This is the second part of the video presentation from Professor Rob Handfield in the PMMS Leadership in Procurement from the 2009 on supply chain risks in this economic downturn. In this part, he highlights that a charactaristic of high performance in not simply laying off people and go for radical cost reduction. He believes that's the time where supply chain leadership is necessary more than ever and more balanced strategies are required.




He talks a bit the tight credit these days and the problems which are created for companies' supply chains because of this: In such situations, there is more chance of your suppliers going bankrupt and you will suddonly end up with immediate procurement risk. So what should you do?

AMR Research, the research firm focused on the supply chain management and its supporting technologies, announced recently that it is expanding its research team with the addition of three new analysts, Paul Lord, Steve Steutermann, and Allen Johnson.

According to PR Newswire, this announcement comes after AMR Research's sold-out supply chain conference, underscoring the company's momentum and the importance of the global supply chain in today's economy.

"We are thrilled to welcome Allen, Paul, and Steve to our supply chain research staff. They each bring a tremendous amount of industry experience, acumen, and enthusiasm to their roles," said Tony Friscia, president and CEO of AMR Research. "These analysts reinforce our expertise in supply chain research and will help us continue to provide the best research and advice to our clients."

With more than 25 years of experience, Steve Steutermann will focus his research on the consumer product industry's supply chain. At companies such as Procter & Gamble and Gillette, Steve held roles in sales, marketing, process improvement, and operations.

Paul Lord will lead research in the chemical and process industries, concentrating on transportation and inventory optimization, manufacturing, and supply chain excellence. Paul has 25 years of experience at chemical companies including Air Products and Chemicals, ARCO Chemical, and Lyondell Chemical.

Allen Johnson joins AMR Research as a research director covering industrial and consumer supply chains. Prior to AMR Research, Allen worked with Hewlett-Packard for 15 years before spending time at IDS Scheer, a business process management and consulting firm.

PMMS Leadership in Procurement: A Global Perspective in Troubled Times was an event organized some while ago in Montreal Canada. Since there are some interesting videos from the presentations in this event on the subject of supply chain management and risk reduction in general, I decided to share some of them with you. In this first series, Professor Rob Handfield from North Carolina State University gives a presentation titled "Preparing for the worst, managing supplier risk in the downturn" (Note: I have posted some other videos from him earlier this year).




In this first part, Prof. Hanfield starts with a discussion about the uncertainty in the current period. He continues with mentioning the fact that because of such uncertainty, many companies have ended up vulnerable and some of them going through bankruptcy or consolidation (acquisition by others). From supply chain perspectives, inflation will be a problem because many of the sources and organizations producing commodity are going down. That of course means bad news for procurement officers so they need to think about it...

Some months ago I published a post about DHL operations in the U.S. which had some problems because of the economic downturn. Apparently such problems still don't exist in China becuase the company is even expanding there:

According to WallStreet Journal, DHL Supply Chain, the logistics unit of Deutsche Post AG's Deutsche Post DHL, plans to add 10 transportation hubs in China by year end to meet growing demand for domestic shipping.

"Our customers are growing in China, which is one of the fastest-growing markets for DHL," said Victor Mok, executive vice president of DHL Supply Chain Greater China, at the opening ceremony of the firm's $25 million hub in Shanghai for transportation in eastern China.

DHL Supply Chain, which focuses on warehousing and road transportation and distribution, also operates four major China transportation hubs in Beijing, Guangzhou, Tianjin, and Wuhan. Martin Rowe, a vice president of DHL Supply Chain Greater China, said Fuzhou and Xi-An will be among the 10 new hubs but he didn't give other details.

"China is not only a production base any more, and we are not just moving things for exporters, but also to support domestic consumption in China," he said.

DHL Supply Chain is a key driver for DHL group's growth in China. The country continues to ban foreign companies from entering its domestic express mail market.

DHL group has invested around $2.2 billion in Asia-Pacific and will continue to make significant investments in the region in the future, Mr. Mok said. He said DHL Supply Chain's growth in China will mostly be organic, though the company doesn't rule out acquisition opportunities.

Here comes another interesting video from Tom Murphy, RSM McGladrey's executive vice president of manufacturing and wholesale distribution. He discusses the results of the company's fourth annual Manufacturing and Wholesale Distribution (MWD) National Survey among more than 900 supply chain executives throughout the U.S.

Respondents to the survey say they expect their companies to rebound from the current recession beginning in late 2009 and early 2010. In general, companies predict an earlier rebound for their own businesses than for their industry or the U.S. economy.



He also provides some interesting insights about the cost increases: As an example more than 65% of the companies mentioned they expect employee and energy cost to increase this year. This is mainly because of increase in the healthcare cost and also energy price volatitility.

Massimo Marchi, Director of supply chain and IT has started a video series on YouTube talking about different aspects of his SCM in his company Beretta. In the video below, Massimo is talking about risk management and innovation in supply chain.




Risks to global supply chains are increasing. In Massimo's opinion, US companies importing most of their product from Europe are particularly at risk. Rising oil prices and high Euro/Dollar changes make importing from Europe to US more risky. Companies need to evaluate alternative domestic sources of supply, shipping and packaging methods, and new technologies.

American transportation and logistics cost is dropping for the first time in a long time; to be exact after six years.

According to a report published by Council of Supply Chain Management Professionals (CSCMP), total spending on U.S. logistics dropped to $1.3 trillion last year, a decrease of $49 billion from 2007.

Logistics Management Magazine also reported that the annual respected benchmark report states the financial damage done to the sector by the ongoing recession. After rising by more than 50 percent the previous five years, business logistics costs fell to 9.4 percent of U.S. Gross Domestic Product last year. That is down from 10.1 percent in 2007. By way of comparison, that figure was 12.3 percent of GDP in 1985:

Transportation costs rose 2 percent, but that was not enough to offset the 13.2 percent decline in inventory carrying costs, primarily due to record-low interest rates last year. Transportation ($872 billion) now accounts for 6.1 percent of nominal GDP while inventory carrying costs ($420 billion) account for 2.9 percent of GDP.

Trucking, which accounts for 78 percent of transport by revenue and half of all business logistics cost, was particularly hard hit, rising just 1.3 percent compared with 4.4 percent for the other modes (rail, barge, air cargo, oil pipelines and forwarders).

For shippers, this has resulted in bargain transport rates, especially in trucking and ocean transport, according to Rosalyn Wilson, the long-time author of the SoL report.

As a result of the shakeout-more than 3,000 motor carriers ceased operations last year, taking out approximately 7 percent of truck capacity-supply chains are being redefined and processes changing.

Siemens Energy & Automation, Inc. announced last week that after extensive testing and evaluation, Northrop Grumman Corporation Aerospace Systems is strongly encouraging its supply chain to explore the use of Siemens Sinumerik 840D solution line CNC for parts design and manufactuing in the F-35 Joint Strike Fighter program.

"Siemens collaboration on the F-35 program began in early 2002 with a CNC technology symposium in Fort Worth attended by Lockheed Martin, Northrop Grumman and BAe Systems," said Tim Shafer, director, Siemens Aerospace Center of Competence. "Since that meeting, the program partners have applied the advanced features of the 840D to solve many of their complex machining challenges. Siemens is honored to receive recognition from Northrop Grumman for this latest advancement in CNC technology."

According to PR Newswire, Siemens technology provides significant advantage for F-35 design and manufacturing supply chain by providing capabilities such as:

- Robust machine design
- Machine tool repeatability
- Machine tool responsiveness
- Environmental temperature stability
- Stable machine foundation

You can visit this web page for more information.

PRWeb reported that Swisslog has released its next generation of Inventory Management Software (IMS) for the hospital pharmacy. The software controls inventory costs, improves workflow efficiency and enhances patient safety.

The software optimizes pharmacy inventory and provides a "perpetual inventory" approach specifically designed for hospital medication flow. Swisslog's IMS will automate reordering of drugs directly with the hospital's pharmaceutical wholesaler. All inventory movements from the warehouse to dispensing, stock levels, remote inventory, and replenishment orders are recorded and tracked.

"Ineffective inventory management often leads to excess stock and high waste due to expiring drugs and, as a result, cost hospital pharmacies millions of dollars each year," says Ben Hinnen, Business Unit Manager for Swisslog Automated Drug Management Systems. "Our inventory management software can reduce inventory costs significantly, while improving workflow efficiency and ultimately the quality of patient care."

Swisslog IMS features several modules including inventory ordering/receiving, satellite pharmacies/departments, and central pharmacy and reporting. It also provides full reporting capability and is designed to be linked to the Hospital Information System/ADT. Hardware requirements include a mobile workstation and a handheld scanner.

It seems the wave of the anouncements from Boeing related to delays is not going to end; in this post comes another one! but I liked the detail analysis of the issues presented in this blog as the author Lisa Reisman describes in detail how the issue of supplier component integration has relation not only with procurement and product development but also manufacturing and the rest of the supply chain. Here comes one quote explaining the issue:

During standard test procedures, Boeing identified 'stress' in the side body structure where the side body joins the wing. In particular, where the upper portion of the wing and the side of body join totaling 18 locations on either side of the plane. The areas are small, one to two square inches but involve an integrated design solution as the wings come from Mitsubishi and the side of body from Fuji. The parts needed to resolve the issue will either be made from titanium or aluminum. Boeing stated that they have "staged material in our fabrication division" and the likely solution can be "retrofitted in production plans" keeping everything else "in-flow."

Lisa explains how Boeing has remained loyal to its formal procedures in product testing and launch to the market despite angry analysts in Wallstreet. I myslef don't like disappointing news from Boeing either but in a sense like the care Boeing is dedicating to managing risk in its supply chain and product management.