But so what? It’s just a little empty space, right?

Then you come across a pallet with two cases on it. One where there should be 30. Then it matters a little more. But what other options are there? You have to build your rack for the highest possible product height? Otherwise you have products you can’t accommodate.

Well, what if the height of the products on the pallet (or tray or whatever your load unit) is what determines where the bottom of the next level begins? We call this Dynamic Storage.

In Dynamic Storage your load unit is supported by load arms that are not constrained by the height of product that can be stored in an opening. These load arms extend a short way from the rack upright. Because there is not horizontal fixed beam across the face of the rack, you can use the load arms you need to place your products, providing the densest storage possible.

There are a variety of advantages for your distribution center with Dynamic Storage. The first and most obvious is that you save money by reducing your foot print. Without all the wasted space and standard dedicated pick faces for every load unit you optimize your storage. Dynamic storage helps you gain a 20% improvement in storage utilization.

In addition, to the space savings from having flexible storage areas there is also the advantage of no lost cube from fixed beam heights found in standard pallet rack.

You also have added flexibility. If packaging should change for an existing product in your distribution center, you can accommodate it. Even if your business changes, with Dynamic Storage your system can accommodate your new products. Your rack height change is as easy as taking one group of products out and putting them somewhere they fit better.

Interested in learning more about how Dynamic storage can help your company save money and improve storage?

Travis Baker

Contact me to learn more and discuss.

“We have the most powerful distribution mechanism that has been created
in a generation,” Mark Zuckerberg, Founder Facebook at the launch
of the 2006 Connect Platform

Many new technologies are converging simultaneously. It resembles the wild, wild west. For many companies, so many things are happening simultaneously, that it is hard to chose how to get started. In the words of one respondent, “I feel like a hamster on a treadmill. It is hard to get off the treadmill to stop to think what combination of tactics will add the MOST value.”

It includes:

Geospatial. Geospatial data combined with point of sale data to deliver a tailored response to the shopper when they are in the store. The data enables insight on not only what you bought, but where you were when you bought the item. And, what your shopping behavior was prior to the purchase. This is redefining couponing. Examples include Groupon a new social couponing company, Get Satisfaction a new rewards program for purchases, Shopkick that rewards you for going into a store, coupons tendered through your Garmin device in your car, and specialized shopping baskets in the stores to tender special offers.

Gaming. Social gaming to enhance the shopping experience, but also unleashing a new opportunity to learn more about a consumer through their gaming behavior.

Mobile Applications. In 2011, 50% of the populations in modern trade countries will have smart phones. Mobile applications in combination with 2-D bar codes can personalize the shopping experience in new ways.

2-D Bar Codes. Direct personalization of the shopping experience through 2-D barcodes to the shelf to either differentiate the product, communicate how to better use the product or connect with gaming to energize the shopping experience.

Virtual Currency. Virtual currency linking the socialgraph, the gaming experiences and the new social commerce sites together. It is a new way of seeing what shoppers really value. Check out the selling of Facebook credits at your Target or 7/11 stores.

Shopping with Friends. Consumers trust their friends. They want to shop with their friends. The Socialgraph enables this new type of shopping experience on Facebook or in a bricks and mortar experience.

Facebook as a Channel. As the conversation is enhanced by commerce, companeis are adding storefronts to their Facebook pages. Community recommendations by friends turns into shopping with friends for enthusiast purchases–hobbies, cosmetics, toys–enhancing the customer experience.

Results from the Research

It has been fun to study. Five months of research culminated last week at Altimeter Group’s sold out event: The Rise of Social Commerce. In an attempt to understand the dawning of this new channel, I drove the research, developed the agenda and delivered the keynote (check it out at http://www.riseofsocialcommerce.com/community/expo-the-rise-of-social-commerce/). I will publish the final report next week.

So you might ask, why is a supply chain gal like Lora Cecere interested in understanding the early days of Social Commerce? The reason is simple. It is an exciting new world of possibilities. It is a both a new channel and a new way of doing business. It is reshaping value chains. More than ever, retailers are now manufacturers and consumer products manufacturers can now sell directly to loyal shoppers. The power is shifting to the shopper. The digital consumer now has the power of the value chain in the palm of their hand, but more importantly, it allows a company to have a direct dialogue with a consumer in a more meaningful way.

I interviewed 53 companies, and as I did the interviews, I could see that they were at very different stages of development. The progression of understanding follows four stages:

Let’s be Social. In this stage, the organization is social for social’s sake. The deployment of the technologies are primarily in marketing and the strategies are very brand-centered; and consequently, not very effective.

Enlightened Engagement. As social maturity evolves, companies have new opportunities for direct dialogue. It enables dialogue and customer service, new product launch, and community development.

Store of the Community. Direct involvement of the community in product assortment, category definition, and demand shaping activities.

Frictionless Commerce. The redefinition of the shopping experience based on mobile, social and ecommerce capabilities that culminate in a TRUE cross-channel experience.

In the interviews, 20% of companies were actively working on social commerce strategies in 2010, but 83% have it on their agenda for 2011. It is NET new spending driven by the line of business leaders. Only 22% of companies have IT leading the charge. However, only 5% of companies have active involvement by the supply chain leaders. My goal is to help supply chain leaders capitalize on this opportunity.

Why should the Supply Chain Leader care?

While marketing colleagues are optimizing the tactics above, and defining new ways to use social to shape demand, promote awareness and energize the shopping experience, it unveils new opportunities for the supply chain team that I find that they are largely unaware of.

Redefinition of customer service. Organizations really don’t have customer service. If you ask what does your customer service department do, you will find that most take orders. There may be another department that receives customer complaints. But, the ability to listen and learn from shoppers and enhance the shopping experience through the integration of social technologies–twitter feeds, Facebook fan comments, private networks, syndication of review data–allows a 360 degree view of the digital consumer for the first time. The ability of the organization to think outside in and engage the shopper in a meaningful dialogue. it unveils the opportunity to listen, to have a meaningful response and to learn. For me, this is exciting.

New ways to sell to loyal shoppers. The concept of anticipation of needs through the social graph is also fascinating to me. Let me give you a personal example. I am going to be a grandmother. I am so excited to be a grandmother, but only my social connections know the full extent of my excitement. For the first time in 20 years, I am a shopper for all things baby. I am also a quilter, a knitter, and an avid crafter. Imagine how a smart company could use this information to anticipate and deliver some exciting offers to me to shape demand. The socialgraph enables unique insight on changes in lifestyle, community sharing, and tailored offers.

Channel proliferation. We have talked cross-channel for years; however, in my shopping experience, Nordstrom comes the closest to having a true cross-channel experience. For most companies, the e-commerce and bricks and mortar channels are separate and distinct. But now we have channel proliferation with M-commerce through mobile and social commerce through Facebook. This channel proliferation will force companies to rethink their supply chains. It will give rise to a new wave of supply chain execution applications. A new bar will need to be reached for inventory accuracy the need for a more real-time signal of inventory in the extended supply chain. Removing data latency on inventory movement will become a new corporate focus.

A new need for new type of supply chain transparency. When we communicate all the way to the shelf with the shopper, a new level of supply chain transparency is needed–especially on manufacturing and quality data– to convey the brand promise for health and wellness, food safety, organic, etc. This driver will redefine manufacturing execution systems and force the integration of bill of material, process quality data, and specification information in a new way. It will also tie manufacturing execution systems to supply visibility. Supply chain execution will no longer JUST be about order fulfillment.

Summary

It is happening. It is exciting, and can redefine value chains. Unfortunately, for 95% of companies that I interviewed, it is ONLY happening in marketing. Here is my plea. Please rethink your supply chain strategies for 2011 to welcome the digital consumer. We have talked about the need for shopper-centric supply chains for a decade. Don’t pass up the opportunity to be a pioneer in making the dream a new reality.

Lora Cecere

You rarely think of what totes add to shipping and storage demands. So let’s look at the different totes available and their pros and cons.

Nesting

Description: Most totes on the market, when they are empty they can “nest” inside one another.

Pro: Results is in lower shipping and storage cost when empty

Con: You lose storage space; because this totes design has sloping walls to fit inside one another.

Stackable

Description: Another common option, have a greater storage capacity than nesting (roughly 20%) because of the straight walled sides.
Con: Require the same amount of space whether they contain product or not.

Collapsible

Description: Innovative option that avoids both of these limitations; a straight-walled collapsible tote.

Pro: It has the storage capacity of a stackable and when collapsed they have a smaller space requirement than nestable totes.

Con: Collapsible totes are roughly 4 times the cost of nestable.
So why would you but the collapsible? The answer is that their ROI is impressive.

Here a quick cost comparison to illustrate possible returns. I have made some assumptions to establish the parameters.

A. No storage in totes – they are purely for distribution
B. Daily volume distributed: 14.125 cu. ft (estimated 40 truckloads a day with no cube loss) small distribution center
C. 5 day pipeline (A complete set of boxes empty, being loaded, in transit, being emptied, being returned)
D. Assume price of $ 12.00 for Collapsible, $ 3.00 for nesting
E. Bulk loading and round up to the highest cubic volume number for the nesting (1.5)
F. Standard footprint and height of the boxes

ROI Comparison

Are you interested in learning more about new ideas in distribution?

Please comment with your thoughts on these methods and ideas!

Travis Baker

Logistics represents a perfect case for exploring how a collaborative approach to complex sourcing can deliver better outcomes for all parties and ultimately improve supply chain performance.

In this 3-part series, we will:

• look at the typical logistics sourcing model, and what it costs companies today

• define what’s required to take a more collaborative approach and the benefits

• speak to current and future technology innovation that accelerates the time-to-value of collaboration

What Logistics Sourcing Looks Like Today

In most cases today, logistics sourcing can best be described as a “winner-take-all” model. I believe that the “fuel cost crisis” of 2008 served as a brief wake-up call to suppliers and customers alike that something had to give. After all, consider what happens when shippers and carriers take an adversarial approach to contracts:

• Shippers discard or weaken important relationships, putting service levels at risk

• Parties neglect agreed upon contract terms, credibility is lost, making it increasingly difficult to negotiate effectively

• Shippers drive carriers toward unsustainably low rates, finding themselves unable to cover loads when capacity tightens back up

There are signs that market leaders have heeded the warning and taken steps to put an end to costly trade-offs and created solutions that benefit both parties. Together with suppliers, these companies have thrown out the old hard-ball rules where the only end game is lowest cost. Instead:

• Carriers honor volume and load acceptance commitments to preserve customer relationships even if it means forgoing opportunistic volumes elsewhere.

• Shippers honor the principals of contracts and preserve the relationships even if some volume re-optimization is required to correct for the dynamism of the collective market.

• When the market has excess capacity, shippers and carriers work to realign relationships to gain efficiencies.

Embracing a more collaborative approach as illustrated below, shippers and carriers achieve greater network efficiency: higher equipment utilization, reduced waste (fuel and dwell), and fewer empty miles, all adding up to significant – and sustainable – cost

Paul Martyn

Want to learn more about how BravoSolution can help your organization source collaboratively? Check out BravoSolution’s collaborative sourcing tool here.

While most food safety reforms focus on the protection and prevention of contamination, traceability systems are critical to quickly identifying product origins for removal from the supply chain. According to the CDC, an estimated 76 million Americans get sick from food borne illness each year, more than 300,000 are hospitalized and about 5,000 die. With such high numbers, growers and retailers alike need to be aware of how invaluable track and trace technologies are.

As the market leader in RFID and thermal printers, Zebra Technologies’ broad experience in supply chain management and building unique RFID and barcode solutions across a variety of industries has illustrated the importance of providing traceability – especially within the food industry. The below video with David Senerchia , Director of Business Development of Zebra Technologies, highlights the importance of food traceability throughout the supply chain:

With more label and scan points throughout a dairy, produce or food growers operation and shipping, products can be more accurately traced throughout the supply chain. This provides an extra layer of protection should a food-borne illness occur – allowing growers to quickly review their records to determine if the faulty product came from any of their farms and then alert their partners.

This can save businesses time, money and reputation. As produce growers/shippers look to obtain Produce Traceability Initiative compliance, they can look to Zebra as a reliable product partner to provide practical, mobile and desktop printing solutions to ensure multiple label and scan points to track the life of the product from farm to fork.

I am also telling my age when I share that Supply Chain Management (SCM) has consumed the last 20 years of my life. Did you know that SCM is less than half the age of Barbie? It is a relatively a new area of study, but one that is growing in importance. As it changes, it is important to retool, and embrace new concepts. As an analyst tracking the evolution of supply chain management, one of the fascinating aspects to me is the rate of change.

Which leads me to vocabulary. I know, a lot of us hate it; but consider that new words open the door to new concepts.

As we move through 2010, there are seven new words that I think are noteworthy and plan to add to my research agenda.

» Digital Consumer: The use of digital media–social networks,blogs, B2C mobility, e-commerce strategies, guided shopping– to shape demand and influence customer buying patterns. Based on recent IBM research of 32,000 consumers in six countries, 22% of the world’s population, or 1.5 billion people, are online. It will reach 2.2 billion consumers by 2013. Today, 63% if adults research purchased through social networks and 47% of the time online reading influences buying patterns. Teenagers send over 2700 texts per month and retail segments are blurring. In a similar fashion, consumer products and retail value networks are blurring. Communication in emerging economies is through mobile phones. Today, in China, mobile devices reach 56% of consumers. The digital consumer is about presence and connectivity. 62% of Gen Y stated that they would be willing to use texting to buy an item. 78% of consumers (primarily baby boomers) are willing to co-create (to share comments on assortment, store layouts, and service requirements) with retailers and consumer branded companies. With this kind of impact, how can we not have digital consumer strategies for 2010?

» Gravitas: When you reach gravitas, you achieve seriousness in conduct and speech. When the practices of supply chain evolved, early adopters yearned for board-level presence. The Great Recession of 2008 drove this transformation. In my travels in Europe in October, I met with five companies. Four of the five had just announced a NEW director-level position on the board. Organizations are maturing, but the practice and processes still need to mature to achieve gravitas at the board level. They are just not taken seriously enough. To evolve, supply chain management will coalesce with macroeconomics and strategy and risk management practices to become the fabric of go-to-market strategies. This is the primary thrust of my research agenda this year. And, maybe my new book. Doesn’t your supply chain need more gravitas?

» Ontology: Increasingly, companies are finding that supply chains lack well-defined behaviors and that one-to-one data mapping and rules don’t do the trick. As a result, the logic of the first generation of supply chain solutions falls short. In computer science, an ontology is a formal representation of a set of concepts within a domain and the relationships between concepts. An ontology provides a shared vocabulary to model a domain and contains information about the objects, concepts and relationships of that domain. In the mid-1970s. researchers in the field of artificial intelligence began to use the term ontology to refer to both a theory of a modeled world and a component of knowledge systems. Key elements in ontologies are attributes, relationships, restrictions, rules, axioms and events. This allows the modeling of relationships and drive more intelligent rules and events. In 2010, look for a new set of solutions based upon supply chain management rules-based ontologies to appear. They will fill the supply chain black hole within the enterprise, form the foundation for collaborative relationships and drive new answers for master data management.

» Stochastic Optimization: This type of optimization incorporates probabilistic or random elements either in the problem data set itself or in the algorithm itself through random parameter values. This is in contrast to the deterministic–where data is assumed exact and constant– approaches that are traditionally used as the basis of Supply Chain Planning (SCP).

» Sentiment Analysis: These technologies apply rules-based ontologies to mine unstructured text on the Internet. The technologies allow the user to understand the sentiment of users–expressed in blogs, ratings and comments, and social media– to understand the true voice of customers. This type of data is useful to gauge the success of new product launch, the effectiveness of competitive products, and the change in customer sentiment. In 2010, the use of sentiment analysis will be especially valuable to high tech electronics companies to understand the acceptance of customers to product features (e.g. battery life on a digital camera or wine commentaries in blogs) on a more real-time basis. It also makes global sensing — all customers by customer attribute and geography attributes– more readily available to drive product portfolio rationalization.

» Supply Chain Black Hole: In organizational enterprise architectures, there is a black hole between traditional Enterprise Resource Planning (ERP) and supply chain application of Supply Chain Planning (SCP or APS) and Supply Chain Execution (SCE). The fixed integration of the early solutions, just does not allow enough flexibility to drive a flexible, agile response or alignment to deliver a profitable order. In 2010, we will start to see the evolution of new solutions to fill this black hole. They will come from best-of-breed providers from non-manufacturing industries– military, financial and insurance technologies– to re-architect back-office applications from the outside-in. (For more on this topic, reference my early blog post.)

» Trickle-up Innovation: Traditionally, product development and innovation processes have launched products first in modern trade and then adopted the products to evolving markets. This is changing. Increasingly, supply chains are shifting to launch new products FIRST in evolving economies and then expand the concepts to modern trade. This shift increases the need for build anywhere, design anywhere practices will be a boon for the virtualization and collaborative workflow capabilities of Product Life-cycle Management (PLM) technologies.

So, while I am sure that these are words that Barbie will never know or care about, for us serious about supply chain management, these terms represent exciting new concepts. So join me in drinking a toast to Barbie. After all, with all of those shoes and accessories, you will have to agree that she was the MASTER of profitable supply chain SKU proliferation.

And, keep your eyes and ears open for evolving opportunities. What words do you think are important for 2010? Let me know by sharing your comments below.

Until then the supply chain shaman is off to uncover new technologies to help you drive supply chain leadership.

Drop me a line. What are the words that you are adding to your supply chain vocabulary in 2010?

Please join me as I plot this course on my blog at www.supplychainshaman.com.

Lora Cecere

This huge shift from an “empty” to a “full” world is truly “something new under the sun” as historian J. R. McNeil calls it in his book of that title. The closer the economy approaches the scale of the whole Earth the more it will have to conform to the physical behavior mode of the Earth. That behavior mode is a steady state—a system that permits qualitative development but not aggregate quantitative growth.

Growth is more of the same stuff; development is the same amount of better stuff (or at least different stuff). The remaining natural world no longer is able to provide the sources and sinks for the metabolic throughput necessary to sustain the existing oversized economy—much less a growing one. Economists have focused too much on the economy’s circulatory system and have neglected to study its digestive tract.

Throughput growth means pushing more of the same food through an ever larger digestive tract; development means eating better food and digesting it more thoroughly. Clearly the economy must conform to the rules of a steady state—seek qualitative development, but stop aggregate quantitative growth. GDP increase conflates these two very different things.

We have lived for 200 years in a growth economy. That makes it hard to imagine what a steady-state economy (SSE) would be like, even though for most of our history mankind has lived in an economy in which annual growth was negligible. Some think a SSE would mean freezing in the dark under communist tyranny. Some say that huge improvements in technology (energy efficiency, recycling) are so easy that it will make the adjustment fun.

“Let me just provide the objectives of the three A’s mentioned in the postingf and then, I would like to share my viewpoints with respect to one of the A’s that I feel is the ‘most relevant and critical’ capability for all the companies. The three A’s that have been talked about are:

a) Agility – it is about how quickly a company can respond to any change in its business environment. It refers to short-term changes.

b) Adaptability – it is the capability of a company to adapt to business changes that are more permanent in nature and therefore, it is strategic and has a long lead time.

c) Alignment – it is the ability to have common and shared interests across the supply chain including vendors and customers.”

Alignment in Supply Chain – is it really possible?