Green Supplier Scorecard

"With the dramatic rise of Green Supply Chain thinking, it is clear that many companies will confront the need or desire to track the "Green-ness" of their supplier base.

But how will that actually be achieved? To date, virtually every report any company has offered has been dependent on self-reporting by suppliers. Wal-Mart has recently announced plans for scorecarding Sustainability performance by its suppliers, but how this will actually be implemented is not completely clear.

Among the key questions: will the Green measures be direct, or indirect? Meaning, will scorecards try to directly measure carbon emissions, or will they use other measures, such as metrics around transportation modes and efficiency, that drive overall Green performance?

It may wind up being a combination, but we think the indirect measures will be easier to capture - and likely be more accurate.

A draft of what such a Green supplier scorecard might look like in the area of transportation is presented below.

Source: Compliance Networks "

Packaging Optimization in Supply Chain Management

Have we ever wondered if products from different companies had the same packaging, what else can help us decide on the purchase beside the quality of the product itself?
Packaging has never been so determining as a factor into the consumer's purchasing decision. The more the company invests in packaging, the higher the price will increase as it is considered part of the main costs.
"It started with soaring fuel and transportation costs a few years ago, as companies realized that “over packaging” and packaging redesigns offered significant opportunities to reduce the dimensions of products for shipping – allowing companies to ship more products in the same carton, pallet or trailer. That directly lowered transportation costs.
Then, even as transportation costs moderated, Green Supply Chain considerations started to rise, where packaging again is seen as playing a critical role, both in reducing waste and eliminating energy use – and with that also reducing transportation expense."

Below is an example from a telecommunication industry company


"By reducing the size of the unit packaging by just 1.5 inches in one dimension, while modestly increasing its strength, the manufacturing was able to get rid of the masterpack cartons, and dramatically impact pallet efficiency."

Inventory Optimization Hierarchy

Supply chain strategies can be as innovative as a business man can imagine, yet it can also be as rigid as a formula. Once you get the formula correct, you shall have the correct answer. On the other hand, if things were wrong from the beginning, that does not always mean there is no other way to alter/improve the circumstance.
Similar thought in inventory, "Companies usually move through a progression in their Inventory Optimization programs, beginning first with optimization of inventory and safety stock policies, next moving to optimization of deployment and replenishment strategies across the supply chain, and finally segmenting customers and using "service policy" optimization to further improve results."

[ Source: Chainalytics ]

Truckload Capacity

Wonder how the truckload carrier capacity in the market works.
The following diagram is pretty much self-explanatory

EPA (Environmental Protection Agency)

Inefficiency in warehouses

[ Source: http://www.insight-holdings.com ]

We all know everything costs. To have a warehouse up and running, there are several cost factors already have to be taken into account. Waste is the enemy of efficiency. However, in reality, inefficiency does happen.
Below is an example from Cliff Holste is Supply Chain Digest's Material Handling Editor.

"I watched an operator struggling to fit too many cartons into a lane of flow racks in the replenishment picking area. After several minutes, he wound up putting some on the floor, and then said he would come back to do the rest when there was space in the lane again. And I thought, yes, if someone doesn't move them into a black hole first. With a little luck, he’ll return just in time to complete the replenishment operation before the picker runs out of inventory and creates a short on a customer order.

Another observation – shortly after a major sales campaign or season, it is not uncommon to find a large number of highly qualified employees busy with handling returned goods. This is generally a tedious and time-consuming process. One has to wonder why so much of this product, which is carefully inspected, refurbished and repackaged, sits for so long on the shelf, and then is often sold-off at reduced prices, or even worse, scrapped.

Employees ask, "Why didn't we know this sooner?" Actually, someone probably did have the right information available to know this when the return was authorized, but their focus was on credit and salvage, not on the probable ultimate disposition of the merchandise. In my experience, returns often add excess inventory to a dying product.

The employees know that these are wasteful processes, but the “system” keeps asking them to do it time after time.

Supervisors and management, too, know that this happens repeatedly. They listen, but don't really hear, or act. Or, so it appears to the people.

What happens when management does nothing? Employees get frustrated. They don't think that it's important to do the job right the first time, because they are going to have to do it again, anyway. They lose confidence in their direct supervisors and begin to wonder about how smart management is really. Ultimately, that can lead the best to look around for more satisfying work."

His final thought on the decrease of skill workers and being more responsible on the floor.
One of the ways to drive efficiency in any operation is to consistent communication. As people always say, prevention is better than cure. If we communicate often, we can figure out the problem and plan to solve it in a timely manner.

Perfect supply chain metric = Perfect order?

[www.laneyduke.com]

Ever since we start to realize nothing in this world is perfect, we have been convinced that perfection is unachievable and only the goal to aim to. However, in supply chain world, an order will be fulfilled perfectly provided that it meets the following common criteria:

• On-time
• Complete
• Damage Free
• Correctly “documented”

Well, it does not seem so hard to accomplish, does it? According to those criteria, would they be the precise metrics to measure whether it is a perfect order? Interesting enough. Here is some gray areas as a matter of fact.

"There are some important questions. For example, some use whether the order was shipped on-time rather than delivered on-time in their calculations. While we could say this is an out-of-date view of things, the reality is that there are many things often outside of the shipper's control – like not being able to secure a appointment at the retailer’s DC consistent with the stated delivery date – that can really mess up the metric.

At one point, Hershey Foods only considered an order “perfect” (in addition to the other attributes) if it was received/entered into its order management system once and then not touched again. I am not sure if they are still looking at Perfect Order that way, but it played havoc on the achievement scores, as you can imagine.
...
“Documentation” is also an issue. First, documentation can mean many things, including invoices, shipping manifests, bar code labeling, carton contents labeling, advanced ship notices, and even now RFID tagging, I suppose. Of course, customer requirements for these and other “documents” vary dramatically between industries and individual customers.

The great challenge, of course, in achieving the Perfect Order is its binary nature. In theory, if you were supposed to ship 10,000 widgets and you can only ship 9,999, the order isn’t perfect – so you get a big Zero for that particular shipment. So, the chances of actually achieving a Perfect Order can be very small."

The conclusion is ... how perfect do you want to be?
"There is a cost to be perfect, and above a given level of perfectness, it actually starts to reduce profit. Where do you draw the line? That’s part of the real rub. You certainly could (and some do) model those trade-offs (including estimates of the revenue and margin lift from increasing perfectness of service). Some companies simply strive for higher levels of service than financially optimal in the short term in the hope of long-term customer satisfaction and market share."