Designing and Managing the Supply Chain

David Simchi-Levi, Philip Kaminsky, Edith Simchi-Levi

Irwin McGraw-Hill, 2000

ISBN 0-256-26168-7

322 pages, $84.38

To order: Call (800) 262-4729 or visit www.mhhe.com

Very few books on supply chain management succeed as both an instructional vehicle for the student and a hands-on resource for the practitioner. Designing and Managing the Supply Chain is the happy exception. This collaboration between academia and the industry (David Simchi-Levi and Philip Kaminsky are university professors, while Edith Simchi-Levi is president of a software-development company) bridges that gap between the pedantic and the pragmatic.

After presenting their view of supply chain management, which closely resembles the Council of Logistics Management's definition—integrating the flow of goods and information from source to consumer—the authors turn to what they call the key supply chain elements. One chapter, for example, examines a logistics network configuration. It presents a case study up front, replete with problems and challenges. The instructional part of the chapter then discusses the technology and decision-support tools that can be applied to the case example. By the end of the chapter, the students (whether they be in the classroom or on the job) can address the issues raised in the cases effectively.

That technique is repeated for a number of critical supply chain topics—inventory management, strategic alliances, international logistics, and the often-overlooked supply chain/product design connection, to name a few.

Especially valuable for readers without a strong technical background is the discussion on supply chain information technology and decision-support systems. Though the book does not provide a comprehensive framework for evaluating and selecting technology, it does offer a useful overview of key considerations and trade-offs to keep in mind when selecting software. The explanation of decision-support systems is particularly lucid.

As a bonus, Designing and Managing the Supply Chain comes with two instructional games (the Computerized Beer Game and the Risk Pool Game) on CD-ROM to reinforce the book's key points.

CPFR: Collaborative Planning, Forecasting, and Replenishment

Voluntary Interindustry Commerce Standards Association, 1998

www.cpfr.org

The ability to collaborate among trading partners is viewed increasingly as a prerequisite to supply chain success. Establishing a business plan that will promote successful collaboration, however, is no small feat. A good first step is to check out the Collaborative Planning, Forecasting, and Replenishment (CPFR) Web site at www.cpfr.org. This site is maintained by the Voluntary Interindustry Commerce Standards (VICS) Board.

The group's mission is to develop a set of standard business processes for creating collaborative relationships between buyers and sellers. The user-friendly CPFR Web site contains voluntary guidelines for jointly creating a business plan, making sales and order forecasts, and fulfilling orders. The guidelines are incorporated into a flexible model that provides variations for different kinds of trading partnerships.

The CPFR model does a good job of breaking down the collaboration process into nine steps—from developing a front-end agreement to generating the order. The site then outlines the key activities associated with each of these steps. Although numerous activities are listed, some are covered much more comprehensively than others.

In addition to the general guidelines, the site gives helpful supplementary information, such as a sample front-end agreement, a technology overview, and case studies involving companies such as Wal-Mart, Sara Lee, and Lucent.

Although created for the retail industry, CPFR seems adaptable to other industries as well. The initiative, however, favors companies with a process orientation and a certain level of technological sophistication. Companies should be able to send forecasts in a standard electronic format (using electronic data interchange, standard interchange language, or extensible markup language). Small companies that do not possess this type of technology will have difficulty using CPFR.

Yet even for companies where CPFR is not an exact fit, this site is an excellent resource. It provides an essential reference point as companies move toward a business strategy that encompasses an extended supply chain.

e-Business: Roadmap for Success

Ravi Kalakota and Marcia Robinson

Addison-Wesley, 1999

ISBN 0-201-69953-2

380 pages, $39.95

To order: Call (800) 824-7799 or visit www.store.awl.com

Why are some companies successful at e-commerce while others founder? How do those successful companies move from traditional to e-enabled supply chain management? It's unlikely that any business—or any supply chain professional within the business—has not asked these kinds of questions yet.

As the title suggests, e-Business: A Roadmap for Success seeks to help readers make that transition. It lays out a logical set of procedures for assessing and then acting on the fast-emerging e-commerce opportunity. One of the sagest pieces of advice for following that roadmap is given up front: Be sure to have an e-business strategy firmly in place before you go out and spend millions on supply chain or other e-commerce applications.

As part of the roadmap, the authors also give their take on what's ahead. A short "What to Expect" segment at the beginning of each chapter sets the stage for the particular topic that follows—technology, organization, supply chain design, implementation, and so forth.

Another interesting and off-beat aspect of the book is the "Memos to the CEO" sprinkled throughout. These brief notes embody thought-provoking questions on challenges and opportunities top management must quickly attend to if they are to enjoy any measure of e-business success.

If you want a lively Megatrends-like discussion of the new e-commerce world, you will enjoy this book. Author Kalakota is a former academic and consultant who recently started an e-procurement company called hsupply.com. His co-authored article on "Order Fulfillment: The Hidden Key to Supply Chain Success" appeared in the Fall 1999 issue of Supply Chain Management Review.

Benchmarking: In Theory and Practice

Ken Stork and James P. Morgan

Purchasing magazine, 1999

236 pages, $39.50

To order: Call (617) 558-4348 or visit www.purchasing.com

Few executives are more qualified than Ken Stork to write about business process benchmarking. A former director of materials and purchasing for Motorola, Stork was instrumental in reconfiguring supply management processes that netted multibillion dollar improvements in inventory turns. Since 1993, he has written a monthly column on benchmarking for Purchasing magazine, managed a consulting practice focused on supply management, and taught supplier management at the California Institute of Technology. Stork's co-author, James Morgan, was for 20 years the editor of Purchasing magazine.

Benchmarking: In Theory and Practice is divided into two sections. The first part provides an overview of the elements of benchmarking: where it fits in organizations, how it can drive change, potential pitfalls, and more. The second contains a series of Stork's essays on benchmarking practices.

Benchmarking is not, the authors say, a series of comparative measurements of various costs and ratios. Nor is it simply the adoption of successful practices of other companies. Rather, benchmarking should be viewed as a "continuous comparison" of business practices across industries. It involves not only looking at how to improve existing processes but also questioning whether scrapping those processes in favor of something else makes better sense.

Readers are taken through the rationale for benchmarking and given an understanding of what makes for good benchmarking—a sort of best practices for determining best practices. They're also introduced to proven measurement techniques and given a sense of the difficulties likely to be encountered in the benchmarking process.

At first blush, it would seem that a primer on process benchmarking would be an anachronism at a time when so much attention is focused on sophisticated supply chain management techniques. But the supply chain still involves the integration of large numbers of processes. And understanding the effect of those processes and how to improve them at the operational level remains crucial. The focus must not be solely on best practices but also on understanding how those practices integrate with the whole supply chain. While explaining the details of benchmarking programs, Stork and Morgan keep that perspective clearly in view.

Who's Who in Logistics Software? Armstrong's Guide to Supply Chain Management Systems

Armstrong & Armstrong Inc., 1999

124 pages, $149 (print version); $199 (print and disk version)

ISBN 1-891645-04-8

To order: Call (800) 525-3915 or visit www.3Plogistics.com

Managers searching for the best software for a transportation management system (TMS) or warehousing management system (WMS) now have another useful source of information. Who's Who in Logistics Software? Armstrong's Guide to Supply Chain Management Systems provides a listing and brief evaluation of 42 software packages.

Although it bills itself as a "guide to supply chain management systems," Who's Who in Logistics Software? focuses primarily on WMS and TMS software. Other product types, such as supply chain modeling, labor management, and integration, receive only a brief mention, while supply chain management software such as advanced planning and scheduling receive no mention at all.

For this reason, when compared with the 1999 Logistics Software CD-ROM, put out by the Council of Logistics Management (CLM) and Andersen Consulting, Armstrong's guide is not as extensive—CLM lists more than 1,000 packages. Yet this publication makes up for that lack of quantity by providing more comprehensive information. Whereas Logistics Software sticks to basic facts such as price, functionality, and frequency of updates, Who's Who also describes and briefly evaluates the product, provides a customer list, and presents case studies.

It is this detail that makes Who's Who in Logistics Software? such a helpful resource for managers trying to compare and evaluate major WMS and TMS software providers. Those searching for a guide to other types of software, however, will need to look to other sources.

Enterprise E-Commerce

Peter Fingar, Harsha Kumar, Tarun Sharma

Meghan-Kiffer Press, 2000

ISBN 0-929652-11-8

360 pages, $29.95

To order: Call (800) 507-2665

The rapid growth of Internet retailing has quickly raised public awareness of the potential for electronic commerce. Yet all too often, e-commerce stories in the popular and even the business press focus solely on the consumer transaction, ignoring the network of business relationships supporting that transaction. The real power of e-commerce, however, lies in the network—in the broad connectivity among all supply chain participants made possible by the World Wide Web.

The authors strive to show how companies can become part of that connectivity, a process that requires a fundamental transition from a traditional business model to one that has electronic commerce at its core. The authors set forth an ambitious agenda for their text, aiming to provide strategic, operational, technical, and marketing guidance for businesses venturing into the world of electronic commerce.

The busy executive will appreciate the book's organization. The text begins with two chapters providing an overview of the major e-commerce concepts. This is followed by four chapters on applications, one on technology components, and one on strategy. The approach lets readers pick and choose those sections of greatest relevance to them without much loss of continuity. The text is thoughtfully designed in other ways as well. It has useful appendices listing resources on XML (extensible markup language); e-commerce information portals on the Web; and dozens of suggested readings on e-commerce strategy, technology architecture, and software development.

The opening chapter provides a fundamental understanding of e-commerce dynamics. Chapter two introduces the concept of the "third wave" of electronic commerce, perhaps the key point to the book. That is, successful electronic commerce requires far more sophistication than merely Internet brochures (the first wave) or Internet-enabled transactions (the second wave, and where most electronic commerce is now). Rather, the future of electronic commerce is using it to integrate processes among supply chain partners—the third wave.

The chapters on vendor management systems and extended supply chain management will prove particularly valuable to readers of Supply Chain Management Review. These sections examine the specific processes, applications, and strategies facing procurement and supply chain managers with regard to electronic commerce.

The authors bring strong credentials to the task. Harsha Kumar and Tarun Sharma are co-founders of EC Cubed, a firm that provides software application components for business-to-business electronic commerce. Fingar is the company's technology chief. All three have extensive experience in e-commerce. In a relatively short space, they have produced a book that provides a surprisingly thorough analysis of where electronic commerce is heading—and what's needed to get there.

Stanford Executive Briefings Video Programs

Stanford Video and Kantola Productions, 1996–2000

$95 per video

To order: Call (800) 989-8273

The "Executive Briefings: Strategies for the Competitive Edge" video series allows viewers to learn from Stanford University's ongoing executive presentations without actually having to make the trip to Palo Alto.

The Executive Briefings series attacks more than 40 issues such as building strategies that get implemented, managing change, and structuring strategic business alliances. Stanford additionally takes advantage of its proximity to Silicon Valley by drawing in industry heavyweights and analysts such as Microsoft's Bill Gates, author Gary Hamel, and author, entrepreneur, and Apple Fellow Guy Kawasaki.

In the January 1998 presentation "Using the Internet to Build Relationships and Simplify Business," for example, Michael Dell discusses Dell Computer Corp.'s successful direct-based, Internet-enabled business strategy.

In the hyper-speed world of e-commerce, it is a given that any presentation about the Internet from two years ago will seem dated. Yet, much of what Dell talks about still has value today. (For one thing, where Dell was two years ago is where many companies are today—Dell was just beginning to work on conducting supplier relations over the Web at the time of the presentation.) Companies are still struggling with some of the challenges that Dell mentions, such as channel conflict. Furthermore, Dell's point that the Internet has to be an integral part of a business's strategy and cannot be bolted on is an important one and bears repeating. Finally, although Dell's success story is well known, hearing it direct from the founder's mouth lends the words weight, value, and interest.

Warehouse Inventory Turnover

Thomas W. Speh

Warehousing Education and Research Council, 1999

28 pages, $10 for WERC members; $20 for nonmembers.

ISBN 1-892663-17-1

To order: Call (630) 990-0256 or visit www.werc.org

This new booklet from the Ware-housing Education and Research Council (WERC) provides convincing evidence that inventory turnover is increasing across all industries.

Written by Thomas Speh, professor at Miami University in Oxford, Ohio, and director of the Warehousing Research Center, Warehouse Inventory Turnover is based on responses from 305 companies. The study found that the average inventory turnover had risen from 8.0 turns in 1995 to 10.4 turns in 1998—a 30-percent increase. WERC believes that this trend will continue into 2000 with inventory turnover increasing to 13.2 turns.

Speh provides a well-rounded analysis of the survey results by looking not only at the average turnover but also at the survey's median, lowest quartile, highest quartile, and range. The findings are broken down further for manufacturers, retailers, and wholesalers as well as by warehouse type (private, third party, and combination).

Also helpful is the survey's investigation of the key influences on the turnover increase, including heightened attention from upper management, reduced stock-keeping units, and improved sales forecasts. The author further fleshes out the report by discussing different measures of inventory and how to better ensure accurate measurement.

Warehousing Inventory Turnover is not really intended to be a formal benchmarking document. For one thing, the responses came predominantly from the manufacturing sector. Yet the publication gives readers a valuable look into broad inventory-turnover trends in a critical supply chain link.