Gartner 2021 top 25 Supply Chain companies

 

Gartner recently announced its list of the top 25 Supply Chain companies, and also recognised the companies that have sustained a high level of Supply Chain excellence over the years in what they have named "Masters" category.

Gartner introduced the “Masters” category in 2015, and to be considered Masters, companies must have attained top-five composite scores for at least seven out of the last 10 years. All of 2020 Masters, Amazon, Apple, P&G, McDonald’s, and Unilever, qualified for the category this year.

Cisco Systems scored the top spot in the ranking for the second consecutive year, followed by Colgate-Palmolive, Johnson & Johnson, Schneider Electric and Nestlé.

Four new companies joined this year’s list: Dell Technologies, Pfizer, General Mills, and Bristol Myers Squibb.

Agile methodology

If you have been following this blog for a while, you would know that we have already shared some insights on the world of project management methodologies that you can find below:

Project Management: Waterfall VS Agile

Agile methodology: Kanban VS Scrum

Today we will get another step closer into understanding what Agile methodologies are and what are the differences as well as the similarities among the different options. 

We will also discover, what are the benefits of these methodologies and when we should apply them.

Hope you enjoy the video!

Agile methodologies

Cold Chain mission: Vaccines

With the outbreak of the COVID-19 pandemic, and subsequent the roll out of the vaccination program in 2021, cold chains have become a concept that a lot of people have become familiar with.

 

We already talked about the Cold Chain in a previous post that you can read in the below link:

 

Cold Chain

 

But with this term now becoming a hot topic, a post of itself should be dedicated to vaccines specific cold chain!

 

Let’s start from the beginning; a cold chain is a temperature-controlled Supply Chain. In particular, the term is used to describe the cold temperature conditions in which certain products need to be kept during storage and distribution.

 

The cold chain is used in the supply and storage of many perishable products, including vaccines, however, maintaining a continuous cold chain in resource-limited places where power supply is unreliable, or even non-existent, is a considerable task.

For vaccines, there are different types of requirements.

 

-    There is an ultralow, or deep freeze, cold chain for vaccines that require -70 degrees C (the Ebola vaccine require this level).

 

-     Next the frozen chain requires -20 degrees C (varicella and zoster vaccinations require this level)

 

-     The refrigerated chain, which requires temperatures between two and eight degrees C (most flu vaccinations only require refrigeration).

 

As an anecdote, the Pfizer COVID-19 vaccine also needs ultracold storage and transportation temperatures as cold as −70 °C, requiring what has been referred to as a "colder chain infrastructure” which has created some issues of distribution as it is estimated that only 25 to 30 countries in the world have the infrastructure for the required ultracold cold chain.

 

If you want to see first-hand how critical cold chain is when distributing vaccines, I recommend watching the series Cold Chain missions, with Ewan McGregor. Here is a taste for it:

Cold Chain Mission - The Congo

 

And if you want more information, check the below document from the World Health Organisation on vaccines cold chain.

Cold Chain vaccines WHO

Logistionary: Vendor Managed inventory (VMI)

 

Vendor Managed Inventory (VMI) is an inventory management practice in which a supplier of goods, usually the manufacturer, is responsible for optimising the inventory held by a distributor/retailer.

In traditional inventory management, a retailer makes its own decisions regarding the order size and frequency, while in VMI the retailer share their inventory data with the supplier such that the supplier is the decision-maker who determines the order size and frequency.

In VMI practice, inventory location depends on the arrangement between the vendor and the customer. The first option is for the inventory to be located both at the customer's and the supplier's premises. For the supplier, this serves as a safeguard against short delivery cycles or synchronised production cycles.

Another option can be for the supplier to deliver to the retailer’s central warehouse or alternatively, to a third party's warehouse. Managing the inventory at the central warehouse enables better optimisation of deliveries and lower costs.

Finally, a third option would be for the inventory to be located directly at the retailer’s premises such as the shop floor itself.

From an inventory ownership point of view, in vendor managed inventory, there are several solutions in terms of payment and transfer of ownership.

In the first alternative, the supplier is the owner of inventory at the premises of retailer. Invoice is issued when the items are sold from the stock.

In the second alternative, retailer assumes ownership of the inventory receiving an invoice upon delivery. However, the supplier is not paid until the retailer sells the items from.

In the third alternative, retailer owns the inventory upon delivery, while the supplier invoices the retailer once the shipment has been made.

In the majority of the cases, the products will be in the possession of the retailer but will not be owned by them until the sale takes place, meaning that the retailer simply houses the product. This is referred to as consignment stock.

There a many advantage for both supplier and retailer of using VMI:

Retailers benefit from reduced risk of going out of stock since the supplier can have information about how the products are selling. 

Retailers also benefit from reduced carrying costs since they shouldn’t need to carry as much excess stock.

Supplier benefit from more control and more customer contact.

Suppliers get to gather information as to the demand for the products, this should also help reduce the amount of safety stock that suppliers need in their warehouse.

This practice can prevent the bullwhip effect since the supplier will have control over the end to end inventory.

 

Retailer-Manufacturer Collaboration - Keys to success

It is not new news that customers have become more and more savvy and educated when it comes to in stores and online shopping. This has lead to increase competition as well as higher expectations from both customers and retailers.

It's clear that the retail game has changed however many retailers and manufacturers are still playing by the old rules and therefore missing out on sales and customer loyalty.

In the current landscape, retailers and manufacturers need to identify opportunities to work together. In the article that you can find clicking in the below link, we explore some examples and case studies of collaborative work between manufacturers and retailers and how this has impacted consumers for the better.

You can fin the article here, hope you enjoy it!

Until next time!

Do you know how Amazon receives your inventory?

 

Even wondered why Amazon is able to receive, pick and dispatch orders within hours?

Have a look at how Amazon receives inventory from their suppliers. Did you noticed how streamlined and strict their policies are when it comes to accepting new parcels into their fulfilment centres?

Porter's Five Forces

Porter's Five Forces Framework is a method for analysing competition of a business and determine the competitive intensity and, therefore, the attractiveness of an industry in terms of its profitability. An "unattractive" industry is one in which the effect of these five forces reduces overall profitability.

This framework was developed by Michael E. Porter and includes three forces from 'horizontal' competition, the threat of substitute products or services, the threat of established rivals, and the threat of new entrants, and two others from 'vertical' competition, the bargaining power of suppliers and the bargaining power of customers.

Threat of new entrants:

Profitable industries that yield high returns will consequently attract new entities. New entrants eventually will decrease profitability for other firms in the industry. Unless the entry of new firms can be made more difficult, profitability will fall towards zero. The most attractive markets are the ones in which entry barriers are high and exit barriers are low; the less time and money it costs for a competitor to enter a company's market and be an effective competitor, the more an established company's position could be significantly weakened.

Threat of substitutes:

Substitute goods or services can be used in place of a company's products or services and pose a threat to the existing company. Companies that produce goods or services for which there are no close substitutes will have more power to increase prices.

Bargaining power of customers:

Defined as the ability of customers to put the firm under pressure and drive prices low. Consumer’s power is high if they have many alternatives but it weakens if they only have few choices. A smaller and more powerful client base means that each customer has more power to negotiate for lower prices and better deals, on the other hand a company that has many, smaller, independent customers will have an easier time charging higher prices to increase profitability.

Bargaining power of suppliers:

Similarly to the consumers bargaining power, the fewer suppliers to an industry, the more a company would depend on a supplier, and as a result, the supplier has more power and can drive up prices. On the other hand, when there are many suppliers a company can keep its costs lower and enhance its profits.

Competitive rivalry:

It refers to the number of competitors and it’s the biggest determinant of the competitiveness of the industry. The larger the number of competitors, along with the number of equivalent products and services they offer, the lesser the power of a company. Conversely, when competitive rivalry is low, a company has greater power to charge higher prices and achieve higher sales and profits.

 

El concepto Uber se traslada al transporte logistico

 

Tras un tiempo en el que se hablo mucho del potencial de la “Uberizacion” del transporte logístico, el Gigante Asiático ha sido el primero en desarrollar una aplicación similar a Uber centrada en el transporte de mercancías. 

Gracias a las nuevas tecnologías y al big data, esta aplicación ha sido capaz de cubrir un nicho de mercado hasta ahora inexplorado, poniendo en contacto a empresas y transportistas y facilitando la interacción entre ellos.

Todavía es pronto para saber si este modelo tendrá éxito fuera de China, pero con su introducción en el mercado sudamericano parece que hay futuro para esta nueva aplicación y los posible competidores que sin duda surgirán en el futuro cercano.

El articulo al completo lo podéis encontrar en el siguiente enlace.

El Uber de los camioneros

Has COVID-19 slowed down our quest for making packaging more sustainable?

2020 was supposed to be the ‘year of sustainability’, building on the momentum of last year where climate action and reducing plastics pollution were at the forefront of discussions.

However, since the outbreak of COVID-19 focus has quite rightly shifted towards overcoming the pandemic.

Most companies have been focussing on ensuring the safety of their staff and customers, managing elevated demand for essential items, and supporting their local communities.

This has mean that the packaging supply chain has had to become more flexible as demand has proven to be unpredictable.

With this in mind, it is not surprising that we have already seen signs that many consumers have rethought their preference for ‘packaging free’ consumption. With hygiene and safety being more prominent in consumers’ minds, some food retailers have gone back to increasing packaging and individually wrapping fruits and vegetables.

Some foodservice chains have also halted use of personal cups because of the risk of contamination, bringing back up the use of disposable paper cups and single use alternatives.

There is a risk that the low oil price may lead to an increase in the use of virgin plastic materials and in some places, single use plastic bags have become widespread rather than reusable ones.

It’s hard to anticipate what the impact of COVID-19 will be on sustainable packaging, but one thing we can say for sure is that in the short term, our behaviours and habits have been transported to the ones we had 10 years ago.

The importance of cost to serve in Supply Chain

In this post, we are going to shed some light on one of the most critical concepts in Supply Chain that most times is not being given the importance it deserves; cost to serve.

Cost to serve is a process that will allow you to identify the total cost of servicing your customers at a customer and product level in order for your business to provide the appropriate levels of service to achieve its business goals.

Cost to serve is critical as it shows that each product and customer demands different approaches and has a different cost profile. Many businesses today still adopt a one size fits all service policy.

Different customers drive different supply chain and logistics costs; large customers, small customers; large orders, small orders, frequent orders, less frequent orders, strict delivery time windows, detailed invoices required in triplicate, constant account management needs etc

The same is true of your products; large products that take up more warehouse space, products that have to be kitted or bundled, products that need temperature controlled storage and many more.

If you can identify the characteristics of your customers and products or services that drive your cost to serve, you will be able to identify low margin customers, low margin products and services and high cost processes so that you can make sure all of your customers are more profitable by providing the right service levels to the right customers.

Overall, understanding Cost to serve will enables your business to focus on both long-term decisions and the prioritisation of short-term actions and will make you able to reposition customers and services, and how they are served to improve overall margin.

The video below explains in a very graphical form the importance of cost to serve and how airlines have been able to make the most out of it!