Roundtable Report: CSCMP continues to expand in China
The origins of the first CSCMP China roundtable stretch back to 2000, when a group of 13 members from China attended the council's Annual Global Conference in New Orleans, Louisiana, USA. The Chinese team was impressed with the conference's influence, extended coverage of logistics, and educational value as well as the association's professionalism. The team members brought this spirit back to China, and in 2002 they created the China Roundtable.
In September 2003, the China Roundtable received official roundtable status. That same year, China's Ministry of Commerce officially registered the newly established CSCMP Beijing Representative Office, which meant that the Council now had a legal presence in China. This was a significant breakthrough, as it allowed CSCMP to legally promote membership and participate in conferences organized by governmentrelated third parties. As a result, CSCMP gained greater exposure to the supply chain community within the country.
Supply chain professionals in Shanghai and Shenzhen found great value in the benefits offered by CSCMP, and in January of 2008, CSCMP's Board of Directors approved the creation of the Shanghai and Shenzhen roundtables. The addition of the two groups was an important achievement for the Beijing Representative Office and the China Roundtable. China's supply chain community is spread out across the country, and localization is a necessary step toward providing added value to more practitioners. CSCMP's presence in China continues to expand as professionals in other Chinese cities work with the association on the development of roundtables in their regions.
CSCMP's growing role in China
The CSCMP Beijing Representative Office and China Roundtable have continuously increased their influence in China by serving as a nationwide source for logistics and supply chain information. CSCMP in China provides educational programs and conferences as well as an up-to-date web site and a Chinese-language quarterly magazine on current issues and hot topics in logistics and supply chain management. Additionally, roundtable leaders travel throughout the country to raise awareness of CSCMP among supply chain professionals and introduce them to breakthroughs and new developments in this field.
CSCMP has also gained the support of government agencies and national logistics associations and has worked closely with them on the development of its conferences in China. The first CSCMP China conference was held in Shenzhen in 2005, followed by Shanghai in 2006. In 2007, CSCMP China successfully organized the CSCMP China Conference in Tianjin with full support of the Tianjin Economic-Technological Development Area in North China. Also representatives from the China Federation of Logistics and Purchasing and the China Association of Communication and Transportation presented keynote speeches at the conference. Their participation was important because the support of their membership will help CSCMP to grow within China.
These efforts have helped the organization earn a reputation for putting on important educational events. In November, the CSCMP Beijing Representative Office and the China Roundtable, in collaboration with the local roundtables, hosted two CSCMP China Conferences, one in Shenyang and one in Shenzhen.
Shenyang is strategically located in Northeast China and is known for heavy industry and automotive manufacturing. The booming economies in this region have been a great incentive for CSCMP to further explore this region and bring supply chain knowledge and expertise to this part of China. Shenzhen, located just a few miles north of Hong Kong, is known for its strong logistics position in China, making this region an unbeatable location for the conference. Planning is underway for future CSCMP China Conferences.
—By Charles Guowen Wang, founding member of the CSCMP China Roundtable and CSCMP Chief Representative in China
Awards recognize creative supply chain solutions
The annual Supply Chain Innovation Awards (SCIA) are not just about celebrating the successes of individual companies like this year's winner, Cisco Systems, and runner-up GENCO. The competition also provides an excellent source of ideas and information for all CSCMP members. The case studies submitted by the finalists and winners illustrate best practices and demonstrate how supply chain professionals can overcome the day-to-day challenges they face while improving productivity within their supply chains.
CSCMP's Research Strategies Committee and Global Logistics & Supply Chain Strategies magazine established the Supply Chain Innovation Award in 2005 to recognize the most innovative solutions and ideas in the supply chain profession. The first SCIA winner, Hewlett-Packard Procurement, set the tone for future candidates. Hewlett-Packard won that award for using freight cost management integration to maximize supply chain efficiencies. Those efforts reduced the company's operational spending from US $14 million to US $7.8 million.
Four years later, the SCIA award is generating great enthusiasm and response among supply chain professionals. Case study submissions that stand out from the rest demonstrate excellence in coordinating and collaborating with channel partners (suppliers, intermediaries, third-party service providers, and customers) as well as integrating supply and demand management within and across companies.
Looking for some inspiration on how to solve your company's problems? Visit https://cscmp.org/education/awards/sc-innovation.asp to learn about past finalists and winners. You can also find out how to submit your company's latest initiative for the 2009 Supply Chain Innovation Award competition.
2008 SCIA Winner: Cisco Systems
Cisco Systems' three-year effort to retool its reverse logistics operations has transformed the company's returns from a cost center to a source of profit. The effort generated US $85 million this fiscal year and earned Cisco the 2008 Supply Chain Innovation Award.
When Cisco began the program in 2005, it was tossing away about US $500 million of returned equipment and reusing less than 5 percent of returned merchandise, said Vice President, Supply Chain Operations Dan Gilbert. After a detailed analysis, the company found that 85 percent of the returned items were "perfectly fine," and much of them deserved a "second or third life" before being recycled.
2008 SCIA Runner-Up: GENCO
Second place for the Supply Chain Innovation Award went to GENCO Supply Chain Solutions, a third-party logistics provider. GENCO was looking for a way to increase the productivity of its distribution center employees and reduce inaccuracies caused by manually entered data. GENCO achieved these goals by implementing an optically enabled real-time location system. This technology uses cameras mounted on material handling equipment to read bar codes on the product in motion as well as bar codes in the ceiling that indicate location. The company is now able to track and verify every move, from putaway to shipping, with 100-percent accuracy.
—By Heather Morys, Education Program Services Associate, and Jessica D'Amico, Research Project Coordinator
2008 Annual Conference Report
If there was an unofficial theme of CSCMP's 2008 Annual Global Conference held in Denver, Colorado, USA this past September, it was "managing during uncertain times." General session speakers, track chairs, and individual presenters again and again hit upon the importance of managing risk and planning for the unexpected.
It was a timely topic indeed: The nearly 3,000 supply chain professionals in attendance already had their eyes glued to Blackberries and news feeds, watching as stock markets plummeted, oil prices fluctuated, credit tightened, and the U.S. Congress began to contemplate a controversial bailout package for banks and investment firms.
Their presence at the conference, however, was a testament to the importance of professional development and education even (or perhaps especially) during times of economic turmoil. After all, the best practices and innovative ideas gleaned from a presentation, a site visit, or a conversation in the hallway could help both companies and careers come out of the downturn stronger than before.
What follows are highlights from this year's conference as reported by the editorial staff of CSCMP's Supply Chain Quarterly. Next year, the conference moves to CSCMP's hometown of Chicago, Illinois, USA from September 20?23, 2009.
Roger Woody becomes CSCMP chair
Every year CSCMP introduces its new board of directors at the Annual Global Conference. This year, the board will be chaired by industry veteran Roger W. Woody, who manages supply chain strategy for EMBARQ Logistics, a provider of distribution and logistics services and software for the communications industry.
Woody has held management positions with Hallmark Cards, Yellow/Roadway Corporation, Delfour, and Sprint. A CSCMP member since the mid-1980s, he is a member of the Heartland Roundtable in Kansas City, Missouri, USA and has served on CSCMP's Board of Directors as Roundtable Chair and as Board Chair-Elect.
Other officers include:
- Immediate Past Chair Richard Murphy, president and CEO of Murphy Warehouse Company;
- Board Chair Elect Robert B. Silverman, vice president of IT business systems for Tommy Hilfiger USA;
- Board Vice-Chair Keith Turner, general manager of alumina and bauxite sales for ALCOA; and
- Secretary and Treasurer Nancy W. Nix, director of the Supply and Value Chain Center and associate professor of supply chain practice at Texas Christian University.
A complete listing of the newly appointed committee chairs can be found at https://cscmp.org/aboutcscmp/inside/board-directors.asp.
CSCMP names award winners
About the same time that the Swedish Academy began announcing the winners of this year's Nobel Prizes, the Council of Supply Chain Management Professionals named the winners of its top awards.
- Arthur Mesher, chief executive officer of The Descartes Systems Group Inc., received the Council's 2008 Distinguished Service Award (DSA). Over 25 years, he has been a pioneer and thought leader in supply chain technology. He was instrumental in developing the first multicarrier manifest system, the first shipper-carrier electronic data exchange, and the first on-demand logistics networks.
- Dr. Dilay Çelebi received the 2008 Doctoral Dissertation Award. Çelebi was honored at the CSCMP Educators Conference for her research titled, "Stochastic Lot Sizing in a Centralized Distribution Network." Her research developed a mathematical model for determining the best lot sizes for a two-level distribution network. Çelebi received her doctorate from Istanbul Technical University.
- Dr. Frank Buffa of Texas A&M University and Dr. Anthony Ross of Michigan State University received the 2008 E. Grosvenor Plowman Award for their paper, "A Model to Measure the Consequences of Using Diverse Supplier Evaluation Teams." The paper proposed a methodology for using data envelopment analysis for addressing logistics and supply chain problems.
- Dr. Photis Panayides, associate professor of shipping economics at Cyprus University of Technology, received the 2008 Bernard J. La Londe Award for the best paper published in the Journal of Business Logistics. Panayides won for "Effects of Organizational Learning in Third-Party Logistics."
- Gubio Henrique, a senior majoring in transportation and logistics management at the University of Wisconsin-Superior, was named the winner of the 2008 CSCMP Undergraduate Paper Competition. Henrique's paper, "Reducing Transportation Costs at RSC," focuses on potential solutions to the rapid escalation of fuel costs.
- CSCMP also teamed up with the Environmental Protection Agency's (EPA's) SmartWay Transport Partnership to present the program's annual SmartWay Excellence Awards to 27 carriers, shippers, and logistics service companies during a ceremony at the conference. To see a full list of the winners, go to www.epa.gov/smartway/transport/partner-resources/awards-2008.htm.
CSCMP session sampler
Here's a taste of some of the presentations and sessions that sparked interest and debate at the annual conference. You can learn more about these and other sessions by downloading the presentation slides, which are available on CSCMP's web site. Member ID and password are needed to access them.
Risk management: A view from the White House
Keynote speaker Frances Townsend, former Assistant to the President for Homeland Security and Counterterrorism, saw plenty of operational and economic disruptions in her years in government. While the government's response wasn't always effective, there is much the private sector could learn from the way the U.S. government and the military manage risk, she said.
During the opening address for the conference, Townsend suggested that as supply chain managers conduct a risk analysis, they should ask themselves: What do we really need? And what do we need to know? Answering those questions will identify the vulnerabilities they should focus on.
Townsend, now a consultant, recommended adopting an integrated approach to risk management that stretches across an enterprise and also includes external partners. Any plan should follow three main steps that are similar to the U.S. military's response to crisis planning, she said. First, prioritize risk based on the potential consequences, and understand what you don't know: "What are the critical unknowns that would affect the way I do business?" Second, try bringing in outside observers who can test your assumptions and see the gaps in your processes; and third, test your plan, as the military does with its exercises. Testing alone is not enough, though. It's critical to fix whatever problems you find and then test again to make sure that those repairs actually solved the problem.
Economy falters but top executives hold steady
Times may be hard, but the executives who participated in CSCMP's panel discussion, "Unprecedented Instability Offers Global Opportunities," chose to remain optimistic, seeing opportunities in the challenges ahead.
Perhaps no one was as aware of those challenges as William Zollars, president and CEO of YRC Worldwide, who saw his company's stock plummet by one-third on the day of the panel discussion. "It's hard to look over the horizon and see good news," Zollars admitted, "but you have to remember that this too shall pass."
While Zollars believes the turnaround will come, he acknowledged that this time it will be painful, and it will be gradual. The only good news, perhaps, is that this is an opportunity for companies to take a step back and look at the business model they and their customers have—and make changes now that will help them thrive in the future, he said.
Jeffrey Schwartz, former chairman and CEO of the real estate firm ProLogis, agreed. "It's time to examine everything in your business, from how you can serve customers better to how you can access capital better," he said.
Bruce Edwards, global CEO for DHL/Exel Supply Chain, has noticed that companies have been making faster decisions since the downturn began. "Companies now are focusing and getting on with what's important, and that's leading to quicker decisions," he said.
The key to surviving in this down economy is to "play defense while planning for offense," according to Richard Jackson, executive vice president of Limited Logistics Services. His company, which is tightly managing its expenses and inventory, expects to be well-prepared when the economy improves.
For Wal-Mart, sustainability adds up
Conference attendees packed a seminar room to hear Kelly Abney, vice president of corporate transportation for Wal-Mart, discuss the retail giant's aggressive sustainability efforts. Abney assured the audience that Wal-Mart has already seen a payback. "It is not just the right thing to do," he said, "it has a [return on investment]."
H. Lee Scott, Wal-Mart's outgoing CEO and president, set three "green" goals for the company: to use renewable energy for 100 percent of its needs, to create zero waste, and to sell products that are sustainable.
For a company of Wal-Mart's size, even small changes can mean big gains. For example, simply determining a way to bale and recycle plastic packaging at its stores reduced the amount of waste being sent to landfills by 150 million pounds, resulting in $17 million in savings and $13 million in revenue. Similarly, steps to make its private fleet greener have resulted in $23 million in annual fuel savings. Some of these efforts include equipping tractors with auxiliary power units in order to eliminate idling, inflating truck tires with nitrogen instead of air, and using new fuel additives. The company is also testing hybrid over-the-road tractors with partners Peterbilt and Eaton.
Wal-Mart is extending these efforts outward to its suppliers. For example, by reducing the size of packaging in 277 privatelabel children's toys, Wal-Mart suppliers were able to eliminate 727 container moves, save 5,100 trees, and use 1,300 fewer barrels of oil. Reducing the amount of water in laundry detergent resulted in using 128.9 million fewer pounds of plastic resin for packaging and saved 478 million gallons of water. It also reduced the number of truck moves by 2.79 million and used 20.7 million fewer gallons of diesel fuel.
How to succeed in cross-cultural negotiations
Buyers and sellers walk into negotiations with certain assumptions and expectations. That's no problem when both sides speak the same language and come from the same culture. But carrying those assumptions into cross-cultural negotiations can lead to misunderstandings, mistakes, and downright disaster, according to Dalip Raheja, president and CEO of The MPower Group, an international consulting firm. That's because different cultures may seek different results from business negotiations. For example, in one study of negotiating styles, all of the Japanese executives polled said their goal in negotiating business deals was a "win-win" outcome for both parties. On the other end of the scale, just 37 percent of the Spanish respondents said an outcome benefiting both parties was their goal.
Successful negotiations will focus on fulfilling mutual interests before, during, and after negotiations, Raheja said in the session "Cross-Cultural Negotiations." To achieve that, international negotiators will need to be aware of the impact of cultural history, beliefs, social and professional status, etiquette, and priorities on approaches to negotiation. Culturally influenced ideas of time and space, nonverbal communication, and personal relationships also affect negotiating styles and the success or failure of negotiations, he said.
Conference speaker videos are now online
Listen in as conference speakers share their unique insights in eight short videos produced by the staff of CSCMP's Supply Chain Quarterly. The videos include an overview of the conference as well as interviews with industry thought leaders CSCMP President and CEO Rick Blasgen; CSCMP Board of Directors Chair Roger Woody; and presenters Mahender Singh, David Simchi-Levi, Robert Lieb, Martha Cooper, and Susan Reyman. To see the interviews, go to www.SupplyChainQuarterly.com.
Recovering from a 3PL near-disaster
The shipper, a well-known consumer and retail company, was a veteran of outsourcing. Its new third-party logistics (3PL) service provider, a large multinational company, had vast experience managing distribution centers.
When the two companies laid out the requirements for their relationship, they were meticulous in their preparations and planning. Yet the first few months after the joint operations began were an unmitigated disaster. On the first day, the distribution center only managed to ship the usual 35; and for the one truckload instead of next three months, merchandise clogged the aisles, locating items became a chancy affair, and detention charges mounted.
In a candid session at the CSCMP conference, Antonio L. Galvao Costa of manufacturer Johnson- Diversey and Gerald W. Perritt of UTi Integrated Logistics told their audience what happened and how they salvaged the relationship.
Among the problems was JohnsonDiversey's overly ambitious agenda—the company implemented both a new enterprise resource planning system and a new transportation management system at the same time it switched thirdparty service providers. The changeover was also plagued by a capacity shortage, an unrealistic timeline, and contractual terms that kept UTi from going into JohnsonDiversey's facility until the actual switchover.
The good news is that both parties were genuinely interested in salvaging the relationship and managed to work through the troubles. Some of the fixes included changing personnel to get the right team in place; handing over additional functions— like forklift and transportation management—to UTi and opening a new distribution centr to ease the space crunch. Today, the speakers reported, those problems have been solved, and the partners are moving forward with a focus on continuing improvements.
What advice would they offer to others embarking on a similar venture? They urged their audience to refrain from trying to do too much at once, act swiftly if people fail to meet expectations, and always do on-site assessments of a facility and its operation beforehand.
