On the contrary, CPFR has scaled The article "Why has CPFR failed to scale?" (Quarter 2, Page 60) has a somewhat familiar tone and tenor compared to several others that I have critiqued over the years. They have had in common an attention-grabbing headline followed by a review of the past, forecasts for the future of CPFR/collaboration, and a conclusion that CPFR is important, but with certain caveats. … [Editor's note: The acronym CPFR, which stands for collaborative planning, forecasting, and replenishment, has been trademarked by Voluntary Interindustry Commerce Solutions (VICS).]
CPFR is about collaboration, and effective collaboration has been identified by Logan and Stokes in their best-selling book Collaborate to Compete as the catalyst for change and a competitive advantage. VICS has had, and continues to have, success in bringing global visibility to CPFR. We have an extensive library of case studies that highlight the benefits that have been realized by a significant number of companies.
To the best of my knowledge, there has never been a negative CPFR article written by a member of VICS or anyone who has had direct experience with implementing CPFR. Typically, those who have written with a negative slant have not attended any VICS CPFR committee meetings, where numerous case studies were presented, including some about the sharing of information between trading partners. Perhaps they might have developed a different point of view if they had just gone to a CPFR meeting.
Let me reference a few such cases.
One example is "A CPFR Success Story," written for the March 2006 edition of Supply Chain Management Review by Larry Smith, senior vice president of planning and replenishment at West Marine, and co-chair of the VICS CPFR committee. Larry is truly a CPFR expert and a seasoned and highly successful executive.
We can also point to IBM's "Expanding the Innovation Horizon" Global CEO Study 2006, and Accenture's "Collaboration Survey" dated September 25, 2006. In addition, Professor Judy Whipple of Michigan State University has just written a paper on CPFR that is based on an indepth survey. Interestingly enough, none of these documents make the point that CPFR is not scaling because of a lack of POS (point of sale) information.
I'm quite familiar, by the way, with the work of André Martin that was referenced in the article. Fifteen years ago, he and I worked on the use of POS information to drive supply chain management, applying the principles of DRP (distribution resource planning) long before he wrote Flowcasting the Retail Supply Chain. We continue to work together on advancing the use of DRP at the point of sale to drive market success for the network of collaborators.
On reading "Why has CPFR failed to scale?" I found that it was "grocery-centric," provided old news, and offered little of value to advancing the practice of CPFR/collaboration. The author's recommendation to separate marketing from managing the supply chain is just unimaginable. In my opinion, marketers have as much, if not more, to do with effective and efficient supply chain management as are those who are directly responsible for that function. New products, promotions, advertising, etc., create demand, which, is managed through the supply chain.
We agree that sharing of market information is important, but we do not agree with the author's contention that CPFR has failed to scale. Scale does not mean conducting CPFR with 100 percent of companies' trading partners. Scale may mean collaborating with the 20 percent of trading partners that represent 80 percent of sales.
Finally … the VICS CPFR Certification program incorporates more than 10 years of experience by practitioners and provides a road map for successful CPFR implementations. While we do promote a demand-driven supply chain, it is but one approach to successfully building collaborative programs.
Joseph C. Andraski
President and CEO of VICS
Importers should tighten control of product quality
I applaud CSCMP's introduction of Supply Chain Quarterly and found many articles in the inaugural issue to be of considerable interest.
My concern is about two articles that specifically targeted topics associated with China: "China's future success may depend on supply chain talent" and "Export diversification will change China's relationships."
Neither of those articles drew attention to product quality and the importance this plays in the success of a supply chain. This has taken on even more importance in light of the recent news relative to the failure of product from China entering the commerce of the United States and the rest of the world. It is even more interesting that the subject of product quality hasn't appeared in most trade publications for a very long time.
Companies have worked hard for many years to bring the consuming public to the point that virtually nobody looks to see where a product was made. That is true of electronics, apparel, footwear, toys, and even food. Yet in the space of just a few months, the "country of origin" issue surfaced and drew widespread attention, reversing all of the work done for the past 20-plus years by major international brands, importers, and retailers.
It all started with tainted pet food, then moved on to toys decorated with lead paint, truck tires with separating treads, tainted toothpaste, and now farm-raised seafood. Just this week there was a recall of more than one million toy ovens in which children could easily burn their fingers. All of these products were produced in China.
People are starting to look again at where their goods are coming from, and that is not good news for anyone who manages part of the supply chain cycle. It is time for everyone involved to take a long, hard look at the quality of their products and, more importantly, to tell their customers what they have done and are doing to ensure that the goods they are providing are of the appropriate level of quality.
Major importers generally have controls in place to ensure product quality … they need to tighten these controls to a level that eliminates any possibility of tainted product. Importers should have on-site laboratories to test chemicals used in manufacturing as well as high-level testing of in-process and finished goods—before they leave the producers' facilities.
Smaller importers are open to greater problems. They don't, in most cases, have people on hand to perform inspections. They may have never visited the factory that is producing their product. They may have found them at a trade show, online, or through a trading company. As evidenced by the truck-tire problem, a product recall can put a company out of business while the management wonders why they didn't spend the "short money" to inspect the product that caused their demise, either by themselves or through a reputable inspection service.
It took a lot of effort over a long period of time to bring us to the point where U.S. consumers accept "globalization" of their goods. But it is taking a far shorter period to reverse all of these efforts, making it important that companies address both the quality of the product as well as let the consumer know what steps they have taken or will take to ensure that their products maintain this high standard.
Herb Rothstein
President, H. Rothstein & Associates Inc.
A hefty 42% of procurement leaders say the biggest threat to their future success is supply disruptions—such as natural disasters and transportation issues—a Gartner survey shows.
The survey, conducted from June through July 2024 among 258 sourcing and procurement leaders, was designed to help chief procurement officers (CPOs) understand and prioritize the most significant risks that could impede procurement operations, and what actions can be taken to manage them effectively.
"CPOs’ concerns about supply disruptions reflect the often unpredictable nature and potentially existential impacts of these events," Andrea Greenwald, Senior Director Analyst in Gartner’s Supply Chain practice, said in a release. "They are coming to understand that the reactive measures they have employed to manage risks over the past four years will not be sufficient for the next four.”
Following supply disruptions at #1, the survey showed that the second biggest threat to procurement is seen as macroeconomic factors, which include economic downturns, inflation, and other economic factors. While more predictable, those variables can substantially influence long-term procurement strategies.
And the third-most serious perceived risk was geopolitical issues, including tariffs and regulatory changes, and compliance issues, including regulatory and contractual risks.
In addition, the survey also revealed that “leading organizations” are 2.2 times more likely to view energy availability and cost as a top risk; indicating a focus on future emerging risks. As electrification drives demand for power, brittle grid infrastructure raises concern about whether the energy supply can keep pace. Therefore, leading organizations recognize that access to energy will become a significant future risk.
The market for environmentally friendly logistics services is expected to grow by nearly 8% between now and 2033, reaching a value of $2.8 billion, according to research from Custom Market Insights (CMI), released earlier this year.
The “green logistics services market” encompasses environmentally sustainable logistics practices aimed at reducing carbon emissions, minimizing waste, and improving energy efficiency throughout the supply chain, according to CMI. The market involves the use of eco-friendly transportation methods—such as electric and hybrid vehicles—as well as renewable energy-powered warehouses, and advanced technologies such as the Internet of Things (IoT) and artificial intelligence (AI) for optimizing logistics operations.
“Key components include transportation, warehousing, freight management, and supply chain solutions designed to meet regulatory standards and consumer demand for sustainability,” according to the report. “The market is driven by corporate social responsibility, technological advancements, and the increasing emphasis on achieving carbon neutrality in logistics operations.”
Major industry players include DHL Supply Chain, UPS, FedEx Corp., CEVA Logistics, XPO Logistics, Inc., and others focused on developing more sustainable logistics operations, according to the report.
The research measures the current market value of green logistics services at $1.4 billion, which is projected to rise at a compound annual growth rate (CAGR) of 7.8% through 2033.
The report highlights six underlying factors driving growth:
Regulatory Compliance: Governments worldwide are enforcing stricter environmental regulations, compelling companies to adopt green logistics practices to reduce carbon emissions and meet legal requirements.
Technological Advancements: Innovations in technology, such as IoT, AI, and blockchain, enhance the efficiency and sustainability of logistics operations. These technologies enable better tracking, optimization, and reduced energy consumption.
Consumer Demand for Sustainability: Increasing consumer awareness and preference for eco-friendly products drive companies to implement green logistics to align with market expectations and enhance their brand image.
Corporate Social Responsibility (CSR): Companies are prioritizing sustainability in their CSR strategies, leading to investments in green logistics solutions to reduce environmental impact and fulfill stakeholder expectations.
Expansion into Emerging Markets: There is significant potential for growth in emerging markets where the adoption of green logistics practices is still developing. Companies can capitalize on this by introducing sustainable solutions and technologies.
Development of Renewable Energy Solutions: Investing in renewable energy sources, such as solar-powered warehouses and electric vehicle fleets, presents an opportunity for companies to reduce operational costs and enhance sustainability, driving further market growth.
Keep ReadingShow less
Peter Weill of MIT tells the audience at the IFS Unleashed user conference about the benefits of being a "real-time business."
These "real-time businesses," according to Weill, use trusted, real-time data to enable people and systems to make real-time decisions. By adopting that strategy, these companies gain three major capabilities:
Increased business agility without needing a change management program to implement it;
Seamless digital customer journeys via self-service, automated, or assisted multiproduct, multichannel experiences; and
Thoughtful employee experiences enabled by technology empowered teams.
The benefits of this real-time focus are significant, according to Weill. In a study with Insight Partners, he found that those companies that were best-in-class at implementing automated processes and real-time decision-making had more than 50% higher revenue growth and net margins than their peers.
Nor is adopting a real-time data stance restricted to just digital or tech-native businesses. Rather, Weill said that it can produce successful results for any companies that can apply the approach better than their immediate competitors.
Weill's remarks came today during a session titled “Becoming a Real-Time Business: Unlocking the Transformative Power of Digital, Data, and AI" at at the “IFS Unleashed” show in Orlando, Florida.
For example, millions of residents and workers in the Tampa region have now left their homes and jobs, heeding increasingly dire evacuation warnings from state officials. They’re fleeing the estimated 10 to 20 feet of storm surge that is forecast to swamp the area, due to Hurricane Milton’s status as the strongest hurricane in the Gulf since Rita in 2005, the fifth-strongest Atlantic hurricane based on pressure, and the sixth-strongest Atlantic hurricane based on its peak winds, according to market data provider Industrial Info Resources.
Between that mass migration and the storm’s effect on buildings and infrastructure, supply chain impacts could hit the energy logistics and agriculture sectors particularly hard, according to a report from Everstream Analytics.
The Tampa Bay metro area is the most vulnerable area, with the potential for storm surge to halt port operations, roads, rails, air travel, and business operations – possibly for an extended period of time. In contrast to those “severe to potentially catastrophic” effects, key supply chain hubs outside of the core zone of impact—including the Miami metro area along with Jacksonville, FL and Savannah, GA—could also be impacted but to a more moderate level, such as slowdowns in port operations and air cargo, Everstream Analytics’ Chief Meteorologist Jon Davis said in a report.
Although it was recently downgraded from a Category 5 to Category 4 storm, Milton is anticipated to have major disruptions for transportation, in large part because it will strike an “already fragile supply chain environment” that is still reeling from the fury of Hurricane Helene less than two weeks ago and the ILA port strike that ended just five days ago and crippled ports along the East and Gulf Coasts, a report from Project44 said.
The storm will also affect supply chain operations at sea, since approximately 74 container vessels are located near the storm and may experience delays as they await safe entry into major ports. Vessels already at the ports may face delays departing as they wait for storm conditions to clear, Project44 said.
On land, Florida will likely also face impacts in the Last Mile delivery industry as roads become difficult to navigate and workers evacuate for safety.
Likewise, freight rail networks are also shifting engines, cars, and shipments out of the path of the storm as the industry continues “adapting to a world shaped by climate change,” the Association of American Railroads (AAR) said. Before floods arrive, railroads may relocate locomotives, elevate track infrastructure, and remove sensitive electronic equipment such as sensors, signals and switches. However, forceful water can move a bridge from its support beams or destabilize it by unearthing the supporting soil, so in certain conditions, railroads may park rail cars full of heavy materials — like rocks and ballast — on a bridge before a flood to weigh it down, AAR said.
Imports at the nation’s major container ports should continue at elevated levels this month despite the strike, the groups said in their Global Port Tracker report.
To be sure, the strike wasn’t without impacts. NRF found that retailers who brought in cargo early or shifted delivery to the West Coast face added warehousing and transportation costs. But the overall effect of the three-day work stoppage on national economic trends will be fairly muted.
“It was a huge relief for retailers, their customers and the nation’s economy that the strike was short lived,” NRF Vice President for Supply Chain and Customs Policy Jonathan Gold said in a release. “It will take the affected ports a couple of weeks to recover, but we can rest assured that all ports across the country will be working hard to meet demand, and no impact on the holiday shopping season is expected.”
Looking at next steps, NRF said the focus now is on bringing the International Longshoremen’s Association (ILA)—the union representing some 45,000 workers—and the United States Maritime Alliance Ltd. (USMX) back to the bargaining table. “The priority now is for both parties to negotiate in good faith and reach a long-term contract before the short-term extension ends in mid-January. We don’t want to face a disruption like this all over again,” Gold said.
By the numbers, the report forecasts that U.S. ports covered by Global Port Tracker will handle 2.12 million twenty-foot equivalent units (TEU) for October, which would be an increase of 3.1% year over year. That is slightly higher than the 2.08 million TEU forecast for October a month ago, and the strike did not appear to affect national totals.
In comparison, the August number was 2.34 million TEU, up 19.3% year over year. The September forecast 2.29 million TEU, up 12.9% year over year, November is forecast at 1.91 million TEU, up 0.9% year over year, and December at 1.88 million TEU, up 0.2%. For the year, that would bring 2024 to 24.9 million TEU, up 12.1% from 2023. The import numbers come as NRF is forecasting that 2024 retail sales – excluding automobile dealers, gasoline stations and restaurants to focus on core retail – will grow between 2.5% and 3.5% over 2023.
Global Port Tracker, which is produced for NRF by Hackett Associates, provides historical data and forecasts for the U.S. ports of Los Angeles/Long Beach, Oakland, Seattle and Tacoma on the West Coast; New York/New Jersey, Port of Virginia, Charleston, Savannah, Port Everglades, Miami and Jacksonville on the East Coast, and Houston on the Gulf Coast.