McCollum is the sales and operations planning manager for Jarden Corporation’s Leisure and Entertainment Group, which manufactures, markets, and distributes a broad line of consumer products. He may be contacted at [email protected].

What began as a somewhat

uncomfortable process change as

part of our S&OP design developed

into a key cultural transformation.

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12 July/August 2012 | APICS magazine

Building Blocks

To comment on this article, send a message to [email protected].

Two Out of Three Ain’t GoodExamining the people and places of total economic viability

As globalization has become a fait accompli, supply chain and operations management has emerged at the forefront of the worldwide economic battle. Our competition isn’t just down the street or across the state line—it’s everywhere. And, as this struggle continues, it comes back to the three competitive dimensions of customer value: speed to market, cost, and quality.

For many years, customers have

compromised by subscribing to the well-

known phrase, “Quality, cost, delivery:

Pick any two.” However, this trend is

changing. Many manufacturers are

increasingly able to deliver all three, and

this capability is making a significant

difference as strategic thinkers consider

where to locate manufacturing facilities.

In the newsWhile globalization may be a done

deal, it has not necessarily caused the

majority of manufacturing jobs to leave

the United States, as was predicted

several years ago. For example, in July

2003, there was an article in the Wall

Street Journal by Clare Ansberry titled

“Why US Manufacturing Won’t Die.”

Therein, she posed the question, “What

role will US manufacturing play in the

national and global economies in the

coming years?” The gist of the story was

that less-skilled work would go to other

countries, while high-technology jobs

would stay here—at least until the skill

levels of people in developing countries

increased. At that time, those jobs could

go, too. Then, higher wages in devel-

oping countries would help to level the

competitive playing field. This prognosis

looked reasonably competitive for US

manufacturing, as innovation and tech-

nology would drive manufacturing job

growth while lower-skilled jobs would

indeed go away.

More recently, an April 2012 article

also in the Journal explained some of

the factors driving the resurgence of

manufacturing in South Carolina. “US

Manufacturing, Defying Naysayers,”

by John Bussey, discusses that state’s

commitment to manufacturing

development and workforce training

through colleges and universities.

He describes how South Carolina’s

growth as an international manufac-

turing hub mirrors the earlier and

equally successful economic training

and development made by the state of

Alabama. First, Alabama attracted the

Mercedes assembly plant, followed by

Honda; Hyundai; and hundreds, if not

thousands, of tier-one and tier-two

suppliers to the state’s automotive

industry. Other states have followed

suit, and the outcome of such col-

laborations between educators and

the manufacturing base translates into

higher productivity, better quality, and

more competitive costs. Bussey lists

other reasons for the resurgence, as

well, such as Mexico’s instability and

rising labor costs in China.

Perhaps the real secret is that—

when it comes to achieving speed,

cost, and quality—virtually all jobs

require higher skill levels to be com-

petitive. For those of us who spent

any time during the mid 1990s in

China, we observed a lot of well-

educated, highly motivated Chinese

people who were eager to learn (and

did learn) how to make high-quality

products efficiently and quickly. But,

despite the emergence of Chinese

manufactured products, many US

manufacturers have continued to be

competitive because of investments in

workforce training and development.

For example, states such as Alabama and

South Carolina have made it a prior-

ity for their workers to learn new skills

and have helped companies please their

customers with high-quality products at

competitive costs.

In the end, one thing is clear: When

certain types of products lend them-

selves to only two of the three dimen-

sions of customer value, it can open

the door for competition. That is why a

well-trained and motivated workforce

that knows how to achieve all three will

never go out of style.

John P. Collins, CFPIM, CSCP, is president of Sustainable Solutions. He may be contacted at [email protected].

Eric P. Jack, PhD, CFPIM, CSCP, is associate dean at the University of Alabama–Birmingham. He may be contacted at [email protected].

By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP

Page 15: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 13

To comment on this article, send a message to [email protected].

To comment on this article, send a message to [email protected].

By Antonio Galvao, CSCP

Working Green

To comment on this article, send a message to [email protected].

The Economics of Clean EnergyInvestments are slowed by financial uncertainty

With much of the developed world plagued by low- and no-growth econo-mies, last year’s 6.5 percent increase in worldwide spending on clean energy might appear to be the silver lining to an ominous financial cloud. However, the fact is that rate of growth is the lowest it’s been in the last eight years.

New data suggest that the usual

suspects—policy uncertainty in the United

States following the Great Recession and

questions about the long-term viability of

the European Union—are to blame. “There

is no sign of a rapid turnaround in either

of these regions in the next 12 months,”

says Michael Liebreich, chief executive

of Bloomberg New Energy Finance, a

market research firm focused on renew-

able energy. “Clean-energy technolo-

gies, particularly solar photovoltaics and

onshore wind, continue to fall in price and

approach competitiveness with fossil fuel

power, but politicians in many countries

appear to be ducking the decisions that

would ensure that the sector maintains its

growth trajectory.”

Perhaps the most important of the

ducked decisions involves the failure

to forge a global consensus on climate

change. Yvo de Boer, former executive sec-

retary for the United Nations Framework

Convention on Climate Change and

current global advisor on sustainability for

professional services giant KPMG, says,

“A global, legally binding agreement on

climate could provide a guarantee and a

level of confidence and certainty that could

foster an even bigger wave of investment in

renewable energy technologies and serious

efforts to cut greenhouse gases.”

Still, the 6.5 percent increase in clean-

energy investment in 2011 outpaced

overall growth in the G-20 countries,

whose combined spending on clean

energy accounted for more than 95 percent

of all investments worldwide. The United

States reclaimed the top position among

G-20 members, unseating China for

the first time since 2009, with an invest-

ment of $48 billion. Germany, Italy, the

United Kingdom, and India also attracted

significant private investment. In all, 2011

investments in clean-energy technologies

totaled $263 billion worldwide.

Solar technologies were the principle

beneficiary, attracting investments totaling

$128 billion, which accounted for more

than half of all clean-energy outlays made

by G-20 countries. That was a 44 percent

increase compared to the year before and

was driven by sharp drops in solar-module

prices. The spike in solar spending helped

offset declines of 15 percent in both wind

and energy-efficient investments.

The G-20 countries aren’t the only

nations influencing the clean-energy

movement. In fact, some of the smallest

countries on the planet are making bold

sustainability statements, motivated in part

by the desire to ensure their long-term

survival. The Tokelau Islands in the Pacific,

threatened by rising sea levels, are intently

focused on becoming carbon neutral.

Officials there say that a hybrid system of

solar energy and coconut oil will supply

enough energy for every resident by the

end of the year, while reducing energy

costs approximately $1 million annually.

Other islands are making similar

progress. Samoa and Tuvalu will derive

all of their electricity from renewable

sources by 2020. The Cook Islands plan

to convert to solar panels and wind

turbines for their energy. United Nations

studies have shown that imports of fossil

fuels represent up to 30 percent of the

gross internal product of some of these

island nations, due to the great distances

they need to travel. Survival, there-

fore, has both a physical and economic

dimension.

While global investments in clean

energy were down in 2011, the trend

over the last several years has been

positive. “Clean-energy investment,

excluding research and development,

has grown by 600 percent since 2004 on

the basis of effective national policies

that create market certainty,” says Phyllis

Cuttino, director

of Pew Charitable

Trusts’ clean-

energy program.

In that context,

it’s difficult to

imagine a more

effective policy

than a global, legally binding agreement

on climate. As de Boer of KPMG argues,

an agreement of that sort would level the

regulatory playing field to the benefit of

all businesses, which would be secure in

the knowledge that their rivals were

following the same rules.

The question is: How long can we

wait for such an agreement? Clearly, any

answer other than “no longer” is simply

too risky to consider.

Antonio Galvao, CSCP, is vice president supply chain—global I&L at Diversey, now part of Sealed Air. He may be contacted at [email protected].

It’s difficult to imagine a more

effective policy than a global, legally

binding agreement on climate.

Page 16: S olume 22 | Number 4 July/August 2012 V API

14 July/August 2012 | APICS magazine

Author Name

LeanCulture

Now, I’d like to expand upon two of

these tools and explore how some real-

life organizations have used them in their

quests to bring about change.

The toolsPower tools correspond to the lower-left

quadrant of the matrix, a situation indi-

cating low agreement on both goals and

how to achieve them. Examples of power

tools include coercion, threats, fi at, role

defi nition, and hard-nosed negotiation.

Power tools can be eff ective in low-

agreement circumstances—but only if

leaders wield enough authority. One

instance of power tools in play occurred

during JPMorgan Chase’s merger with

Bank One in 2004. Th e CEO aggressively

drove technology changes, includ-

ing threatening to make all decisions

regarding a technology upgrade himself

if they were not performed in six weeks.

Th e same CEO also reconfi gured a quota

control system, endangering the jobs and

bonuses of the branch managers who

relied on those quotas.

Kaizen events are one strategy com-

panies use to quickly drive changes on

the shop fl oor. In my time working with

General Motors, I saw my colleagues

employ this technique as a power tool,

squeezing immediate price reductions

from suppliers, who understandably were

reluctant to change their business meth-

ods. However, the automotive giant had

the clout to de-source any vendor that

refused to participate. Th rough exten-

sive and rapid engineering changes, GM

was able to use the ultimate power tool

of physically changing work, rendering

it impossible to revert back to the old

ways.

Management tools, on the other

hand, relate to the lower-right quad-

rant—low agreement on business goals,

but high agreement on how to achieve

them. Th ese techniques include fi nan-

cial incentives; hiring and promotion;

training; standard operating procedures;

control systems; and measurement

systems, such as the balanced scorecard

and hoshin kanri, which is a method for

developing and implementing strategic

goals (also known as policy deploy-

ment). In the right circumstances,

measurement systems to drive change

can lead to amazing results.

Measurement systemsLet’s explore in detail two case stud-

ies in which measurement systems

played a large role in the journey toward

change. Both companies were similarly

sized, were privately owned, and shared

fi nancial information with employees—

in fact, both engaged in profi t sharing,

where employees could personally ben-

efi t from high performance.

At the fi rst company, a plant manager

was charged with moving metal-forming

equipment for use in construction sites

to another location. His team performed

careful time and motion studies, as well

as a rationalization analysis of how to

leverage lean techniques and achieve

fl exible assembly at the new site. Th e

goal was to produce 100 fi nished units

in a single eight-hour shift , a feat never

previously accomplished at the com-

pany. Studies indicated this was pos-

sible; however, months went by without

the goal becoming realized. Finally, the

plant manager installed a large, $2,000

monitor, which displayed in real time

the number of units remaining until the

target was met.

Within 12 days, the magic number of

100 units was reached for the fi rst time.

During the next month, this became a

routine occurrence; and two months

later the team hit 120 units. Th e plant

manager was ecstatic, and the monitor

paid for itself every week in increased

productivity. Best of all, no other actions

were necessary.

Th e second company, a manufacturer

of printed circuit boards, also was in the

process of adopting lean manufacturing.

During the implementation, managers

recognized that rework and corrections

comprised 35 percent of total costs.

Figure 1: Agreement matrix

Change Can Be EasyBringing about agreement to accomplish lasting transformation

In the last edition of “Lean Culture,” I introduced several concepts I gleaned from a Harvard Business Review article titled “Th e Tools of Cooperation and Change.” I invited readers to locate their companies on a matrix of four quadrants, with one axis representing the level of agreement on business goals throughout the organization and the other representing agreement on how to achieve those goals. (See Figure 1.) I also introduced four sets of change management tools—power, leadership, management, and culture, each corresponding to the quadrant of the matrix where it is most eff ective.

By Ron Crabtree, CIRM, CSCP, MLSSBB

Page 17: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 15

To comment on this article, send a message to [email protected].

However, there were insufficient data to

perform a root cause analysis and uncover

the reasons behind this. Plus, the company

lacked the technological infrastructure to

efficiently track and record these data.

The management team’s solution was to

display issues visually on white boards

as they were identified and analyze the

results on spreadsheets. Not only were

the white boards standardized and

conspicuously placed in each depart-

ment, but the company also committed

time and resources for material review

boards and clerical support for record-

ing the information. Company leaders

explained that capturing the amounts of

rework and the resulting human effort

and scrap would enable them to perform

an investigation into the root causes of

the problem in upstream process steps.

They went to great lengths to point out

that the process was not intended to

place blame, but to discover what was

breaking down in the operation.

However, despite the efforts and encour-

agement of management, the project was

a dismal failure. An investigation revealed

that employees were reluctant to record the

needed information and continued per-

forming rework as before. The employees

had no shortage of excuses, including that

recording was too difficult and they lacked

the ability to guess root causes.

What was different in the two situa-

tions? In the first, there was a high level of

agreement about what to do—make more

product and thereby further enjoy the

benefits of profit sharing—as well as on

how to achieve it. Workers all recognized

the benefits of recording hourly produc-

tion results against a goal

and celebrating incre-

mental breakthroughs.

In the second

environment, com-

pany culture differed

considerably. While

staff members were in

fundamental agreement

about what to do—reduce rework and

boost operating performance—they

lacked agreement about how to solve

the problems. Employees secretly saw

the system as a way to place blame and

promote rivalries. Without buy-in, the

measurement tool could not get the

job done.

Power tools can be effective in

low-agreement circumstances—

but only if leaders wield enough

authority.

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In the end, what worked at the second

company was ratcheting up standard

work and preventive measures. The

engineering team served to force the

necessary changes with tightly dictated

work methods and more rigorous

inspection standards—which you may

recognize as power tools as opposed to

management tools.

Change the planThe authors of the Harvard Business

Review piece warn that without a

“modicum of agreement on both

dimensions of the matrix,” the tech-

niques they describe generally won’t

work. I believe this explains why

strategic plans often fail. If you find

that agreement is lacking in either axis

on the change management matrix,

this is a barrier to success that requires

action. A specific plan with clear

accountabilities can close the gaps and

enable a higher likelihood of success.

Ron Crabtree, CIRM CSCP, MLSSBB, is president of MetaOps and coauthor of four books on operational excellence. He also writes an online magazine; runs an online radio show; and teaches, presents, and consults. He may be contacted at [email protected].

Page 18: S olume 22 | Number 4 July/August 2012 V API

16 July/August 2012 | APICS magazine

By Philip E. Quigley, CFPIM, PMP

Management Perspective

To comment on this article, send a message to [email protected].

Agility in the Social Media EraResponding quickly to customer desires

If you look around, it’s plain to see that sales and marketing are being transformed by the internet and social networking. One example can be found in Best Buy’s decision to downsize and close stores due to declining CD and DVD sales. Even Walmart and the automotive industry are feeling the impacts. Members of sales teams in diverse industries all carry iPads and chase customers on Facebook and Twitter. The internet clearly is changing every sales business.

But what does this mean for companies

and professionals in supply chain and

operations management? While there

is no simple checklist for surviving and

thriving in the internet age, the current

trends can begin to describe what issues

will be prevalent in the near term. For

starters, customers will express their likes

and dislikes and expect businesses to

respond. New designs might be rushed

into production, existing designs might

be modified, new versions might be

produced, and prices might go down.

Regardless, it means supply chain

and operations management profes-

sionals must be part of the dialogue:

sitting in on marketing meetings,

monitoring customer feedback, and

becoming involved in decisions

about how to respond.

What happens, then, when a customer

has more than a mere suggestion or

complaint, but a real quality problem?

A recent example of this is found in the

highly publicized Toyota recalls of 2009

and beyond. There had been rumors of

trouble, but they were not taken seriously

until an accident killed an entire family.

The challenge lies in how to monitor the

chatter from various channels, under-

stand what people are saying, and cor-

rectly prioritize issues so they get resolved

quickly. It requires looking at the orga-

nizational structure, evaluating who can

makedecisions, and reexamining reward

systems, to name a few essential steps.

Next, consider the fact that cus-

tomer communication is volatile and

can spike or dip with the success or

failure of a product. Contrast the mil-

lions of iPhone sales with the sharp

decline in demand for Blackberry

products. Supply chain and opera-

tions managers must fine-tune enter-

prise resources planning systems and

rethink facilities and suppliers to be

able to identify sales trends and react

quickly—within days or weeks, not

months or quarters.

Taking swift actionI recently read an article about how

Honda has made its auto factories

more flexible. Literally, a facility can

build one model one day and switch

to another the next. Honda accom-

plished this with careful thought and

at considerable expense, but the com-

pany now has the ability to change

with the market. How does your

organization compare? How fast can

you ramp up or down a product or

product mix? It depends on the speed

at which you can get data, analyze

them, and make a decision. It also

requires the ability to swiftly imple-

ment the decision with certainty.

It is crucial, when analyzing your

own processes, to document them

carefully and understand how they

work. Use devices such as flow charts,

and develop metrics that show how

agile your company can be. You must

have an understanding of how well

you perform and how fast you can do

things in response to customer input.

These reactions may seem unneces-

sary now, but look at which compa-

nies are going bankrupt and which

are thriving. Watch how automotive

dealers handle their customers pull-

ing up inventory and price data on

their smartphones and using this as

leverage in negotiations. The world

is changing. To put it simply, we are

going to have to adapt or die.

Philip E. Quigley, CFPIM, PMP, is a senior application portfolio manager for Computer Sciences Corporation. He teaches at Chapman University’s Argyros School of Business and Economics and California State University at Fullerton. He may be contacted at [email protected].

The challenge lies in how to monitor the chatter

from various channels, understand what people

are saying, and correctly prioritize issues so they

get resolved quickly.

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APICS magazine | July/August 2012 17

By Dave Turbide, CFPIM, CIRM, CSCP, CMfgE

A Time-Tested Technique Studying the successes and shortcomings of material requirements planning

Material requirements planning (MRP) is the calculation of potential shortages and replenishment activity from the master schedule using the bill of material and inventory availability data. Developed in the early 1950s, the basic approach still is at the center of every enterprise resources planning (ERP) system more than half a century later.

Of course, MRP has in fact changed

over the years, benefiting from ever-

increasing computer capabilities and

the advent of new computational and

programming techniques. But the

world also has changed. In the 1950s

and 60s, demand outstripped capacity—a

company could release a new product,

put it on the market in great quantities,

and likely sell it. Today, it is more often

the case that capacity is greater than

demand, and competition is global and

relentless. Customers tell manufactur-

ers what they want, when they want it,

and how much they are willing to pay

for it. More variety, smaller individual

product volumes, short lead times and

product cycles, and intense pricing

pressure are the characteristics of

business.

For many people, MRP doesn’t

provide what they need. Alternatives

and additions continually emerge

to try to resolve this issue. Most

Another strategy is to develop ideas

and techniques to overcome MRP’s

limitations and make it more responsive

to today’s manufacturing realities.

Demand-driven MRP, documented in

the latest edition of Orlicky’s Material

Requirements Planning, is one such

approach. It incorporates traditional

MRP, lean, and the theory of con-

straints, replacing MRP’s push-oriented

approach with a “position and pull”

execution strategy.

Looking toward the futureAfter more than half a century of

extensive use around the world,

MRP still is the definitive solution

for manufacturing companies—new

approaches supplement the methodol-

ogy, but they do not replace it. On the

other hand, such initiatives emphasize

that MRP is not perfect.

The world continues to change,

providing challenges and opportuni-

ties for manufacturers, management

theorists, and software developers

alike. Today’s enhanced solutions aim

to address these challenges. As for

tomorrow, we’ll just have to see what

challenges emerge and how MRP

enhancements evolve to meet them.

Dave Turbide, CFPIM, CIRM, CSCP, CMfgE, is a New Hampshire-based independent consultant and freelance writer and president of the APICS Granite State chapter. He may be contacted at [email protected].

notable among these is lean manu-

facturing—also known as the Toyota

Production System—which relies on

flow production and physical signals

(kanban) rather than forecasts and

software calculations. Lean manu-

facturing is an efficient and effective

production management system

where it fits the environment; but, it

does not fit everywhere nor always

provide the planning capabilities that

are needed in fast-moving production

situations.

Recognizing that neither approach

provides all the answers to effective

production planning and control,

some companies create a hybrid

system combining the best aspects of

MRP and lean.

There have even

been a few suc-

cess stories in

this regard, with

a full MRP and

ERP implemen-

tation supple-

mented by the

use of lean and

kanban for production control and

material management. Many MRP

software providers now even include

flow production management and

electronic kanban capabilities in

their product suites.

Enterprise Insights

After more than half a century of

extensive use around the world,

MRP still is the definitive solution

for manufacturing companies.

To comment on this article, send a message to [email protected].

Page 20: S olume 22 | Number 4 July/August 2012 V API

18 July/August 2012 | APICS magazine

information technology departments.

As the discipline crossed the threshold to

legitimacy and became critical to business

success, many leaders discovered their

e-business strategies were insufficient

and inconsistent when it came to

product portfolio management, pricing,

return policies, and shipping charges.

Some companies had internal strife,

with departments competing against

one another. Practices such as supply

chain planning, sourcing, warehousing,

and transportation and logistics became

far more complex.

Finally, after years of adapting,

most firms have created healthy rela-

tionships between their supply chain

and e-commerce functions. However,

from my own experiences in the pub-

lishing industry, I find that people still

are confused about the composition

and depth of the modern digital value

chain and its effect on the traditional

physical supply chain.

Nowadays, to make it in the pub-

lishing industry requires becoming

a true media company. Publishing

companies have evolved from some-

thing similar to consumer products

manufacturers, who are fortunate

enough to only worry about supporting

integrated e-commerce sites. Now,

publishers must constantly release

compelling, effective, high-quality

content in diverse formats: physical,

electronic, and multi-platform. This

content might include traditional forms

of writing, applications, videos, podcasts,

and games. Media businesses also must

distribute and maintain content con-

sistently and securely while respecting

privacy requirements.

Where once only the ability to produce

a book was required, now these

companies must master hundreds—if

not thousands—of permutations in

design and distribution. Effective leaders

understand how best to discover and

implement projects against a flood of

competing technologies, ensuring they

are cost effective and sustainable for

The Digital Value ChainDeveloping a comprehensive data distribution strategy

Whenever the question arises of which company has the best-performing supply chain, Apple inevitably is at the top of key lists and industry markers such as the Gartner Top 25. In the recent past, some questioned whether Apple had a true supply chain, pointing to how the tech giant has branched out from traditional computer hardware and consumer devices to areas such as e-commerce and digital content. Lately, however, many of its harshest critics have come to admire Apple’s supply chain capabilities, including its brilliant success in integrating new product design and launch, pricing strategy, consumer loyalty, and e-commerce infrastructure, as well as the total customer experience it provides.

Apple has the proven ability to not

only create products and services

people want, but also deliver a seam-

less customer experience, whether in

person or online. To any organization

grappling with the task of developing

a digital value chain, Apple serves as a

prime, powerful example of how to do

things right.

Let’s get digitalIn the early days of my career, the digital

value chain meant electronic data

interchange transactions—simple com-

munications between organizations that

shared inventory levels, demand data,

forecasts, replenishment amounts,

purchase order acknowledgements, and

the like. This sort of connectivity remains

powerful and necessary at many

companies, but it pales in comparison

to the complexity and value of today’s

data chains. For example, when systems

began to come about that provided the

ability to view and order products and

services online, it was both a novelty

and an inspiration. Many business

leaders struggled over the ensuing years

to define a viable e-commerce strategy,

having to determine the correct courses

of action without much in the way of

research: deciding whether to merely

display products and branding or to

offer the ability to place orders, how to

handle online pricing, and how to manage

fulfillment, among other concerns.

It is a sad truth, but, at many

organizations, e-commerce was an

afterthought or simply a mechanism

for brand and company awareness. The

worst offenders were late in developing

systems that could provide both strong

functionality and a viable customer

experience. At many companies,

e-commerce was seen as a technol-

ogy issue, so ownership was given to

ExecutiveView

By David Aquino, CPIM

Page 21: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 19

years. These people have clear seats at

the development table, enabling them

to understand the ultimate product and

platform development strategy and

recognize the keys to revenue, profit-

ability, and longevity.

Supply and demand planningFor supply chain leaders who are

incorporating digital content as part

of their demand and supply planning

processes, it’s great that every item

distributed electronically is one fewer

piece of physical inventory. The challenge

is in effectively capturing the associated

data and connecting interdependencies.

It’s important to have answers to dif-

ficult questions such as: Does the fore-

cast consider digital cannibalization?

How much digital content should be

produced? What is the total projected

revenue for both physical and digital

material, considering different pricing

approaches?

For successful planning of digital

supply and demand, first define the

master data attributes for these items,

including product classes, pricing, life

cycles, versions, and connections to

physical product codes. Once a logical,

non-conflicting hierarchy is in place, it

is important to understand the unique

demand patterns for the digital products,

including base level, seasonal elements,

pricing sensitivity, and total life cycle.

In my experience, the assumption that

physical and digital products always

have similar demand patterns is erro-

neous. From a supply perspective, it is

easy to think that digital products don’t

require much work. However, as digital

increases its impact on the physical

supply chain, it is critical to create a

harmonious strategy: thinking ahead

for the decrease of physical products,

researching new manufacturing

methods, and improving network

design to accommodate smaller

inventories. Ultimately, the goal is to

adopt a model that supports both physical

and digital products.

Within the business process for

digital products, two key challenges

arise in the new product development

and launch arena: Customers are forced

to manage many different technology

platforms without much in the way of

guidance, and a lack of priority align-

ment means digital orders often become

lost during fulfillment. Mature organi-

zations focus greatly on rationalizing

platforms and structures and building

environments that can support multiple

platforms more readily.

Training and product knowledge

development are evolving, as systems

demand more technical proficiency,

striking a balance between the issues

of access and entitlement, bug manage-

ment, and core content. Additionally,

it takes reinforcement throughout the

business that digital content is not lower

in the fulfillment hierarchy. Eventually,

order controls and human resources

and management practices will shift to

increase focus on digital fulfillment.

Finally, what constitutes success-

ful fulfillment for a digital product

or platform? Is it when the product

becomes available? Whenever a

customer attempts to access a given

system? When a download or update

occurs? Organizations must not only

build new metrics beyond those of the

traditional physical supply chain that

accurately capture consumer desires,

but also integrate holistic metrics

wherever possible that represent sup-

ply chain performance across a mix of

products and services.

For fledgling digital value chain

organizations, a dearth of available

reporting and metrics can leave supply

chain leaders ignorant of situational

issues and customer frustrations until

they escalate beyond the boiling point.

Reporting and metrics must match the

significant expectations of the digital

world. This may enhance all metrics

surrounding demand and supply

planning, fill rate, and cost adherence

for the entire operation.

It is easy to dismiss the history of

e-commerce and the rise of digital

media as distractions, irrelevant to

other industries and supply chain

aspects. However, today’s digital market

strategies, management, and global

requirements are forcing even the most

reluctant supply chain leader to consider

how the digital value chain affects his or

her operations. By studying the short-

sightedness of the past, we can learn

from the mistakes of others and ensure

the integration of the physical and the

digital worlds is faster and less painful

than before.

David Aquino, CPIM, is vice president, operations strategy, planning, and performance, at Houghton Mifflin Harcourt. His career as a supply chain executive has spanned many global organizations within the consumer products industry, including PepsiCo, Scholastic, Foster Grant, and Aramark. He may be contacted at [email protected].

To comment on this article, send a message to [email protected].

As the discipline crossed the threshold to

legitimacy and became critical to business

success, many leaders discovered their e-business

strategies were insufficient and inconsistent.

Page 22: S olume 22 | Number 4 July/August 2012 V API

20 July/August 2012 | APICS magazine

Leadership MaterialStrategic thinking at all levels of the organization

BookReview

By Karl M. Kapp, EdD, CFPIM, CIRM

To comment on this article, send a message to [email protected].

The New Edge in Knowledge: How Knowledge Management is Changing the Way We Do BusinessBy Carla O’Dell and Cindy Hubert Published in 2011John Wiley and Sons236 pages

The American Productivity and Quality Center is a nonprofit

research firm with almost 20 years of practice in knowledge

management, including benchmarking, best practices, and

implementation in organizations both large and small worldwide.

In this book, authors Carla O’Dell and Cindy Hubert share some

of the insights, ideas, and innovations they and others at the

organization have learned through its rich history.

Knowledge management—“a systematic effort to enable

information and knowledge to grow, flow, and create value”—is

just as critical in manufacturing as it is in other fields. In fact, it

may be more critical, as veteran manufacturing employees in

the baby boomer generation begin to retire from the workforce.

The danger is that these retiring boomers will take decades of

knowledge with them when they go. As the authors indicate, every

organization competes based on how much knowledge its people

possess. Companies lose sales, governments lose wars, and people

lose jobs when they don’t have the strategy and means to connect

the dots.

The New Edge in Knowledge attempts to connect those dots

in terms of knowledge management. Early on, the book creates

a foundation for key strategic concerns related to knowledge

management. Later, it details how to identify and focus attention

on the value propositions related to knowledge management,

followed by an examination on how to select the right approach

and build a business case for enterprise knowledge management.

Next is a look at the benefits, successes, and characteristics of

properly executed knowledge management strategies. Web 2.0 and

its impact on knowledge management are briefly touched upon,

followed by governance, building a knowledge-sharing culture,

and measuring the impact of knowledge management efforts.

The book ends with a call to “make best practices your practices.”

O’Dell and Hubert can help your company innovate, grow, and

share knowledge. The concepts presented in this book should be

enough to prod any manufacturing leadership into thinking more

seriously about its knowledge management practices.

Leading Effective Supply Chain Transformations: A Guide to Sustainable World-Class Capability and ResultsBy William B. Lee and Michael R. KatzorkePublished in 2010J. Ross Publishing260 pages

The authors of Leading Effective Supply Transformations pull no

punches, opening with a harsh statement: “This is a book that

recognizes the sorry state of the supply chains of many com-

panies—supply chains that are in dire need of transforma-

tion.” Unfortunately, for many organizations, this statement is

all too true, many supply chains are breaking down or operat-

ing under a great deal of strain.

This book addresses the complex human behavior challenges

associated with creating sustainable supply chain transformation.

The authors stress the nature of the leadership required to

make supply chain transformation possible. The first three

chapters examine the supply chain from a big-picture perspective.

While ostensibly aimed at the C-suite, this section provides

insights to all levels of the business into transformative supply

chain issues such as globalization, wealth transfer, the short-

term demands of Wall Street, innovation, and more.

The book addresses the details of the transformation

process, examining issues such as fixing material problems,

stemming escalating costs, creating a strategic plan, facilitating

collaborations among partners, and managing multiple supply

chains. The concepts are brought together by a discussion of

nine key initiatives organizations need for transformation.

Lee and Katzorke provide the background, tools, and ideas

that can help transform a poorly performing supply chain. If

you are looking for methods to improve processes, strengthen

people, and get the most out of partnerships, this book can

provide the tools you need.

Karl M. Kapp, EdD, CFPIM, CIRM, a professor at Bloomsburg University, is author of Gadgets, Games, and Gizmos for Learning and coauthor of Integrated Learning for ERP Success. He may be contacted at [email protected].

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APICS magazine | July/August 2012 21

By Richard E. Crandall, PhD, CFPIM, CIRM, CSCP

RelevantResearch

Why would manufacturers be inter-

ested in providing services? Would that

not move them from their core compe-

tencies or shift their strategic objectives?

Actually, in many cases, adding services

not only strengthens core competencies,

but also helps the business focus on

strategic objectives. Following are

some of the reasons manufacturers

should add services to their product

portfolios.

Increase sales and profits. Perhaps

the most attractive reason for add-

ing services is the prospect of boosting

revenues and profits. “Post-sale service is

one area of the supply chain where profit

potential still remains untapped by many

manufacturers. But that may be changing

with mounting evidence of its impact on a

company’s bottom line” (Vigoroso 2011).

Increase product sales through sup-

port of customers. Many manufacturers

have found they can increase sales if they

provide added support to their custom-

ers, especially in the form of financing.

Thomas Edison, the founder of what

became General Electric, recognized this

opportunity early. His company invested

in small, private electric utilities to assure

there would

be a read-

ily available

supply of

electricity to

homeown-

ers, to whom

General

Electric wanted to sell electrical appli-

ances (Rothschild 2007). Today, as retail-

ers often are larger than their manufactur-

ers, the manufacturers have refocused

financing efforts upstream toward their

own suppliers.

Enhance relationships with

customers. Manufacturers are becoming

more customer-centric. As they move

from a “make and sell” to a “sense and

respond” strategy, they will enhance the

sale of their manufactured products and

solidify their position as a viable and con-

temporary business (Halleck 1999).

Now, consider the definition of supply

chain: “the global network used to deliver

products and services from raw materials

to end customers through an engineered

flow of information, physical distribution,

and cash” (Blackstone 2010). From this,

it is obvious that a supply chain spans all

the industries included in the NAICS.

The supply chain concept also offers an

opportunity for manufacturers to add

services to their operations.

There are two main categories of

customers for manufacturing compa-

nies: other businesses and individual

consumers. When selling to other busi-

nesses, manufacturers have a direct

connection. When selling to individual

consumers, manufacturers often go

through distribution companies such

as wholesalers and retailers. Therefore,

the link with consumers is less direct.

But this is changing as more manufac-

turers move to online sales of products,

with the subsequent direct link with

consumers.

Manufacturing is considered one

of 10 major divisions, or classifica-

tions, of businesses. While the first

two—Agriculture, Forestry, and

Fishing; and Mining—can be viewed

as extractive businesses, Construction

and Manufacturing are transforma-

tive. All the classifications listed after

Manufacturing can be grouped into a

broad category of services.

Manufacturing is “a series of inter-

related activities and operations

involving the design, material selection,

planning, production, quality assur-

ance, management, and marketing of

discrete consumer and durable goods”

(Blackstone 2010). It involves taking

the outputs from farms and mines and

transforming them into facilities or

products.

While manufacturing is concerned

with making a product, services focus

on enhancing the product’s use. This

involves making it more accessible and

more meaningful to the user, whether

that be another business or an indi-

vidual consumer. The APICS Dictionary

defines the service industry as “an

organization that provides an intan-

gible product (e.g., medical or legal

advice)” and “all organizations except

farming, mining, and manufacturing”

(Blackstone 2010).

Exploring Your OptionsWhy manufacturers should consider the service business

The North American Industry Classification System (NAICS) uses the following codes to classify businesses: 01-09—Agriculture, Forestry, and Fishing; 10-14—Mining; 15-17—Construction; 20-39—Manufacturing; 40-49—Transportation, Communications, Electric, Gas, and Sanitary Services; 50-51—Wholesale Trade; 52-59—Retail Trade; 60-67—Finance, Insurance, and Real Estate; 70-89—Services (professional, health care, education, accommodation, and entertainment); and 91-99—Public Administration (governments and nonprofit organizations).

Adding services not only strengthens

core competencies, but also helps the

business focus on strategic objectives.

Page 24: S olume 22 | Number 4 July/August 2012 V API

22 July/August 2012 | APICS magazine

or expand revenues. The services on

the upper portion have been classified

as tier 1, tier 2, and tier 3 to indicate

different levels of attractiveness, with

tier 1 being the most attractive, tier 2

somewhat attractive, and tier 3 the least

attractive.

The service sectors are color-coded to

indicate potential attractiveness of the

specific service business. Green services

indicate a logical extension because

they are linked directly to the product.

Yellow services indicate reasonable

extensions if the manufacturer has

technically qualified people or a strong

financial position. Orange services

indicate the manufacturer should use

caution before entering; they represent

a real stretch. At the bottom of the

diagram, social services are coded in

red to indicate that most manufactur-

ers should leave these matters up to

nonprofit organizations and govern-

ments. The logistics functions also are

probably not a good area because of the

specialized nature of the process and

the highly competitive industry.

Evaluate product performance after

sale. Providing repair and maintenance

services to buyers of their equipment

enables manufacturers to evaluate how

well products perform in an industrial

setting. They can assess durability and

serviceability—and selling spare parts

adds to the manufacturers’ knowledge

about critical design points.

Search for new product opportunities.

Being closer to customers often provides

new product opportunities. Servicing

equipment implies a physical presence in

the customer’s facility. This enables the

manufacturer’s employees to cultivate

relationships with the customer’s staff,

perhaps leading to the early identification

of customer needs. It also makes it pos-

sible to observe a competitor’s equipment

and its strengths and weaknesses.

Search for additional profitable

business. As products reach the mature

stages of their life cycles, profit margins

decline because of increased competition

from other companies or new prod-

ucts. If a manufacturer doesn’t have a

continuing stream of new products,

it may find its income eroding. It is

tempting for management to look

for added business with higher

profit margins, sometimes found

in the service sectors. IBM saw its

manufactured product line erode as

small computers replaced the large

mainframe computers at which IBM

dominated. While it took an outsider,

Louis Gerstner, to lead the transition,

IBM transformed itself into an almost

completely service-oriented company,

with emphasis on consulting and

systems management.

Potential service businesses When manufacturers sell prod-

ucts to other organizations, they

can consider providing producer

services, such as repair, mainte-

nance, spare parts, and facility

management. When manufacturers

sell to individual consumers, they

can consider providing personal

services.

Figure 1 illustrates some of the

services that can be added to support

Third-party particpation—consulting

Figure 1: Service opportunities for manufacturing companies

Model of services provided to businesses

Government relations

Risk andinsurance

Legal services

Auditing and taxes

Tier 3 producer services

Extractiveagriculture mining

Inboundlogistics

Transformative -manufacturing

construction

Outboundlogistics

Distributivewholesaling

retailing

Homedelivery

Personalpost-sales

ongoing contact

Collect,dispose

Recoveryrecycling

remanufacture

Social services

Standards Health care LocationincentivesEducation Industry and

consumer data Communications

=

Government agencies—local, state, and federal

BankingHR

managementTraining,

educationGlobal

guidance

Projectmanagement

Facilitiesmanagement

Tier 2 producer servicesProcess

consultingFinancing

Replacementparts Tier 1 producer services

Repair andmaintain

Page 25: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 23

To comment on this article, send a message to [email protected].

To comment on this article, send a message to [email protected].

Tier 1 servicesOne of the most obvious services for

manufacturers to add is providing

replacement parts for their products.

Replacement parts often have a larger

profit margin, and original equipment

manufacturers are in the unique

position of knowing more about the

component parts of their product than

anyone else, at least in the early stages

of the product life cycle. In addition

to attractive profit margins, the sale of

replacement parts can provide some

useful information about durability.

GE has long sold replacement parts

for its jet engines. In addition, it has

maintained a presence in the nuclear

power business by selling replacement

parts for reactors built in the 1960s

(Rothschild 2007). Caterpillar is another

company that stresses the importance of

having fast response to customers who

need replacements for heavy equipment

(Caterpillar 2012).

Another logical extension for manu-

facturers is providing repair and mainte-

nance services. This is most important for

manufacturers of equipment that requires

professional-level repair and maintenance,

such as nuclear power plants or sophisti-

cated medical imaging machines. It also

is appropriate when the user organization

does not have qualified personnel to main-

tain more mundane equipment, such as air

conditioning, copiers, and elevators.

Tier 2 servicesTier 2 services represent a bigger chal-

lenge, but may be even more rewarding

for manufacturers in terms of increased

income and closer customer relationships.

While these services extend manufactur-

ers’ product knowledge, they tend to be

less specific to a product and more con-

cerned with higher-level decision making.

Examples include facilities management,

project management, process consulting,

and financing.

Facilities management could involve

the management of a distribution center

for a retailer or the management of an

automated people-mover system for an

airport. Project management may include

performing the return on investment

analysis for building a nuclear plant and

then managing its design, installation, and

operation. An example of process con-

sulting is a manufacturer working with a

customer on design of packaging to protect

the product and reduce cost.

Providing financing to customers has

long been a service that well-financed

manufacturers have pursued. Some exam-

ples include paying a supplier for tooling

used exclusively for the manufacturer,

stocking consignment merchandise at a

retailer, or buying airplanes and leasing

them back to the airline. GE started lend-

ing money to private electric utilities in the

1870s and later consolidated its financing

business under GE Capital, which today

is a major component of GE’s business

(Rothschild 2007).

Tier 3 servicesProviding tier 3 services would be a

severe challenge for most, if not all,

manufacturers. These include specialized

professional services, such as govern-

ment relations (lobbying and political

activism), insurance, auditing and tax,

legal services, and banking. It also may

include other services that are outside

the ongoing scope of a manufacturer’s

business and likely beyond the core com-

petencies of most organizations. While

some companies have tried the banking

route, two notable withdrawals include

General Motors and Sears.

Businesses to avoidMoving product is a more complex

process today than a century ago. At

one time, automobile manufacturers

delivered their finished cars to deal-

ers. Today, many are using third-party

logistics providers such as UPS and

Ryder to move their cars. With the

strength of existing companies in the

industry and the complexity of govern-

ment regulations, it does not appear to

be an attractive service area.

Clearly, manufacturers should avoid

entering services that are beyond their

core competencies. Even GE, with one of

the finest in-house managerial training

programs, found that some of its ventures

exceeded capabilities. The company found

that a good manager could not always

effectively manage a business in which

he or she had no experience. One of its

market opportunities was designing and

building housing communities in the

1960s, an unsuccessful venture that was

vacated after finding that land acquisition

was a critical step in the process, but one

GE had missed (Rothschild 2007).

As shown in the bottom half of Figure

1, social services may be too far from a

manufacturer’s comfort zone to be viable.

Most of these services fall into the realm

of nonprofit organizations, state-funded

organizations, and regulatory agencies.

Making the moveThere is considerable evidence that manu-

facturers are successfully moving into

services. The previous examples from GE

and Caterpillar illustrate their commit-

ment to service businesses. GE Capital,

the financing arm of the company,

represents approximately one-third of

revenues. In addition, each of its product

business segments have major service

elements (GE 2011 10-K). Total service

profits represent more than 50 percent of

GE’s revenues for the past several years

(Mergent Online 2012).

Caterpillar has expanded its service

operations, and the company has this

to say about its customer and dealer

support group: “When our customers

need to build out, dig down, or power up,

Caterpillar is there to support their needs.

Our Seed-Grow-Harvest Business Model

is built upon a foundation of delivering

valued quality products, services, and

solutions to our customers, which in turn

provides them with the lowest owning and

operating life cycle costs. This begins with

building sophisticated, quality machines

and then supporting the customer in a

variety of ways: employee equipment train-

To comment on this article, send a message to [email protected].

Page 26: S olume 22 | Number 4 July/August 2012 V API

24 July/August 2012 | APICS magazine

ing on job sites, supply aft ermarket parts

and service support, and off ering eBusiness

and Equipment Management solutions”

(Caterpillar 2012).

Although not yet a major consideration,

the sustainability movement may portend

the need to consider not only the product

and service life cycles, but also the recovery

life cycle that is almost certainly just over

the horizon. See Crandall (2012) for a

fuller discussion of these life cycles.

Finally, just as manufacturing compa-

nies are moving into services, some service

companies are moving into manufacturing.

But that is another story.

References1. Blackstone, John H. 2012. APICS Dictionary.

APICS Th e Association for Operations

Management. Chicago, Illinois.

2. Caterpillar Customer and Dealer Support.

(2012). caterpillar.com/cda/layout?m=38997

5&x=7&ids=3366549.

3. Crandall, Richard E. 2012. “An Expanded

Perspective on Product Life Cycles, Ten

Attributes for Success,” APICS Magazine.

22(3), 20–23.

4. GE 10-K. 2011. Products and Services.

ge.com/products_services/index.html.

5. Haeckel, Stephan H. 1999. Adaptive

Enterprise: Creating and Leading Sense-and-

Respond Organizations. Harvard Business

School Press. Boston, Massachusetts.

6. Immelt, Jeff rey R. 2011. Letter to

Shareholders, GE 2010 Annual Report.

7. Mergent Online. 2012. General Electric Co.

mergentonline.com/companydetail.php?comp

number=3597&pagetype=synopsis.

8. NAICS Association. 2012. naics.com/search.htm.

9. Rothschild, William E. 2007. Th e Secret to GE’s

Success. McGraw-Hill, New York, New York.

10. Vigoroso, Mark W. 2011. “Manufacturers

Profi t from Post-Sales Service,” Industry Week

and Servigistics Manufacturing Roundtable.

For a free bibliography of more than

60 articles on this subject, contact the

author at [email protected].

Richard E. Crandall, PhD, CFPIM, CIRM, CSCP, is a professor at Appalachian State University in Boone, North Carolina. He may be contacted at [email protected].

To comment on this article, send a message to [email protected].

Page 27: S olume 22 | Number 4 July/August 2012 V API

The APICS Interview

Building Stronger Bonds

Strategies to maximize collaborative supply chain relationships

Rennie: First, please explain what sets apart manufac-turers’ relationships with channel partners from other business relationships.

Pope: Channel organizations are unique because of their

dual roles. They are, in fact, customers. Most distributors

and other channel organizations do buy the manufacturer’s

product. But they are also a conduit to the end customer

organization—the one that actually uses the manufacturer’s

product—playing exactly the same role here as the

manufacturer’s sales team.

Why is this important to understand when striving to create successful partnerships?

Pope: Firms that fail to recognize this duality oft en get into

trouble and fail to create successful partnerships. Success

requires a careful balancing act, one that recognizes both roles.

Editor’s note: APICS magazine managing editor

Elizabeth Rennie recently spoke with George F. Brown

Jr. and Atlee Valentine Pope of Blue Canyon Partners.

Brown and Pope specialize in helping companies create

and maintain eff ective strategic relationships with

channel partners. Here, they explore the makings of

strong collaborations and how to maintain them.

Atlee Valentine PopeCofounderBlue Canyon Partners

George F. Brown Jr.CofounderBlue Canyon Partners

Page 28: S olume 22 | Number 4 July/August 2012 V API

26 July/August 2012 | APICS magazine

What are some other typical reasons why channel partner relationships fail?

Brown: Our research points to several leading causes of

channel confl ict and failed relationships. At the top of the

list is “margin management.” Stated simply, if the partners

in the relationship aren’t both making money as a result

of the relationship, it is doomed to failure. Th ese are, aft er

all, business-to-business relationships, with each fi rm having

shareholders who expect rewards. Close behind in terms of a

source of confl ict is suspicion about end customer ownership.

Relationships between manufacturers and channel partners

involve numerous case studies in which suspicions were

warranted—such as manufacturers that went direct to the

end customer, cutting out the channel partner; or if the

channel partner substituted another manufacturer or even its

own private-label brand, cutting off the manufacturer.

What symptoms should supply chain and operations management professionals look out for in their own relationships?

Brown: In terms of key metrics to monitor: First, are each of

the partners to the relationship making money? Second, is there

clarity about the roles and responsibilities of each of the two

organizations vis-à-vis the end customers—and agreement that

such roles and responsibilities are appropriate and stable?

If you do see your own partner relationship failing, what are the most important actions to take, and why?

Pope: Identify and solve the problem. Th ere were good

reasons for the two fi rms to enter into the relationship originally,

and it’s likely that something has changed, perhaps due to

external forces, perhaps due to industry dynamics. Figure

out what has changed for the worse, and then identify how to

resolve that problem.

Far better, however, is being proactive and getting ahead

of such problems. Regular, face-to-face meetings with key

executives and relationship sponsors who openly ask the right

questions about the relationship can head off failure before

it occurs. Best-in-class organizations know that the potential

problems in manufacturer-channel partner relationships are

numerous and likely to occur regularly, so they have processes

to identify them quickly and address them before they become

overwhelming.

You say it’s necessary to be proactive. What advice do you have for people who are aiming to get ahead of potential problems?

Brown: Never forget that these are business relationships.

This [concept] is centered on the importance of margin

management—making sure that both parties are profiting

from the relationships. Unless that is the case, there is simply

no reason why the relationship can or should survive. It’s a

fundamental.

I remember a major manufacturer of construction tools

that went to market through a traditional set of distributor

relationships with individual distributors in each important

metro market. They saw widely varying market share

numbers without any ability to explain that variation on

the basis of any factors they could identify in terms of

market demographics, competition, or other usual suspects.

Working with this fi rm and its distributors, we measured the

profitability of each metro market distributor in terms of

this manufacturer’s product line. What we found was a

nearly perfect correlation between market share and profit-

ability. In metro markets where the distributor wasn’t making

money, this manufacturer was getting very little mind

share or attention. As the manufacturer implemented new

programs to ensure distributor profitability, it saw improve-

ments in previously lagging markets.

Pope: Also, it’s crucial to be attentive to the factors that

drive success in all business relationships. This idea

recognizes the route-to-market role played by the channel

partner in collaboration with the manufacturers whose

products they carry. Unless the team members—manufac-

turer and channel partner—are delivering value to end

customers and doing so better than the competing teams,

they will lose out. So, a key element of relationship manage-

ment always involves determining how the manufacturer-

channel partner team is going to create value for their targeted

end customers. Remember, the end customers drive the

business; they are the ones that both manufacturer and

channel partner have to woo and win. Without them, there

is no reason for the relationship.

[We consulted with] an agricultural equipment manu-

facturer and its dealers … that work very closely to off er

support services to end customers aft er equipment is sold.

[Leaders at this company] recognize that equipment down-

time is unacceptable at key times—for example, harvest.

And they have even created strategies for almost instant

replacement of broken equipment during such periods. Th e

manufacturer put into place an overnight direct-ship

program to support its dealers. Dealers staff their service

centers 24/7 when necessary. Both organizations have played

a role in building and implementing these strategies. In

interviews with farmers, we oft en heard quotes like, “Th ere

are several competitors that are close in terms of product

quality and price points, but what allows this fi rm to stand

out is its commitment to service.”

Brown: Th ird, put into a place an explicit plan for how the

organizations will collaborate eff ectively in delivering services

to the end customers that [they] are serving. Services … is

a relatively new element to the mix. Not too long ago, many

channel organizations simply delivered value by having the

right products easily available at the right locations for end

customers. But more and more, those end customers are

demanding high-value services and choosing the teams that

deliver them. It’s not only a route to competitive success, but

also a way to avoid commoditization and pricing pres-

sures. Planning for best-in-class service delivery is another

responsibility of the relationship champions in the two

organizations.

Page 29: S olume 22 | Number 4 July/August 2012 V API

Two examples from the electrical products manufacturing

and distribution industry illustrate this new approaches to

services. One example of a simple, but highly valued, service

is when one distributor delivers products to job sites that

can be disorganized, messy, and full of hard-to-identify crates

and materials. Th is distributor takes a picture of where it was

delivered and a picture of the signature of the person who signs

off . Th ey save on customer service because they don’t need to

chase the delivery information down, and they have a more

satisfi ed customer, who gets immediate information on where

the product has been placed at the job site. As another example,

another electrical distributor has worked with several manufac-

turers to build solutions off erings on everything from inventory

management to energy effi ciency. When appropriate, “SWAT

teams” from the two organizations work with end customers to

deliver these high-value solutions.

When trying to create strategic relationships with channel partners, how is success measured?

Brown: The business done through a successful strategic

relationship should yield attractive margins vis-à-vis relevant

industry standards and faster-than-market growth rates …

Secondary measures that we’ve seen in certain instances have

been the criticality of the relationships in serving the most

demanding end customers, contributions of the relationship

to new product development and innovation, and contributions

of the relationships to improved operations—for example,

lower inventory carrying costs, superior demand manage-

ment and forecasting, et cetera. But the simplest and most

correct answer is that successful strategic relationships

should be the source of sustained and profi table growth.

To comment on this article, send a message to [email protected].

“The end customers drive the business; they are the ones that both manufacturer and channel partner have to woo and win. Without them, there is no reason for the relationship.”

APICS extra

REGISTER AT APICS.ORG/EXTRA.

APICS Extra Live: Creating Strong Relationships Between Manufacturers and DistributorsPresented by: George F. Brown Jr.Founder, Blue Canyon Partners

Date: August 9, 2012

Time:1:00 p.m.–2:00 p.m. CT

Where: Online

Attend APICS Extra Live to gain deeper insight into the July/August APICS magazine “APICS Interview” with George F. Brown Jr. This online webinar will explore how to achieve positive “CoDestiny” relationships between manufacturers and distributors, as well as other third-party channel organizations such as wholesalers, retailers, integrators, and contractors.

In this APICS Extra Live, you will learn toachieve proactive leadership and ongoing attention to collaboration and cooperation

identify and alleviate disagreements before they reach a negative critical mass

sustain healthy, profitable relationships.

Page 30: S olume 22 | Number 4 July/August 2012 V API

28 July/August 2012 | APICS magazine

An Indian company overhauls inventory with the TOCBy Mahesh Gupta and James F. Cox III, PhD, CFPIM, CIRM

Page 31: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 29

India is in the midst of a retail revolution. By 2015, it is set to

become one of the top fi ve retail markets in the world. Th e

country also is the second-largest global producer of footwear.

While international brands such as Gucci, Charles and Keith,

Nike, and Adidas have made their presence felt in higher-end

markets, domestic companies largely cater to the mass and

economy markets.

Liberty Shoes is one of those companies. Since opening in

1954, it has become one of the fi ve largest footwear manufac-

turers in the world and is the only Indian leather shoe brand.

It maintains a global presence, doing business in more than

25 diff erent countries, including Russia, Italy, and France,

as well as throughout the Middle East. Marketing at Liberty

Shoes includes a network of more than 70 distributors; 5,000

multi-brand outlets; and exclusive retailers, consisting of 148

showrooms and 54 Liberty-branded retail outlets.

Four years prior to undertaking a new distribution and

replenishment solution, Liberty’s sales were fl at and profi ts

were negligible. Market share was less than 2 percent, despite

its reputation as a top domestically produced Indian brand.

Even though sales were stagnant, the company introduced

many products each season under the assumption that new

fashion lines would increase sales.

Liberty planned for the two seasons of summer and winter

with a forecast horizon of six months. Its factories produced to

capacity. Production and distribution lead time was about 60

days. Distributors and exclusive shops were under pressure to

place orders for the next six months, and items were pushed as

close to consumers as possible (see Figure 1).

One challenge in the fashion industry is that forecasts oft en

are wrong, especially at the individual item and retailer levels.

Additionally, only about 15 percent of new designs turn out to

be winners, selling out in about six to eight weeks. Th ese facts,

along with a push distribution model, create a feedback loop

that produces stockouts; a limited range of new products; less

buying; high receivables; and large amounts of slow-moving

and buff er inventory everywhere, including at the central

company, distributors, and shops. Th e increased inventory

negatively aff ects growth, profi tability, and relationships with

shops and distributors.

Enter the theory of constraintsIn It’s Not Luck, Eli Goldratt proposed a distribution and

replenishment solution based on the theory of constraints

(TOC). In the simplest terms, the approach exploits the fact

that the cumulative forecast at the plant level is more accurate

than at individual links. Using heuristic models, replenishment

and emergency inventory levels at strategic supply chain links

are determined. It is a powerful tool, but relatively diffi cult to

implement: It fi rst requires that each supply chain link undergo

a paradigm shift in processes and thinking.

Common wisdom is that improvement occurs when fore-

casts improve, enterprise resources planning systems become

faster and more powerful, inventory visibility is raised, better

personnel are acquired, key performance indicators are modi-

fi ed, and the like. Instead, supply chain improvement comes

from establishing a distinctive competitive edge. An eff ective

supply chain solution must ensure that each link in the chain,

from raw materials supplier to consumer, recognizes its state of

ideal performance.

For distributors and showrooms, this state is to keep inven-

tory levels low but maintain high availability—to buy less of

each item, but with more variety and quick resupply of popular

items. For this to occur, replenishment lead times must drop

dramatically, boosting sales without raising fi xed cost. With

higher inventory turns, distributors and showrooms achieve

signifi cantly greater return on investment. With higher returns

on investments, it’s easier to attract new distributors. Th e

company can capitalize on these advantages, further broaden-

ing its reach and range. Meanwhile, the consumer fi nds the

perfect shoe. Every supply chain link benefi ts from the decisive

competitive edge.

With guidance from the Vector Consulting Group, Liberty

Shoes implemented a TOC initiative with the aim of raising

sales and, more importantly, profi tability. Th e implementation

took the form of the following six discrete steps.

Figure 1: Initial supply chain model at Liberty Shoes

5 factories 70 distributors5,000

multi-brand retailers

148 exclusive showrooms

54 Liberty stores

Consumers

Total supply chain inventory: 125 days

Total lead time: 60 days

Product introductions per year: 2

Page 32: S olume 22 | Number 4 July/August 2012 V API

30 July/August 2012 | APICS magazine

Step 1: Establish a central warehouse. About 70 percent of

footwear is sold for more than six months—these are termed

replenishment items. Th e central warehouse carries replenish-

ment items up to a buff er target and acts as the aggregation

point for stocks to serve many diff erent distributors. One

immediate benefi t is that the central warehouse’s aggregated

forecasts are more accurate than at

the retailer level. Inventory is com-

municated daily to the factory, which

produces to buff er levels. In eff ect, the

central warehouse decouples produc-

tion lead time from replenishment

lead time, greatly reducing distributor

lead time from about 60 to 15 days.

Step 2: Implement a production priority system. Most items deplete

some amount of buff er every day.

As demonstrated in Figure 2, buff er

is divided into three zones: green,

which represents high inventory lev-

els; yellow, meaning adequate inven-

tory; and red, where there is a risk of

stockouts. (Not shown is a black level

of inventory exhaustion and poten-

tial lost sales.) At the factory, risky items are produced fi rst,

followed by items with more stock available. Facilities produce

to demand, and production lead times are further reduced.

Step 3: Ensure retail availability. Shops maintain inventory

for replenishment items equal to transportation lead time plus

some amount of safety stock. Retail outlets communicate daily

sales or current buff er for each item, and computer systems

generate replenishment orders automatically. Tight replenish-

ment practices at the retail level, coupled with high availability

at the central warehouse, ensure high availability and lower

inventory at distributors.

Step 4: Decouple production and raw materials lead times. If raw materials are unavailable for replenishment items in

time for orders, production lead times can increase. Hence, it

is critical to ensure availability of raw materials at all times. A

buff er replenishment system for raw materials similar to that

described previously can be implemented with suppliers. Each

week, suppliers receive buff er penetration reports along with

priorities, ensuring eff ective raw materials management.

Step 5: Identify fashion winners and losers quickly. When

products were introduced only twice

a year, distributors ordered for a six-

month horizon across a wide range of

styles, faced inaccurate forecasts, and

had limited capital. As they would

not be restocked within a season,

distributors were loath to take on risk

and bet on potential winners.

Th ere is a better way, and smart

buff er management is the key. If

an item is continually in the red, it

likely is a winner and buff er targets

increase. Likewise, green items are

losers and require less buff er. In this

model, sales trends can be tracked on

the fl y, generating product portfolios

for individual shops and the central

warehouse.

Step 6: Increase the number of new products. Th is has the

eff ect of smoothing production and cash requirements. Instead

of twice a year, Liberty now introduces products eight times

with smaller ranges in each introduction. Th e sellers can buy

in smaller quantities than before. Once a winner is identifi ed, it

becomes a replenishment item in the central warehouse, ensur-

ing that a wider range of products reaches, and is maintained

on, retail shelves.

Charting the outcomesFollowing implementation of the TOC distribution and replen-

ishment system at Liberty Shoes, replenishment frequency for

each item at each stocking point became greater. Th e forecast-

ing horizon is now about one month, compared to about six

Figure 2: Post-implementation supply chain model at Liberty Shoes

The daily, automatic replenishment of items prevents immeasurable

lost sales.

5 factories 101 distributors8,000

multi-brand retailers

85 exclusive showrooms

254 Liberty stores

Consumers

Total supply chain inventory reduced by 50 percent

Production lead time:15-20 days

Distribution lead time:5-15 days

Production introductions per year: 8

Finished goods availability:95-97 percent

Central warehouse

Page 33: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 31

months previously. Th is prevents retail stores from getting

stuck with slow movers and enables continuous reordering of

winning items. Distributors and retailers have a much greater

return on investment and tripled inventory turns, and they can

more rapidly expand with fewer risks.

Additional benefi ts include the following:

Availability at the central warehouse is above 97 percent.

Overall inventories are down by about 50 percent.

Th ere now are 101 distributors, about 8,000 multi-brand

retailers, 85 exclusive showrooms, and 254 Liberty-branded

retailers.

Th e strike rate of new items—the frequency of sales per sales

opportunities—has increased from 15 percent to more than

60 percent.

Inventory liquidation sales are needed much less frequently.

More new retailers and distributors are coming to Liberty

Shoes—about two new stores have opened each week in the

past year.

Sales at exclusive showrooms and Liberty-branded retail

outlets are up about 30 percent.

Overall sales are up about 20 percent.

Finally, the daily, automatic replenishment of items prevents

immeasurable lost sales.

Perhaps most importantly, the thinking at Liberty Shoes

now is guided by TOC philosophies. Company leaders and

shop fl oor workers alike are better able to identify root causes

of problems, construct win-win solutions, and develop eff ective

implementation plans. Th e replenishment system responds

more quickly to demand changes. And the need for fi ghting

fi res has reduced signifi cantly, freeing up senior managers to

focus on other projects in order to ensure future growth.

Th e challenge in implementing the type of TOC distribu-

tion and replenishment model described in this article is that it

requires major evolution of the collective thinking of all parties

in the supply chain. It demands thinking holistically and means

that retailers must learn to devalue discount schemes and oper-

ate in a pull distribution mode, where supplies are based upon

consumption. It is a diffi cult transition for the entire business,

but with proper care in implementation, it will create a decisive

competitive edge.

Mahesh Gupta is a professor of management and entrepreneurship at the University of Louisville, specializing in management philosophies such as Just-in-Time, the theory of constraints, and quality management. He may be contacted at [email protected].

James F. Cox III, PhD, CFPIM, CIRM, is professor emeritus for the Terry College of Business at the University of Georgia. He may be contacted at [email protected].

To comment on this article, send a message to [email protected].

Workers assemble shoes in a Liberty facility.

Page 34: S olume 22 | Number 4 July/August 2012 V API

32 July/August 2012 | APICS magazine

As supply chain and operations management professionals, we

all are familiar with ABC analysis, Pareto’s law, and the 80-20

rule. When it comes to cycle counting, these basic principles

have their place—but a generic, cookie-cutter approach won’t

work every time. Take a step back from the most basic guide-

lines, and consider the following questions:

Does Pareto’s law really fi t your business? Are 80 percent

of your inventory dollars wrapped up in 20 percent of your

items (and vice versa)?

Does ABC analysis hold up at your company? How many

low-dollar, high-volume items such as screws, nuts, bolts,

and washers do you have?

What type of industry do you represent? Is your company a

job shop, a custom builder, a process or discrete manufacturer,

or something else? At what pace are you producing? Do you

deal with high or low volumes? Push systems or pull systems?

Many leaders don’t have a good sense of their organizations’

identities or have lost track of what they have become. Before

you can fully understand your business, you may have to do

some digging. Only then can you implement the right cycle

counting program to support your company.

Evaluate the current stateRegardless of the nature of your industry or your experience

level, a successful cycle counting program begins with the fol-

lowing steps.

Determine inventory mix. In other words, fi gure out what per-

centage of inventory dollars represents what proportion of items,

and vice versa. As this fi gure approaches 50-50, it makes more

sense to treat each item as having the same cycle time. But when

inventory begins to more closely resemble the 80-20 rule, classic

cycle times are more likely the best fi t: 4 weeks for A items, 8 weeks

for B items, and 26 weeks for C items. You may wish to tweak these

numbers further. As most enterprise resources planning (ERP)

packages include only a standard analysis, it may be necessary to

work closely with your information technology department to

modify the soft ware program’s input and reporting structures.

Count the number of locations and parts. Th is will aid in

determining the number of resources necessary to support

whatever cycle is necessary.

Examine material fl ow through the warehouse. Answer

questions such as: Do your items have dedicated storage bins?

Are the bins placed at random? Do some items stay in inven-

tory perpetually? Are there items with short lives due to only

custom demand? Th is will aid in deciding whether to focus on

locations, materials, or even materials within locations.

Set accuracy goals. Try not to get hung up on this step—just

pick a number. Once the program begins and you start seeing

accuracy data, you will know where you are and can update the

goal accordingly. All cycle counting systems should have lon-

ger- as well as shorter-term goals, usually annual with monthly

increments.

Defi ne the program’s purpose. Th is step actually is quite

easy. Th ere is only one purpose to cycle counting—to fi nd

out how errors occur and eliminate the practices that created

them. As you eliminate the root cause of the errors, inventory

accuracy rises. Th ose who say they cycle count to maintain

accuracy do not have the right focus.

My company, TSE Industries, is a Clearwater, Florida-based

manufacturer of custom-machined plastic parts, custom rub-

ber extrusions, compression-molded rubber, and cast urethane.

We maintain a job shop environment, and most manufacturing

is performed make-to-order. Additionally, there are a number

of specialty chemicals produced in a process environment,

sometimes make-to-stock and sometimes make-to-order.

As far as inventory mix goes, 60 percent of our inventory dol-

lars are wrapped up in 40 percent of goods, and vice versa. Th ere

are about 1,800 locations and 5,000 individual parts to deal with.

We use a random location system, as there’s not enough

room for dedicated bins. Th e number of parts per bin varies.

Bins are mixed and matched to ensure an even amount of work

each day. Th is enables counting to begin and end and research

into errors to be completed the same day. We examined how

items move through the warehouse to and from work in pro-

cess, subcontractors, and customers.

Eventually, aft er redefi ning the organization, we identifi ed a

cycle counting program that worked best for us.

One company’s systemOur lead times are relatively short, and we carry an average of

three months of inventory for the custom orders that represent

most of our volume. Th e majority of our materials have a simi-

lar ability to shut down production, and heavy investment in

inventory as with classic C items is undesirable. Th e 60/40 split

of our inventory further supports the notion that each item

deserves the same amount of attention. With these factors in

mind, it did not take much eff ort to fi gure out that a quarterly

cycle for the entire inventory was appropriate.

One-of-a-Kind Inventory ManagementDesigning the right cycle counting system for your businessBy Mark E. Neuman

Page 35: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 33

To ensure the entire inventory is cycled through, we

assigned each of our 1,800 bin locations a count date. Aft er

a day’s locations are counted, they are tracked in a computer

database. It’s easy to refer back to the last date a bin was cycle

counted when an error occurs. Seven workers perform the

daily counts along with one data administrator. Th e counts are

performed blind—that is, the material handlers do not know

what is in the database when counting. If parts are found

in a location the system has not

accounted for, workers record this

information on a form, which later is

used to aid in reconciliation.

About 27 locations are counted per

day, with an average of 75 parts. Th e

best element of this system—assum-

ing the work is divided correctly—is

that it requires only about 30 minutes

of work for each material handler

and about three hours for the admin-

istrator. No extra people and no

overtime are necessary.

Once material handlers turn in

their count sheets, the administrative

work can begin. Counts are checked

against the system. If a discrepancy is

found, the administrator fi rst checks

for any pending updates that would

bring the quantities into sync. If that does not provide a match,

the area is recounted. If the recount doesn’t match, we perform

a root cause analysis. Most importantly, this evaluation begins

and ends on the same day—an absolute must for an eff ective

program.

Initially, the program was 93 to 95 percent accurate. We

attributed the high level of accuracy to existing discipline and

reconciliation programs. In subsequent years, we have raised

the bar, as our annual goals inch toward 100 percent. In the

last three years, we have maintained a consistent 99.5 to 100

percent accuracy.

When we discover an error, it becomes coded and tracked

among a range of issues. Our list of causes includes

material transferred incorrectly

material received incorrectly

information recorded incorrectly

material issued incorrectly

material shipped incorrectly

policy violation

unknown.

Of course, we consider the elusive “unknown” category to

be our nemesis. But its existence helps us focus on eliminating

it altogether. We maintain a laundry list of possible reasons for

unknowns, and we continue to chip away at them.

One way we’ve found to speed the process is to recognize

sealed containers from previous cycle

counts. As long as the container is

still properly sealed and unopened,

the count is taken directly from the

container. Units that continue to be

unused are moved to remote loca-

tions where the counting is done

even more quickly. Th ese materials

transfer to a slow-move candidate

list, and hopefully eventually out of

inventory altogether.

Despite the opinions of many,

cycle counting is not a process to

maintain accuracy; it is designed to

discover how errors occurred and

to eliminate the possibility of them

recurring. We are tremendously

satisfi ed with our program in keeping

track of the causes of errors and the

overall health of our inventory. Parts are available nearly 100

percent of the time, and there are very few occasions when

production is stopped or a customer is shorted due to an

inventory error. Finally, one of the greatest benefi ts is that our

people now believe in the inventory fi gures because they know

how the data were generated. Th is has instilled our workforce

with confi dence, pride, and boosted morale.

Mark E. Neuman is vice president of materials at TSE Industries, a global plastics, rubber, and specialty chemicals manufacturer. He has nearly 40 years of experience in materials management in the manufacturing arena, and he is a former member of the APICS board of directors and past president of the Florida West Coast chapter. He may be contacted at [email protected].

To comment on this article, send a message to [email protected].

There is only one purpose to cycle counting—

to fi nd out how errors occur and eliminate the practices

that created them.

Page 36: S olume 22 | Number 4 July/August 2012 V API

34 July/August 2012 | APICS magazine 42 July/August 2012 | APICS magazine

Page 37: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 35

Stack Up Solutions

Taking a closer look at pallet layer optimization

By Homayoun Taherianand Kristen Kravitz, CSCP

Supply chain and operations management professionals are

under constant pressure to reduce costs. Th e recession has forced

many manufacturers to get creative when seeking savings oppor-

tunities in their supply chains. Ultimately, the key to reducing

supply chain expenses is to understand cost drivers. Product unit

handling confi guration is one such driver. It has great savings

potential and has not yet been explored by many companies.

Product unit handling confi guration refers to the method

used to move a product through the supply chain in pallets,

cases, or totes, for example. In the fast-moving consumer

goods sector, where large product volumes mean that any

variable cost reduction can have a major impact on the bottom

line, understanding how product unit handling confi guration

aff ects supply chain and logistics costs is critical.

How many layers?In consumer goods, pallets tend to be the primary handling

confi guration, so that is largely where we focus our eff orts.

In most companies, packaging engineers—usually with some

input from marketing—design the pallet confi gurations.

Engineering focuses on optimizing pallet surface use while

balancing physical packaging strength to minimize product

damage. However, there are many ways the pallet confi guration

aff ects the total supply chain, and the packaging team does not

always consider the cost impact of decisions once a product

enters the outbound logistics chain.

As an example, say a company has a pallet with four layers

and 10 units per layer for a total of 40 units. If engineering adds a

layer, making a 50-unit pallet, the following outcomes are likely.

At the manufacturing plant, workers experience reductions in

pallets needed for the same amount of product

other packaging supplies, such as shrink-wrap, labels, and

corrugated pallet sheets

fi nished goods handling.

Likewise, at the distribution center, the company sees

decreases in

labor hours to unload and put away products

loading moves of pallets into outbound trailers

product damage due to less overall handling.

Further, case picking—typically a more labor-intensive activ-

ity than full pallet picking—might be increased or decreased,

depending on customer order patterns. Assuming a decrease,

more units per pallet per move leads to fewer replenishment

moves and reduced need for supplies. Warehouse space usage

also might go down or up depending on storage method.

Inbound to the distribution center, costs will either increase

or decrease depending on product type and loading and

transportation methods. And outbound from the distribution

center, the unit-per-pallet change might be positive, negative,

or nonexistent—for instance, if products are shipped less-than-

truckload, there would be minimal change.

Examine the costsYour fi rst step should be to analyze the costs and benefi ts

associated with changing the number of layers per pallet. You

can be as conservative or aggressive as you wish when model-

ing scenarios. For example, for a product with four layers of

10 cases per pallet, analyze what happens when the number of

layers becomes three or fi ve. Th is focus makes it easier to look

at a limited number of change scenarios for each stockkeeping

unit (SKU), which is advantageous for a project incorporating

several hundred SKUs—a common occurrence in the consumer

goods industry.

Our company, UTi Worldwide, is a global supply chain and

logistics consulting fi rm performing services including air and

ocean freight forwarding, contract logistics, customs broker-

age, and more. Recently, we worked with a large commercial

cleaning products manufacturer to develop a model that could

capture each potential logistics impact and display the results

for fi ve scenarios for each SKU, ranging from a two-layer

reduction to a three-layer increase. We evaluated about 1,450

SKUs, excluding those with packaging that precluded addi-

tional layers, such as drums or totes. Th is model enabled us

to determine the optimal number of layers for each SKU and

packaging type based on logistics costs.

In building this model, we settled on the following steps for

conducting a layer evaluation project.

1. Defi ne the variables. Th ese include material costs such

as pallets and labor, the labor for essential warehousing tasks,

and basic constraints. It’s important to think about the relevant

constraints at work. Some of the constraints we imposed

included pallet stack height, trailer door height, and total

allowable trailer weight. Also bear in mind soft constraints,

which should be fl agged as problem areas but can be overcome

Page 38: S olume 22 | Number 4 July/August 2012 V API

36 July/August 2012 | APICS magazine

with suffi cient will or investment.

Our soft constraints included the

warehouse rack opening and the

rack’s weight capacity.

2. Set the correct scope. Th ink

through all the activities that take

place, from the end of the manufac-

turing line through delivery to the

customer. Some are easy to model,

while others are more diffi cult or

impossible and should be avoided.

You also may want to take a close

look at each SKU and eliminate

those that can’t feasibly be changed

or are too slow-moving to warrant

consideration.

3. Clean up the data. Your project

model is only as accurate as your

data. Reliable productivity studies,

accurate samples of historical order

data, and precise dimensions and

weights for each SKU you wish to

model are essential.

4. Determine the right scenarios. You’ll need to know how aggressive

you can be in recommending changes,

as well as what degree of layer change

falls within your risk tolerance.

5. Model future behavior. Many

dynamics demand creative model

building and assumption making.

Some must be tackled on a case-by-

case basis, but looking at historical

patterns can help. One of the most

complex dynamics in our model was

determining how the number of layers aff ected case picking. We

wound up looking at a historical sample of orders and judging

how pallet layer changes would have aff ected them then.

6. Prioritize savings. We found that fl agging soft constraints

early on made it easier to see which cost savings were the

low-hanging fruit and which would not be easily attainable,

considering the investment required to implement them.

Some factors are not as easy to model and may require

expertise from other parts of the organization. For example,

we have never been able to discover a simple mathematical

function that predicts the cost eff ects of modifying pallet layers

up or down. However, we presented our data to the packag-

ing engineers, who processed them and suggested changes in

packaging and pallet layer confi gurations to accommodate the

new units per pallet. Th ey used our concrete data to determine

if investing in increased packaging strength would be a feasible

way to reduce logistics costs.

Aft er analysis of all our data, we found that only 55 percent

of SKUs showed savings for any of the fi ve layer change scenar-

ios. Initially, we estimated total savings at $437,000 annually.

Once we applied soft constraints, the amount we saved from

just the low-hanging fruit was still a healthy $200,000. A good

portion of that amount was repre-

sented in a relatively small number of

about 10 SKUs.

The whole enterprisePallet layer optimization seemingly

aff ects only a few business areas, but

this type of project has signifi cant

cross-functional potential. Upon

completing our analysis, we pre-

sented our recommendations to the

packaging and manufacturing teams.

Additionally, marketing and cus-

tomer service were brought into the

conversation. Ultimately, the project

had four distinct analytic phases:

logistics, packaging, manufactur-

ing, and customer. We ensured that

we listened to and addressed the con-

cerns of all stakeholders. Note that,

in order to ensure internal align-

ment, internal stakeholders were

addressed fi rst.

Despite being performed last,

customer analysis is vitally impor-

tant. Marketing and customer service

groups must work with the customer

base to ensure they can accept pal-

lets in the new confi gurations and

to encourage them to purchase in

the new full-pallet quantities. If,

for example, the units per pallet are

increasing for a fast-moving SKU, it

may be necessary to demonstrate how

customers will benefi t from improved

logistics to balance out increases in inventory carrying costs.

In the current economic landscape, costs are constantly put

under a microscope. Th rough examining the traditionally iso-

lated task of pallet confi guration design and examining it from

a new perspective, we were able to present our organization

with big cost reductions—without sacrifi cing customer value.

Homayoun Taherian is a senior consultant in the supply chain design and innovation group at UTi Worldwide, a global supply chain and logistics consulting fi rm. He has 10 years of experience in supply chain management and manufacturing across the automotive, chemical, and consumer goods industries. He may be contacted at [email protected].

Kristen Kravitz, CSCP, is a manager in UTi Worldwide’s supply chain design and innovation group. She has conducted supply chain optimization and strategy projects across a number of industries, including pharmaceuticals, chemicals, mining, defense, and consumer goods. She may be contacted at [email protected].

To comment on this article, send a message to [email protected].

Pallet layer optimization seemingly affects only a few business areas, but this type of project has signifi cant cross-functional potential.

Page 39: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 37

Network globally and connect locally with the APICS

Supply Chain Channel.APICS Supply Chain Channel lets you interact like never before with supply chain

and operations management professionals. Advance your career, expand your

knowledge base, and grow your professional network all in one place.

Be seen: Highlight your background and

skills in your member profi le.

Connect: Join online communities to

network with other professionals.

Find colleagues: Search for professionals across

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directory.

Get involved: Read and respond to industry

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Learn: Exchange information in the

resource libraries.

>> Visit supplychainchannel.org to activate your profile today!

Page 40: S olume 22 | Number 4 July/August 2012 V API
Page 41: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 39

New L andscapes and Emerging Opportu nit ies

Years ago, many US manufacturing companies moved

their operations overseas to produce consumer products

and improve profitability. These goods then were deliv-

ered and sold to Americans for a cheaper price. Today,

these same developing countries are seeing an explosion

of buying power. Middle-class populations worldwide

are growing more sophisticated and affluent. Over the

next several years, they are anticipated to increase by

about 70 million people. These people also are becom-

ing more tech-savvy—more than half of internet users

worldwide live in emerging markets. This enables them

to access, review, and purchase consumer products

through popular social media sites or mobile phones vir-

tually anytime and anywhere.

Many manufacturers are trying to take advantage of

these developments, but it’s not as easy as making a few

minor adjustments to their operations. Rather, business

leaders must carefully examine how to best leverage sup-

ply chains in emerging countries in order to effectively

produce, distribute, serve, and expand services to local

economies. This means deploying a supply chain strat-

egy that aligns with the larger business plan, improving

operations, recruiting top talent, and understanding

local laws and nuances. In this context, consumer products

manufacturers should consider five imperatives in their

efforts to compete effectively in new markets and avoid

common mistakes.

1. Al ign with the corporate strategy. Manufacturers should take a holistic approach when

aligning manufacturing and distribution operations with

the larger business strategy. This means determining how

research and development, marketing, sales, finance, infor-

mation technology, and human resources fit together to

achieve the company’s broader business objectives.

Business leaders should determine profit targets and col-

lect and analyze data from various market drivers, includ-

ing consumers, competition, regulatory concerns, and

internal constraints. This may help them establish a prod-

uct portfolio that meets customer needs and is competitive,

viable, and profitable. Armed with this information, com-

pany leaders can better manage and structure their manu-

facturing and distribution operations: determining what

can be outsourced or made in-house, identifying producers

and suppliers, developing and implementing production

technologies, and more.

Maximizing global demand and supply opportunit ies

By Praveen Kishorepu ria, Mark Qu inn, and Adam Mussomeli

Page 42: S olume 22 | Number 4 July/August 2012 V API

40 July/August 2012 | APICS magazine

2. Manage the g lobal su pply cha in network. While many companies have designed detailed marketing

plans for emerging markets, they’ve fallen short in devel-

oping an effective supply chain. Doing so is not easy, but

it can improve performance by 5 to 15 percent. Leaders

should consider local conditions and factors—such as

the dependability of local utilities, regulatory policies,

labor and transportation costs, infrastructure, supplier

strengths and weaknesses, and cultural norms—when

customizing a global supply chain. It’s also important

to find data on overseas locations that are reliable and

comparable.

Professionals should think cross-functionally, incor-

porating human resources, facilities, and tax and regulatory

perspectives when creating a rigorous supply chain

design. For instance, a human resources perspective can

help reduce turnover and wage and benefits costs while

improving productivity.

Similarly, companies can make significant gains by

comparing financial and risk conditions of potential

locations in a supply chain network. Business leaders

also must consider tax policies and treaties, customs and

duties, and tax incentives for locating facilities, among

other factors when

working to improve

performance across the

enterprise.

3. Improve manufactu r-ing and distribu t ion operat ions.

Consumer products

companies can improve

the productivity, flex-

ibility, and speed of

their manufacturing and

distribution operations.

It takes rigor, discipline,

and imagination to look

across the supply chain

for significant savings.

For example, if companies analyze the true profitability

of their product categories, they may find a handful of

categories produce the majority of profit. As a result, they

may decide to collaborate with some players or outsource

categories to save money. Companies also can use certain

metrics, such as operating equipment effectiveness, to

quantify and improve manufacturing efficiencies.

When companies develop new products, they should

accommodate differences in culture, taste, price sen-

sitivity, and regulations within each emerging market.

This requires supply chain involvement in the early stages

to identify production and delivery costs and develop a

network of reliable suppliers and transportation provid-

ers. Consequently, this can help avoid delayed launches,

product safety problems, and regulatory compliance issues,

among other setbacks.

Moreover, companies that collaborate with local suppliers

can help develop new products and improve existing ones.

They should only personalize marketing, sales, and product

development to the particular market, but also understand

local preferences in product packaging. And supply chain

services and pricing always must be customized with an

eye toward the customer. Many companies tailor services

to meet customer demands, but fail to adjust product pricing

accordingly.

4. Deploy a governance model to manage risk. As a company grows globally, business leaders should

rethink their relationships with suppliers and service

providers. They will need greater visibility and oversight to

effectively manage the risks of a distant supply chain. This

means establishing a formal program to qualify, certify,

and manage outsourcing partners, such as contract manu-

facturers and component suppliers.

Programs like this establish standard operating pro-

cedures for dealing with partners and providing product

consistency, such as in the areas of price, performance,

and quality. These procedures might focus on governance

structure, product specifications, certification and

performance requirements, contractual and legal terms,

and corporate values and culture.

Plus, company decision makers have come to recognize

the value that foreign offices play in monitoring remote

operations. These offices can serve a dual purpose as a

legal entity to provide tax and duty savings.

5. Focus on talent in the su pply cha in. As consumer goods supply chains become global, there

is a greater need for talent with specialized knowledge and

experience. Some companies are developing, recruiting,

and retaining talent to fit the skills needed to manage

these supply chains. Business leaders should recognize

that employees in various regions and of different ages are

motivated in distinct ways. For example, Gen Y employees—

the youngest generation in the workforce—cite additional

Page 43: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 41

compensation as a primary motivator, while baby boomers

point to strong leadership. Competition to find and retain

high-quality supply chain managers is intensifying.

There are several steps companies can take to retain

leading employees and decrease turnover:

Focus on high performers who drive the company’s

performance.

Demonstrate leadership commitment to help earn

employees’ respect and dedication.

Make employee retention and management top

priorities.

Tie supervisor bonuses and rewards to turnover

numbers.

Build trust through open communication.

Collect and use institutional knowledge to manage

and retain employees.

Create budgets for social events that engender a stronger

internal network.

Build the company’s brand so the organization is

known as a desirable place to work.

Managing su pply cha in complexity Growing economies can be a springboard for improving

the corporate bottom line. But effectively tapping into these

markets has implications for a company’s business strategy,

supply chain network, and risk management capabilities.

It’s not just about aligning the supply chain with broader

business goals, but also redesigning it to address unique

and local challenges.

Business leaders should improve the effi ciency of supply

chains, develop a better internal product development

function, collaborate closely with suppliers and providers,

and implement governance processes. They must take into

account local factors and focus on identifying, retaining,

and recruiting local talent. As demand for consumer goods

has changed globally, manufacturers who supply those

goods likewise must adapt.

Praveen Kishorepuria is senior manager at Deloitte Consulting LLP. He may be contacted at [email protected].

Mark Quinn is director at Deloitte Consulting LLP. He may be contacted at [email protected].

Adam Mussomeli is principal at Deloitte Consulting LLP. He may be contacted at [email protected].

To comment on this article, send a message to [email protected].

DO YOU HAVE WHAT IT TAKES?

As an APICS magazine reader, you value the high-quality information, case studies, and best practices you access in these pages. Now is the time to share your knowledge and industry expertise by taking your involvement with APICS a step further and becoming an APICS magazine author.

The editors of APICS magazine and APICS Extra encourage you to submit an article for publication.

Visit apics.org/magazine to learn more about APICS author’s guidelines, feature article specifi cations, and editorial procedures.

Be an APICS Magazine Author

Page 44: S olume 22 | Number 4 July/August 2012 V API

42 July/August 2012 | APICS magazine

WAM Supply Chain delivers research, analysis, best-prac-tices consulting, benchmarking and

advanced supply chain planning solutions to companies in the process industry, including chemicals, refining, phar-maceuticals, and process CPG. The WAM solution provides a broad set of visualization, decision support, and opti-mization tools that address the unique challenges found in managing complex process supply chains. For over 20 years, WAM has helped companies address a wide range of business processes including sales & operations planning, collaborative demand management, inventory optimiza-tion, distribution planning, production planning, schedul-ing, and procurement planning. For more information on WAM Supply Chain, please visit wamsupplychain.com.

WAM Supply Chain600 West Germantown Pike, Ste 230Plymouth Meeting, PA 19462TF: (800) 358-8305 PH: (484) 530-4380FX: (484) 530-4854Email: [email protected] wamsupplychain.com

Global Supply Chain Visibility, S&OP, Demand Planning, Scheduling, Inventory Optimization

Smoothie® is the industry standard solution for desktop and server-based sales and operations planning that’s used

by many of the best global companies. It is available in a range of editions, but all Smoothie solutions feature Pivot Forecasting® and Pivot Planning®, proprietary technologies that make it possible to seamlessly plan at any level of aggregation and along any dimension like product, channel or customer. Retire your spreadsheets and contact Demand Works for highly accurate fore-casts, collaboration, time-phased multilevel inventory planning, and S&OP.

Demand Works Co.PO Box 627West Chester, PA 19381PH: (484) 653-5345Email: [email protected]

Sales and Operations Planning Software

IFS delivers software to make enter-prises more agile by streamlining four core strategic processes: service & asset management, manufacturing, supply chain and projects. IFS devel-ops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS provides software solutions that serve manufacturing, project-based and asset-intensive industries. We thrive in complex environments and with businesses that strive to be agile.

IFS Applications is a pioneer in providing business soft-ware based on actual business processes. Companies can reconfigure the software on the fly, enabling them to adapt quickly to changing market conditions. And because IFS Applications is component-based, customers need only deploy the functionality they require and implement it step by step, adding new components as their business changes or expands.

IFS300 Park Blvd., Ste.555Itasca, IL 60143PH: (888) 437-4968 Email: [email protected]/us

Agile ERP for Complex, Demanding Industry

Arkieva (formerly Supply Chain Consultants) is a leading provider of supply chain planning software that helps manufacturers and distributors optimize

and better manage their supply chains. Arkieva software solutions are at work in more than 200 locations around the world, in industries that include chemicals, food processing, glass display screens, semiconductors, and industrial fabrics and fibers.

Arkieva software (formerly Zemeter) enhances the timeli-ness and effectiveness of the supply chain by enabling dynamic collaborative supply chain planning. It is also designed to adapt to the changing business needs over time. It is built around the Microsoft paradigm and sup-ports full integration to ERP and other data systems as well as the user’s desktop. The software modules include Demand Planner, Business Analyst, Inventory Planner, Optimization based Supply Planner, Rules based Replen-ishment Planner (MRP/DRP), Finite Scheduler and S&OP support tools including meeting manager and dash-boards. Visit us at www.arkieva.com.

Demand Planning, Forecasting, Inventory Optimization

P R O D U C T S H O W C A S E

Page 45: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 43

P R O D U C T S H O W C A S E

Epicor enterprise resource planning (ERP) raises technology to a level that delivers unprecedented business management and control, supporting continuous performance through real-time, in-context business insight. More than 9,500

manufacturers and distributors worldwide have put Epicor’s powerful, yet easy-to-use manufacturing and distribution software to work in their business. All the functionality is embedded and works together to help take control of customer contacts, configurations, estimating, sales processing, planning, cost control, production scheduling, inventory, fulfillment, finance, and much more. Featuring Epicor True SOA™ and robust functionality for businesses globally and across industries, Epicor is redefining enterprise application software.

Epicor Software Corporation7683 Southfront Road Livermore, CA 94551 USA PH: (800) 999-1809 FX: (949) 585-4091 Email: [email protected]

Redefining ERP Software for Manufacturing and Distribution

The APICS Dictionary contains essential terms

for the global supply chain and operations

management profession.

Send us suggestions or changes you’d like to

see in the next edition of the APICS Dictionary.

To learn more, visit apics.org/dictionaryterms.

Submit a Term for the APICS Dictionary, 14th edition

ho form a supply chain to make and distribute a set of products. dynamic

anban—An alternative use of kanban methodology to create an automatic

unching of a purchase order to a supplier. Dynamic kanban is used as an

ement of the manufacturing execution system to allow for Just-in-Time

liveries to production. demand planning—Using forecasts and experience

estimate demand for various items at various points in a supply chain. Several

recasting techniques may be used during the planning process. Often, families

items are aggregated in doing this planning. Aggregation also may occur

y geographical region or by life cycle stage. Forecast demand is compared to

tual demand in order to measure and increase forecast accuracy. See: demand

anagement. inbound logistics—The group in charge of moving materials

om suppliers or vendors into production processes or storage facilities; or,

e actual movement of such material. key performance indicator (KPI)—a

nancial or nonfinancial measure, either tactical or strategic, that is linked to

ecific strategic goals and objectives. The movement of

ms from one point to another inside a facility or between facilities. strategic

riables—The most important variables that effect the business environment

d business strategy. These are typically the economic situation, population

mographics, changes in technology and government policies. triple bottom

ne (TBL)—Measuring the economic, social, and environmental consequences

a firm’s activities. visibility—The ability to view important information

roughout a facility or supply chain no matter where in the facility or supply

n the information is located. warehouse management system (WMS) A

em that manages all processes that a warehouse carries out. These processes

ude receiving, picking, and shipping.

A never-ending effort to expose and eliminate root causes of problems:

ll-step improvement as opposed to big-step improvement. Syn: continuous

rovement. See: kaizen. lean production—A philosophy of production that

hasizes the minimization of the amount of all the resources (including time)

d in the various activities of the enterprise. It involves identifying and eliminating

-value-adding activities in design, production, supply chain management, and

ing with customers. Lean producers employ teams of multiskilled workers at all

ls of the organization and use highly flexible, increasingly automated machines

roduce volumes of products in potentially enormous variety. It contains a set of

ciples and practices to reduce cost through the relentless removal of waste and

ugh the simplification of all manufacturing and support processes. Syn: lean,

manufacturing. (NOTE: “Lean” definition only says “Syn: lean production.”)

rations management—1) The planning, scheduling, and control of the activities

transform inputs into finished goods and services. 2) A field of study that

ses on the effective planning, scheduling, use, and control of a manufacturing

ervice organization through the study of concepts from design engineering,

ustrial engineering, management information systems, quality management,

The APICS

Dictionary contains the core terminology

and emerging

vocabulary you need

to speak the same

language across

your supply chain.

THIRTEENTH EDITION

APICS Dictionary

Advancing Productivity, Innovation, and Competitive Success

Not an APICS member? Join APICS today to begin

receiving valuable member benefi ts including the APICS Dictionary; APICS magazine; and more. Visit apics.org/join.

Page 46: S olume 22 | Number 4 July/August 2012 V API

44 July/August 2012 | APICS magazine

Epicor Software Corporation7683 Southfront Road Livermore, CA 94551 USA PH: (800) 999-1809 FX: (949) 585-4091 Email: [email protected]

Epicor enterprise resource planning (ERP) raises technology to a level that delivers unprecedented business management and control, supporting continuous performance through real-time, in-context business insight. More than 9,500 manufacturers and distributors worldwide have put Epicor’s powerful, yet easy-to-use manufacturing and distribution software to work in their business. All the functionality is embedded and works together to help take control of customer contacts, configurations, estimating, sales processing, planning, cost control, production scheduling, inventory, fulfillment, finance, and much more. Featuring Epicor True SOA™ and robust functionality for businesses globally and across industries, Epicor is redefining enterprise application software.

SUPPLY CHAIN Directory

Demand Works Co.PO Box 627West Chester, PA 19381PH: (484) 653-5345Email: [email protected]

Product: Smoothie® is the industry standard solution for desktop and server-based sales and operations planning that’s used by many of the best global companies. It is available in a range of editions, but all Smoothie solutions feature Pivot Forecasting® and Pivot Planning®, pro-prietary technologies that make it possible to seamlessly plan at any level of aggregation and along any dimension like product, channel or customer. Retire your spreadsheets and contact Demand Works for highly accurate forecasts, collaboration, time-phased multilevel inventory planning, and S&OP.

Arkieva (formerly Supply Chain Consultants) is a leading provider of supply chain planning software that helps manufacturers and distributors optimize and better manage their supply chains. Arki-eva software solutions are at work in more than 200 locations around the world, in industries that include chemicals, food processing, glass display screens, semiconductors, and industrial fabrics and fibers.

Arkieva software (formerly Zemeter) enhances the timeliness and effectiveness of the supply chain by enabling dynamic collaborative supply chain planning. It is also designed to adapt to the changing business needs over time. It is built around the Microsoft paradigm and supports full integration to ERP and other data systems as well as the user’s desktop. The software modules include Demand Planner, Business Analyst, Inventory Planner, Optimization based Supply Planner, Rules based Replenishment Planner (MRP/DRP), Finite Scheduler and S&OP support tools including meeting manager and dashboards. Visit us at www.arkieva.com.

IFS 300 Park Blvd., Ste.555Itasca, IL 60143TF: (888) 437-4968 Email: [email protected]/us

Product: IFS delivers software to make enterprises more agile by streamlining four core strategic processes: service & asset management, manufacturing, supply chain and projects. IFS develops, supplies, and implements IFS Applications™, a component-based extended ERP suite built on SOA technology. IFS provides software solutions that serve manufacturing, project-based and asset-intensive industries. We thrive in complex environments and with businesses that strive to be agile.

IFS Applications is a pioneer in providing business software based on actual business processes. Companies can reconfigure the software on the fly, enabling them to adapt quickly to changing market conditions. And because IFS Applications is component-based, customers need only deploy the functionality they require and implement it step by step, adding new components as their business changes or expands.

Page 47: S olume 22 | Number 4 July/August 2012 V API

APICS magazine | July/August 2012 45

SUPPLY CHAIN Directory WAM Supply Chain600 West Germantown Pike, Ste 230Plymouth Meeting, PA 19462TF: (800) 358-8305 PH: (484) 530-4380FX: (484) 530-4854Email: [email protected] wamsupplychain.com

WAM Supply Chain delivers research, analysis, best-practices consulting, benchmarking and advanced supply chain planning solutions to companies in the process industry, including chemicals, refining, pharmaceuticals, and process CPG. The WAM solution provides a broad set of visualization, decision support, and optimization tools that address the unique challenges found in managing complex process supply chains. For over 20 years, WAM has helped companies address a wide range of business processes including sales & operations planning, collaborative demand management, inventory optimization, distribution planning, production planning, scheduling, and procurement planning. For more information on WAM Supply Chain, please visit wamsupplychain.com.

Accellos 8AccuteX EDM 9Adidas 29AIM Computer Solutions rapidtrak.net 46Ansell Limited 8Apple 18Arkieva arkieva.com 42, 44Best Buy 12Camstar Systems 8Connected Nation 9Crown Equipment Corporation 9Daimler 12Demand Works demandworks.com 42, 44DRS Technologies 8Encon 8Epicor Software Corporation epicor.com 43, 45Facebook 12GE 23General Motors 12HighJump Software highjump.com 46Honda 12, 16Hyundai 12IBM 22IFS ifsworld.com/us 8, 24, 42, 44Infinito Global infinitogl.com C4Infor 8JDA Software jda.com C2JPMorgan Chase 12Kelley 8

The following companies appear in this issue of APICS magazine either as part of

the editorial content or as a paid advertisement. Note: Advertisers appear in bold.

Laser Design 9Liberty Shoes 29–31MIR3 9Nike 29Onset Computer Corporation 8Opto 22 8PPR 29Ryder 23Sapient Automation 9Servigistics 8Twitter 12UPS 23UTi Worldwide 35–36Vector Consulting Group 29Ventyx 9Vormittag Associates (VAI) vai.net 46Walmart 12WAM Supply Chain wamsupplychain.com 42, 45Wavelink Corporation 8Wesley International 9

APICS CPIM apics.org 7APICS CSCP 7, 55APICS Dictionary 43APICS International Conference & Expo 1, 6APICS Research 6APICS Supply Chain Channel 37APICS Website C3

Page 48: S olume 22 | Number 4 July/August 2012 V API

46 July/August 2012 | APICS magazine

HighJump Software5600 W 83rd StreetSuite 600, 8200 Tower Minneapolis, Minnesota 55437TF: (800) 328-3271Email: [email protected]

Product: HighJump™ Warehouse Advantage

Strengths: HighJump™ Warehouse Advantage offers advanced warehouse management functionality to manage even the most complex distribution environments. This powerful WMS helps to ensure fast, accurate fulfi llment through directed, optimized workfl ow, utilizing the most advanced wireless and bar code technologies, including RFID. The HighJump warehouse management system executes strategic processes such as receiving, put-away/fl ow-through, in-ventory management, order processing, replenishment/pick/pack, loading and shipping. And with its uniquely fl exible architecture, the system is easy to per-sonalize, without changing source code.

AIM Computer Solutions, Inc.34673 Bennett DriveFraser, MI 48026PH: (586) 439-0300Email: [email protected]

Product: RapidTrak™

RapidTrak™ the low-priced, web en-abled, wireless material tracking system designed to provide basic warehousing, inventory tracking and logistics function-alities; a valuable tool for tracking MRO Items, tooling and die sets, and perishable materials consumed in manufacturing.

Highlights:RF portable data collection or PC-based data entryMobile application for fl eet inventoryEconomical barcode labels to reduce errorsHosted solution on dedicated and managed servers that are PCI Compliant, and SAS 70 certifi edMulti-language capableUser-defi ned Email Alerts Multilingual E-mail messages for alertUser-defi nable fi elds with validationIntegrates with Microsoft Dynamics GP

Features:Track inventory moves and transfersManage consumable inventoryTrack and verify additional product characteristics via user-defi ned fi eldsFind inventory by Warehouse, Location, Item Number, TrakID or UPCTrace inventory audit transactionsConvert multiple units of measurePutaway by HAZMAT or other groupingVerify TrakIDs at Warehouse/Location

Vormittag Associates, Inc. (VAI) 120 Comac StreetRonkonkoma, NY 11779 Contact: Maggie Kelleher, Business Development Phone: (631) 588-9500 Toll Free: (800) 824-7776 Fax: (631) 588-9771 Email: [email protected] vai.net

VAI S2K Warehouse Management Soft-ware offers a wide range of benefi ts for companies in the manufacturing, retail, food distribution and related service in-dustries. S2K Warehouse helps business-es enhance productivity, improve overall warehouse effi ciency, meet operational performance objectives, and increase customer satisfaction. S2K Warehouse will enable companies to cut costs while providing added value for customers with real-time enterprise integration. Additionally, it will enable accurate and effi cient end-to-end tracking of goods throughout the entire facility.

WAREHOUSE MANAGEMENT SYSTEMS Directory

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2011ANNUAL REPORT

Mission StatementAPICS builds and validates knowledge in supply chain and operations management. We enable our community

global marketplace.

APICS The Association for Operations Management

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Dear APICS members,

Last year, the organization was able to build on the momentum of a successful 2010. The current state of the economy presents a tremendous opportunity for APICS to demonstrate

education, and membership as organizations strive to remain competitive in this still volatile economic climate.

We are pleased to report that in 2011, APICS has proven that it can be a resilient organization

positive outcomes:

Membership GrowthMembership numbers exceeded the objective with overall membership growing by four

back-to-back years of membership growth.

Expanded EventsThe annual conference in Pittsburgh attracted more than 2,000 registrants, which resulted in revenue exceeding projections. In addition, APICS successfully hosted a conference in Asia, leading to additional conferences both domestically and abroad.

exceeded sales projections and had a record-setting year.

New Initiatives

succeed professionally. Products such as the newly released APICS Principles program

network, and improve performance at work.

We will continue to leverage the successes of 2011 to create new growth and opportunity for APICS, its members, and the global supply chain and operations management community.

Best regards,

Marc Harris, CPIM, CSCP Abe Eshkenazi, CSCP, CPA, CAE

Letter from APICS Leadership

Abe Eshkenazi, CSCP, CPA, CAE

Marc Harris, CPIM, CSCP

48 July/August 2012 | APICS magazine

Page 51: S olume 22 | Number 4 July/August 2012 V API

s 2012 Projected p

2011 Actual Operating Revenue 2012 Projected Operating Revenue

2011 Actual Operating Expenses 2012 Projected Operating Expenses

Other

Training

Conference

Education Materials

Certification

Membership

Board, committee, andvolunteer activities

**Figures are estimates only

*Source of Financial Information

statements for the year 2011 only. An unqualified opinion was issued by Blackman Kallick, LLP, APICS’s independent auditors. For

21%

30%31%

5%4%

10%

31%

23%

29%

4%3%

27%

25%

25%

10%

7%

25%

24%

27%

10%

8%6% 6%

FinancialsAPICS has maintained its strong fi nancial position and continues to achieve its goal of growing revenue in support of its mission to serve our members and customers.

9%

APICS 2011–2012 Revenue and Projections

2011* 2012**

Total Revenue $24,400,000

Total Expenses $20,000,000 $21,400,000

NOI

APICS magazine | July/August 2012 49

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APICS 2011—A Year of Growth and Innovation

APICS CSCP Program

important milestone—more than 10,000 individuals earned the APICS CSCP designation.

designation, the APICS CSCP designation is becoming the industry standard for excellence.

In addition, 2011 resulted in the highest sales in the history of the APICS CSCP program.

APICS CPIM Growth

The APICS CPIM program continued to show steady growth in 2011. As of December 2011, more

centers since 2007.

In addition, new APICS CPIM designees in North America increased 10 percent compared to 2010.

APICS Principles of Operations Management Program

program that will replace the APICS Fundamentals program. These courses are classroom-based and instructor-facilitated to meet the needs of professionals new to the materials and

mini-courses or can be combined with other Principles course sessions to create a customized learning experience.

APICS Membership Gains Strength

In addition, membership increased in the student, joint international, enterprise, young professional, and international e-member categories.

Global Success with Leading Corporations

APICS enhanced its collaboration with corporations this year and enhanced international growth and relationships.New relationships were established with dozens of top, global organizations including Coca-Cola, Ingersoll Rand, PwC, and Schneider Electric. Existing relationships were bolstered with established companies including Aramco Services, BASF, Cooper Industries, DuPont, IBM, Intel, Novartis, Tetra Pak, and Unilever. APICS corporate expansion demonstrates that APICS is being embraced as the standard for excellence worldwide.

APICS growth in 2011 was largely due to strong educational and certifi cation sales. The APICS CPIM and CSCP program grew through the efforts of our channel partners and corporate services department.

50 July/August 2012 | APICS magazine

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Industry Collaboration

Manufacturing Skill Certifi cation Partnership with the National Association of Manufacturers’ Manufacturing Institute

APICS partnered with the Manufacturing Institute to support

brings together leading certifying organizations to ensure the high-quality education and advanced skills that are critical to success are available to individuals interested in going into manufacturing. This NAM-Endorsed Manufacturing Skills

manufacturing jobs. The APICS CPIM and CSCP programs will

APICS in the News

CNBC and USA Today

and in December 2.

APICS CEO Abe Eshkenazi weighed in on the effect of

store,” focused on challenges faced by small businesses.

APICS Events Across the GlobeAttendance at APICS events across to globe exceeded expectations in 2011 and included a new event in Singapore—APICS’s fi rst event in Asia.

2011 APICS Events

2011 Asia Supply Chain & Operations | Singapore

APICS and IBF present Best of the Best S&OP | Chicago, Illinois, USA

2011 APICS International Conference & Expo | Pittsburgh, Pennsylvania, USA

2012 APICS Events

2012 APICS Asia Supply Chain & Operations | Shanghai, China

APICS and IBF present Best of the Best S&OP May 10–11, 2012 | London, England

| Chicago, Illinois, USA

2012 APICS International Conference & Expo | Denver, Colorado, USA

APICS North American Seminar SeriesTopics include

Strategic SourcingRisk ManagementDemand-Driven Material Requirements Planning

The 2012 APICS International Conference & Expo

Denver, Colorado, USA, will host the 2012 APICS International Conference & Expo. This event is the largest annual gathering of supply chain and operations management professionals worldwide. Attendees will focus on achieving maximum productivity, meeting consumer demand, and remaining agile amid instability and unpredict-ability. Educational sessions will connect the APICS body of knowledge to strategies and tactics to meet and overcome the challenges companies face in the changing landscape of supply chain and operations management.

APICS magazine | July/August 2012 51

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APICS Career Packs

APICS unveiled career packs in 2011. They offer career path, competencies, and job

organizations interested in establishing required competencies for the workforce.

APICS Research Reports

reports are the product of surveys conducted by APICS to gather information about the experiences of supply chain and operations management professionals. Members can use this research, along with practical how-to steps and best practices, to improve operations in their organizations and gain insights about industry best practices.

APICS Folios

The APICS folios were introduced in 2011. The folios highlight APICS research and provide members with practical applications. Folios include research reports, summaries, relevant applications, and articles from the awarding-winning magazine.

Leading the Way with Innovative Research and Industry ContentAPICS released new products in 2011 focused on industry research and career advancement for the supply chain and operations management fi elds. APICS research reports, folios, and career packs provide insights into trends and practices that are key to delivering the highest level of organizational and individual performance.

52 July/August 2012 | APICS magazine

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The New APICS Website

APICS launched its newly redesigned website in January 2012. The new apics.org offers a more streamlined, content-rich web experience for professionals in the

enhanced industry content, including magazine and research sections.

APICS Supply Chain Channel

The APICS Supply Chain Channel is an exciting new feature of apics.org. The channel

community. Members have access to a global membership directory as well as

APICS Magazine

A new interface for magazine was introduced with the launch of the new apics.org. This user-friendly portal enables magazine subscribers and members to download and access the newest issue of magazine and archived articles and to search for relevant content. magazine introduced an interactive element, enabling users to comment on articles online.

APICS on Social Networks

APICS continues to grow its presence on various social media networks. At the end

New ways to connect with APICSIn 2011, a variety of new avenues were introduced to connect the APICS community with APICS. The launch of a new website, interactive APICS magazine articles, and the launch of the APICS Supply Chain Channel position APICS for growth and increased brand awareness.

APICS magazine | July/August 2012 53

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2012 APICS Board of Directors

Marc Harris, CPIM, CSCPChair

Robert Boyle, CFPIM, CIRM, CSCPChair-Elect

Mondher Ben-Hamida, CPIM, CSCPSecretary-Treasurer

Director, Terra Grande District

William BickertDirector-at-Large

Norman Carmichael, CPIM, CSCPDirector, Southwest District

Bintong Chen, PhDDirector-at-Large

Rick Donahoue, CPIM, CSCPDirector, Mid-Atlantic District

Paul HowattDirector, Canadian District

Vadim KapustinDirector-at-Large

Jerry Kilty, CFPIM, CIRM, CSCPDirector, Southeast District

Al KueblerDirector-at-Large

Merri Rich, CPIM

Dana Riess, CPIMDirector-at-Large

David Rivers, CFPIM, CIRM, CSCPDirector, Northeast District

Jason Wheeler, CPIM, CSCPDirector, Great Lakes District

Tammy Williams, CPIM, CIRM, CSCPDirector, Heartland District

APICS Professional Staff Leadership

Abe Eshkenazi, CSCP, CPA, CAE

Sharon RiceExecutive Vice President

Dean MartinezSenior Vice President / General Counsel

Core Values

TrustMake Data-Driven DecisionsFocus on InnovationDemonstrate TeamworkPersonally MeaningfulFocus on Customer SatisfactionAccountability

54 July/August 2012 | APICS magazine

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Master and implement supply chain best practices with the APICS Certifi ed Supply Chain Professional (CSCP) program.Demonstrate your ability to add value across the supply chain to your current and prospective employers. The 2012 APICS CSCP Learning System will help you leverage the strategies and best practices that can enhance your organization’s bottom line and improve your earning potential.

Now is the time to earn the APICS CSCP designation. Discover fl exible learning options and try a free demo of the APICS CSCP Learning System at apics.org/cscp.

The 2012 APICS CSCP Learning System has been updated and reorganized to offer deeper integration of day-to-day best practices, techniques, and technologies, enabling you to maximize your organization’s effi ciency and boost the bottom line. Learning system modules focus on

APICS Fundamentals of Supply Chain Management

APICS Supply Chain Strategy, Design, and Compliance

APICS Implementation and Operations.

Enhance Your Value with Supply Chain Expertise

According to the Operations Management Employment Outlook, APICS CSCP designees earn an average 11 percent more than their uncertifi ed counterparts. Source: apics.org/research.

APICS CSCP Exam and Learning SystemUpdated for 2012

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56 July/August 2012 | APICS magazine

To comment on this article, send a message to [email protected].

By Randall Schaefer, CPIM

LessonsLearned

That’s the Spirit!Some unusual advice to motivate young workers

I recently was the professional develop-

ment speaker for an APICS chapter and

found myself sharing a table with several

students. Many of them asked what

counsel I had for people just starting

to enter the workforce. Not wanting to

tell them a bunch of things they already

knew, I off ered two pieces of advice they

probably had not heard before.

1. Never doubt the validity of what

you were taught. Th is will not be a

problem if you are lucky enough to land

a job at a company where processes are

under control and procedures and disci-

plines are woven into the very fabric of

the organization. But such organizations

usually promote from within, as lower-

level employees are already indoctrinated

in the culture. Chances are, you will be

hired by a business that has lots of prob-

lems—the idea being that you can help

sort out a few of them. Th is will not be

easy; aft er all, the people who hire you

likely are the very reasons things are out

of control.

Remember: Th e buck stops at the top.

When a high-level executive does not

insist upon processes and procedures,

does not enforce disciplines, and tolerates

unachievable delivery promises and

lots of panic expediting, this attitude

tends to replicate through the ranks.

Th e attitude “do what’s necessary today

and don’t worry about tomorrow” will

get a few hot orders out the door on

time, but also will result in late ship-

ments for the majority and encourage a

culture of chaos. Again, remember what

you learned. Establish and enforce

procedures and disciplines to achieve a

profi table and sustainable operation.

2. Understand what engages your

boss. Don’t assume that just because

your boss has many areas of respon-

sibility, he affords each

of them equal attention.

Learn what excites and

interests your boss and

what does not. My first

white-collar job after

college was in 1969 as a

personnel manager. My

new company was grow-

ing fast, and it was dif-

ficult to keep up with the

necessary hiring. This was

aggravated by the fact that

the shop supervisors had

final say over who worked

for them.

It quickly became apparent that

the supervisors did not care about

the state laws on hiring practices.

Soon enough, the state employment

agency contacted me. They had sent

job seekers our way and kept records

of whom we hired and who we did

not—and those records were damn-

ing, indeed. The agency intended to

write a letter to the company presi-

dent demanding our hiring practices

be brought in sync with the law. But

I knew he would not respond well to

such a threat.

Instead, I suggested they just annoy

him. I wrote the letter for them under

their letterhead, and the head of the

agency signed it. It calmly laid out the

facts and insisted on a series of face-

to-face meetings with him to dis-

cuss the situation. I counted on our

president cringing at the thought of

meeting with young, socially liberal

bureaucrats, who would criticize him

for tolerating illegal hiring practices.

A few days later, the letter arrived,

and I was summoned to his office. He

asked whether the allegations were

true, and I confirmed they were and

reminded him that most manufactur-

ers avoided these troubles by giving

the personnel manager final hiring

authority. He did, and six months

later, my new hires brought our

minority employment in line.

I was just 23 years old, but managed

to successfully orchestrate a resolu-

tion because I knew my boss did not

want to engage in thorny personnel

issues and would fight if confronted.

I was also certain that, if irritated

just a bit, he would look for the

quickest way out.

Randall Schaefer, CPIM, is an industrial

philosopher and independent consultant.

He may be contacted at randallschaefer@

att.net.

Do you have an anecdote that teaches, enlightens, or amuses? Consider sharing it with the readers of APICS magazine. Stories should be approximately 700 words. Email submissions to “Lessons Learned” editor Randall Schaefer at [email protected].

Illu

stra

tio

n b

y T

erry

Co

lon

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Staying current on the latest APICS content has never been easier with the enhanced features of apics.org.

Visit apics.org to exploreexpanded digital magazine features career resources including career development tools and job postings new ways to engage with the global supply chain and operations management community

current supply chain and operations management researchenhanced terms and features

Connect to APICS through apics.org

New ways to access APICS magazine

Comment on articlesShare your favorites on social media

Network with colleagues worldwide

Online directory of colleagues across the globeOnline communities tailored to

Learn locallyLearn and growFind APICS courses in your community

Explore apics.org today.

Page 60: S olume 22 | Number 4 July/August 2012 V API

GLOBAL LOGISTICS