Thursday, December 6, 2012

Apple to Move Back Manufacturing

imageToday’s big news doing the rounds is that Apple intends to bring the manufacturing operations back to the US! This happens a day after I wrote extensively on this trend, discussing several examples from many large companies evaluating their off-shored manufacturing operations and deciding to bring them back. Some simply don’t find it cost effective any more, others may have a combination of reasons including the IP and branding risks.

Wednesday, December 5, 2012

The New Manufacturing Destination: Americas

imageThe pendulum on far-shoring for manufacturing may have just swung back. Many factors including higher gas prices, rising labor costs in China, shrinking product life-cycles, innovation premium, environmental-awareness, social branding needs and even political environment have contributed over the last few years to reverse a trend that seemed irreversible. Smaller, nimble, pioneering companies started the reverse trend during the last few years and it may finally become a tide with the likes of GEs joining the fray.

Friday, October 19, 2012

Logistics Clusters

All of us are familiar with the concept of similar businesses clustered together in the same geographic area. Of course, the silicon valley comes to mind being the most visible and famous! But there are other lesser known clusters that exhibit the same phenomena: Digital Media City (DMC), a 135 acre complex, outside Seoul’s central business district in the Sangam-dong district in Korea, and SEEPZ (Santacruz Electronics Export Processing Zone) in Mumbai, India are some other examples. Automobile industry around Detroit, steel mills in Indiana, and apparel in North Carolina have all been examples of similar clustering phenomena before the changing business conditions moved them elsewhere. 

Friday, October 5, 2012

Holiday Pulse 2012

imageIf Winter comes, can Spring be far behind? Fall is here, can the holidays be far behind? And with the holidays comes the annual rite of predicting what might the retail sales bring. After all, holidays are big business: $586.1 billion to be precise, expected in 2012. This is the number predicted by NRF after their annual ritual forecast of holiday sales, “Tempered by political and fiscal uncertainties but supported by signs of improvement in consumer confidence, holiday sales this year will increase 4.1 percent to $586.1 billion. NRF’s 2012 holiday forecast is higher than the 10-year average holiday sales increase of 3.5 percent.”

Monday, September 10, 2012

Cost of Your Checkout: $12M Every Second

imageCheckout is so much an integral part of retailing. In the world of big box retailing, in fact, checkout may be the only time a customer directly relates to someone representing the retailer. So why are retailers trying so hard to get rid of their only opportunity to connect with their customers?
Because checkout costs them a pretty penny.

As per a Reuters story Wal-Mart says it can save $12 million a year for every second it can cut from the average checkout time at the Wal-Mart chain in the United States. Supermarkets typically have slim margins and profitability and therefore are likely to seek any advantage to reduce on labor that can account for 8-10% or more of sales.

Wednesday, August 22, 2012

Creating Compelling Customer Experience

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When retailers think of customer experience, supply chains are generally not the top of mind. It is all about the glossy catalogs, slick web-sites, product images, interactive product experience, videos and all the other technology, media, and communication glitz bundled together and thrown on the consumer to make the sale! But what happens after the sale is secured? Is customer experience truly limited to slick product presentations and glitzy web-sites? Or is there more to it beyond the glitz, glitter, and glamor?

We believe that great products and presentation is simply a good start for a great customer experience. A truly compelling customer experience goes deeper, substantially deeper and is only enabled when the underlying supply chains can keep the fulfillment promises made and meet the customer expectations of time, quality, and service.

Monday, July 30, 2012

Omni-Channel Omni-Complex

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According to the U.S. Commerce Department, retail e-commerce sales accounted for 4.9% of all retail sales in the second quarter of 2012, up from 4.6% at this time last year. In fact, e-commerce has consistently grown from less than a percent to almost 5% of the total retail sales during the last two decades, often growing two to three times the rate of growth for conventional retail. Omni-channel retailing is here to stay. That part is concluded! Therefore, if you are a retailer and wish to stay around longer, welcome to the new world of omni-channel retailing. Hopefully, you have been working on building your omni-channel capabilities for some time, because it ain’t going to be easy or quick for that matter! 

Friday, July 13, 2012

Tomorrow is Too Late!

Sit back and relax. No need to dress up, no need to find your car keys, no need to get into the car, spend on gas, search the endless aisles of your local big-box retailer, no need to worry about whether your size or color will finally be in stock or not! Have a computer on the web and a credit card, you are all set to go. Look for an Amazon warehouse near you enabling same day delivery on thousands of products.

Thursday, June 21, 2012

Warehousing: What is In, What is Out

The results are out!

Warehouse Education and Resources Council (WERC) has presented their annual report for 2012 on DC metrics at their conference in Atlanta. The report is based on a survey where the respondents represent a broad range of industries and warehousing needs. What is in? On-time shipments, average warehouse capacity used, and order picking accuracy are the top three metrics. What is out? Annual workforce turnover, line-fill rate, and percent of damage-free supplier orders fell to the bottom of the list.

Read more at Supply Chain Digest. Or get your copy at WERC.

Wednesday, June 6, 2012

Business Strategy Must Drive Supply Chains

imageIf you had to decide what supply chain capabilities your company should build to create advantage, what would they be? We are all familiar with constantly juggling the conflicting goals of minimizing inventory while establishing the highest service levels, reducing labor while increasing throughput, and reducing supply costs while maintaining stable supplies. We know that a supply chain that is integrated with the rest of the business functions, that senses changes, adapts, optimizes, and works within the context of the larger business strategy without any conflicts would be great. What we grapple with is how a supply chain strategy can be created that is not only aligned, but actually enhances the business strategy. This is not a theoretical discussion: Pioneering companies must continuously evolve their supply chains to create capabilities mandated by their business strategy to create competitive advantages. The failure to do so can be fatal.

Friday, June 1, 2012

Is Your Supply Chain Effective?

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You may have spent a fortune in establishing good processes and implementing technology solutions to automate and enable them. So, now do you have an effective supply chain? How do you know when you do? What is an effective supply chain anyway? Is it the ability to quickly react to volatile demand? Is it the ability
to maintain the highest inventory turnover in the industry? Does it mean
having the lowest days of accounts receivable? What about accounts payable?
Shortest cash-to-cash cycle? Highest ROA? Agility? Lean manufacturing?
Optimal product mix? Highest resource utilization?

Tuesday, April 24, 2012

Changing Face of Supply Chains: Where Next?

imageThe 20th century started with the industrial revolution and then the world plunged into WWI. That was quickly followed by the great depression in the US, WWII, and then a long cold-war era between the two superpowers and with large part of the world under communism. Then towards the end of the century, things started to look up: The Soviet Union was dissolved, China introduced its market-based economic and social initiatives, India’s markets started opening up, and suddenly the world was a very different place. The effect on supply chains was profound. As the world stabilized politically, the risk of doing business diminished, and corporations were suddenly able to contemplate commerce without boundaries. The free trade agreements further facilitated the process and we saw supply chains extended across the globe. The picture below captures that image of global supply chains powerfully.

Tuesday, April 17, 2012

The Cost of 0.1 Seconds

April 23rd edition of Forbes focuses on Amazon and its boss Jeff Bezos. Amazon started in 1994 and since then, has defined what it takes to be the largest online retailer. The secret? It is always day one for the Internet at Amazon! From Forbes, “Amazon has metrics showing that a 0.1 second delay in page rendering can translate into a drop of 1% drop in customer activity.” What can that 1% drop in customer activity do to revenues? Assuming a 10% conversion rate (assuming most customers at Amazon are repeat and not just exploring the site), it translates into 48 million dollars!

Monday, March 19, 2012

Big Data in Supply Chains

imageSuddenly, the big data is everywhere. Big data is huge (pun intended). The buzz around big data itself is pretty big. How big is big data after all? IDC says that in 2010, the size of digital universe cracked the zettabyte barrier. How big is a zettabyte: That would be a giga-giga-kilo – that is 21 zeroes after 1 or 1,000,000,000,000,000,000,000.

Monday, January 30, 2012

Creating A Better World through Supply Chains

imageCould the smudges on your shining ipad be the tears of a child forced into labor? Or may be the tears of a husband, a wife, a child who lost their spouse, parent or a sibling to a suicide under hopeless desperation? As always, Apple is taking the lead so you won’t have to worry about that. Apple released a Supplier Responsibility Progress Report in 2012 detailing its efforts to monitor its suppliers and improve worker protections and factory conditions.

Monday, January 16, 2012

Aston Martin and Supply Chain Strategy

imageWhere will you find an Aston Martin and a book on Supply Chain Strategy together? Well, these are two of the things Pankaj Munjal considers as essentials. Pankaj is the managing director of Hero Motors Corporation in India, the largest two-wheeler company in the world.

Thursday, January 12, 2012

Hours of Service: Bane or Boon?

The Federal Motor Carrier Safety Administration issued a new Hours-of-Service (HOS) rule on December 22, 2011. This may make the American roads safer, may make carriers more profitable by adjusting the demand-supply equation in their favor, and may enhance the quality of life for the American workers in the logistics industry. Or it may make the retail supply-chains more inefficient and more expensive to operate and everything just a little more expensive. As always change is hard to adopt and there is some truth on both sides of the argument.