CSCMP 2009 Annual Global Conference - Day 1

[Sandy Vosk]

I’m writing this from my hotel room in Chicago where I’m attending the Council of Supply Chain Management Professionals (CSCMP) annual global conference. Although attendance is down from last year, as in most industry conferences in 2009, there are attendees from over 40 countries. The theme of this year’s event is “Ideas, Tools and Results” and as Rick Blasgen, President and CEO of CSCMP said in his opening address, …”innovation, collaborative strategies and new technologies will be the key to success” going forward for supply chain companies.

Gary Maxwell, SVP of International Supply Chain for Wal-Mart Stores, Inc., delivered the Keynote presentation on “World Class vs. Best-in-Market Supply Chains”. Mr. Maxwell spoke of how Wal-Mart approaches setting up operations in different countries around the world. The company first looks at their potential customers: who they are serving (demographics); what they expect; what they have experienced before; and where Wal-Mart wants to take them. It’s just as critical to understand the unique culture, laws and institutions of each country, before setting up an infrastructure of warehouse and distribution centers. There is a need to balance land and labor costs with the regulatory environment. In India, for example, a company must pay taxes every time you move goods across a state line.

Mr. Maxwell’s key point was that it was critical to understand how people shop today and the costs of setting up infrastructure “…must match what customers can afford, appreciate and pay for.” He used a comparison between India’s open markets and Japan’s retail stores where individual fruit was wrapped and packed in clamshells, totes and cardboard containers to demonstrate the vast differences between how and where people shop, what their expectations were in shopping and the vastly different infrastructures that were required. to support them This is why Wal-Mart build “Best-in-Class” for today and then evolves over the years.

There were 3 educational time slots during the day, where you can choose from over 20 different “tracks”. This is always challenging for me because there are so many good choices. In the morning I selected “Intel: Creating the Low-Cost Supply Chain”. I had heard James Kellso, Senior Supply Chain Master at Intel, present before at the R. Hadley Waters annual supply chain conference at Penn State University and greatly appreciated his knowledge, style and candor. This session focused on how Intel used collaboration across its supply chain to significantly drive down costs for their new “Atom” product line, a microprocessor chip that is 45 nanometers (180 atoms wide), switches on and off 300 billion times a second and will be the key to Intel’s market strategy over the next few years.

Mr. Kellso shared that Intel’s current supply costs are about $5 per unit for $100 dual Pentium chips. Intel’s goal is to build a new supply chain that can support 1 billion Atom units annually by 2012. Since the new Atom chip will sell for about $10 per unit, Mr. Kellso’s challenge was to reduce supply chain costs to approximately $1 per unit. He spent most of the session sharing more about the internal collaboration that was required to think radically different about the problem and the strategies he used to create a “high-performance” team. The team ultimately recommended a radical new way of manufacturing which drastically drove down the costs of inventory – shifting to a build-to-order with 2 overlapping 4-day shifts at the plant. This required collaboration with Intel’s substrate manufacturers to shift to a Just-In-Time process. Intel has been quite successful to-date selling over 4 times the projected 5 million units.

I sat in on an excellent session in the afternoon as well, “Metrics, Analytics, and Reporting for Supply Chain Management – A Welch’s Case Study”. Bruce True, Manager of Distribution Planning, Welch Foods and William Copacino, President and CEO, Oco, Inc. discussed how Welch’s utilized Oco’s SaaS (Software as a Service) Business Intelligence software to combine visualization tools like scorecards and dashboards with drill-down analysis capabilities to track Welch’s key transportation performance metrics such as “air weight”, cost per mile, fuel surcharges, on-time delivery, etc. The business challenge Welch’s had was the migration to a new ERP (Enterprise Resource Planning) system where “freight pay” details remained on a legacy system. Oco uses nightly data updates from Welch’s to provide a web-based solution that is not only utilized by Welch’s but the carriers as well, to monitor their performance and how they compare to others. According to Mr. True, Welch’s saw a payback in 30 days on the Oco solution.

My evening was topped off by an invitation to a cocktail party at Jones Lang LaSalle’s corporate offices at the MidAmerica Club at the Aon Center. Unfortunately, it was a little too foggy to enjoy the view from the 80th floor, but I certainly enjoyed the hospitality and networking. Now, on for Day 2!

Supply Chain Experts, a community of highly qualified professionals, can help your organization find unique solutions to supply chain challenges that can help you improve your bottom-line, competitive position, and overall customer satisfaction.

Sandy Vosk is President & CEO of Allied Tracking Systems, Inc. a technology company that specializes in supply chain solutions which improve operational efficiency, business intelligence, asset management and collaboration with customers, suppliers and partners. He speaks at a number of industry events and was recently published in David Coleman’s “42 Rules for Successful Collaboration”. Sandy is also the founder of Supply Chain Experts.

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Corporate Web Site: Allied Tracking Systems

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[Pat Lupica]

Sandy, thanks for the summary of events for what sounds like a great SC forum.