Author: Dale Benton

When it comes to pallet racking, flow storage is essential for managing perishable, time-sensitive products on a first in, first out (FIFO) basis.  Since its design eliminates aisles and fills the space with additional pallets, it provides many times more storage than selective rack. In addition, forklift travel is greatly reduced because drivers only need to place and retrieve loads from either end of the system - significantly reducing operating costs, maintenance, and accidents. Better space utilization also minimizes the need to light, heat and cool the facility, further decreasing expenses.

While the advantages are numerous, due in part to its design and moving parts, there are additional considerations for those operations looking to improve production with a flow storage system. These 10 tips can help prolong the life of the equipment, cut maintenance costs, and enhance safety with the proper design, selection, and operation of the system. 

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Original Post: MDM

 

Smartphones and apps have permeated every aspect of business. But before you invest in mobile technology, make sure you understand what your customers want from mobile, says Senthil Arumugam, vice president of distribution, US LBM Holdings LLC in Making the Case for Mobile.

 

“Our app user base has continually grown over the last three years, and customers have clearly indicated this to be a time saver for them at the jobsite," Arumugam said. "Our investment in customer-facing technologies reflects this belief.”

 

While not every company needs to invest in mobile apps and other tools that help customers do their jobs away from the office, it is critical to know if mobile is something your customers want.

 

MRO or safety products, for example, lend themselves to mobile because they can be set up with one-click reordering. Even if ordering remains low, customers who know they can navigate to a mobile-friendly platform for other services will be less likely to start browsing elsewhere.

 

While a mobile app might not work for every distributor, gauging your customers’ demand for it is critical to keeping pace. According to a Google study, 52 percent of users are less likely to engage with a company if it has no mobile site. Does that include your customers?

 

Read more about how to make mobile work for you in Making the Case for Mobile. 

Original Post: APICS.org

 

Companies within the service industry are changing the concept of ownership and the ways consumers access goods and services — from movies and TV shows to places to stay and means of transportation. Now this trend is making its way into the manufacturing industry to connect small businesses in need of prototypes and products to manufacturers with idle machines.

In her April 8 article for Quartz, Ellen Sheng highlights MakeTime, a Kentucky-based start-up that specializes in distributed or on-demand manufacturing. Companies, entrepreneurs and inventors can engage MakeTime’s services to rent time on nearby manufacturing equipment — including CNC (computer numerical control) milling machines, water jets and laser cutters — to build their prototypes or complete their production runs. 

MakeTime Founder and CEO Drura Parrish was inspired by his own professional experiences to create this service. As an architect, he spent time in machine shops creating custom items and noticed that expensive machinery often sat idle, instead of making the company money. Some manufacturers might have overinvested in equipment after winning big jobs in the past, but as the contracts ended or the products and market changed, the equipment became surplus for these companies. As a result, U.S. manufacturing equipment sits unused about half the time, on average, Sheng writes.

There also is a group of small businesses that do not have the funds to invest in their own manufacturing equipment. This is where MakeTime comes in: The firm connects companies that need machine time with manufacturers that have it. Basically, the customer uploads parts files into a MakeTime product library, adds the order to the online cart, and specifies the project lead time. Within one business day, MakeTime will match the project with a manufacturer and follow up with a data-driven quote. If the quote is satisfactory, the customer signs the purchase order and submits payment. During the process, the customer can track parts from the start of machining to delivery, staying informed every step of the way.

The process helps clients make their products in a quarter of the time it usually takes with traditional manufacturing processes, Parrish tells Quartz. “We streamline [the process], so 100 to 200 machine shops can operate with the same level of control as one,” he says. In addition, the service cuts down on some of the administrative aspects of orders, including the time it takes to find manufacturers, request price quotes, receive and evaluate them, and negotiate the best deal.

In addition to changing the way small businesses access manufacturing services, this Uber-style model could transform the manufacturing industry as a whole. Sheng points out that this industry has been slow to digitize and standardize. For example, there is no universal file type used in manufacturing. Instead, different companies use different software and file types, standards, and descriptors. Some even still stay away from technology and rely on pencil-and-paper drawings.

This particular industry also is very siloed and specialized. Various certifications and specialized machines and processes for working with certain types of materials often result in manufacturers sticking to the types of parts they know best. For example, an auto parts manufacturer likely won’t also make parts for the oil and gas industry, even if the equipment is similar, Sheng notes. MakeTime hopes to break down these silos and properly align supply and demand in machining.

Transformation ahead

Although MakeTime’s model is new to the manufacturing industry, this innovation has the potential to transform the way manufacturers function, find customers, and meet their production needs. Right now, though, the industry is slowly accepting the change and only using this method for small orders of noncritical parts. This slow, methodical progress is in line with recommended change management processes for individual businesses. The APICS Dictionary, 15th edition, defines change management as follows: “The business process that coordinates and monitors all changes to the business processes and applications operated by the business, as well as to its internal equipment, resources, operating systems, and procedures. The change management discipline is carried out in a way that minimizes the risk of problems that will affect the operating environment and service delivery to the users.” 

Authored by: Christon Valdivieso

Edited by: Afton Knight

 

In my last article, I wrote about ASAP management and SOPs. I identified four steps to creating lasting SOPs, and wanted to add some clarity concerning Step 1. The first step to implementing lasting SOPs is to ensure the SOP is clearly understood by leadership and personnel. However, this principle is easier said than done. To elaborate, there are two important elements that should be discussed. The first is to obtain buy-in. The second element is to clearly communicate that vision. Obtaining buy-in, the first element, is the more difficult and most critical one. In fact the major reason “70% of all organizational change efforts fail” is due to leadership not getting enough buy-in.

 

What makes the buy-in process difficult is the changing business landscape. Businesses are increasingly headed toward more collaborative cultures. Companies are realizing the true cost of operating within silos and are seeking to break down functional barriers and develop cross-functional practices. This new landscape requires a collaborative intelligence focused on inclusion and respect.

 

In a silo or independent operation, collaboration often means asking associates for input before making a final decision. In a cross-functional role, collaboration entails a team-based development process. In both cases, collaboration is instrumental in obtaining buy-in. Professionals need to develop their collaborative intelligence to understand which environment they are in and how to successfully include the appropriate stakeholders. Professor John Kotter of the Harvard Business School explains:

“Buy-in is critical to making any large organizational change happen. Unless you win support for your ideas, from people at all levels of your organization, big ideas never seem to take hold or have the impact you want.”

 

How you approach getting buy-in is, then, also critical. True buy-in is more than support. Lasting buy-in is a result of co-creation. Thus, getting key stakeholders involved earlier will help ensure you have support later.

 

Once buy-in is achieved, the second element—ensuring everyone understands the vision—is simplified as there is an established coalition of support for the new standard or process. The second part requires clear communication of the vision and the ‘why’; which, if you haven’t clearly developed the ‘why’, you probably do not have much buy-in. How you communicate is also important. Printing and posting a new policy for rank and file associates without an announcement or explanation would be as ineffective as a reference slide in a slide deck to senior leadership. When communicating a vision, how you communicate is just as important as what you communicate.

 

Before going down the SOP implementation steps take a second look at step 1 and consider this thought: Do you have a clearly defined vision and a coalition of support?  

Authored By: Christon Valdivieso

Edited By: Afton Knight

Recently, I wrote about the seven complexities (7Cs) and how they add waste and increase costs. The solution to most of the 7Cs is to create standards to help increase effectiveness and reduce waste. It is only natural, then, that we take some time and talk about SOP's as well. Most of us know that SOP stands for standard operating procedure and understand the value of having them implemented. Unfortunately, for many operations—especially those with un-managed complexities—SOP means “Sometimes Our Policy.”

The problem originates with organizational focus. Companies with ASAP management approaches are inherently reactive and usually cannot be proactive. Leadership is generally too focused on the now to develop SOPs that proactively drive the future. This is because ASAP management is exception based management focusing on current needs while SOPs create a standards-based management system that can focus on future needs. This truth forces two basic questions:

    

    1)    Is my company an ASAP company?

    2)    How do I institute lasting SOPs?

The first question is relatively simple. Begin by looking at deadlines, lead times, and planning horizons. If they consistently seem too short, are always rushed or interrupted, or if they are "floating" and do not actually exist, you probably operate in an ASAP environment. This is frequently synonymous with "do whatever it takes" and sometimes even the "just make the customer happy" environments as they engender exception based operations.

Take Robert, for example. Robert works in a warehouse for a wholesale company providing goods to box stores in Northern California. This company prides itself on next day delivery to its customers and requires its sales team to have orders in by 2 pm to ensure they can pick, pack, and stage orders for the next day. Frequently, however, orders continue to roll in until 3 pm and the end of each day is usually a scramble—regardless of how much planning went into it. While the company believes it has established a 2 pm cut-off “standard,” the cut-off is floating and thus exceptions are made almost daily in order to “make the customer happy.”

Question two requires a bit more work. SOPs provide a solid foundation for training and allow organizations to hold people accountable. SOPs provide associates and supervisors a reliable reference for how tasks need to be done, and teaches team-members that the organization is serious about their processes and expects them to be followed. To ensure lasting SOPs are instituted, three main steps should be followed:

     

     1)    Ensure the purpose of the SOP is understood by leadership and associates

     2)    Engage appropriate stakeholders

     3)    Ensure the SOPs are distributed and read

     4)     Monitor Compliance

While these four steps seem simple, the reason SOPs fail most often is because one of these four steps are violated. When supervisors are promoted—especially from a different department—do they understand the purpose of the SOPs or even where to find them? Are the trainers passing on the SOPs as intended or are they teaching their own version? Is the training documented?

When I worked in restaurants, we talked about the same SOPs at every shift meeting all week before going to the next topic and circled back to them several times a year. This ensured every person—new or seasoned—understood the standards and did not deviate from them over time. How well are SOPs re-visited at your organization? Are you in an ASAP company? The truth is SOPs are easy to implement, but sustained SOPs require a commitment to teach and re-teach as time goes forward. Without the commitment, SOPs will quickly go from “standard operating procedures” to “sometimes our policy.” With that said, I supply this thought: What does “SOP” mean at your organization?

Authored by: Zach Cohen

www.linkedin.com/in/zacharyacohen/

Maersk is the first multinational supply chain company to announce its foray into utilizing blockchain technology to streamline its operations. Maersk has partnered with IBM to launch a version of Hyperledge Fabric, an IBM blockchain solution that has been developed as part of the Linux Foundation’s Hyperledger Project. Maersk and IBM are by no means the first companies to utilize blockchain technology the supply chain space. This credit duly goes to pioneers like OpenTradeDocs, Provenance, SkuChain and Wave that have been diligently working on the application of blockchain technology to supply chain finance, bills of lading and transparency to supply chains.

Potential Impact of Maersk & IBM's Solution

Maersk and IBM’s solution is the first large scale solution for cross-border shipping and logistics. Specifically, their solution makes the process frictionless for customs officials and logistics providers involved. What struck me about Maersk’s and IBM’s solution was that it could integrate and operate with multiple customs systems at several ports and with various types of products. With the current paper-based system, there are numerous problems with supply chain visibility, supply chain finance, potential for corruption, human error and fraud. Besides these problems, there are numerous direct and indirect costs attributed with an international shipment that each impact the shipments lead time. Each direct and indirect costs impacts a shipment's lead time differently, this is shown in the diagram blow.

Source: Maersk 

Pilot Project

Kenyan Flowers Sent to Holland

Maersk looked at a single shipment of flowers being sent from Mombasa to Europe in 2014. This single shipment generated 200 separate communications between about 30 different organizations including the grower, logistics companies, government agencies, banks and Maersk [1]. These 200 communications created a stack of documents that measured about 25 centimeters in height [2]. Maersk and IBM tested their solution by adding all the actors to a blockchain solution that utilizes smart contracts.

Once the growers submit a packing list via a computer or mobile device a smart contract is initiated. This starts an export approval workflow with the relevant Kenyan government agencies. As soon as an export agency signs the relevant document, its status is automatically updated within the blockchain. All relevant parties can view the status of each export document. At the same time, simultaneous status updates about inspection of the flowers, sealing of the refrigerated container, pickup by the logistics company and approval by the customs company are sent to the Port of Mombasa. This enables the Port to prepare for the arrival of the container. Further, all documents and actions related to the physical goods are shared. Permitting tracking of where the flowers are and who has possession of them as well as the next steps on their journey. This is particularly important due to the perishable nature of flowers.Source: IBM

Challenges

Still challenges remain as Maersk and IBM rollout for this solution. Getting buy-in from governments, major 3PLs and land-based logistics providers is crucial. Customers will want to know that the major logistics companies are also using this solution enabling ease of use and assurance. Further, expansion will be limited by the number of governments, customs agencies and port authorities willing to adopt this new system. Other challenges:

·     Buy-in from other government agencies need in the export/import process

· Varying import and export

·     Ease of use for customers

·     Teaching all relevant government agencies involved in the export/import process how to use the system

·     SCM Finance platform linkages will they be a part of the platform?

·     Linkages with 3PLs and land-based logistics providers

Does Blockchain = Cost Savings?

The big question is will blockchain truly generate significant cost savings for Maersk, other ocean carriers, logistics services providers, ports and customs officials? For a short answer yes. IBM conducted a use case with a shipment of avocados on the same shipping route Mombasa to Rotterdam, and calculated that the cost of the shipment was $2,000. However, the cost of the paperwork for the shipment cost $300, or 15-20% of the shipment's cost, which can be attributed to inefficiencies in visibility and timing in the export process [3]. When you consider that the cost of processing the documentation for a single shipment cost approximately twice as much the shipment itself, reducing the cost of processing trade related documents related by 15-20% would greatly reduce overall costs. This is just in terms of processing the documentation, not even with regards to the impact that the blockchain solution has on supply chain barriers. Additionally, reduction in document processing times impact overall shipment lead times.

Blockchain's Future at Maersk and Beyond

Blockchain has other advantages besides reducing the costs of processing trade related documents. Fully unlocking the true potential of smart contracts via blockchain has the latent potential for a frictionless trade platform where supply chain finance, customs processes and import/export licensing can be optimized for all parties throughout the supply chain. Further, it enables a chain of custody to be created for shipments so that all actions, documents, location and custody of the shipment are known to both the supplier and buyer creating complete transparency. Other added benefits are verification of certifications from third parties, which are particularly important in the case of food safety, conflict free minerals and pharmaceuticals. It will be interesting to see how Maersk utilizes the blockchain solution with these items that require more scrutiny from export and import officials with regards to certification.

If the Linux Foundation is developing other blockchain solutions for supply chain aimed at overcoming supply chain barriers and this is the first of many products to come, the future is very bright indeed. However, Maersk and IBM's product still has to scale their product. It has proven with successful with a challenging and time sensitive perishable good. Maersk's expansion of the blockchain solution to products that face the most numerous obstacles during the export and import processes are the ideal place to start. If they can conquer the most challenging products to ship, then routine shipments will give them little difficulty as they continue to onboard clients to the blockchain solution.

Potential Global Impact?

Let's think about this in a more global context for a second. The International Maritime Organization and the UNCTAD estimate that approximately 90% of the world's trade was transported by sea in 2016 [4]. With so much of the world's trade stuck in processes that are so inefficient, inconsistent and ambiguous they impact not only businesses but also consumers through higher costs. A 2013 study by the World Economic Forum, World Bank and Bain Capital found that reducing supply chain barriers to international trade could increase world trade by 15% and world GDP by 5% . The report goes on to further state that "reducing supply chain barriers to trade could increase GDP up to six times more than removing tariffs [5]." The estimates in the report are based on if every country in world improved only two supply chain barriers - border administration and transportation and communication infrastructure - to even half of the world's best practices. Maersk and IBM's solution directly affects both of these areas. Further, their solution maybe the first of many to start reducing the supply chain barriers to international through blockchain.

Sources

[1] IBM. “Maersk and IBM Unveil First Industry-Wide Cross-Border Supply Chain Solution on Blockchain.” IBM News Release. (March 5, 2017) https://goo.gl/9sZr0D

[2] Ian Allison. “Shipping giant Maersk tests blockchain-powered bill of lading,” International Business Times. (October 14, 2016) https://goo.gl/OI5e6b

[3] Ian Allison. "Maersk and IBM want 10 million shipping containers on the global supply blockchain by year-end." International Business Times. (March 8, 2017). https://goo.gl/Uayxaj

[4] International Maritime Organization. “IMO Profile.” United Nations. https://goo.gl/yzn7lM

United Nations Conference on Trade and Development. Review of Maritime Transport 2016. UNCTAD Secretariat, 2016: New York.

[5] World Economic Forum, Bain Capital and the World Bank. “Enabling Trade: Valuing Growth Opportunities.” 2013. World Economic Forum: Geneva.

Authored By: Christon Valdivieso

Edited By: Afton Knight

A subway station in Chicago has two escalators. One only goes up, the other only goes down. Your company wants to build another single direction escalator. It has done the research and it comes down to your decision. Do you build one that goes up or one that goes down?

I came across this question recently and found the various answers I got to be quite interesting. Some initially took the easy way out and said, “I don’t know” while others, like myself, sought the most profitable solution for the company. Most of the supply chain people I discussed this with took a while before considering flow, bottlenecks, queue time, or even variability of demand. Each is a reasonable—and understandable—response, but the supply chain focus seemed to be secondary? Many of us are quick to relate to the bottom line, but not the process by which we achieve it.

It is said, “You can tell a lot about someone by the company they keep.” In the office, we work with various departments and colleagues to reach some bottom line objective. While leadership initiatives come and go, there is always the push to maximize the bottom line. There is nothing inherently wrong with this “bottom line” mindset, but it easily becomes “the company we keep.” If supply chain professionals are to grow and add value, they need to remain in the mindset of how the supply chain, and their process, impact the bottom line. The fact is while entry and secondary managers learn about and get certified in supply chain, they get immersed in a world of profitability.

The shift, then, needs to be towards an immersion into the mindset and language of our profession. Similar to a language immersion, a mindset immersion has two main benefits:

1)    Familiarity with real-world, practical applications of the language and concepts; and

2)    In-depth understanding of inhibitors and processes

Just like learning a new language, immersion adds benefits that a classroom cannot provide. It not only reinforces learned principles, it demonstrates aspects of the language that simply cannot be replicated in the classroom. For industry professionals this equates to participating in professional organizations, reading blogs, teaching concepts to others, attending conferences, etc. In these settings industry professionals are surrounded by the language and the concepts that create success without the pressure of leadership direction. Understanding the benefits of immersion I supply this thought: How does the company you keep describe you?

Authored by: Thomas P. Gale

Originally Published on: MDM.com

2017 is setting up a market stability that we haven't seen in many years. That's the good news. But, of course, I can't leave well enough alone. There are also good arguments that 2017 will be a tipping point for wholesale distribution, as our recent reports in MDM have outlined.

The tipping point won’t be a moment in time; it won’t happen overnight. This tipping point will be felt by distributors and suppliers at very different rates based on the unique market characteristics across all 19 wholesale distribution sectors in the US and the types of customer segments served.

But it’s important to talk about the canaries in the coal mine.

There is one key driver for everyone: customers. And markets are converging on one segment – mid-market customers. Every company defines what the mid-market is for them, but it ranges from companies of 10 employees up to 500 – and for some it's even up to 1,000. These mid-market customers are the competitive prize driving convergence.

I’m not a big fan of the term “convergence,” but it describes more accurately what is happening today than any other term. It includes what every business is seeing in terms of digital impacts and how a multichannel approach to sales and marketing is a critical competitive shift driven by customers.

Convergence is taking place across all sectors of the channel, in technology and to the very nature of what a productive workforce looks like. Customers are driving how their suppliers position to capture and engage their attention and business. These are fundamental shifts.

In our 60-minute Industry Outlook webcast last week, I outlined examples of how both Grainger and Staples have developed multichannel strategies to target small- and mid-market customers. Both have reduced store locations and strengthened digital channels. Staples’ strategy is to move from being an office products retailer to a solutions partner for mid-market customers. It’s aggressively growing its product portfolio and already expanded its share of safety, jan/san supplies and increasingly broader MRO and facility maintenance product categories.

Amazon also continues to expand and impact channel dynamics as both a convergence driver and enabler as a digital utility or platform across every sector.

The key question in 2017 is how to protect and grow core customers. In a scenario with improving market conditions, there will be more powerful competition for the sweet spot of mid-market customers. We’re in a continuing cycle where there is a growing gap between companies adapting to these trends and those that aren’t.

Some talk about a tipping point where that gap becomes a cliff for non-adapters. All of these factors combine to offer a two-sided story – good growth is more likely than the past few years, but competition will be tougher from all sides.

 

For a modestly optimistic economic outlook for 2017, I recommend that you watch our 60-minute on-demand webcast of last week. Dave Manthey of Baird shared his economic snapshot and outlook for key markets across industrial, electrical and building products and facilities maintenance sectors. He also reviewed upbeat results from our fourth-quarter survey of more than 500 distributors.

Authored by: Estelle Rossman

Original Post on: https://www.linkedin.com/pulse/why-blockchain-game-changer-estelle-rossmann

Authored by: Patrick Burnson

Original Post on: SCMR.com