This week I am fresh back from Knoxville and the University of Tennessee's Spring Supply Chain Forum
I have presented at many university supply chain forums in the past, including Penn State (several times), Georgia Tech (several times), MIT, Harvard, University of Wisconsin and maybe one or two others. The basic structures are the same: a group of companies (generally in the 20-40 range) pay a decent size fee to belong to the forum, in return for which they usually receive in part two events per year featuring presentations from practitioners and others.
Largely but not totally, the sponsoring companies tend to be either in the general geographic region or have supply chain execs that graduated from a given university.
So earlier in the year, Dr. Paul Dittmann (ex of Whirlpool) who runs Tennessee's Global Supply Chain Institute and assists Dr. Ted Stank with the Forum inquired if I would come down and present on supply chain trends. After the demand for my standard speaking fee was quickly rebuffed, I said Yes anyway, as I was planning on issuing a new set of supply chain megatrends sometime this year as it was.
I managed to get the new trends finalized a good 24 hours before my presentation on Wednesday morning, to what was a very large crowd for these type of Forum events (Tennessee does as good a job as anyone at marketing their Forum and especially their research). My presentation seemed to go over very well, with dozens of people complimenting the work afterwards. The new megatrends for 2016 will be released here in this column in coming weeks.
It was a quality event, with a number of excellent speakers. I have seen Frank Crespo, VP and chief procurement officer at Caterpillar, speak before, but he keeps updating the presentation, so I am always happy to hear him again.
Let me first say that what Cat is doing in many areas is simply incredible, "engineering" the supply chain (vendor, sourcing point, flow path, inventory levels and more) for literally every one of the hundreds of thousands of parts Caterpillar sources or makes. How this is even possible I am not quite sure, but it is saving the company I am guessing many tens of millions of dollars annually if not more.
Caterpillar is also on the leading edge on the Internet of Things, with nearly all of its some 3 million machines in the field equipped with sensors and wireless data connections. Caterpillar can now see in detail how each is actually being used, both in terms of efficiency and optimal performance. Crespo told an anecdote of a technician in Peoria who saw an operator of a piece of mining equipment in Virginia was shifting the motor in neutral when coming back down the rock pile, and who then called the driver to make user he understood that practice can lead to premature transmission wear.
"Every decision impact time and money," Crespo noted.
Caterpillar has built a slew of analytics and visibility tools to support its managers. He observed that many companies sort of assume the information on a manager's screen is accurate and timely. Often not the case, Crespo said, and the reason why Cat has been so focused on improving the flow of supply chain information to optimize the flow of materials. "You have to attack problems with the information flow with the same rigor you do with issues with the material flow," Crespo said, but noting that is harder because you can't see it in the same way.
Wendy Herrick, VP of supply chain in North America for consumer products giant Unilever, spoke on "Leading with Purpose," which detailed the company's aggressive efforts at sustainability and making the world a better place.
I did not know that much of this mindset comes from the company's founding days, when in the 1880s William Lever started what would ultimately become half of Unilever by marketing a new kind of soap that he hoped would "'make cleanliness commonplace," and " lessen work for women."
For example, when Unilever measures its carbon footprint, it not only counts the CO2 emissions of its own operations and that of its supply chains, but also the CO2 that might be released in its customers' use of the product. That contributes to the fact that its total Unilever greenhouse gas emissions rose 4% from 2010 to 2015 - but that is as compared to a 21% growth in sales.
But Herrick said Unilever's results prove that sustainability wins in the market. Only 8% of publicly traded companies have increase both revenues and profits every year over the last 10 years. Unilever has a strong eight-year streak going, and expects many more.
What I don't understand is why a combination of the network planning and inventory optimization tools I know P&G uses couldn't have answered these questions, rather than needing a separate, outside modeling effort. The answer I received in part was that the VCU model allowed the "isolation of variables" better than such packaged tools. So custom modeling apparently is still required to get the job done in some (many?) cases.
There was an interesting session on "platform thinking" in the consumer packaged goods world by Cristian Negrescu of Mondelez and Mike Burnette of Tennessee, ex of P&G. "Platforms" of course make obvious sense in areas like automobiles or construction equipment, but in consumer packaged goods too?
There is more, but I am out of space. Good job by the Forum. As a final note, there is an air show this weekend in Knoxville, and while awaiting my flight at the airport, we were treated to several practice sessions by the Navy's Blue Angels. I have seen them before, but they are very cool as always. Nice way to end a good couple of days in the Volunteer state.
Any reaction this trip report on the University of Tennesee Supply Chain Forum? Should supply chain and R&D wrest more control of NPI from marketers in the CPG world? Is custom modeling still the answer to many supply chain problems? Let us know your thoughts at the Feedback section below.
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