Sales & Operations Process Improvement
Important "Quantitative"
Supply Chain Decisions

July 2014    
In This Issue
Mitch Millstein, Ph.D.
Important Aspects of Supply Chain Management
Help an Academic

 

I am putting together a Logistics Systems Analysis class for my university (University of Missouri - St. Louis), and I thought it would be helpful to you to see the types of decisions logisticians make to minimize costs and maximize customer service. 

Doing something "because we have always done it that way" can dramatically increase costs and hurt customer service.  Take a look at the article below, and if you want more details click on the white-paper link. 

Sincerely,

The Supply Velocity Team
Mitch, Ray & Cyril
Mitch Millstein, Ph.D.

I successfully defended my dissertation on June 12th.  Thank you to everyone in my network who provided ideas that powered my research, opportunities to try my analytical models and encouragement during this 4 year journey. 

The photo to the right are my dissertation committee: Doug Smith, Joe Martinich (my advisor), Bob Nauss and Don Sweeney. 
Mitch is Presenting "Customer Optimization" 

If you live in St. Louis and would like to hear about my research on customer optimization, UHY (A large accounting firm) is hosing me on July 16th.  You can email Marissa (mnoelker@uhy-us.com) to attend. 

CUSTOMER OPTIMIZATION:

Sometimes the easiest way to increase your profitability and grow sales is to work with your clients differently than you do today.  Come join UHY this month as we have the President of Supply Velocity, Mitch Millstein, Ph.D., show us a new ways to evaluate your customers' performance to increase your company's profitability.

 

In this interactive session, Mitch will share with us techniques he has used with his clients to increase bottom line profitability and cash flow.  If you're a company that has ever hit a plateau in profitability, cash flow growth and sales, this is one presentation your leadership team should attend.

 

YOU WILL LEARN HOW TO:

  • Get your marketing efforts to attract high potential prospects
  • Make sure your sales reps are driving the right conversations with existing customers
  • Ensure your customer service provides your best customers with your best service
  • Increase profitability and cash flow
  • Align your Operations, Finance and Sales teams
Important Quantitative Supply Chain Decisions  

Link to Additional Details 

 

http://www.supplyvelocity.com/wp-content/uploads/Important-Quantitative-Supply-Chain-Decisions.pdf 


 

We decided to call this "Quantitative" Supply Chain Decisions, but we could have called it Logistics Decisions.  Logistics can be described as the supply chain within a firm, encompassing the more quantitative decisions.  We will provide an overview of these decisions.  For more details you can click on the link above, which will take you to a detailed white paper we wrote.  It is organized so you should be able to easily find the section that you would like more details. 

 

Production Logistics Decisions

  • Location and number of facilities
    • Cost versus Customer Service
    • Economies of scale
  • Product design
Logistics issues regarding production will involve where to locate your production facility and your product design (and therefore production and inventory) strategy.  Having fewer, larger facilities will often reduce costs, due to economies of scale, but can place your facilities farther away from customers. 
 

Product design can have a profound impact on logistics.  In the attached white-paper we describe six product design / production strategies that will affect shipping and warehousing costs, and customer service.   

 

Transportation Logistics Decisions

  • Vehicle routing
  • Transportation Mode
    • Economies of scale versus Speed and Flexibility
        

Transportation can be 50% of your total supply chain costs.  Therefore, managing cost and customer service is critical.  Often we find companies that do not re-optimize their routes.  Software and methods exist to help you minimize distance traveled, and therefore fuel costs.  Routes and stops should be evaluated  at least twice a year, and preferably more often.    

  

Transportation mode should also be evaluated.  There are a number of different vehicles, from ships and planes to sizes of trucks that you need to consider when shipping product.  Again, larger, is usually lower cost, but only if you can fill up the vehicle and deal with the lack of flexibility.  For example, you will likely not be able to reroute a railcar if it needs to change the ship-to location.    

 

Storage Logistics Decisions

  • Location and Number of facilities
    • Cost versus Service
  • Type of facility
    • Direct-to-consumer warehouse, B2B warehouse, Cross-dock warehouse, Value-added provider, Retail store
  • Inventory levels
    • Stockout costs versus Obsolescence
    • Safety stock and Reorder point
    • Order (Production or Purchase) Quantity
  • Packaging
    • Customer perception versus Costs

Storage logistics decisions are numerous and complicated.  We have provided a summary in the bullets points above.  This list is too long to write about in this e-newsletter, so if you want the details, they are available in the attached white paper.     

 

If you want more information any of these strategies, give Mitch Millstein a call (314-406-4962) or send him an email (mitch@supplyvelocity.com).
Help an Academic, take this survey      

While we are talking about academia, my colleague, Wes Boyce is doing his Ph.D. dissertation on trust and collaboration in supply chains.  He needs purchasing professionals to fill out this 9 minute survey.  (I did it myself, and it took me 9 minutes.)  Below is the survey link and some additional notes to clarify some of the questions. 

 

https://www.surveymonkey.com/s/2BGYPRZ

 

#4) How is storage different than inventory?

Storage implies raw materials versus components.

 

#19) what if this is a pure business-to-business supplier-customer relationship and there is no point-of-sale data involved?  Do they leave it  blank? 

Blank responses are never ideal, but that sounds like a reasonable choice of action since an answer would be false anyway.

 

#20) Is synchronized decision making, joint decision making?  I have never heard the term synchronized decision making.  I am familiar with this term for production; synchronizing production flows to achieve a just-in-time inventory system, but never for just decision making. 

Yes. It evolved from the dimension of collaboration called decision synchronization, but it is joint decision making.

 

#31) Are communication channels email, phone, EDI, other? 

 Any and all of the above.

 

#35) What would you suggest a company should answer if they never participated in close supply chain relationships, in other words that this would not be applicable to them?    Do they leave it blank? 

That sounds reasonable to me.

 

#45) I don't understand the first bubble on this question (Assistant (Director, manager, etc.))

 That probably could have said "Assistant __________ (Director, manager, etc.)". In other words, they are an assistant manager, assistant director, etc.