I’m a picture guy.  In our kind of work, we have to be able to take a lot of data and make sense out of the process or processes that generated it.  I used to work with a fellow named, Bill, who has a PhD in Operations Research, and is probably one of the smartest people I’ve ever met in my life.  Bill is a guy who can look at six or seven big tables of numbers and then say something like, “… and the answer is 7.563.”  He was usually right.  I don’t have that talent to create the linkages among lots of different types of information in my head to come up with a conclusion like that.  That’s why I like pictures.

Recently, one of my colleagues and I were visiting a manufacturing plant to assess their production scheduling process.  The client invited us to visit the plant because they knew they had a problem.  As we followed the scheduler through his day, we began to understand the root causes of the problem.  So how did I choose to communicate what we’d found to the client?  You guessed it; I drew a picture.

When the plant manager first opened the file containing the flowchart of their existing process, she told me she only needed to see that it took me three letter-sized pages to document to the process to know that the process was much too complex and cumbersome to be fixed with a couple of “quick hits.”  Why is it that she knew without studying the details that we needed a full redesign to fix this process?

I think many of us are just built that way.  I know there is a lot of clinical and academic research that shows how we human beings use our sense of sight as a first preference for observing the world, and that there are specific parts of our brains that are able to detect visual patterns or the lack thereof.  However, I don’t think we need to see the results of that research to know why the phrase, “a picture is worth a thousand words,” is such an enduring statement.  It rings true with all of us.

That’s why I like a software product called Tableau.  It is marketed as a visual analysis tool and I think it does its job quite well.  Although I don’t claim to be an expert user, I have found it quite useful when I need to understand what’s going on in a large dataset.  Let me illustrate using an example from a recent transportation analysis that we did for one of our clients.

Our client had grown by acquisition and managed its transportation in a very de-centralized manner.  Each of the sites contracted individually with their own set of carriers, using their own set of criteria for selecting and then awarding business to the carriers.  Profit Point was called in to help the client understand the cost-savings opportunities that would result from a more centralized approach to carrier contracting and management.

Our first priority was to find out what was going on at all of the different sites so we developed a database from the client’s freight payment records to do it.  Now, picture this (pun intended).  We now have over 63,000 individual shipment records to analyze and we needed to do it in a way that told a story that we could understand and that we could then communicate to the client.  The first thing we did was look at the spend by plant and by carrier.  The spend by plant was more of a prioritization issue, to understand which of the plants had the highest freight spend, but the spend by carrier became the first part of our story as you can see in the two pictures below.

This second chart was a very powerful image to help the client quickly see that the number of carriers being employed was out of control.  You don’t even need to be able to read the name of the carrier on the Y-axis to know that there are too many carriers in this picture.  Many of these carriers had only a single load all year long, but were still carried in the system.

We also wanted to show the client the significant different in pricing policies across their carrier base.  The following slides show how we used some more of Tableau’s functionality to make our point.

By plotting cost vs. distance for all of the shipments, we were able to see the general correlation of cost with distance that we expected, but we also saw a number of outliers that we wanted to better understand.

We then highlighted a group of very high-cost shipments and kept only those points to see what we might find out.

Using a simple stacked bar chart, it was very apparent that carrier “C-g,” the red bar in the chart at left, was the main player in this group.  Once “C-g” was identified, we were able to demonstrate that their cost was always greater than the average cost for shipments with distances greater than 200 miles and by as much as 50-66% for shipments with distances greater than 1000 miles.

Again, these pictures allowed us to find one of the smoking guns inside this mass of data.  Suffice it to say that we found many other opportunities through similar visual analysis.

Because of these pictures, and others like them, it was an easy sell.  Using a tool that makes it easy to use the built-in “intelligence of our eyeballs,” we were able to develop a convincing call to action for our client, who went out to the market with a targeted freight bid and reduced their transportation spend dramatically.

As technology continues to penetrate more and more aspects of business and our everyday lives, it makes more and more data available for us to turn into useful information.  But it’s only useful information when we can put it into a form that we understand and can communicate it to others.  That’s why I’m a picture guy.

To learn more about Profit Point’s transportation services, call (866) 347-1130 or contact us here.

“Going Green” is becoming a higher priority for companies large and small, as regulatory bodies and consumers around the world push for more readily-available information on corporate carbon footprints and companies’ plans to control / reduce their carbon emissions.  But how do you do this most cost-effectively?  Optimization is a tool that can lead to better “green” decision-making.

First, let’s review of the types of decisions that companies are making today.  Here are some real world examples from recent press reports…

Dole Food Company,  the world’s largest producer of fruits and vegetables, has committed to make its banana and pineapple business in Costa Rica carbon neutral over the next decade.  Dole social responsibility officials Sylvain Cuperlier and Rudy Amador recently highlighted their priorities in achieving this in an interview :

• measurement of current carbon footprint and activities, such as the use of fertilizers,
• research into and collaboration on mitigation and sequestration projects, and
• improved  operations, including increased use of rail transportation on land and more energy-efficient refrigerated containers for maritime shipments.

Tyco Waterworks, a worldwide supplier of water system equipment based in the UK, has documented its consolidation of multiple manufacturing plants into a single Manufacturing Centre of Excellence for meter boxes, plastic injection molding and gunmetal products in Bridgend, South Wales.  Having all its manufacturing under one roof results in a reduction in the company’s overall energy consumption and transport, with a resulting positive impact on its carbon footprint (as well as giving operational efficiency benefits.)

Xerox Corporation, which provides document services and equipment around the world, maintains a fleet of 5,000 vehicles used by its technicians in the United States as they respond to customer requests for service.   Tony Rossi, Xerox’s manager of programs and operational support, said in an interview that his programs, which have reduced fuel consumption over the last several years by 10%, and have a goal of a 25% reduction, can be grouped into four categories:

• pairing each driver with the best-sized vehicle for his / her needs,
• improving the fleet’s fuel efficiency as vehicles are replaced,
• tracking driver routes and distances traveled on a daily basis, and
• using GPS systems to match available technicians against pending requests as they are dispatched during the day.

The common thread?  These companies have made progress towards their cost and carbon goals by

• understanding their current situation, and what their options include,
• implementing more efficient operations over their existing supply chain (thus generally using less energy and lowering their footprint), and
• making the most effective capital additions to their supply chain systems when justified.

Optimization techniques can allow you to identify the best solutions that are possible in improving efficiency and implementing capital projects.  Thus you can make the best choices for meeting your goals from the options that you have at hand.

In making decisions for a manufacturing-oriented supply chain like the one described for Tyco Waterworks above, a network design tool like Profit Network can help you evaluate the benefits of:

• keeping or consolidating existing facilities, as well as,
• opening potential manufacturing sites, taking into account
• capital costs,
• shutdown charges,
• manufacturing rates and costs,
• freight costs, and
• and a host of other costs and constraints on operations.

Profit Network uses a combination of linear and mixed integer programming and related optimization techniques to guarantee that you evaluate a range of solutions and identify those that are best for your particular needs.  Potential decisions that can be evaluated include both operational changes and choices among proposed capital projects that will lead to greater efficiency.

Xerox and Dole have scheduling problems that can be solved by both optimization and heuristic means.  The Xerox technician dispatching problem is a variation on the mathematically well-studied Assignment Problem, which can be solved using “greedy” algorithms (which pick off the “low hanging fruit” but are not guaranteed to give the absolute best solution) or more comprehensive methods that can give the best solution, at perhaps a longer solve time.  Transportation scheduling problems again can be solved through these methods. Using the technology of the 21st century will be critical for businesses to meet their “green” objectives.  Optimization technology is one of these new technologies that will help you reach these goals.

This article was written by Dr. Gene Ramsay, Profit Point’s Infrastructure Planning Practice Leader. To learn more about Profit Point’s Supply Chain Sustainability services, please call (866) 347-1130 or contact us here.

Image courtesy of Gavin Schaefer.

Why do our customers come back to us over and over again? More than anything, I believe it is because they value the collaboration with our innovative team of creative supply chain thinkers.

There are two key concepts here: Collaboration” and “Innovation”. Let me say a few words about each.

Some companies are looking for external consultants to provide a roadmap, out of the box solution or tell-me-what-to-do best practices. Those companies typically are not our customers. Our customers are the ones who recognize the best partnerships are those that are collaborative: they actively bring unique knowledge and insights of their business and we provide best practices from across many industries, deep supply chain optimization expertise, and state of the art solutions that are practical, implementable and useable in all kinds of supply chain organizations. Together, we define, design and implement solutions that significantly improve supply chain operations in a sustainable and long-lasting way.

In addition to being collaborative with our customers, we are constantly evolving in our understanding of how to approach and improve supply chain operations. While a significant portion of our methodology and solutions are based on tried and true paradigms of supply chain operations that have remained valid across decades, we also recognize that competitive advantage comes from adapting to changing times, understanding the 10% that truly is unique about each companies supply chain, and sprinkling in critical differentiators when appropriate. This always looking forward, approach enables to provide uniquely tailored approaches to supply chain management that are grounded on the foundation of best practices and well established management theories that have been proven over decades across many industries.

You will find many examples of this innovation if you peruse our website. A few worth highlighting are:

• We were honored to have received Supply & Demand Chain Executive’s Green Supply Chain Award in 2008 for our early release of Green Network supply chain design software.
• We have been pleased to partner on a continuing basis with industry innovator MachineryLink to enable their success implementing a never seen before business model to support farmers across North America
• We have been delighted to be the optimization partner for Logitech as they implement unqiue and innovative optimization approaches to common supply chain challenges.

If you believe in this collaborative and innovative approach to supply chain management, we invite you to look around our website and read many of the exciting successes we have had with our customers. Thanks for stopping by.

“Swapping commodities with other manufacturers instead of shipping internationally can greatly reduce transportation costs and boost profits. Finding the right swap partner will help you avoid the risks that are inherent in these arrangements.”

This quarter’s issue of Supply Chain Quarterly features an insightful article from Alan Kosansky and Ted Schaefer on commodity swaps.

“If you’re under a mandate to make substantial cuts in supply chain costs, you probably have already “picked the low-hanging fruit”—that is, you’ve made the obvious, easyto- achieve improvements. You probably have optimized delivery to your customers by routing orders through the most efficient network of warehouses. It’s likely that you also are sourcing from highly efficient manufacturing plants around the world. And perhaps you have partnered with ocean carriers and leveraged your shipping volumes to negotiate the best rates in the industry….”

You can download the article in PDF form here. CSCMP members and subscribers to the magazine can read the complete article here.

If you would like to learn more about our Supply Chain Optimization services, please call (866) 347-1130 or contact us here.

This month, Manufacturing Today magazine published an article entitled Supply Chain: Time to Experiment, which was co-authored by Dr. Alan Kosansky and Dr. Joe Litko of Profit Point. The article discusses how executive-level business decisions can include a broad range of interconnected variables leading to an extensive array of options and discusses how business leaders can gain exceptional insights in to future scenarios.

Read the complete article here.

If you would like to learn more about our Supply Chain Optimization services, please call (866) 347-1130 or contact us here.

Supply chain optimization consulting firm selected as a top solution provider for supply chain decision makers.

Profit Point, the leading supply chain optimization solution company, was awarded the Supply & Demand Chain Executive 100 award for its role in improving supply chain decision making.

Our good friends at DRK Research recently published an excellent white paper entitled The impact of business analytics on supply chain performance.

The paper investigates the relationship between analytical capabilities in the plan, source, make and deliver area of the supply chain and its performance using information system support and business process orientation as moderators. Structural equation modeling employs a sample of 310 companies from different industries from the USA, Europe, Canada, Brazil and China. The findings suggest the existence of a statistically significant relationship between analytical capabilities and performance. The moderation effect of information systems support is considerably stronger than the effect of business process orientation. The results provide a better understanding of the areas where the impact of business analytics may be the strongest.

Read the complete article here.

This month, Chief Executive magazine published an article entitled Increasing Value Across the Supply Chain, which was co-authored by Dr. Alan Kosansky and Jim Piermarini of Profit Point. The article discusses how optimization technologies can be used to maximize supply chain value by implementing more sophisticated approaches to standard practices such as inventory and asset management.

Read the complete article here.

Many of us have worked with companies that provide large ERP solutions. Some of these experiences have been successful and others somewhat less than ideal. If you work in the manufacturing, supply chain, logistics areas, then you realize the vast importance of having access to meaningful data, although implementing a large ERP system does not necessarily mean you can get to that data. It has been my experience that having the data available and having the ability to get to that data and using it to perform strategic or tactical analyses may be challenging.

I recall a situation that happened to me many years ago. I was working for a large corporation that maintained a large database on its customers. All of this information was on a mainframe. To get access to the data so that we could perform analyses and generate reports required communication with the MIS department. We would schedule a meeting with one of the analyst to discuss what data we needed access to and what reports we required. The analyst would routinely tell us to fill out a job request form number 777. Then, this form need to go through several levels of management approval. If the request made it through the approval process it was put on the development schedule. Typically from start to end the process would take several months. In today’s world that would not be acceptable.

Shortly after this experience, personal computers were introduced into the business environment. Mainframe shops began to downsize. Resources devoted to maintaining and updating these large systems were streamlined. Business analysts that had access to PCs began to feel the freedom. They had a hardware environment that came with software such as spreadsheets that allowed them to take control and to perform the analysis on the data that they needed. It no longer required communicating with MIS, filling out forms, getting layers of management approval.

So my question is: Why does it still take weeks or months to get access to data in a meaningful format from these large ERP systems? I thought we improved the process. Oh, by the way, I was curious why the MIS development was assigned the number 777.  This was the question posed to me. You know how long it takes to get three sevens lined up on a slot machine? I answered, a long time; in fact it may never happen. MIS’s response, you are correct, and that is about how long it can take for us to process your request. I am not sure we have evolved too far from the old 777 days.

If you have not seen this site yet, it’s a must. This is a comedy series about big ERP. There are several episodes, with more to come.

If you have worked with industry standard ERP systems, then this comedy series will get some laughs.  Great scripting, acting and production! Well done!

I liked it so much that we’re including the videos here:

Episode 1

Episode 2

Episode 3

Episode 4

Episode 5

Episode 6

If you would like to learn more about our Supply Chain Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Richard Guy, Profit Point’s Director of Sales.

When using a rapid iterative development process, a client may see several solutions to his problem that are not perfect.  Getting the best feedback from the client at every cycle of the development is important.  If you get only the most obvious evaluations, the progress towards an acceptable product is erratic, possibly unsuccessful, and very painful.

Recent experience was a scheduling application where we did not have direct contact with the final user.  Here we were working for an intermediate third party.  It finally became clear that feedback was going to be limited to a comment about the feature the customer wanted to focus on.  Usually that would represent some aspect of the solution that was either unacceptable or very different from current practice.  Some current practices would require new resources and changes in parts of the system that could not be easily changed.

The limited feedback means that each improvement would come along one dimension at a time.  In most cases there are several important elements to a good solution.  Although it might sound reasonable to focus on one at a time, it can turn out that the last problem to be overcome means a substantial revision to modeling logic.  That can happen even when the last problem is relatively minor.  In other words the next-to-last solution is very close to the desired solution, but the model logic requires substantial revision or an entirely new concept to succeed.  In a coast-to-coast driving trip, the Grand Canyon represents just a small part of the distance.  Crossing it requires a different approach than driving across Kansas.

Of course, this is like a traffic accident.  Regardless of who is at fault here — NO ONE WINS.  Model development is a joint responsibility.  It requires a lot of effort by the developer and the customer to be successful and efficient. 

At the start of the process it will be difficult to get a customer to read through some defects to find more subtle problems.  But it is worth the effort for both the developer and the customer.  One possible approach to this is to develop a word picture or checklist of what an entirely acceptable solution looks like.  In the example mentioned above the end product is a schedule of work for some crews.  So the checklist could involve things like the duration of the workday, the order of activity completion, limits on available resources as implied by the schedule, and correlation between activities in different parts of the system.  In the example given here it was the lack of correlation that was never identified as a model requirement until very near the final product.  Creating that correlation required substantial model revision, search for appropriate parameters, and another series of regression tests.

Also essential is an appropriately large set of data for testing.  Looking at a single data set at a time magnifies the problem of getting a customer to look at all aspects of a solution.  Very often one data set does not exercise all parts of a model.  If tests are done on live data provided each day, new deficiencies are discouraging and the prospects of success can seem bleak.   

There seem to be some good principles here.  Do not assume that aspects of model behavior not commented upon are acceptable.  Develop a checklist or word picture of the perfect or acceptable solution.  Keep that checklist growing as new information is uncovered.  Get comments on all parts of the checklist/picture at every stage they are observable.  Start with data that represents the variety you would see in the system over a reasonable period of time. 

This article was written by Joe Litko, Profit Point’s Business Optimization Practice Leader.

To learn more about our supply chain improvement services, contact us here. 

Our work here at Profit Point is all about helping our clients make changes that will get them to a better place be it lower costs, higher throughput, shorter lead times, lower inventory, etc. But change is hard so how do you navigate what could be very troubled waters to ultimate get to these benefits? Sometimes insights come from unlikely places. Read on.

A few weeks ago we adopted a greyhound puppy. We named him Blue. Usually greyhound puppies are not available for adoption as pets because they almost always go into racing. Blue came to us because he had a broken leg that was subsequently amputated. His racing career was over before it even started. You can see a picture of Blue below.

His name is Blue because the grey color in greyhounds is known as blue (don’t ask me why because I don’t know) and because he has bluish eyes.

When we brought Blue home I was reminded that dogs’ digestive systems like sameness. Sudden changes don’t go over well and usually manifest themselves in the form of runny stools. A little Kaopectate works wonders in dogs as well as humans!

Changing Blue’s diet got me thinking about what we do at Profit Point and what elements are essential for making change happen. There are three things I’d like to highlight in this article.

You’ve gotta have a champion.

First, you’ve got to have a champion. The champion is someone who

• believes in the change
• is committed to making the change and
• can effect the change.

The champion must understand why the change is important; believe it should be done; will see it through to completion and has the resources under his / her control (directly or indirectly) to make it happen.

Some years ago I was sitting in an employee lunch with a Vice President of a company I used to work for. We were discussing some current corporate change initiative and someone asked what will happen if some of the employees affected by the change don’t go along with the program. The Vice President answered “Either the people will change or the people will change.” This Vice President viewed this initiative as being so important to the future of the company that if the effected employees refused to adapt to the change they would have to be replaced. This may sound harsh but we were discussing a change that was crucial to the company’s survival. I worked for another company that refused to make these hard changes and do you know what happened? They were taken over by another company who had no qualms about laying off thousands of workers.

You’ve gotta have a champion.

Communicate, communicate, communicate.

Second, it is so important to communicate

• what the change is that you are making
• why you are making the change and
• what the expected results will be.

A former boss of mine was fond of saying “People will live with a problem they understand rather than a solution they don’t.” He coined that pithy bit of wisdom because unfortunately he had more than one experience where a project he was involved with had great promise but crashed and burned upon implementation. Apparently the people affected by the change didn’t understand and consequently didn’t trust the solution. Communication does not guarantee understanding and acceptance but without it you’ll be setting yourself up for failure from the get go.

Communicate, communicate, communicate.

Go slow.

Third, when we implement a new work process or software tool of any significant size or scope, we always used a phased approach. A typical project plan might look like the following:

1. Develop a process / tool for a well defined pilot scope
2. Implement for a pilot set of users (maybe in one region of the world or some other logical subset of users)
3. Allow for time to fix unforeseen issues and additional development
4. Implement for a broader set of users
5. Allow for time to fix unforeseen issues and additional development
6. Implement to remaining set of users

Clients have told us that they have had industrial accidents because of too much change in too short a time. This can risk long, unexpected downtimes that result in loss of production capacity or worse personal injury or even death.

Go slow.

I’m happy to report that Blue’s digestive track is back to normal. I was the champion and easily made the changes to his diet since I’m the one that feeds him. I tried to communicate what was going on but he just barked and whined for his food as most puppies do. I certainly did make slow gradual changes in moving him to his puppy kibble which he really likes now.

I’m also happy to report that he is adapting to having just three legs. You can see him playing with his pug friends in the neighborhood below.

This article was written by Mark Rockey, Profit Point’s Production Scheduling Practice Leader.

To learn more about our supply chain improvement services, contact us here.

Jake works in customer service, and the phone rings… It has been a long day already, but he is happy when the phone rings, so he says:

“Hello, this is Jake at Western Chemical Resupply. How can I help you?”

“Hello, Jake, this is Paul, I need to order some pool supplies for my pool business.” says the voice on the other end of the line.

This is great, no problem. After getting Paul’s customer information, he asks:

“So I typically order 150 units of the new chlorine product to start the season, and I am opening my store in a few weeks. Do you have any in stock?”

“Certainly we have 100 units in stock today, and are getting steady re-supply shipments from the manufacturer all the time,” Jake says.

So many people have already begun ordering that new product, it looks like it is going to be selling well this season, Jake thinks. Jake begins a new order for the new chlorine product, typing into the order system the SKU and the 150 units, and next comes the date field. When does Paul want it? Jake asks Paul when he would like to have it shipped, and Paul answers with that dreaded question… “When can I have it?”

Yes, we all know it sounds so simple and innocent… a simple request, like “Are you free Friday for lunch?” or “When will your car be out of the shop?” but the plain fact is answering that question can be fraught with difficulty and implications. Difficulty since the state of Jakes information systems do not currently serve this up to him in a friendly way, and there can be implications, since the company policy is to stick to their commitments; once Jake makes a promise on the ship date, he may not change it without the customer’s consent: often difficult to get. Jake has already made many commitments for this product, and each new one he makes adds to the importance of not getting this wrong. A wrong answer could mean calling a lot of unhappy customers to re-schedule their ship dates.

In order to be able to answer it properly, Jake needs to know several pieces of information, all of which are in his order system. He needs to know the re-supply schedule over the next several weeks, as far out as the re-supply lead time. He needs to know the open orders that are on the books today, and for which he has already given firm ship dates, that may not slide with out causing him great pain. That’s all he needs in theory. But in practice, he needs to see this information combined in such a way to make him be able to give Paul a good answer.

So Jake opens the daily inventory chart for this SKU in the order system. The daily order chart combines the on-hand inventory with the incoming supply, and then subtracts the orders, each day to produce the daily inventory chart, like the one shown below. Jake can see the numbers too, but he is a visual kind of guy, and relates better to the graph.

But as Jake looks at this chart, he struggles with which date to choose to be able to commit to Paul for the 150 units he needs. He can see that there will be enough in inventory on or about Jan 9, then after that there is a spike in inventory around the 18th of Jan. Surely that should work? But what Jake doesn’t see is the amount that he can actually promise. He doesn’t see it because most tools do not show it. Most tools do not calculate it. Or if they do, it is kept from the user to be able to make good promises while they are on the phone. What Jake needs to see is a inventory graph like the one below, when it is plainly clear when and for what amounts commitments can be made without disturbing the other orders that have already been committed.

If Jake had this chart, he would be able to see in a glance when Paul could have his 150 units. 150 units will be available to promise (“ATP”) on Jan 27th. In fact, Jake could suggest shipping as much as 115 units on Jan 10th and the balance on Jan 27th. Paul likes this idea, since it means he can start selling it faster, and accepts Jakes idea. Jake enters the orders for 115 on the 10th and 35 units on the 27th. Paul likes getting some fast, but getting the commitment to get it all by the 27th. Jake likes being able to make the shipping commitment without having to reschedule all the other open orders. Once he enters the order, he refreshes his inventory chart for this SKU just to see what it looks like now. Ok, he thinks, that means no orders for the new chlorine product until the end of the month, at the earliest. Good to know.

Calculating the amount available to promise is not rocket science. Guessing at the amount available to promise is a recipe for a headache.

Profit Point delights in presenting useful information to the people who need it to make their work lives better. ATP is just one of our strong points. Contact us today to see how we can help you be able to answer some of those seemingly simple questions with ease.

This article was written by Jim Piermarini, Profit Point’s CEO and CTO.
To learn more about our scheduling optimization services, contact us here.

Profit Point’s Director of Supply Chain Services Recognized as a Thought-Leader within the Supply Chain Industry

North Brookfield, MA (PRWEB) February 24, 2010

Profit Point, the leading supply chain optimization company, announced that its Director of Supply Chain Services, Ted Schaefer, has been named a 2010 Supply & Demand Chain Executive “Provider Pro to Know.” Supply & Demand Chain Executive Magazine, the executive’s user manual for successful supply and demand chain transformation, this week announced the tenth annual listing of Pros to Know in the Supply Chain Industry.

“This year’s Provider Pros to Know have shown themselves to be thought-leaders in the Supply Chain industry,” said Andrew K. Reese, editor of Supply & Demand Chain Executive. “Highlighting the learnings that the Provider Pros to Know have taken out of the Great Recession provides our readers with a wealth of best practices that they can apply in their own supply chains, as well as insights into how leading organizations are positioning themselves for competitive advantage in the Great Recovery ahead.”

The Supply & Demand Chain Executive Provider Pros to Know is a listing of individuals from a software firm or service provider, consultancy, or analyst or research firm who have personally helped clients address the challenges of the recession and prepare for the recovery ahead.

“It is an honor to be recognized by Supply & Demand Chain Executive as a Pro to Know,” said Schaefer. “However, this award represents a company-wide effort, which includes a team of experienced and pragmatic consultants, as well as a technology development group that builds practical tools to solve complex supply chain problems. In the end, our reward comes from helping our client become the hero within their organization’s supply chain.”

Profit Point’s supply chain optimization services provide clients with clear, actionable guidance that accounts for the many what-if scenarios facing their businesses in these uncertain economic times.  By optimizing the supply chain network design, Profit Point’s clients are able to recoup millions of dollars in annual operating costs.

To learn more about Profit Point’s supply chain consultants, visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization.  The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization.  Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Rohm and Haas, Dole Foods, Logitech and Toyota.

About Supply & Demand Chain Executive:
Supply & Demand Chain Executive is the executive’s user manual for successful supply and demand chain transformation, utilizing hard-hitting analysis, viewpoints and unbiased case studies to steer executives and supply management professionals through the complicated, yet critical, world of supply and demand chain enablement to gain competitive advantage. On the Web at www.SDCExec.com.

There is a better way to qualify consultants and software vendors and award business, rather than using the RFP process.

Request For Proposal’s (“RFP’s”) are used by many organizations to gather information and details about services and prices from various consultants and software vendors.  These organizations believe that this is an efficient (for the RFP issuer, at least) method and process to acquire the best possible services at the lowest price.  This is not true.

And what about government organizations that are often required by law to go through the RFP process?  They do so with the belief that the RFP effort will improve accountability and reduce favoritism, corruption, and nepotism.  Does it?  I am about to share with you some ideas and thoughts from a consultant’s viewpoint.  It is my belief that organizations can do better without the RFP process and even government agencies or businesses that do not have the flexibility, can take some steps that will enhance an out-dated process.

RFP’s do not create a healthy relationship

Initially, a majority of the effort involved with RFPs is creating an RFP instrument. The instrument is pushed from the issuer to the respondent, typically in a word document that is sent electronically with a deadline to respond. It is a one-way distribution channel.  From my experience, the RFP document does not capture all the thoughts of the business.  Some RFPs are rewritten and tweaked so many times, that sometimes it is actually difficult to uncover the true “needs” message from the final document.

There are also applications and services available that allows an organization to post an RFP on a website and ask for respondents to use this medium for their response. This may make sense if you are buying commoditized widgets, but not consulting services or special-use software. This may seem efficient in the organization’s viewpoint, but it is inherently one-sided. Many of these instruments set up communication rules that are rigid and sterile with the thought that they are being fair to all the vendors. What they ignore is the working relationship, which often has a major impact on the success of a consulting engagement.

Healthy, productive relationships start with healthy communications.  It has been my experience that organizations that take the time to engage in a conversation with a potential vendor to explore a possible relationship have a far better chance of developing a healthy and productive business relationship and get services and/or software at a much better price.

What comes out of this relationship are conference sessions that generate ideas, thoughts, and brain storming that focus on developing a methodology or application design that is on target and meets the needs of the organization. Projects that promote an open and dynamic communication style from the beginning will be more likely to succeed.  This communication process is powerful and creates a solid foundation for an ongoing business relationship.  Allocate more time to engage and verbally communicate with the potential consultant and you will truly understand whether they can add value to your organization.

RFPs attempt to get something for nothing

Or at least something for real cheap. As someone once said: There ain’t no such thing as a free lunch.  It is a law of economics. If you are searching for a business solution with a goal of the best possible outcome for you and your company, then think of this. You spend a few hours or days searching the Internet for companies that offer the type of services you are looking for. You may already be doing business with or have talked to a few companies, but want to compliment that list with several others. You sent out a standard formatted e-mail requesting more information about the company and their services. 60% of those e-mails go unanswered. You ask yourself why? Because, the busy companies will not waste their time with your solicitation. Why? Because they are busy helping other companies. Why are they busy? Because, they offer a solution that is in demand. A solution or service that is based on performance and price.

RFPs limit your options to those that are on your short list. RFPs limit your visibility to those solution providers that actually have the time and inclination (at that very moment) to respond. RFPs limit your responses to those that do not avoid RFPs, as is the case with many successful firms. The 40% of the e-mails that are answered are from companies that are sitting on the bench because no one is using their services. Hmmmm, I wonder why? Intelligent and professional organizations will not give you something for nothing. I am sure, they would be pleased to engage in a conversation with you or your team if there is a real opportunity for them to help you. You can get value and information from these companies, but not with an RFP.

Qualified suppliers ignore RFPs

Many suppliers of professional services believe that the RFP process is “fixed,” as in “rigged,” and another vendor has already been chosen. This may or may not be the case, but since the perception for many vendors is no hope to win the business, the smart allocation of their valuable resources is not to respond.

Surveys have been conducted to understand why qualified suppliers ignore RFPs. These are some of the responses from these surveys:

“…the winner is often decided before the RFP even goes out.” – J. H.

“…you can assume a presumptive winner has been chosen.” – M. H.

“…often RFPs are all but awarded when they go out.” – T. M.

Effective and experienced consultants know better than to waste their time on low-probability activities, so they typically read the request in part, and then trash it.  This process not only eliminates a significant number of consultants that might have been well-qualified for the project or application, but it is quite likely that it eliminates the best candidates for the project.

Consider the example of hiring a key executive or business manager. Posting a job opening and reviewing the resumes that are submitted will rarely, if ever, yield the best candidate. The best candidates are gleaned from a careful, personal vetting process.

RFPs reward the wrong things

Answer right, and win the business. Firms who are forced to respond to a lot of RFPs hire specialists who know little about the craft, but do know how to write RFP responses. In even more cases, RFPs reward “gamblers” who have the time to throw excessive man hours at responding to an RFP. These vendors are very successful in winning business through the RFP process. Someone pays for all of this work. The RFP costs are embedded in the rates the client pays. These rates are typically higher than their standard rates. You will pay the piper.

In addition, does the organization receive a solution or service that is best in class? What they receive is exactly what they asked for. They may receive all the deliverables outlined in the scope, but to add additional functionality to software, or expanded scope will cost more.  RFPs make everything a commodity. By definition, extraordinary work it is not.

RFPs provide a false sense of confidence

Just because you put a lot of time, energy and money into something does not make it great. It just helps you to convince yourself that it is great. If I managed to group, whether it was IT or operations, I would question why they always recommend an RFP p
rocess. Are they afraid to step out of the box and try something different? Are they so set in their ways that they resist change? Can the RFP process be a liability to your company and actually make you pay more for services than you should? I think so.

Is there a more efficient process?

Yes. Organizations need to follow the basics.  Ask questions such as:

• How much does this sorta thing cost?
• Do you have capacity?
• What is your approach?
• Are you qualified?
• What is an example of a similar problem that you have solved?

All of these questions can be answered through referrals, web site research, a couple phone calls, and emails. For example, if you are in charge of supply chain improvement at your company and do not already have a list of focused consultants that would likely be a good fit for your business, then you may be missing an opportunity to add significant value in your organization.

Personally solicit vendors who you would like to work with. Start by communicating with the sales and marketing people of vendors. You may look at them as “sales” people, but they play an important role and a good consulting firm has well-informed and experienced sales staff. They have the power and keys to provide you with valuable information about their company, their services, and their products. They also have direct links to others in the organization that will be useful to meet. Ask them to introduce you to the experts, meet the people who will be providing the consulting, the support services, etc. Ask to meet the management team. If you cannot get access to these people early on in the discovery process, then you certainly will not have access to them once a project starts. You never have access through an RFP.

Think Small

Every business leader hopes for and works toward breakthrough innovations.  But in tough economic times, innovation often requires too much risk for an organization and its change-resistant customers.  Instead of dreaming of “The Next Big Thing”, focus on innovating in smaller, manageable bursts.  Look for improvements to current products and services.  Use small and cheap experiments to test new ideas.  Seek out innovations that are easily adapted by consumers and do not require huge investments.  These innovations are more likely to be palatable to your stakeholders and customers, and they are often the building blocks for larger, more long-term breakthroughs.  Adapted from “Find the 15-Minute Competitive Advantage” by Rosabeth Moss Kanter.

Keep the project or software selection on a small scale. Once you have developed an initial relationship with a preferred supplier based on your qualification process then it is time to evaluate their performance.  Award them with a small project or purchase software with an evaluation timeline.  Let the vender know that they have been selected to provide your company with services and or software, but you want to take small steps to ensure that they are the right vendor before you award a larger project.

An example of a first project would be paying for the scoping phase of a much larger project. What can come out of this is a functional requirements document that can be used with the same vendor or others if you are not satisfied with the relationship. If the initial project or software phase is successful then expand the scope in phases to reach your ultimate goal. By starting small, this will give you the opportunity to assess the relationship, deliverables, and costs. This discovery phase will also give you an opportunity to learn more about the creative and experiential value that the consultant will bring to then engagement. These “soft” benefits often yield significant value to the project, but can be impossible to reveal before the working relationship begins.

RFP Die-hards

There are companies and agencies that have legitimate needs and are willing to pay for services and software, but are required by law, or policy, to submit RFP.  This may be a formality or a company policy, but this should not prohibit you from developing a relationship and internal process to provide you the best services or software to meet your budget.  The most successful projects are a collaborative effort between the company and the vendor or consultant.

A word for those that must follow an RFP process.  Since there is a general feeling in the suppler arena that RFPs are a big waste of time, is it any wonder that potential vendors do not respond? This leaves legitimate buyers for services and software in a pickle. Their reputation is soiled by those who issue bogus or pre-won RFPs. How can you prevent the hard work of your RFP from being greeted by the lonely silence of an uninterested vendor community? How do you get on the radar of capable suppliers? Sometimes just being aware of the problem gives you a solution. Knowing that vendors have this negative perception, you can take steps to remove their fears by following a few simple steps. First and foremost, make it personal, talk to potential vendors. Ask the important questions and prescreen their responses.

• Are they interested in developing a relationship with your company?
• What work have they delivered in this area?
• Are they flexible with their work process and approach to match your needs, or does their product do everything for everyone?
• What makes them different from other service or software providers?

Share your timeline. Share your concerns. Share your budget and asked if they can deliver a solution within these constraints. Be honest with the overview of your needs, and your questions and your feedback to the potential vendor. Be flexible with your process, and listen to the supplier. Most suppliers will respond in a like way, and provide you honest feedback on your RFP. There may be a faster, better, cheaper approach than you have so meticulously spelled out in the RFP.

If there does not appear to be a future relationship, then move on. It is also fair to ask vendors if they are aware of any companies that can provide you the services or software that you are looking for. You may be surprised at their answers. Most legitimate companies will recommend another company and sometimes even a competitor.

It is also helpful to let the vendor know if there is internal competition or not. This allows the vendor to assess whether this is a fishing expedition for your internal IT department to get ideas and a strategy, or if it is a real opportunity. In addition, if there is no external influence on the formulation of the RFP from another supplier, then declare that. Some RFPs are written with so much detail that it is fairly obvious that the document was prepared by third party for that party’s benefit. Do not let the vendor selection date slide. You have asked for a vendor to respond by a specific date, therefore you have a commitment to meet your decision date too. Not selecting a vendor by the selection date says much about the company. Keep the relationship professional and build trust with meeting deadlines.

Now, this does not guarantee that you will get an enthusiastic response from the most-qualified suppliers. You will, however, remove some of the chief fears that they have about you as a buyer. Anything that you can do to raise the vendors’ trust level will encourage them to respond.

Summary

There is a better way to award business and qualify consultants and software vendors, rather than using the RFP process. Engage and communicate with the consulting firm or vendor on a personal level, be honest and realistic on costs, dates, and deliverables. Build in some flexibility, and reasonableness, and follow a communicative and collaborative process. You will help your company improve, have more fun, and see so
me amazing results.

If you would like to learn more about our Supply Chain Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Richard Guy, Profit Point’s Director of Sales.

Profit Network 4.5 enhances visibility for decision makers and extends modeling capabilities to handle the world’s largest supply chains.

North Brookfield, MA (PRWEB) February 4, 2010 — Profit Point, a leading Supply Chain Optimization company, today announced the introduction of Profit Network 4.5, a major upgrade to their award-winning supply chain network design and modeling software. The software update includes a combination of new features and technical enhancements which combine to support richer scenario testing for larger supply chains over a longer time periods.

“With almost 10 years in the field, Profit Network has been put to the test against some of the world’s largest supply chains,” noted Jim Piermarini, Profit Point’s Chief Technology Officer. “But best practices have expanded over time, so decision makers are looking for more integrated and comprehensive modeling solutions.”

Profit Network 4.5, which is used by many Global 2000 companies to model supply chain plans, has been enhanced to integrate better capital planning, greater control over facilities decisions and improve tracking and modeling of sustainability initiatives. The modeling software now includes improved options for integrated capital spending, facilities decisions, natural resource planning and emissions mitigation.

“Ultimately, the number one priority for our customers remains capital planning and return on investments” said Piermarini. “A company’s infrastructure plan will dictate 80% or more of future costs. So, we added several features that help analysts understand the capital impact of decisions to control costs and maximize the long-term logistics benefits.”

The software update also includes several technical enhancements to improve planning for the largest supply chains, over longer periods of time. “We’ve added a new core optimization process into Profit Network 4.5,” stated Piermarini. “Customers will now have 50% more addressable memory capacity, which will yield deeper visibility in to larger networks and the long term tradeoffs that are being modeled.

To learn more about Profit Network and Profit Point’s supply chain software, visit www.profitpt.com.

About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Dow, The Coca-Cola Company, General Electric, Logitech, Sealed Air, Bridgestone and Toyota.

The new year is upon. But for supply chain professionals like you, many of the challenges from 2009 remain.

To help our clients navigate the uncertain future, we conducted a survey in 2009. The survey included supply chain decision makers from large multi-national organizations to small domestic concerns.

Our goal was to extract the top risks and opportunities for 2010 and beyond. Our final report for the survey has been compiled in summary form and highlights several of the top keys to success. You can download the report by clicking the link below:

Download the SC 2010 Survey Report

I hope you find value in the report. And, as always, if you have questions or concerns about your supply chain, please feel free to call us at (866) 347-1130.

Sincerely,
Alan Kosansky,
President, Profit Point, Inc.

Don’t forget the corollary to Murphy’s Law, that Murphy was an Optimist.

Given the recent negative turn of events in the economy as a whole, and on Wall Street in particular, it is critically important for decision makers to always be aware of those ‘Black Swan’ occurrences that might be lurking in the future ready to derail the best-laid plans and forecasts. Such incidents are extreme and/or catastrophic in nature. They are the outliers that we think we can safely ignore. These are the events that when we talk about them in hindsight we begin by saying “Who would have thought that …” Well, although we’ve all heard of Murphy’s Law “if it can go wrong, it will”; as recent events have shown us, Murphy was an optimist!

Although the use of the term ‘black swan‘ probably originated in the 17th century, it has more recently come into vogue as a result of the book “The Black Swan: The Impact of the Highly Improbable” by Nassim Nicholas Taleb. Since Black Swan events are so very rare, we think we can forget about them when making plans and forecasts. The problem is that when they occur, they can wreak complete devastation on an organization or business. They cannot be ignored; they need to be properly evaluated and anticipated so that the organization will survive the event, and hopefully rebound and prosper in the future.

An example of a Black Swan Event would be the destruction and devastation resulting from Hurricane Katrina in New Orleans. Another obvious one would be the attacks of 9/11 and the collapse of the World Trade Towers. And let’s not forget the Tylenol tampering scare. At the time, society was shocked in its naivety that anybody would ever do such a thing. And these examples are not meant to imply that a Black Swan need be something negative. There can be tectonic and unexpected events, such as the sudden collapse of the U.S.S.R and the fall of the Berlin Wall, that are generally considered as being of a positive nature.

Although various methods are available to analyze random or unpredictable processes, the analytical modeling techniques that are typically used today are frequently insufficient to meeting the challenge of the Black Swan. In order to provide insight into the risks associated with some situation or decision, modelers have at their disposal tools ranging from “merely” solving a closed-form algebraic equation of a probability distribution, to the use of a full blown Monte Carlo simulation program. But fundamental to many analyses is the Normal Probability Density Function, the familiar ‘bell-shaped’ curve where the two tails of the graph (at the far left and right) taper down to equal 0. The problem is that since the late 1800s, researchers have recognized that this curve, with its ‘near-0′ tails does not accurately model Black Swan events.

Such extreme circumstances demand the use of a group of probability functions that are being called “fat-tailed” or stable-Paretian distributions. These, functions, based on the work of Vilfredo Pareto in the late 19th century, give higher probabilities of occurrence to events in the tails of the curve. A specific example of one is the Cauchy Distribution. Whereas the Normal curve approaches 0 at plus or minus 3.5 standard deviations, a Cauchy (depending on its parameters) is still not close to 0 at plus or minus 5 standard deviations.

Gen. Carl Strock of the Army Corps of Engineers, addressed a press conference shortly after Hurricane Katrina regarding the New Orleans levee system. He said, “… when the project was designed … we figured we had a 200 or 300 year level of protection. That means that the event we were protecting from might be exceeded every 200 or 300 years. That is a 0.05% likelihood. So we had an assurance that 99.5% of this would be okay. We unfortunately have had that 0.5% activity here.” The General’s analysis was based on a Normal distribution. If however a fat-tailed distribution had been used, that 300 years would have been much less, perhaps in the range of 60 to 80 years, and perhaps remedial actions would have been taken to avert the disaster that nearly destroyed the city of New Orleans.

The most generalized version of the equation of a fat-tailed probability function is below.

The parameter is what determines the thickness of the two tails, what is called the kurtosis of the function. Generally, as  decreases, tail thickness increases. In fact, the standard Normal Distribution is merely a special case of this equation where the parameters have certain specific values.

The problem with these fat-tailed distributions is that, depending on the specific values chosen for the parameters (which determine the exact shape of the graph), they may not be solvable algebraically. With the Normal Distribution, it’s possible to mathematically solve the equation and state that the probability of a certain event is some specific value. However, fat-tailed distributions do not lend themselves to this kind of a closed-form analysis. To be able to estimate the chances of specific events, numerical methods such as Monte Carlo simulations or binomial decision trees are required.

So the conclusion is that in analyzing any decision or plan that involves random processes, it is critical to realize and anticipate both the worst and best case scenarios. The business person or decision maker should discuss with the modeler/analyst what might really happen under a wide range of possible scenarios. Realizing the drawbacks of the Normal Distribution, together they need to decide on whether or not a probability function with a fat-tail (embodying this kind of “the sky’s the limit” thinking) is appropriate. And if a fat-tail distribution is required, the modeler/analyst must decide on the best numerical technique to address the needs of the decision maker.

This article was written by John Hughes, Profit Point’s Production Scheduling Practice Leader.

To learn more about our supply chain optimization services, contact us here.

This month’s issue of U.S. Business Review features a supply chain article entitled Balancing Act: Cost, inventory and service in a volatile economy. The article, which was co-authored by Profit Point’s CEO/CTO, Jim Piermarini, and the company’s Senior Account Manager, Cindy Engers, discusses solutions for preserving customer service levels, while reducing costs and inventory risks.

Below is a video interview with Ted Schaefer, Profit Point’s Director of Supply Chain Services, discussing supply chain optimization including cost reduction and supply chain sustainability issues for greener decisions with Xpress Optimization Suite.

To learn more about our supply chain network design services, contact us here.

For the sixth year in a row, Food Logistics has identified the top 100 technology and solution providers to the food industry. Known as the FL100, this resource is a listing of software, hardware and IT service providers that focus on the unique technology needs of the food distribution industry.

Grocery and foodservice manufacturers and distributors are turning to these solution providers to help them reach their business goals. The FL100 are based on their proven track record and expertise in the industry.

See the complete list of FL100 companies.

If you like a challenge, then you probably think of 2009 as the best of times. Whether you are a manufacturer, transporter, or supply chain service provider, 2009 was a year filled with change. These changes, compounded by reduced access to capital, probably meant that you had to do more with less. Creative solutions were rewarded; business as usual probably didn’t cut it.

So what can we expect for 2010? Many of the same challenges will persist: Shifting demands, volatile expenses (especially those related to fuel), and continued pressure to be prudent with capital expenditures. At the same time, some industries will lead the way out of the recovery, while other will struggle with recessionary pressures.

Like a homeowner after a hurricane, many companies will take the time to assess the damage, and begin the re-building effort. What they are likely to find is that their operations have become out of sync with their supply chain network and infrastructure.

2010 will see many companies working to re-align their supply chain infrastructure with the needs of their customers and their recession driven changes to supply chain operations. This might include things like re-aligning manufacturing capability to geographic demand, rationalizing your distribution network and channels to current demand patterns, or re-negotiating supplier arrangements to more appropriately reflect new supply chain realities.

As spring cleaning prepares you for sunny times after a long cold winter, the supply chain work ahead will allow the industrious to excel. Change typically causes supply chain infrastructure and supply chain operations to become mis-aligned. Severe change, like most of us have experienced over the past 18 months only exacerbates the problem. The year ahead will be the time to re-align our supply chains and get the most out of the limited capital we will have available to us. Some specific actions to consider include:

• Determine if your distribution network has been re-aligned to meet the changes in your demand.
• Analyze your transportation strategy – are you leveraging your volume to negotiate the best rates from a strategic carrier base?
• Re-evaluate your manufacturing strategy – Are you sourcing the right products from the right locations to minimize your total delivered cost, including manufacturing costs, raw material supply costs, transportation costs and inventory?

Good luck in your work ahead!

If you would like to learn more about our Supply Chain Optimization services, please contact us. And if you would like to receive future updates on the supply chain optimization industry, subscribe to our SCO Journal and our SCO Newsletter.

Contributed by Dr. Alan Kosansy, Profit Point’s President.

This month’s issue of Supply & Demand Chain Executive features a supply chain “best practices” article entitled The Changing Landscape of Optimization Technology. The article, which was co-authored by Profit Point’s Director of Sales, Rich Guy, and the company’s President, Dr. Alan Kosansky, reviews the optimization tools that are empowering today’s leading supply chain decision makers.

If you would like to learn more about our Supply Chain Optimization services, please call (866) 347-1130 or contact us here.

Logitech is a world leader in personal peripherals, driving innovation in PC navigation, Internet communications, digital music, home-entertainment control, gaming and wireless devices. With a history of fast-growing distribution channels and a product line that is frequently being updated, Logitech’s key supply chain challenges are similar to those of many other consumer electronics heavyweights. Its product life cycles are relatively short and consumer demand can be fickle. But when Logitech gained global, mass market status with customers ranging from Walmart and Best Buy to direct online sales, its supply chain challenges were compounded.

With mounting distribution challenges, Logitech engaged Profit Point to bridge the gap between their ERP and their real world need to compete. Click the link below to access the case study:

In this video interview with CSCMP’s Supply Chain Quarterly, Ted Schaefer, Supply Chain Practice Leader at Profit Point, offers practical advice on how to make supply chains both “green” and profitable.

Watch the video interview to learn more about the ways leading companies are cutting costs and emissions:

To learn more about Profit Point’s Supply Chain Services, please contact us.

“Companies are increasing their local supply capabilities while reducing the costs and risks of highly centralized, offshore production and procurement strategies.“

This month’s issue of Supply & Demand Chain Executive features an informative article entitled The Future of Network Planning. The article, which was co-authored by Profit Point’s President, Dr. Alan Kosansky, and the firm’s Director of Supply Chain Services, Ted Schaefer, looks at the emerging trend towards a more “local” supply chains.

You can read the complete article here.

To learn more about Profit Point’s Global Supply Chain Design services, please contact us.