Global Logistics and Supply Chain Strategies - September 2008 - (Page 55)

Now, with the oil price run-up and the attendant examination of risk, sourcing there has become less and less desirable.” Like Johnston, Karrenbauer sees some operations moving back home or at least a bit closer. But he feels the same accent on cheap labor will eventually focus on Africa. While the distances would not be as great, operations in Africa would pose many of the same risks. “But we don’t seem to learn from history very well.” While information is the basis of risk avoidance or mitigation, it has to be realized that future information is inherently unreliable, says Sujit Singh, chief operations officer for Supply Chain Consultants. He maintains that that uncertainty is accounted for in the solutions that the Wilmington, Del.-based developer markets. With the what-if planning that he describes, the planner tries to mitigate risk by basing decisions not on an exact data point but around ranges of data points. To illustrate, he says, “We may anticipate our demand to be 3,000 tons of something, plus or minus a certain percentage because we’re dealing with uncertain future data. The what-if scenario could be, hey, what if it were 50 percent more? What we’re trying to do by asking that question is to see the robustness of our current plan within an acceptable range of variation in the information that might come in the future.” By definition, plans entail some risk, Singh says, so you operate within certain parameters. “As long as we stay within suchand-such range, for example, we will be OK. You meed to be able to say, however, if we go out of this range, the variation will be so much that it will require a new plan.” The example of one of SCC’s clients illustrates the value in carefully modeling variation. The company, a beef processor, was tempted to flood the market when a Canadian rival was hit by the mad-cow disease scare some years ago. There was great fluctuation not only in supply but in pricing as well. “Through a what-if capability, our client figured a better position was to carefully control this high-price situation rather than flood the market and depress prices.” Today’s rather difficult economy has given the chemical industry, a major vertical for Supply Chain Consultants, a rough ride. There’s no doubt that there has been a high demand for various chemical products in the last few years. At the same time, raw material prices for the chemical companies are tagged to the petroleum industry. Sourcing, production, inventory and transportation have all been impacted by the economy and rising fuel costs, and each requires careful modeling and planning. In the last 20 years or so, says Singh, a major challenge has originated internally in most companies, from management. “They are saying, ‘You’ve got to do all this, and be best in class, and meet my customer demand, and have 100-percent service levels and, oh, by the way, don’t keep any inventory.’” Singh says, “You have multiple forces pulling you in different directions and yet you must optimize everything and get this mix that management demands. That’s the central problem.” Supply Chain Consultants recommends assessment of five functions that if done properly should help manage risk: demand data, collaborative demand planning, inventory planning, supply/demand balancing and sales and operations. Using just one, inventory planning, as an example, Singh says there is a renewed focus to look at the inventory picture in totality. “We call it inventory structural analy- sis, which is a term borrowed from civil engineering, and we’re saying if the inventory structure supports the different fluctuations in your business, you need to evaluate the structural capability of that inventory, where is it strong, where is it weak, what are the areas where you can make improvements. This is as opposed to just coming in, and saying from the top down that we will run at this or that level. “Using this analysis, we’re trying to manage risk by figuring out a targeted plan.” Clearly, the future is filled with variables, many of which pose great risk to the enterprise. The right information, timely, accurate and specific, may just help you target an intelligent plan. To access this article online, visit The Digital Edition at www.SupplyChainBrain.com. Resource Links GT Nexus, www.gtnexus.com JDA Software, www.jda.com Insight Inc., www.insight-mss.com Supply Chain Consultants, www.supplychain.com Logistics Zen Carlile is a proven leader in multi-modal transportation and logistics solutions. Whether it’s a pallet of tools headed to Tacoma or a 100-ton module destined for Alaska’s North Slope, Carlile has the expertise, equipment and connections to deliver peace of mind, every time. www.carlile.biz l 1.800.323.2296 ROAD - RAIL - SEA - AIR ALASKA I HAWAII I UNITED STATES I CANADA www.SupplyChainBrain.com GLOBAL LOGISTICS & SUPPLY CHAIN STRATEGIES 55 http://www.SupplyChainBrain.com http://www.gtnexus.com http://www.jda.com http://www.insight-mss.com http://www.supplychain.com http://www.carlile.biz http://www.carlile.biz http://www.SupplyChainBrain.com

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Global Logistics and Supply Chain Strategies - August 2008 Contents Editorial GL&SCS Exclusive Fast Forward Up Front Cover Story: Free The Enterprise: Busting Silos in the Supply Chain Business Process Management Merits New Look fromCorporate Strategists Ships and Ports Explore Many Ways to Go Green The Right Information Should Help Avoid Any Kind of Risk Industry Voices

Global Logistics and Supply Chain Strategies - September 2008

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