Ocean Containers
In 1988 Don Schneider, CEO of Schneider National, Inc., the largest U.S. truckload motor carrier, over-ruled the advise of his executive team and decided to invest some $4,000 per truck in an experimental on-board computer system (from Qualcomm) that would allow continuous communication between his over-the-road fleet of trucks and a central computer system. Originally lured by the expectation that better communication would make his company preeminent in customer service, Schneider found that the primary advantage came from lower costs of operations. Two-way communication and global positioning provided better visibility to the fleet and offered the carrier the opportunity to change its dispatch and routing decisions in real time. The carrier could now react in real time to the latest news available about the host of everyday occurrences that can impact both a fleet's delivery progress and its customers' requirements, such as:
This relatively primitive event management system, combining real-time visibility with real-time communication, put managers back in control of the fleet and allowed them to make profit-maximizing adjustments in operations. What had initially looked like a $14 million gamble paid off quickly in millions of ways as countless errors and missed opportunities were avoided.
Today's supply chain managers, operating in complex, multi-modal, multi-country and even hostile environments require a far greater level of control. Many products like flowers, fresh foods and pharmaceutical agents are difficult to handle, require temperature control or other kinds of protection, and are shipped over global networks. Even the simplest consumer goods now cross numerous borders, where they are taxed, transshipped, rebundled and otherwise transfigured. At every point of contact items can be lost, infected or damaged, sometimes maliciously, occasionally catastrophically.
For shippers and receivers the stakes involved in safe and secure transit now rise well beyond the simple calculus of "over, short or damaged". Their governments, stockholders and lawyers now need to know who is responsible when toys become toxic; when food becomes poison; when shipments become weapons. More helpfully, supply chain managers are exploring and beginning to adopt systems and processes that can prevent dangerous or malignant items from infiltrating our stores, restaurants and homes.
Adoption of event and asset management systems and processes are rising to the top of corporate agendas. Using a variety of sensors, communication media and protocols and sophisticated information centers, these systems are designed to provide early warning of unexpected events and bring them under the control of supply chain managers.
One such provider of visibility and control solutions, System Planning Corporation of Arlington, VA, has developed GlobalTrak. Designed to provide real-time information on containers as they move from source to ultimate destination, the highly configurable GlobalTrak package is comprised of various sensors and seals, two-way communication systems, and data management systems that match information about events in transit with the standard shipping documents associated with those events. Users determine what events they need to monitor and how closely they need to be monitored, whatever they may be, such as:
The system is then configured to report on progress as it occurs and to provide special reports when the sensors pick up unexpected activity. Because the system can be equipped with satellite, cellular and radio frequency technology, information about events can be captured and acted upon as they occur, no matter where or when.
Because such systems offer a great deal of protection, their use is being promoted and to some extent underwritten by at least one insurance provider, Marsh, which is developing a supply chain risk management practice. Prudent shippers are no longer relying on government rules and inspectors to protect them from hazards associated with international commerce.
For more information visit our Google Group page on Supply Chain Management.
To learn more about our work in consulting, read about our Practice or check out our Case Studies.
Tuesday, July 8, 2008
Creating Secure Global Freight Networks
Thursday, July 3, 2008
Kellogg's Old and New
100th Anniversary Limited Edition
Previously we had reported on Kellogg's commitment to promote only healthy food to children (see Kellogg Reformulates). Kellogg recently announced significant progress in both introducing new, healthier foods and in reformulating some of its old favorites.
Last year when the reformulation program was announced about half of Kellogg's products around the world that were being marketed to children met the Nutrient Criteria, which are:
Kellogg now reports that by the end of 2008 approximately 70% of products marketed to children will meet the guidelines whereupon advertising to children under 12 for the products that fail the guidelines will cease.
Among the products that have been successfully reformulated are:
New, healthier offerings that are being introduced include:
Kellogg is also making it easier for consumers to find nutrition information, by prominently displaying Guideline Daily Amounts (GDA's) on package labels. Its informational website, KelloggNutrition.com, has also been enhanced.
In more good news, presumably aimed at adults, Kellogg has announced at least a temporary return of the Hydrox cookie in a limited 100th Anniversary Edition. You can show your enthusiasm for the first and (in my humble opinion) BEST creme-filled chocolate sandwich cookie by entering the Hydrox Fan Contest at HydroxCookies.com before July 14, 2008.
For more information visit our Google Group page on Kellogg Company.
To learn more about our work in consulting, read about our Practice or check out our Case Studies
Wednesday, July 2, 2008
Too Many Starbucks?
Orin Smith
In 1999 when I first met Orin Smith, the now retired ceo of Starbucks, I was impressed with his warmth, intelligence and sincerity. I live in Chicago, where Starbucks had claimed an early beachhead, so I was familiar with the company's proclivity to create storefronts in close proximity with each other, and as a supply chain strategist I needed to know how this pattern would evolve as the chain expanded. Orin explained that the stores reached economies at very small scale; that each store in an urbanized area drew from a very small locale; and that a store in an office building with 20,000-60,000 inhabitants would not infringe on the market territory of one across the street with another 30,000 office workers.
In short, one store with one coffee station in the right location was profitable, even though most of its business occurred before lunchtime.
Starbucks advertising in those heady days was carried on millions of cups and thousands of storefronts and almost nowhere else. Its message was the wafting of the aroma of fresh ground beans through the open doorways.
As Starbucks scales back a bit in the U.S. it is much less likely to do so in urban areas than in suburban and residential locations where the store design and concept is less relevant to its clientele. Despite many false starts, Starbucks has failed to offer food that approaches the quality of its drinks. The "big food" concept (featuring muffins as large as your head), the "soggy sandwich" concept, and now the "reheated breakfast sandwich" concept all lack the basic elements of freshness, value and taste. That matters less in an urban location, where the coffee trade alone can sustain the store. In a suburban location, it takes more than coffee to start the family car.
For Lewis Black's comedic take on the phenomenon check out this video on YouTube.
See our newsletter on Restaurant Lifecycle Management here.
For an update on Starbucks' progress since Howard Schultz re-commandeered the brand, see "Starbucks Says Good-bye to the Bears." See also Chain Restaurant Development for more articles on related topics.
To learn more about our work in consulting, read about our Practice or check out our Case Studies
Thursday, May 8, 2008
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See our newsletter on Restaurant Lifecycle Management here.
Monday, May 5, 2008
A Lifecycle Approach to Retail Store Development
No matter how precisely the engineer tunes the interplay of the kitchen systems and the operating requirements; and however artfully the interior design matches lighting, surfaces, display fixtures and shelf space to brand message, consumer traffic and demographic, the ideal prototype will confront harsh reality during construction.
Parcel limitations and historic facades and zoning restrictions constrict available space. Local architects, contractors, franchisees and even attorneys make a series of decisions that contribute to a unique design for each location. Can anyone find a record of what was in fact built?
Store design is the result of the layering and revision of hundreds of thousands of discrete bits of information from hundreds of sources. The roles of the participants may be well-defined, but their work is highly interdependent. The cabinet-maker takes space away from the checkout queue. The size of the refrigerator impacts the dairy delivery schedule. Unless these interdependencies can be managed, errors, rework and delays will be the norm. Does anyone track, much less control, modifications to the design over time?
The challenge of cataloging and maintaining the specifications of these completed designs has been so daunting that virtually no chain operator has attempted it. Instead, they dispatch armies of surveyors and interviewers to the field whenever they choose to consider a menu addition or operating change that might impact the physical requirements of the store.
Knowledge carefully compiled as designs are completed has been carelessly set adrift, retarding innovation.
It need not be so. With forethought, clear intent and appropriate tools an organization can architect a holistic, collaborative, knowledge-preserving capability for managing the store development lifecycle.
The tools to manage this kind of complexity have been developed, but not yet adapted for the retail industry. Commonly referred to as Product Lifecycle Management (PLM) systems, this technology enables designers of complex, interdependent mechanisms to work separately and collaboratively. Using PLM tools for managing projects, workflows, digital content and rapid visualization, leading chain operators are bringing store design solutions out of the research laboratory and into the boardroom.
Retail Lifecycle Management™ (RLM) is the emerging framework by which retailers will adapt the best practices of PLM to manage the evolution of the design of their stores, assortments, menus and concepts. It will provide chain operators with the tools, processes and management systems to sustain timely, profitable development of their most proprietary assets--their stores.
See our other posts on Retail LIfecycle Management by clicking the RLM link in the Index of Topics on This Site in the sidebar to the right of this blog. See in particular our post Design is Destiny.
To learn more about our work in consulting, read about our Practice or check out our Case Studies
Wednesday, April 30, 2008
Beer and Chips: Optimizing Truck Loading
Optimizing truck loading
If you think your trucks are running full, you probably have not met Tom Moore. A logistician with a keen eye for the critical, overlooked detail, Tom knows the importance of getting an extra pallet on a truck that is about to depart Memphis for Miami, and he has helped some of the world's largest manufacturers find creative ways to load their trucks to the legal limit.
Truck loading involves an exquisite set of trade-offs between weight, volume, balance and compactness that even some of the most seasoned supply chain experts do not fully appreciate. U.S. federal law, for example, limits the gross vehicle weight of a tractor, trailer and its cargo to no more than 80,000 pounds when traveling on the interstate highway system. Safety regulations of the federal government and the various states further restrict the dimensionality of trailers and tractor-trailer combinations, such as by limiting the length of a single trailer to 53', the length of tandem trailers to 28', the total length of tractor-trailer combinations, etc. There are even restrictions on the way cargo weight must be distributed across the truck, with no axle allowed to bear more than 34,000 pounds. (Similar regulations apply in other countries.) Consequently, loads invariably reach one legal maximum before they approach the constraints imposed on other dimensions. They "weigh out," for example, before they "cube out."
Most supply chain practitioners have developed rules of thumb that help them navigate these restrictions without paying fines for overloading trucks. A brewer, for example, may program its order management system to limit its truckloads to 44,000 pounds of finished product, estimating that the weight of the tractor, trailer and "dunnage" (pallets and packing material) will consume 36,000 pounds of the 80,000 pound limit. A logistician like Tom, however, is troubled that this "full" truckload would in a real sense be nearly half empty, as it would be composed of some 22 pallets of beer, each weighing about 2,000 lbs., stacked 5' high and loaded on the floor of the trailer. Above the tab-tops of this glistening load of cans he would see 4 feet of empty space from the front of the trailer to the tailgate.
On the other hand, if the brewer were also delivering potato chips, boxed and stacked in 4-foot high, 1000-lb. pallets, it could replace 11 pallets of beer on a truck with 22 pallets of potato chips and still obey its size and weight restrictions. And, by mixing this light and heavy freight on each truck, the beer and snack food manufacturer could deliver 44 pallets of potato chips (a full truckload) and 22 pallets of beer (two full truckloads) in only two trucks, thereby saving 1/3 of its linehaul shipping cost.
Moore has developed and implemented a software solution for this classic loading problem that selects freight from a list of upcoming orders to optimally configure truckloads. He has saved his clients, including such sophisticated shippers as Procter & Gamble, from 4-10% of their total freight delivery costs. That pays for a lot of beer.
To read more about our work in supply chain consulting, please refer to our Profile and Case Studies.
You may contact us directly here.
What do logisticians do for FUN? Try your hand at this game and see how many pallets you can get on a trailer without tipping the scales.
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