Supply Chain Management Best Practices, Second Edition · PDF filefm JWBT243-Blanchard...

three parts: Part I briefly introduces supply chain management with examples of best-in-class supply chains in various industries and proven methods for measuring the performance of a supply chain. Part II presents the traditional core processes of supply chain management and discusses the best practices being followed by specific trend-setting companies within the global marketplace. Finally, Part III reveals the strategies, solutions, and technologies used by leading companies to design their extended enterprises, including up-to-the minute tips on going green and lean in your supply chain.

Get your company on the supply chain “best practices” track and achieve supply chain excellence with the world-class guidance found in Supply Chain Management Best Practices, Second Edition.

DAVID BLANCHARD is an award-winning journalist and the Editorial Director and Associate Publisher of Penton Media’s Supply Chain Group. He has served as editor-in-chief of several Penton magazines, including IndustryWeek, the leading publication for manufacturing professionals, Logistics Today, and Supply Chain Technology News. He has also launched and edited numerous print and online publications covering the supply chain, transportation, manufacturing, and computer industries. He is a frequent speaker at major supply chain industry events. He lives in a suburb of Cleveland, Ohio.

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Between inventory management, distribu-tion, warehousing, and transportation costs, corporations are spending over $1

trillion every year. And who’s responsible for managing all that spending? If you’re reading this, you probably already know the answer—it’s YOU—the supply chain professional. While your job description may differ depending on where you work, the goal to develop and position a company’s supply chain to compete and win in today’s global marketplace is pretty much the same—and it’s daunting.

Now featuring relevant and timely new chapters on keeping your supply chain “lean and green,” Supply Chain Management Best Practices, Second Edition describes in detail how you can build a “best-in-class” supply chain, told through the accomplishments—and in some cases, failures—of supply chain practitioners and experts. Author David Blanchard—Editorial Director of Pen-ton Media’s Supply Chain Group—provides a unique dual perspective as journalist and insider, with access to top supply chain professionals and their insights on creating and sustaining a world-class supply chain.

Packed with abundant anecdotes, interviews, case studies, research, and analysis, this resourceful book is strategically organized into

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$60.00 USA/$72.00 CAN

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SUPPLY CHAINMANAGEMENT Best Practices

Second Edition

“Supply chain management is fast becoming a core competency within successful companies. Dave Blanchard’s comprehensive exploration of SCM best practices hits the mark. It’s chock-full of real examples of journeys taken to achieve supply chain excellence. Practitioners worldwide can learn much from the insightful conclusions arrived at in the book.” — Rick Blasgen, President and CEO

Council of Supply Chain Management Professionals (CSCMP)

“As a journalist, Dave Blanchard has an exceptional ability to look at supply chain best practices from the inside out. His broad perspectives on the burning issues in supply chain management, coupled with his diligent research, make this book a must-read for anyone interested in improv-ing and enhancing their supply chains.” — C. John Langley Jr., PhD, Professor of Supply Chain Management

Georgia Institute of Technology

“Combining his talents as a journalist and supply chain management professional, David has taken some of the best practices in our field and presented them in an easy-to-read format. This book is the In Search of Excellence for supply chain managers. It is a must-read for those companies wanting to improve supply chain performance.” — Robert A. Novack, PhD, Associate Professor of Supply Chain Management

Department of Supply Chain and Information Systems

Pennsylvania State University

“Blanchard’s Best Practices is the right information delivered at the right time in the right way to address the right problems and to provide the right solutions to the nightmares of managing a supply chain in today’s global environment. Supporting his conclusions with actual business sce-narios, the author has given the reader insightful advice on how to establish and maintain good communication, collaboration, and cooperation between vendors, customers, manufacturers, dis-tributors, and anyone else who functions as a link in the ‘plan, source, make, deliver, and return’ process. This book is required reading for those who have made the supply chain their life’s work as well as those who are just starting to make it their career.” — Dan Fox, Corporate Traffic Manager

Samsonite Corporation

“Blanchard is an extraordinarily perceptive observer of supply chain processes. He sees the big picture. He has compiled practical and replicable examples from all segments of industry and companies. This book clearly outlines what is possible, and how talented and creative individu-als and their supportive companies are approaching the tasks to keep their companies financially viable and competitive in this ever-changing global economy. David Blanchard has painted a picture of what informed talent and supportive management can accomplish.” — John A. Gentle, DLP

John A. Gentle & Associates, LLC

www.RelaTranShips.com

Praise for the First Edition of

SUPPLY CHAIN MANAGEMENT Best Practices

David Blanchard

SUPPLY CHAINMANAGEMENT Best Practices

S e c o n d E d i t i o n

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Supply Chain ManagementBest Practices

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Supply Chain ManagementBest Practices

Second Edition

DAVID BLANCHARD

John Wiley & Sons, Inc.

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Copyright C© 2010 by David Blanchard. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.Published simultaneously in Canada.

No part of this publication may be reproduced, stored in a retrieval system, ortransmitted in any form or by any means, electronic, mechanical, photocopying,recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the1976 United States Copyright Act, without either the prior written permission of thePublisher, or authorization through payment of the appropriate per-copy fee to theCopyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923,(978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests tothe Publisher for permission should be addressed to the Permissions Department, JohnWiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax(201) 748-6008, or online at http://www.wiley.com/go/permissions.

Limit of Liability/Disclaimer of Warranty: While the publisher and author have used theirbest efforts in preparing this book, they make no representations or warranties withrespect to the accuracy or completeness of the contents of this book and specificallydisclaim any implied warranties of merchantability or fitness for a particular purpose. Nowarranty may be created or extended by sales representatives or written sales materials.The advice and strategies contained herein may not be suitable for your situation. Youshould consult with a professional where appropriate. Neither the publisher nor authorshall be liable for any loss of profit or any other commercial damages, including but notlimited to special, incidental, consequential, or other damages.

For general information on our other products and services or for technical support,please contact our Customer Care Department within the United States at(800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

Wiley also publishes its books in a variety of electronic formats. Some content thatappears in print may not be available in electronic books. For more information aboutWiley products, visit our web site at www.wiley.com.

Library of Congress Cataloging-in-Publication Data:

Blanchard, David, 1958–Supply chain management : best practices / David Blanchard. – 2nd ed.

p. cm.Includes bibliographical references and index.ISBN 978-0-470-53188-4 (cloth)

1. Business logistics. I. Title.HD38.5.B476 2010658.5–dc22

2009043705

Printed in the United States of America

10 9 8 7 6 5 4 3 2 1

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http://www.wiley.com/go/permissions

http://www.copyright.com

http://www.wiley.com


To Nancy, Julia, and Grace

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Contents

Preface to the Second Edition xv

Acknowledgments xvii

PART I INTRODUCTION TO SUPPLY CHAINMANAGEMENT 1

CHAPTER 1 If Supply Chain Is the Answer, Then What’sthe Question? 3

Flashpoints 3

You Knew This Job Was Dangerous When YouTook It 3

The Big Picture 5

The Supply Chain’s Back Story 6

Roadblocks on the Supply Chain Path 8

Separating the Good from the Best 10

CHAPTER 2 Anatomy of a Supply Chain 13

Flashpoints 13

Aerospace: Changing the Game, for Better or Worse 14

Automotive: Building Customer Loyalty for theLong Term 16

Chemicals: Finding the Right Supply ChainFormula 17

Consumer Packaged Goods: The Moment of Truth 18

Food and Beverage: Cutting Out the Middleman 20

High Tech/Electronics: Zero Latency 21

Pharmaceuticals: Fighting Counterfeiters with RFID 22

Retail: Customer Centricity 24

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viii Contents

CHAPTER 3 Supply Chain Metrics: Measuring Up to High Standards 27

Flashpoints 27

How to Prevent a Supply Chain Heart Attack 28

What Makes a Supply Chain Leader? 29

Measure Satisfaction 31

Everybody’s Talking about Benchmarking 32

Do the Right Things 33

Supply Chain Checkup 33

Time for a Turnaround 34

Learn the SCOR 35

SCM for Dummies 36

Follow the Roadmap 37

Make It All Meaningful 38

PART II TRADITIONAL CORE PROCESSES OF SUPPLYCHAIN MANAGEMENT 41

CHAPTER 4 Planning and Forecasting: Headed for the Future 43

Flashpoints 43

A Bias against Good Plans 45

From Soup to S&OP 46

No Time Like the Real Time 47

The Truth Plays Out 48

End-to-End Integration 49

The First Shall Be First 50

Analyze This 52

A Happy Ending 53

CHAPTER 5 Procurement: Go Right to the Source 55

Flashpoints 55

Giving Procurement Its Due 56

Managing the Changes 57

Keep Your Friends Close and Your Suppliers Closer 58

Looking Backward to See Forward 59

Working for Every Penny 60

Ensuring a Healthy Supply Chain 61


Contents ix

The War on Complexity 62

It Seemed like a Good Idea at the Time 63

An Online Car Wreck 64

A Rating Service for Buyers and Sellers 65

CHAPTER 6 Manufacturing: Supply Chain on the Make 67

Flashpoints 67

A Direct Line to Supply Chain Success 68

Better Decisions for the Customer 70

Tying It All Together 71

Digital Supply Chains 71

Collaborating on Product Designs 73

Nearly Perfect 75

The Future of Manufacturing 77

CHAPTER 7 Transportation: Logistics a la Mode 79

Flashpoints 79

Riding the Roads 80

Regulations and Deregulation 81

Fuel for Thought 82

A Capacity for Change 83

Know Thyself, and Thy Carrier Too 84

How to Achieve Sustainable Savings 85

Collaboration Is a Two-Way Street 86

A Carrier by Any Other Name 87

Automate to Consolidate 88

Get It There on Time 90

CHAPTER 8 Distribution and Warehousing: Going with the Flow 91

Flashpoints 91

Virtual Inventory 92

Cross-Docking, Compliance, and Collaboration 94

Handle with Care 95

Where the Rubber Meets the Load 97

Can You Hear Me Now? 98

Wireless in the Warehouse 99


x Contents

Turn, Turn, Turn 100

Half Full or Half Empty? 101

How to Better Manage Your Warehouse 102

CHAPTER 9 Site Selection: Location, Location, Location 105

Flashpoints 105

Striking the Proper Balance 107

A Site for Sore Eyes 108

Finding the Right Place 109

A Look at Gillette’s Distribution Network 110

Cost versus Service 111

Match Your Network to Your Business Strategy 112

How Much Is Too Much? 113

Weighing the Intangibles 114

Quality over Quantity 115

A Quick Guide to Site Selection 116

CHAPTER 10 Globalization: It’s a Not-So-Small World 119

Flashpoints 119

Playing by Somebody Else’s Rules 120

Develop a Global Vision 121

Friendly Nations 122

“Low Cost” Sometimes Means “Poor Service” 124

Living in a Somewhat Flat World 125

Keeping an Eye on China 126

Take a Look for Yourself 128

Finding the Next Global Hot Spot 129

The Need for Supply Chain Visibility 130

Closer to Home 131

CHAPTER 11 Customer Service: Keeping the Customer Satisfied 133

Flashpoints 133

The Perfect Order 134

The High Cost of Imperfection 135

One Good Return Deserves Another 136

Supply Chain in Reverse 138


Contents xi

Managing the Relationship 140

Money in the Bank 142

Supply Chain at Your Service 143

A Culture of Customer Satisfaction 144

PART III SUPPLY CHAIN STRATEGIES 145

CHAPTER 12 3PLs: When You’d Rather Not Do It Yourself 147

Flashpoints 147

A Shift to the Supply Chain Side 148

Letting Somebody Else Do It 149

Supply Chain Essentials and Nonessentials 150

Finding Your Core Competency 151

Square Pegs And Round Holes 153

Think Strategically 153

The Financial Impact of Outsourcing 154

Staying in Touch 155

Going beyond the 3PL Model 156

Outpacing the Competition 157

CHAPTER 13 Collaboration: Extending the Enterprise 159

Flashpoints 159

Mutually Beneficial Relationships 160

Winning Small Victories 161

Respecting Your Partners 162

A Better Way to Sell Mouthwash 163

A Nine-Step Program for CPFR 165

Great Expectations, So-So Results 165

More Reliability and Better Service 167

Challenges in Supplier Management 169

How to Get the Most Out of a Relationship 170

CHAPTER 14 Security: Seeking Shelter from SupplyChain Storms 173

Flashpoints 173

“It’ll Never Happen Here” 174


xii Contents

Customs-Trade Partnership against Terrorism 176

Getting Countries to Talk to Each Other 177

Sometimes Low Tech Is as Good as High Tech 178

Taking Responsibility for Your Supply Chain 179

Securing the Supply Chain 181

10+2 182

Taking Steps toward Effective Compliance 183

Supply Chains at Risk 184

An Investment Worth Making 186

CHAPTER 15 RFID: A Game of Tags 189

Flashpoints 189

The ABCs of RFID 190

Proactive Replenishment 192

In Search of Payback 193

Tagging till the Cows Come Home 194

Taking RFID Seriously 196

Work the Bugs Out 197

A Matter of Privacy 198

No Need to Be Passive 199

CHAPTER 16 Green Supply Chains: It’s Not EasyGoing Green 203

Flashpoints 203

The Elephant in the Room 204

Justifying the Cost 205

Look for the Green Label 206

The Carbon Footprint of a Banana 207

Sustainability throughout the Supply Chain 209

Good to Green 209

How Big Blue Went Green 211

Eco-Friendly Strategies 212

Low-Hanging Fruit 213

CHAPTER 17 Continuous Improvement: Lean on Me 215

Flashpoints 215


Contents xiii

From Push to Pull 217

The Toyota Way 218

Don’t Settle for Occasional Improvement 219

Lean Principles 221

Lean, Mean Flying Machine 222

The Value of Teamwork 224

Leaning in the Right Direction 225

CHAPTER 18 The Supply Chain Profession: What Keeps YouUp at Night? 227

Flashpoints 227

Talent Search 228

Hiring Problem Solvers 231

Training the Next Generation 232

Optimizing the Workforce 233

What Keeps You Up at Night? 234

Gray Matters 235

The Secret to Supply Chain Success 236

Notes 241

About the Author 261

Index 263

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