Logistically Speaking: Everything New is Old Again

Nov. 8, 2012
At the supply chain industry’s biggest show of the year, collaboration was just as prominent as innovation.

Covering the CSCMP 2012 conference last month, I felt like I was reliving moments from previous supply chain events, with only subtle differences to indicate that I hadn't really seen it all before, even though that might've been my first impression. Of course, part of that déjà vu feeling came from the setting itself; due to some logistical quirk in scheduling, this was the second time this year (MODEX 2012 being the first) that a large-scale supply chain show was held in Atlanta's World Congress Center). Many of the same speakers were on hand again to remind us (as if we needed to be reminded) that the Southeast is booming with logistics activity.

But while the location of the CSCMP 2012 show conjured up memories from earlier in the year, the unofficial theme of the conference carried distinct echoes harking not just back a few months but to the previous decade and even to the previous century. Yes, that legendary supply chain concept collaboration is back in vogue, nudging aside topics such as lean, cost reduction and mode shifting that were popular buzzwords during the recession. There were sessions on horizontal collaboration, collaborative distribution, shared supply chains, business social networks, collaborative transportation, cloud-based collaborative logistics, and any other wrinkle on collaboration that you can think of. And why not? Working more closely with customers and suppliers is the one essential factor in supply chain management.

So high-tech giant Dell, which helped pioneer interest in supply chain initiatives with its legendary "direct model," talked about its evolution to a new model that emphasizes innovation. "Only one in four Dell customers were using the direct model," explains William Hutchinson, the company's vice president of global logistics, "so we needed new ideas to grab more customers." One of those "new" ideas (which of course really isn't new at all) is to get input from customers, suppliers and external experts. "The goal," Hutchinson says, "is to seek sources of differentiation, not a path to parity. Many times we don't ask the hard questions because we don't think we can fix them."

Cisco Systems, another high-flying supply chain leader from decades past, addressed the topic of—what else?—collaborative planning. As Chalam Kalahasti, director of Cisco Supply Chain Operations, points out, collaborating with suppliers when you outsource all of your manufacturing to third-party partners brings its own set of challenges. One of the keys, he says, is to take a more strategic, if you will, approach to strategic sourcing.

"Engaging the sourcing/purchasing department during the product introduction phase is reactive," Kalahasti says. "Sourcing needs to be influencing new product development during the design stage, at the very beginning of the process." To extract maximum value from new product introductions requires partnership with your suppliers during the product concept stage.

Back in the late 1990s, supply chain technology became "the next big thing" largely due to the popularity of software solutions powered by artificial intelligence that could run through a nearly countless number of "what if" situations in a short period of time. These solutions, made popular by best-of-breed providers such as i2 Technologies and Manugistics (neither of which is around anymore), live on in various packages from the likes of SAP, Oracle, Infor and numerous other providers, but the industry has been looking for some time for incremental gains in performance.

That day may be arriving soon, due to the advent of such developments as the Physical Internet, described as a new paradigm for distribution through highly leveraged collaborative distribution networks, and based on work by the University of Arkansas' (and MH&L Editorial Advisory Board member) Russell Meller and others. And that might be just the first step toward intelligent supply chain networks, according to Intel's Frank Jones, who foresees a day when these networks will be able to "talk" to each other thanks to embedded intelligence based on algorithms.

For me, the best quote of the conference came from Greg Rake, senior vice president of supply chain with Pier 1 Imports, which not only sums up the energy on display everywhere at the CSCMP 2012 show but also the old-versus-new theme: "When I got out of college 30 years ago, the supply chain was where old operations people were put out to pasture. Today, the supply chain is driving real, measurable value for companies."

Follow me on Twitter @supplychaindave.