Interstate Transport is Hiring Branch Managers

Interstate Transport is HIRING BRANCH MANAGERS and skilled sales professionals – full salary, benefits and profit split.

Enjoy all the freedom and perks of an agent (with a large profit split) yet relax with the security of an employee with consistent pay and great benefits! It’s the best of both worlds.

Satellite Branch Representatives

Interstate Transport is seeking experienced brokers with the drive to take their careers to the next level with an unprecedented opportunity.

Description

Interstate Transport, Inc., a leading third-party logistics company headquartered in St. Petersburg, Florida, has immediate openings for brokers with experience in the trucking / logistics / 3PL industry.

This position reports to Interstate’s COO.

See our website for full details.

PLEASE PASS THIS ALONG. AFTER ALL, HAPPINESS IS GETTING AHEAD!

Interested? CLICK HERE

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, Employment, Logistics, The Interstate Life | Tagged , , , ,

Interstate Transport Garners Food Logistics Top 3PL Award

We are incredibly honored to announce that Food Logistics has once again selected Interstate Transport for its annual list of Top Third-Party Logistics Providers.  Food Logistics’ resource directory of 3PLs includes leaders in the industry whose products and services are critical for companies in the food and beverage supply chain, from food growers, producers and manufacturers to retail grocers, convenience markets and others.

Here is what Lara L. Sowinski, editor-in-chief of Food Logistics had to say about the award, “This year’s list reflects the growing diversity of 3PLs and cold storage providers operating in the food supply chain, who are adapting to changing demands from their customers and end consumers alike.  Food safety and security is one such demand, as are energy efficiency and controlling costs. Whether the 3PL or cold storage provider is a small, specialized player or one with international reach and resources, the companies we’ve included for 2013 share a commitment to providing measureable value and industry expertise to their customers.”

To receive this award year after year is such an honor.  It is validation that our company is achieving excellent service levels that are recognized by our customers and business partners, as well as by the industry at large.  Our focus is to stay in front of the trends and to utilize technology in every aspect of our business to provide the unrivaled service that our customers have come to expect. I credit our amazing team here at Interstate with our ongoing success and I know that their hard work will continue to bring us even more of these types of accolades in the future.

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, Logistics, The Interstate Life, Trucking | Tagged , , , , , , , ,

Getting the Most out of Your 3PL Partner – Part 3

Following is the final installment of an article from the Supply Chain 247 website.  The writers have broken down the process of finding and working with a 3PL into five, well thought-out steps. You can read the first two parts of the article in our previous posts.

5 Steps to Improving Your 3PL Relationships

Members of the University of Tennessee’s center for Executive Education share their five steps and a series of tips to improve your outsourcing relationship right from the start. By Kate Vitasek, Pete Moore, and Bonnie Keith

June 09, 2013

Step 3: Align interests This step entails designing and documenting how a company and the service provider will work together to achieve the desired outcomes.

In basic terms, this is the part of the process where both companies should document, with as much precision as possible, how the outsourcing company and the service provider will work together to achieve the desired outcomes. It’s the first pass at the future vision for how the two companies will communicate, collaborate, and innovate together to achieve the best results.

This brings us to our sixth tip: Identify risks before you transition the work. While it’s not clear if the parties took the time to align interest, we have to assume that the parties—at least the service provider—likely did not do a proper risk assessment.

We hypothesize that if interests were aligned and a proper risk assessment was performed in the relationship, Armstrong would not have stated “it was evident pretty much from the start that it wasn’t going to work.” Obviously the parties got out of the gate on the wrong foot.

Step 4: Establish the agreement Vested Outsourcing is based on reducing the total cost of ownership (TCO) versus simply the costs of the transactions performed by the service provider. As such, 3PL pricing models should include incentives that will be used to reward the outsource provider when they achieve the desired outcomes and TCO targets.

This brings us to our seventh tip: Establish a pricing model with incentives that encourage service providers to put skin in the game and invest in your business to close the gaps. As mentioned before, the Armstrong case study cited that “the arrangement was not meeting Armstrong’s established costs and service goals.”

One approach they could have taken was what we call a “fee at risk” pricing model. This is when a service provider charges below market rates for service—but then is rewarded with incentives for delivering results against the desired outcomes. The more successful both parties are, the more profit the service provider makes, often two to three times market rates. A true win-win because the companies become vested in each other’s success. The more successful the company is, the more success the service provider is.

Step 5: Manage performance This is a most crucial step around which the other steps revolve. Outsourcing is not a “throw it over the fence” business process. Neither should it be an exercise in micromanagement.

Our eighth tip helps to make this clear: Develop a governance structure based on insight versus oversight. A sound governance structure outlines how the business will be managed, not just the service provider. The service provider is in essence an extension of the firm with regards to the work they provide.

If you have picked a service provider you trust and it is aligned with your interests, we find it’s often futile to micromanage the service provider. We often refer to this as a “junkyard dog” syndrome because the company outsources and then leaves in place employees who watch over and guard the old processes that have been in place for years. We hypothesize that this may have been the case in the Armstrong relationship, as the case study notes that they kept four people in place to manage the service provider’s 10 employees.

Coming full circle The lines of demarcation between doing outsourcing effectively and doing it ineffectively can get a little blurry. As such, instead of drawing a line in the sand we promote an integrated “full circle” approach that includes the five steps we have outlined above.

We believe that even though Armstrong World Industries was the winner of the Shipper of the Year award, we’d have to give both Armstrong and their service provider a failing grade on their ability to outsource effectively. Even if the service provider was 100 percent at fault, we believe an outsourcing failure is a failure.

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, The Interstate Life | Tagged , , ,

Getting the Most out of Your 3PL Partner – Part 2

Following is part 2 of a 3-part article from the Supply Chain 247 website.  The article takes an in-depth look at building a lasting, profitable relationship with your 3PL.

5 Steps to Improving Your 3PL Relationships

Members of the University of Tennessee’s center for Executive Education share their five steps and a series of tips to improve your outsourcing relationship right from the start. By Kate Vitasek, Pete Moore, and Bonnie Keith

June 09, 2013

All too often, companies dust off an existing Statement of Work, rush to competitive bid, and give the service provider three months or less to transition the work—we’ve seen many that only allow for a four-week transition.

The great thing about the five-step framework is that it can be used during a request for proposal (RFP) or with an existing supplier to improve a relationship. Skipping steps usually results in a poorly conceived business outsourcing agreement or worse—a total disconnect in what the service provider is doing versus what the customer actually needs.

Step 1: Lay the foundation The first thing a company should do before ever lifting a finger to outsource is to thoroughly understand if outsourcing is right for their operations. Management consultant Peter Drucker famously stated: “Do what you do best and outsource the rest.”

The problem is that far too many companies jumped on to the outsourcing bandwagon without realizing if outsourcing was right for them.

The October LM case study on Armstrong raised a red flag for us when we read the statement: “Managing transportation was once a core competency of Armstrong.” If managing transportation was a core competency, why did Armstrong outsource in the first place? This leads to our second tip: Don’t outsource what is core. A company should only outsource when a service provider can do the work better, faster, or cheaper.

When Armstrong’s 3PL relationship began failing early on they decided to move the work back in house. Because they brought the work back in house, we believe that Armstrong did not follow our second tip.

Step 2: Understand the business Once a company has properly decided that outsourcing is the right choice and has done its homework associated with laying the foundation, it should take the time to establish a baseline that both benchmark the potential cost, service, or other opportunities.

Which leads us to our third tip: Understand your baseline and benchmarks before you outsource. In the Armstrong case study, one of the key decision makers said: “When we priced it out we were shocked to learn that we were less than half of what everyone else was charging.”

The article explains that the Armstrong team discovered this after they realized that their 3PL was failing. If Armstrong had done sound baseline and benchmarked cost and service they would have realized that they had an outstanding team that would not have benefited from outsourcing; in turn, they would have prevented themselves the pain of transitioning the work only to bring it back in house.

Armstrong also pointed out that “there was a failure by the 3PL to understand Armstrong’s customer requirements” and “the biggest flaw was that our 3PL took a one-size-fits-all approach…We have specialized needs, and they did not appreciate the complexity of our business.”

Tips to better outsourcing decision making
tip #1: slow down and take the steps to get outsourcing right before you start any work.tip #2: don’t outsource what is core.tip #3: Understand your baseline and benchmarks before you outsource.

tip #4: ensure potential suppliers understand the business.

tip # 5: develop clearly defined and measurable desired outcomes.

tip #6: identify risks before you transition the work.

tip #7: establish a pricing model with incentives that encourage service providers to put skin in the game.

tip #8: develop a governance structure based on insight versus oversight.

That sets up our fourth tip: Ensure potential suppliers understand the business. Our research and experience says that many companies are poor at stating their requirements. In fact, we often see service providers forced to “understand the business” based on a poorly written RFP and incomplete and inaccurate data.

One way to overcome this is for companies to open their doors and let service providers in to look around and explore the details of business. Let them ask for data—after all they’ll need this to run your business effectively.

Once service providers have had a chance to thoroughly understand the business, the companies and the service providers should mutually agree on cost and service goals. We call these desired outcomes. If the service provider understands the baseline costs and service levels clearly then they can feel more comfortable about signing up to achieve your desired outcomes.

And this takes us out fifth tip: Develop clearly defined and measurable desired outcomes. You are outsourcing because you have gaps in where you are today and where you want to go (your desired outcomes). It is important to make sure the service providers understand those gaps and knows what success is (your desired outcomes).

The Armstrong case study pointed out that the arrangement was not meeting Armstrong’s established costs and service goals. As researchers and educators, we love to review RFPs and poke holes in how poorly requirements are often stated and how few clearly state their desired outcomes.

Our experience is that service providers do not sign up to take on a client’s business with the intent to fail. As such, we strongly recommend that all companies take the time to work with service providers to ensure they understand the business and communicate the desired outcomes and gaps.

Read our August 20, 2013 post for the conclusion of this article.

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, The Interstate Life | Tagged , ,

Getting the Most out of Your 3PL Partner

I found this article on the Supply Chain 247 website and thought it contained some great ideas for working with 3PLs.  Below is part 1 of the article.

5 Steps to Improving Your 3PL Relationships

Members of the University of Tennessee’s center for Executive Education share their five steps and a series of tips to improve your outsourcing relationship right from the start. By Kate Vitasek, Pete Moore, and Bonnie Keith

June 09, 2013

Back in October 2010, we eagerly opened our issues of Logistics Management (LM) to read the feature article about Armstrong World Industries and how they won the coveted 2010 NASSTRAC Shipper of the Year award after bringing their outsourced transportation back in house.

As we read the case study we were actually disheartened to learn that the reason they brought the work back in house was due to a failed third-party logistics services provider (3PL) relationship.

Yes, there are some bad service providers out there. But my experience is that there are always two sides to every story. I’m sure that the service provider Armstrong parted ways with would have their own story to tell from which we could all learn a lesson or two.

However, this article is not about assigning blame, but pointing out practical steps, tips, and advice on how to improve a 3PL relationship and prevent one from becoming a failure.

As experts and outsourcing coaches, members of the University of Tennessee’s Center for Executive Education have created five steps to improve your outsourcing relationship from the start and help maintain that partnership once it gets rolling.

Over the next few pages, we’ll explore each of these five steps and provide some of our favorite tips and advice to help you improve your 3PL relationships.

Getting started Many of the problems companies experience stem from jumping into the contract prematurely without a solid understanding of the ramifications. With this in mind, our first tip is to slow down and take the steps to get outsourcing right before you start any work.

To do this properly, we recommend the five-step implementation approach that is profiled in the article Vested Outsourcing: Five Rules That Will Transform Outsourcing. The article goes into detail on each of the five crucial steps companies and service providers can take to create a successful 3PL relationship:

1. lay the foundation;

2. understand the business;

3. align interests;

4. establish the agreement or contract; and

5. manage performance.

When taken individually, these steps can offer shippers and service providers valuable insight into current operations. However, they tend to work best when implemented as a process for outsourcing by allowing companies to implement a true collaborative 3PL relationship where the company outsourcing and the service provider have a vested interest in the other’s success.

Continued in our August 16, 2013 post.

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, The Interstate Life | Tagged , , ,

New Broker Registrations Down in 2013; Expect Further Decline

New government regulations and national pressure on small business cited for the decline in new broker registrations

Official government data from the Federal Motor Carrier Safety Administration shows an alarming statistic: the number of new truck broker registrations declined for six straight months in 2013. In fact, the decline started in September 2012, and continues as new, upcoming government regulations cause a significant barrier to entry for new small brokers to obtain a license to operate.

The data was compiled by Mike Curry of MyCarrierResources.com and analyzed by  Interstate Logistics Group.

chart

I was quite surprised by the data. There is often discussion about how government regulation crowds out competition in the brokerage and carrier sector. Here we have the actual data that shows us how small businesses’ growth is directly impacted as the barriers to entry rise.

Industry experts cite many reasons for the decline in newly licensed brokers, with the latest being the upcoming $75,000 broker bond needed to qualify to obtain a property broker’s license.

Most bonding companies and insurers are unwilling to take on the risk for a new entrant and therefore require personal guarantees, a bank letter of credit, or posted collateral to secure the necessary bond. A small new entrant just doesn’t have the excess capital on top of the usual start­­-up costs of a new business.

Other barriers are making it more difficult to start a new brokerage, as well. Beginning October 1, 2013, a new broker must prove that at least one officer has three full years of brokerage experience. Moreover, a generally moribund economy has kept freight volumes relatively low and the spread between rates charged to shippers and prices paid to carriers are extremely narrow and declining, making profit margins tighter than ever. This is being felt by small and large brokers alike, with even large, publically-traded brokerages, whose financials are transparent, posting rapidly declining margins as capacity further tightens.

“As 80% of US employment is derived from the small business sector, this is sad to see,” said Mike Curry of MyCarrierResources.com. “Unless small businesses are encouraged to grow and thrive, then national unemployment will remain high and shippers will be restricted from significant local competitive choice. Almost every government resource shows that the vast majority of new employment has historically come from small start-up business or small businesses hiring one or two additional employees. Without small business growth, unemployment will remain high.”

If the small brokers continue to face such unprecedented difficulties in starting or maintaining competitive businesses, they will have to form alliances to go toe-to-toe with the large regional or national brokers. We have been working with many to band together and to fight back. There is strength in numbers and the very survival of the small broker may well come down to cooperation in the face of increasing government and economic regulations that are unlikely to go away anytime soon.

Posted in 3PL, 3PL; Logistics and Transportation Broker, Business, Logistics, The Future of Trucking, The Interstate Life, Trucking, Trucking Industry Regulations | Tagged , , ,

CSA Hearing set for September

The U. S. Court of Appeals for the District of Columbia Circuit will hear arguments from the Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT) on September 10, 2013.  This suit claims that the FMCSA improperly instructed shippers and brokers to consider carriers’ CSA scores when selecting carriers.  Follow this story on the Transport Topics website.

Court to Hear CSA Arguments in September

A federal court will hear arguments in September on whether the federal government followed the law in implementing and publicizing the new Compliance, Safety, Accountability program for trucking and bus company safety rankings.

The Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT), a group of brokers, shippers and carriers, filed the lawsuit last year, saying the Federal Motor Carrier Safety Administration should have followed the formal rulemaking process when it told shippers and brokers to consider CSA scores when hiring carriers.

The U.S. Court of Appeals for the District of Columbia Circuit said that a three-judge panel would hear the case Sept. 10. ASECTT, along with other industry representatives and companies, is asking the court to force FMCSA to hide CSA scores from the public and to submit the shipper and broker guidance for public comment before making it final.

In briefs in late 2012 and early 2013, ASECTT and FMCSA argued over whether the shipper and broker guidance, which was released online as a digital presentation in May 2012, constituted a regulation from the agency. If it did, ASECTT and its allies argued, the agency violated the law by failing to study the regulation, propose it and seek comment before finalizing it.

The groups “challenge the FMCSA release as unlawfully introducing the new substantive rules and a new ultimate arbiter for determining the safety fitness of such carriers . . . and as doing so without adhering to required procedures,” they said in a December brief.

For additional coverage, see the Aug. 5 print edition of Transport Topics.

By Timothy Cama
Staff Reporter

Posted in Asset-based trucking, Business, CSA: Compliance, Safety, Accountability, Trucking, Trucking Industry Regulations | Tagged , , , , ,

In-Depth Look at Supply Chain Trends – Part 4

Following is the final part of a 4-part article found on the Supply Chain 24/7 website.  The article takes an in-depth look at supply chain trends, including forces that affect these trends that are not typically discussed in such studies.

10 Supply Chain Trends for the Next 10 Years

July 09, 2013

Ability to ExecuteTrends 2, 6, and 8 received the highest ability to execute rankings. These trends are:

  • Trend 2: Disclosing supply chain externalities will be crucial.
  • Trend 6: Product clockspeeds will determine the number and nature of the supply chains.
  • Trend 8: Technology to support SCM will primarily be “on tap.”

In general, the executive rankings on ability to execute came in lower (average scores were closer to 55 percent) than the other three criteria measured. Interestingly, the lowest ranked trends (i.e., least ability to implement) with scores of less than 50 percent, related to adopting artificial intelligence learning systems and incorporating social data into the supply chains.

Specifically, some executives raised concerns about the data linkage that would be needed for best-of-breed learning system to be effective.

Complexity of Execution
Trends 1, 6, and 10—service chains, product clockspeed, and artificial intelligence—received the highest complexity rankings (average of 86 percent), meaning that the executive group perceived them to be the most difficult to implement. Part of this may be due to the highly cross functional nature of the trends.

Standardization of education processes was ranked just below these top three in terms of execution complexity.

Summarizing the Results
When weighted equally across the four dimensions and normalized, the overall relevance rankings by our executive group show a distribution that ranges from 61 percent to 82 percent (see Exhibit 3).

Overall Relevance of 10 Trends

Trends 6, 1, and 7 have the largest relevance, reflecting the issues that are top of mind for the executives. Notably, their ability to execute against these trends is relatively high as well.

The middle cluster—comprised of Trends 2, 4, and 8—show an overall relevance ranking greater than 68 percent, suggesting that these are only slightly less relevant and tougher to implement than the top-tier trends.

Finally, the trends with the lowest overall ranking are perceived to be of lesser relevance and slightly more difficult to implement than the others. The bottom two in the overall rankings were Trend 3 (serving the “Base of the Pyramid”) and Trend 9 (leveraging social media in closed loop process).

The ranking of the social media trend, in particular, came as a bit of a surprise—given all the recent hype surrounding Big Data. Yet the result proves the point that while Big Data is a useful tool, the ability to transfer the data to supply chains and the related ability to execute remains a big challenge.

As we step back and decipher the implications for supply chain practitioners, it is abundantly clear that the ability to create differentiated and multiple supply chains and to embrace a service-based culture is of paramount importance. These capabilities, coupled with the need to service smaller, unique segments in a profitable manner, continue to be high on industry and executive agendas. Importantly, all of these highly ranked competencies have the ability to move the economic performance needle.

Finally, we would be remiss if we did not mention some of the ideas that the executives themselves brought up during our discussions. Their insights ranged from the ability to foster open collaboration (across Buy, Make and Move portions of supply chain) with trading partners; to improving enterprise supply chain risk management processes and education; to incorporating in real time local regulatory measures and product postponement for local preferences.

Staying still is not an option for supply chain practitioners. Having the ability to create incremental value is fine, but real progress comes from anticipating and capitalizing on the kinds of mega trends we have discussed here.

We believe that these trends we have put forth will be powerful drivers for change going forward, and it is encouraging to see that the senior executive group agreed in large measure. Equally encouraging and enlightening was the deeper understanding gained of the implementation challenges that lie ahead. One has to start somewhere: Enjoy the journey.

Posted in Business | Tagged ,

In-Depth Look at Supply Chain Trends – Part 3

Following is the third part of a 4-part article found on the Supply Chain 24/7 website.  The article takes an in-depth look at supply chain trends, including forces that affect these trends that are not typically discussed in such studies.

10 Supply Chain Trends for the Next 10 Years

July 09, 2013

Executive Validation of the TrendsTo validate our 10 trends in the “real world,” we conducted a short but impactful field survey with a group of senior executives from various industries.

Their responsibilities ranged from chief executive officer, chief financial officer, chief operating officer, and chief information officer to heads of supply chain.

The industry mix, as shown in Exhibit 2, was comprised of 55 percent consumer products, 22 percent industrial manufacturing, and 11.5 percent each in high-tech and services.

The responses from each segment were weighted equally.

Several members of the executive group surveyed also had significant prior experience in pharmaceutical/heath care and were able to bring additional perspective from that experience.

We discussed the trends in person with each of the executives in our validation group. (For a full listing of the companies and participants, see Author’s Note.)

We asked these executives to respond to the 10 trends identified based on four criteria: relevance to the industry; relevance to corporate business performance; ability to execute on the trend; and complexity of execution.

Industry Breakdown of Validation Group

Each of the four criterion was graded on a three-point scale with a low being scored as 1, medium a 2, and high a 3.

Relevance to industry was defined as the relevance to the particular executive’s industry overall (as opposed to just his specific company).

Relevance to business performance focused on the ability to move the needle of balance sheet or P&L performance in a positive direction.

Ability to execute was interpreted as the corporation’s ability to act on the trend in the immediate near term. The final criterion addresses the overall complexity of the implementation.

While survey result tabulation and computation can often lead to a lot of analysis (just ask a statistician), our objective in field testing the trends was to gauge the level of relevance in the current business setting.

This as opposed to predicting trends from a pundit perspective—and my apologies to all the pundits.

The executives’ points of view are presented without any internal bias or analysis added.

Applicability of Trends Across Industry Segments

In the accompanying sidebar on industry applicability, we provide our perspective on the impact of the trends on individual business sectors based on the many client engagements that we have completed in the past few years.

Industry Relevance
The executive group ranked Trends 1, 6, and 7 as the highest in the relevance category. To recap, these trends are:

  • Trend 1: Service chains will become more important than product chains.
  • Trend 6: Product clockspeeds will determine the number and nature of the supply chains.
  • Trend 7: Micro segmentation will be key to success.

All three of these trends received relevance scores higher than 80 percent. The percentage was determined by the sum of all 10 rankings divided by the maximum total score of 30 (that is, the amount if all 10 executives had given the trend a high [3] relevance rating).

In essence, the increased importance of pre- and post-sales service, the ability to segment product clockspeeds with a supportive supply chain footprint, and the ability to hone in on the customer/consumer targets were deemed most relevant across the largely manufacturing-centric executive group. The next highest set of rankings were the trends of “on tap” technology and social data closed loop chains.

Business Performance
In terms of impact on business performance, Trends 1 (service vs. product chains), 4 (globalization of knowledge workers), 6 (clockspeeds), and 10 (imbedded artificial intelligence) received the highest rankings from the executive group. The average scores for the three were higher than 75 percent.

The next highest-ranked trend, with a score of close to 70 percent, was Trend 7 (“Micro Segmentation will be key to success”).

Combining the results of the first two criteria (which essentially is a gauge of the trend’s ability to affect financial performance) reveals that Trends 1, 6, and 7 have the greatest potential to advance the supply chain performance curve.

All three had combined relevance and performance scores in excess of 75 percent. Trends 4 (globalization of knowledge workers) and 10 (artificial intelligence) were the fast followers with scores that were higher than 70 percent.

Surprisingly, Trends 2 and 3—disclosing SCM externalities and designing supply chains and products for base of pyramid—were ranked as having only low to medium relevance. The low relevance of the pyramid trend was a likely function of the market positioning of majority of the surveyed companies (high end brands or U.S.-centric brands).

Examining the externality ranking, most of the executives agreed that it was highly relevant and many already had programs in place. However, the general sense was that the ability to positively monetize on the additional expense associated with this trend was still in the distant future. On both of these trends, however, many of the executives suggested a wait-and-see attitude.

In terms of business performance in particular, they pointed to the cost of compliance associated with Trend 2 and the company’s ability to flourish in the emerging geographies associated with Trend 3.

Continue following this article in our 8/2/2013 post.

Posted in Business | Tagged ,

In-Depth Look at Supply Chain Trends – Part 2

Following is the second part of a 4-part article found on the Supply Chain 24/7 website.  The article takes an in-depth look at supply chain trends, including forces that affect these trends that are not typically discussed in such studies.

10 Supply Chain Trends for the Next 10 Years

July 09, 2013

The 10 Trends in Detail1. Service chains will become more important than product chains. In many if not most business sectors today, great product is considered to be the table stakes just to play the game. Increasingly, discerning consumers are demanding more from pre- and post-sales service for the goods they buy.

Accordingly, companies that effectively couple the pre- and post-sales service supply chain activities (including product knowledge, in-store service, warranties, responsive consumer services, and the like) will emerge as the winners over their solely product-centric competitors.

That message was underscored by Apple CEO Tim Cook in his recent apology to consumers in China for the company’s perceived failure to listen to feedback about post-sales service.

This was a great example of a company with one of the most innovative products in the marketplace forgetting that the consumer is still largely in charge and that service plus product (in this case, repair and warranty practices) trumps product only.

2. Companies will need to fully report supply chain externalities. In Corporation 2020, Sukhdev writes in depth about corporate externalities—defined as the impacts of an organization’s manufacturing and business processes on other segments of society—and the need to disclose those externalities.

While some work has been done around supply chain sustainability and the need to reduce carbon footprint, companies will need to do a much better job of disclosing the end-to-end impacts of their supply chains.

This means measuring and reporting on the effect of major supply chain transactions on jobs created, carbon footprint reduction, sustainable procurement processes, types of labor used, and modes of transportation among others.

The customer or consumer will begin to demand the transparency into these impacts much as these have now on the labeling of food and beverage products.

3. Supply chains must be designed to serve the “base of the pyramid.” The late Professor C.K. Prahlad authored a compelling book entitled The Fortune at the Bottom of the Pyramid, which later was modified and widely referred to as the “base” of the pyramid.

The book pointed to the market potential of the five billion-plus people in the world whose incomes are less than $2,000 a year. We contend that companies in the consumable and durable sectors, in particular, will need to create products and associated supply chains to support the products that will cater to this market segment.

To tap into this enormous potential, our supply chains must go through a total utilitarian design philosophy in order to deliver sustainable bottom-line performance. Current supply chain thinking, which is largely based on a cost plus model, will need to shift to a “not to exceed” cost model.

4. Knowledge work and workers will become global in nature. Knowledge work in supply chains today accounts for approximately 40 percent of the total labor hours spent. Much of this work deals with complex analytics, planning, procurement processing, and provision of services.

This nature of the work, the need for multi-language support, and the associated local complexities of the different geographies being served will necessitate the seamless globalization of supply chain knowledge work.

As an example, you could see a U.S.-centric company performing supply chain planning in the Philippines, operating procurement centers of excellence in Singapore, and conducting global business analytics in Brazil.

5. SCM will have a standard certification process similar to that for CPAs. Many universities offer undergraduate and graduate degrees in supply chain management. In addition, professional associations such as APICS, CSCMP, and ISM offer a range of certification programs.

However, in most cases these programs either focus on the basics of SCM or on a specific activity such as import/export or financial analysis. We believe that a fundamental shift will occur in the normalized delivery, content served, and certifications of supply chain professionals.

Many other professions like accounting (Certified Public Accountant) and engineering (Professional Engineers) require national board examinations as well as continuing professional education (measured by a specified number of hours per year).

We contend that a similar professional credentials program will be required for supply chain professionals to normalize the knowledge base of the incoming resources.

6. Product clockspeeds will determine the number and nature of the supply chains. I recently worked with a global consumer durables company where over 70 percent of the products had a life span of less than 18 months. Another 20 percent had a life span of three to four years, with the remaining 10 percent exceeding five years.

This “fast clockspeed” lifecycle is becoming more the norm than the exception. The days of the steady and static product catalog is past; thinking otherwise, in fact, is a recipe for disaster. However, we continue to find companies using a single supply chain approach to service all segments irrespective of the time constraints.

The winners of the future will have the same number of distinct supply chains as there are product clockspeeds. In addition, supply chain organizations will need to be aligned by product segments as well as functional segments in a matrix fashion to serve the distinct supply chain needs.

7. Micro segmentation will be key to success. Do you have a detailed knowledge of your individual consumer or customer segments—your micro segments? The honest answer for most companies would be “no.” A micro segment is defined as that exact part of the general buying category that triggers the purchasing decision—not the category itself.

To illustrate, in recent work with a provider of smart phone accessories, we discovered that the company had several underserved micro segments—specifically, the design your own/assemble your own accessory segment. However, the ability to identify and service those segments was far beyond the reach of this company’s supply chain.

Going forward, organizations will need to know their micro segments, and their supply chains must be able to effectively service them based on the business strategy. I always encourage clients to think of their business in terms of the individual consumer or groups of consumers as opposed to a broad brush view of categories. Put another way, adopt a B2C (business to consumer) mindset even if your operation is predominantly B2B (business to business).

8. Technology to support SCM will primarily be “on tap.” SaaS (software as a service) is gaining mainstream attention. We contend that most if not all supply chain technologies by 2020 will be delivered and consumed via this method—or “on tap.”

The user will pay for the ability to use the capability and will not have to incur the large fixed costs of ongoing maintenance, upgrades, and infrastructure expenditures that can amount to almost 25 to 30 percent of the cost of ownership.

The widespread adoption of SaaS constructs will likely be accelerated by the rise of cloud computing and diminishing concerns about the security aspects of SaaS.

9. Leaders will leverage social media in a closed loop feedback process. Social media data is everywhere today. In recent work we did with a durable goods company, we found that they had 2,000 websites/ blogs that were discussing their products and service needs on a fairly regular basis.

However, this company—like most—did not have a systematic method to study the data and disseminate the information to the various supply chain constituencies (design, planning, procurement, service, manufacturing, and so forth). This is necessary to provide closed loop feedback processes that allow the company to proactively respond to the feedback.

The winning companies will be able to receive, process and act on the data that is being provided to them by their constituents via social media.

10. Artificial intelligence will be embedded in mainstream supply chain activities. Humans learn by doing and processes improve as they get “leaned out.” Yet somehow, every time we build a supply chain system we begin the process from the ground up.

Planners go through the same calculation steps every time they start; procurement folks repeat approximately 35 percent to 40 percent of the activities they did in the past. The same holds true for people involved in building logistics and execution systems.

The problem is that when embarking on a supply chain program or initiative we do not have access to algorithms that learn and retain the knowledge and experience of the past. We contend that supply chain artificial intelligence will need to be embedded in more effectively automating mainstream supply chain activities.

Continue following this article in our 7/30/2013 post.

Posted in Business, Trucking | Tagged ,