Trends, tips, and tools from experts in planning and execution
By Staff -- Manufacturing Business Technology, 10/1/2006 12:00:00 AM
Distribution-center dynamics starting to shift
According to a survey by the Supply Chain Consortium, comprised of participating suppliers and retailers, 43 percent of retail operations have implemented highly automated operations, with only 14 percent retaining highly manual procedures. Warehouse management systems now handle 60 percent of all put-away storage location selections, while 55 percent of inbound orders are planned against advanced shipping notices.
“Distribution centers are more fluid and adaptive,” says Brian Hudock, author of the report and a partner with Raleigh, N.C.-based Tompkins Associates. “It's in how they react to changes in volume, being able to ramp up quickly, leveraging equipment and staffing plans ahead of time so they can bring people in without causing excessive overtime.”
It's surprising at this point in time that there isn't a higher instance of automated operations, Hudock points out. “That the number was only 43 percent was surprising, as most retailers are trying to squeeze every ounce out of operations so they can be more competitive. Automated systems represent one of the easiest ways to do that.”
SCM provider reports record gain
Manhattan Associates, a supply chain management (SCM) and execution solutions supplier, reported record software revenues in Q2 of fiscal 2006—a 37-percent increase over the same period the previous year on record revenues of $21.2 million. Cash flow from operations increased 54 percent to a record $31.4 million. The company closed three deals worth $1 million or more.
Says Pete Sinisgalli, president and CEO, “Our Q2 license revenue was a new record for us, exceeding the previous record from Q4 of last year of $16.2 million by about $5 million, or about 30 percent. It was a very strong quarter for warehouse management sales, and a very strong quarter for sales of our other products—especially transportation management. About 60 percent of Q2 license fees were from new customers.”
Struggling with SRM
A study by Stamford, Conn.-based Archstone Consulting found a high percent of respondents reporting difficulties mastering suppler relationship management (SRM). More than 50 percent of respondents see inconsistent SRM practices across their organizations, and an inability to hold suppliers accountable. Fewer than 10 percent believe they have adequate systems for robust SRM.
“We were surprised that 93 percent reported significant challenges in managing suppliers,” says Ramin Tabibzadeh, an Archstone Consulting principal. This is the result, he claims, of “ineffective allocation of resources, and too many people facing off with suppliers without a clear structure of roles and responsibilities. There is a broad need for process and workflow management to improve SRM,” he says.
Risk mitigation efforts net business benefits
Heightened potential for supply chain threats is prompting companies to implement risk-mitigation and security-improvement initiatives. According to a study conducted by the Stanford University Global Supply Chain Management Forum on behalf of The Manufacturing Institute, the business benefits are significant.
The report, Innovators in Supply Chain Security: Better Security Drives Business Value, offers these benefits stats:
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38-percent reduction in theft/loss/pilferage;
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14-percent reduction in excess inventory;
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49-percent reduction in cargo delays;
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29-percent improvement in transit time; and
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26-percent reduction in customer attrition.
“We began with the belief that there were benefits from security investments, but some of the numbers were very high,” says Dr. Barchi Peleg-Gillai, director of research for the Stanford Global SCM Forum. “In the area of improved visibility, one company saw a 90-percent to 100-percent improvement. Regarding resilience—that is, how long it takes to identify and resolve a security-related issue—another company reduced overall process time by 50 percent.”
The report is part of an ongoing program sponsored by IBM.
