Reduce Supply Chain Excess

Supply chain excess – it costs!

Supply chain excess estimates range from $100 billion to over $1.5 trillion depending on the geographical region and various product categories. With new environmental restrictions being introduced by state and federal governments it is no longer feasible, or affordable, to procrastinate on reducing supply chain waste. While there may be some initial costs, green supply chains consume significantly less energy in manufacturing, transporting and warehousing vastly saving money in the long run.

Packaging sustainability – repackage, recycle

First, begin with examining all product designs. Where can material expenditures be reduced? Are there more energy efficient savings? What about different product packaging options?

Secondly, examine raw materials waste. Can any materials be recycled, or redesigned and be reused? With how technology has progressed a lot of waste, which was previously discarded, can now be recycled.

Reduce supply chain waste

Is there a way to efficiently decrease excess inventory? Certainly the internet and globalization have made it much easier in finding buyers for consumer products. But at the end of the day, a large volume of excess inventory indicates that the end-to-end supply chain remains largely inefficient.

It’s virtually impossible to completely eliminate all excess inventory, however, it can be substantially reduced by engaging with more efficient supply chain practices. By ensuring the best quantity of supply exists in the supply chain, while also building with quality products, a significant reduction will happen.

Implementation of waste minimizing programs have been successful in improving company products and reducing overhead costs. For example, Microsoft recently renovated their Redmond, Wash., campus with stellar energy efficient results. Through a combined effort of energy management, alarm management and fault detection, Microsoft expects to save more than $1 million per year in energy costs, with a payback of less than 18 months. In a statement released by Microsoft’s Chief Environmental Strategist:

“What we learned confirmed our hypothesis: Microsoft (and by extension, many organizations with similar real estate portfolios) don’t need to undertake capital-intensive retrofits to cut building energy costs. Instead, we saw buildings become dramatically more efficient by introducing software to harness and utilize the building systems already in use. By integrating powerful analytics that add intelligence to existing building infrastructure, our buildings got smarter, more efficient and less costly to operate.”

In all, waste reduction increases the quantity of finished goods that will pass quality green standards, while also, minimizing the waste of raw materials.

Key Questions to Ask SCM Vendors

Think of it as two phases for your company.

Phase One: Supply chain evaluation

20/20 hindsight can be a horrible headache. How many times have each us said, “If I knew back then what I know now, I would have done this differently.” This can be no different when choosing SCM software. Strategic planning, thorough research, and handling critical questions will save you from future “shoulda, coulda” woes. In fact, a comprehensive assessment of your own company’s supply chain should be first priority before initiating SCM vendor talks. Here is a list to keep in mind while evaluating:

  1. Have you conducted a comprehensive assessment of existing businesses? Do you have a legitimate need for SCM software at this time?
  2. What is your overall objective?
  3. Do you have a selection committee in place? Are members from across different departments (top management, consultant, suppliers)?
  4. Have you identified specific requirements you want in your SCM software?
  5. Can you justify an investment which may not see a ROI for over a year? Are there any government grants your company will qualify for to help offset costs?
  6. How much change can your company make?
  7. How will you support and maintain new technology?

The more initial information gathered, the better the results when implementing SCM software.

Phase Two: How will this work for my company?

With a plan in mind, start vendor searching! Ultimately, you want a complete SCM system, which will intelligently integrate with your established CRM. This is the time to ask hard-hitting SCM software questions. Here is a small list of example questions:

A) Clarifying communication:

  • How would the SCM software work with your customer relationship management (CRM) system?
  • How would your business, IT and SCM software strategies all fit together?
  • Ask to speak with other vendor clients or customers. How has the SCM software worked for them?

B) Getting the service and support you need, even long term:

  • What type of flexibility and reliability do you offer?
  • Do you have a future road map that will help my company grow?
  • Could you list the top few supply chain performance improvement initiatives over the next couple of years?
  • What kind of training is required for program managers?
  • What is the learning curve for SCM software?
  • Can this SCM system handle my company’s long term goals?

C) Maintaining your system:

  • Is the system difficult to maintain?
  • Is there a lot of downtime with the system?
  • What are your supply chain performance improvements initiatives for the following years?

Hopefully, these questions will give you a starting point to implement a thoughtful research strategy. Asking key questions will help you chose the best SCM software for your company, and avoid any long term regrets.

Social Supply Chains

Social media in the B2B capacity

In case you’ve been living under a rock, social media has completely changed eCommerce on a global scale. For the average consumer, its become second nature to follow trends online and searching for the best deals. Social media has certainly thrived in a business-to-consumer (B2C) setting, as online retail giants Amazon and Overstock.com can attest. But will social media survive in a business-to-business (B2B) capacity? Will this strengthen supply chains?

Social media with B2B might predict future inventory needs

A recent example of social supply chain involves global retail giant Walmart. After acquiring Kosmix, a social media platform, Walmart plans to devise and develop social, and mobile, networking capabilities within their supply chain. Kosmix, now renamed WalmartLabs, hopes to enhance Walmart’s communicative collaborations with customers, suppliers, and logistic service providers.

“Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping, both online and in retail stores,” said Mr. Castro-Wright, Vice Chairman for Walmart, in a statement.

Anand Rajaraman, co-founder of Kosmix, said in the Walmart statement: “Our work has focused on developing a social genome platform that captures the connections between people, places, topics, products and events as expressed through social media.”

So, what does that mean? Simply stated, introducing social media in the supply chain puts people, not documents, in the middle. Facilitating a social supply chain environment allows intuitive growth, design and flow. According to Mr. Rajaraman, social media can even predict customer demands, which helps determine what new products should be added to different stores, “We’re analyzing social information for the neighborhood area of each store,” he said. “How should the interests of a community influence the assortment in the store?”

Here is one example. Perhaps after investigating your data you find an increase of social activity pertaining to “hiking boots” resulted in increased buying activity during fall, but primarily on the East Coast. This saves the company time and money during the following season.

Is it the next step?

Realistically, social supply chain is the next step of eCommerce development. Indeed, as Facebook and Google+ connect personal social circles, social media within the B2B environment creates enterprise collaboration with suppliers. B2B software companies, like Moxie Software and Yammer, can harness how people down the supply chain communicate and collaborate with one another, or improve how companies analyze real-time information to help make smart business decisions. The end goal enables an efficient, money-saving social supply chain.

Green Supply Chain: Changing the Corporate World while Saving the Environment

Our world is currently undergoing major environmental change-researchers claim that the extreme weather occurring of late is caused by our lack of concern for the Earth. We tend to take our resources for granted considering the growing world population, resulting in resource depletion. Legislation enforcing stricter environmental regulations will soon be passed in America. The concern for environmental issues has also caught the eye of the corporate world. Companies are quickly realizing that green supply chains will help them reduce costs while helping save the environment.

Green Supply Chain: What is it, and Why use it?

A green supply chain is the process of using and transforming environmentally friendly inputs through change agents, whose byproducts can be used to improve the environment, or be recycled. Companies in the corporate world are realizing that using a green supply chain can be a competitive advantage in the marketplace; they are coming up with innovative solutions for which a green supply chain will help them save money and help the environment. For example, some companies are focusing on indirect purchases to help prevent environmental issues. Reducing the amount of cardboard used for packaging, and creating “smart packages” will help the company save money, and contribute to the environmental cause. Another way sustainability can be profitable is through the organic food craze- grocery stores charge high prices, and make a large profit off organic food that consumers are willing to pay much extra for. The green supply chain phenomenon also gives rise to a new industry- companies specializing in sustainability training and certification.

Real World Examples

The concept of the green supply chain has already spread to several Fortune 500 companies. General Motors (GM) reduced disposal costs by $12 million by establishing a reusable container program with its suppliers. PG&E has also been supporting green supply chain efforts- it gave its first Green Supply Chain award to Southwire Company. Southwire Company converted 1/3 of its cars to hybrids, thereby reducing landfill waste by 27%. It also eliminated lead activities from its products. Walmart has also begun implementing the green supply chain, and has seen an increase in profits by 7% ever since.

Inmar: Leader in Reverse Logistics Solutions

Interested in reducing your company’s rate of returns and improving trading partner relations while displaying a commitment to customer satisfaction and the environment? If so, implement reverse logistics solutions for your company today. Reverse logistics solutions can benefit your company greatly, and provide valuable data that can better its future functioning. Inmar Reverse Logistics, a company specializing in reverse logistics solutions for over 30 years, guarantees that by using its reverse logistics solutions, your company will receive maximum value.

Types of Reverse Logistics Solutions that Inmar Offers

1) Returns Management: A reverse logistics solution that monitors the reverse logistics process from the initial return authorization to final disposition. This includes facility management, financial management, processing of all physical returns, etc.
2) Asset Recovery: Maximizing the value/revenue of the overstocked, obsolete, surplus products while taking into consideration the brand value.
3) Re-Marketing: A solution that calculates the maximum value from the returned product, and conducts re-marketing strategies, such as refurbishing or repacking, accordingly.
4) Supply Chain Consulting and Analysis: This reverse logistics solution focuses on ensuring the efficient removal of waste, while minimizing loss and risk. This is done through detailed analysis of your company’s supply chain processes.
5) Recall Management: Focuses on liability issues, product reliability and payment, consumer safety, and brand image recovery/management.

Reverse Logistics Solutions Excellence

A leader in providing reverse logistics solutions, Inmar received the Reverse Logistics Operational Excellence Award from the Reverse Logistics Association in March 2011. Inmar won this award due to its exceptional work for their client, ADT. Inmar Reverse Logistics provides technology-driven reverse logistics solutions to a client base of over 300. Their clientele base is spread over a variety of diverse markets, including Toys, Consumer Goods, Footwear and Apparel, Pharmaceutical Companies, etc. Other successful companies specializing in unique reverse logistics solutions include GENCO and ModusLink.com Global Solutions. GENCO’s reverse logistics solutions focus on managing the complete returns management process for its customers throughout the whole of North America, while ModlusLink Global Solutions focuses on integrated returns management, repair, and asset disposition solutions.

Reverse Logistics Process: How to Increase Profits by Sending Products Back

Though supply chain logistics has been the primary focus, an increasing number of companies are discovering the great deal of money that can be made in looking the opposite way, and sending things back. Reverse logistics is a rapidly advancing concept in today’s business world, as Third Party Logistics Providers (3PLs) discovered that up to 7% of an enterprise’s gross sales can be captured by return costs through the reverse logistics process.

What is the Reverse Logistics Process?

In a nutshell, the reverse logistics process is that of removing new or used products from their initial place in the supply chain; this occurs when customers return products, and when there is overstocked inventory or outdated merchandise. The products are then redistributed from the point of consumption to the point of origin, in order to recapture product value. The ultimate goal of the reverse logistics process is to maximize value, or achieve proper disposal of the product to the satisfaction of the customer or consumer, as customer satisfaction is the number one priority.

How does it Work?

The detailed reverse logistics process differs based on the company’s unique products and policies. According to Chuck Poirier of the Computer Sciences Corporation, the reverse logistics process can be broadly outlined in five points:

1)      Reconditioning- when a product is cleaned, repaired, and restored to a “like new” state.

2)      Refurbishing- a more detailed form of reconditioning, particularly in repairs.

3)      Remanufacturing- Requires disassembling and reassembling the product entirely.

4)      Resell- when the reconditioned, refurbished, or remanufactured product is sold again as new.

5)      Recycle- when a product is reduced to its basic elements, which are reused.

A Booming Industry’s Success Stories

The concept of reverse logistics has created the new industry of Third Party Logistics Providers (3PLs), which specialize in reverse logistics applications, customized to fit the size and type of any client’s company. One such company is Unyson, which manages returned/damaged products for clients. They conduct the reverse logistics process by entering the items into a custom built Web-based communication and transportation network, which allows them access to track shipments in transit in an organized fashion, and ensure that they return to a return center for reconstitution or disposal. Companies that benefit from such services include Bed, Bath & Beyond- which, thanks to reverse logistics processing, can provide their customers a no questions asked return policy, resulting in greater customer satisfaction.

2010 Green Supply Chain Awards

Supply Chain and Social Responsibility were the focus of 2010 Green Supply Chain Awards which took place a few weeks ago. The awards recognize companies that put emphasis on sustainability when it comes to supply chain strategies.

The list of green vendors is comprehensive with several top of the line vendors in the mix; proving that the ‘green supply chain’ can help businesses optimize their operations, while still being eco-friendly. In fact, corporate responsibility and the green supply chain are slowly becoming the norm in the manufacturing industry. As evidenced by the recent trend of small to midsized companies being subjected to trade barrier blockage due to emerging rules and regulations. In short, social responsibility efforts are on the rise.

“The purpose of [the Green Supply Chain Awards] is to highlight a range of strategies and solutions that companies are employing to incorporate sustainability into the supply chain,” said Andrew K reese, the editor of Supply & Demand Chain Executive. “Our readers can use this information as a baseline to assess the clarity and content of the sustainability and related supply chain management goals and strategies, implementation measures taken and performance results to date.”

The nominees were selected based on standout projects to incorporate sustainability in customers’ supply chains.  Recipients of the green supply chain nominations varied from logistics and transportation companies to healthcare and pharmaceutical enterprises.

Past nominees were chosen for proactive action where suppliers avoided costly disruptions and companies that introduced mobile based communications systems to reduce paper bills. The example of past green supply chain nominees prove that seeing sustainability as a risk management tool can be relevant throughout the supply chain.

The importance of the green supply chain has never been more relevant. Not only is being green socially responsible, green supply chain software can also help lower an enterprise’s overall risk through streamlined operations.

IBM Supply Chain Software Drives McKesson’s Success

Businesses with a supply chain are infamous for having a surplus of tracking issues. The Supply Chain is a complex infrastructure to monitor and manage, without the proper software. If enterprises wish to optimize their supply chain, they should seek a solution that streamlines picking, tracking shipping, transportation, assembly and delivery, among other things.

McKesson, the pharmaceutical distribution conglomerate, has implemented IBM’s Supply Chain Sustainability Management Solution, to help streamline the operational processes of their supply chain. IBM’s Supply Chain Sustainability Management Solution is a web-based SaaS that has modules to determine the emissions and distribution costs of any number of variables.

IBM’s Supply Chain Solution also has modules that help weigh the costs and benefits of various ways to store pharmaceuticals. For example, the system can help McKesson decide whether to cold-store insulin or vaccines in one central refrigerated storage facility or if operating cold rooms at a number of warehouses would be optimal. IBM’s Supply Chain Software can also help determine what transportation routes would be efficient and budget-friendly based on traffic patterns and time.

McKesson was IBM’s first Supply Chain Sustainability Management Solution’s user, but soon the IBM Supply Chain SaaS will be available through IBM’s Global Business Services.

McKesson is seemingly satisfied thus far, Don Walker Senior VP of McKesson explains: “IBM has given us the tools we need to weigh the environmental and financial effects of actions we may take in our supply chain. This system will be valuable to any business seeking ways to achieve both their financial and carbon reduction goals.”