DHL Supply Chain riding digital wave with ‘smart glasses’ pilot

The digital wave continues to wash over the global economy, and it’s making a big splash at a Center for Operational Excellence member company.

dhl supply chainMember DHL Supply Chain this month announced that it has completed a pilot of a new augmented reality addition to its warehouse picking operations, equipping employees with “smart glasses.” By wearing these glasses, employees have instant access to visual displays that give picking instructions, along with details on where the item is located and where it should be placed on carts.

DHL Supply Chain in a press release said it’s seen boosts of productivity of up to 15 percent during pilot tests in the U.S. and in Europe, CIO and COO Markus Voss calling the digitalization “not just a vision or a program” but “a reality for us and our customers.”

DHL Supply Chain is one of many companies grappling and experimenting with the role of digital technology in legacy business models that, in some industries, haven’t seen radical disruption in generations. The challenge of digitization was the subject of an event just this week at The Ohio State Univeristy, where COE partnered with three other Fisher centers to address challenges and opportunities in this area.

In the opening keynote, Cisco executive Jeremy Aston shared research from the company’s Global Center for Digital Business Transformation showing that in just two years, companies’ perspectives on digitization have shifted drastically. In 2015, only 15 percent of surveyed companies told Cisco and its partners that digital disruption was already occurring in their industry. That number jumped to 49 percent this year. At the same time, roughly one in three of the executives surveyed told Cisco that digitization would have a transformative impact on their industry. Just two years ago, that perspective was shared by one in 250 surveyed executives.

DHL Supply Chain hinted that the “smart glasses” picking pilot is just the start, with plans to look at leveraging this technology in training and maintenance functions, among others.

Global sourcing projects offer chance to connect with Fisher students

One of the best ways to unlock the value of your company’s membership in the Center for Operational Excellence is engaging with students at Fisher College of Business.

Prof. John Gray

Once again, COE is offering member companies the opportunity to partner with groups of students on projects designed to give them real-world experience – and give you real value at no cost. COE Associate Director John Gray is seeking interested companies to host a group project for his second-year MBA and junior/senior undergraduate “Strategic Global Sourcing” classes for autumn semester 2017.

To indicate your company’s interest, just fill out a quick survey by Tuesday, Aug. 8. If your project is selected, you’ll work with Prof. Gray in August to create a more detailed project scope, which will be presented to students at the start of the academic year.

In these projects, students take what they’re learning in class – make-vs.-buy decisions, location decisions, supplier management, and more – and apply it to a real-world problem-solving need at your company. By opening up your doors, providing data and committing to roughly one call per week, your company receives up to three hours of work per week per MBA student along with a written deliverable, which can include analyses conducted through the project.

Check out the “Student Engagement” section of COE’s website for more specifics on recommended project scope and more.

Many COE member companies take advantage of project opportunities as a way to network with students and build relationships that ultimately could open doors to internships and/or job opportunities. Projects also offer the chance for concrete ROI – the “I” being solely your company’s time and commitment.

Looking to engage more with the global sourcing community? Join Prof. Gray’s LinkedIn group. If you have questions or would like more details, contact him at gray.402@osu.edu.

Fisher Prof. Craig wins ‘best paper’ honor for retail industry research

A professor in the academic department closely affiliated with the Center for Operational Excellence is part of a team that took home a top research award for a recent paper on the retail industry.

nate craig fisher
Prof. Nathan Craig

Fisher Assistant Prof. Nathan Craig traveled to Washington, D.C., last month to accept the Ralph Gomory Best Industry Studies Paper Award, given annually by the Industry Studies Association. Craig and co-authors Nicole DeHoratius (University of Chicago) and Ananth Raman (Harvard Business School) clinched the honor for their paper “The Impact of Supplier Inventory Service Level on Retailer Demand,” published last year in Manufacturing and Service Operations Management.

The journal where Craig’s work was published was one of seven in a pool of contenders for the prize, which was judged by top researchers at universities in North America and Europe.

The winning paper breaks new ground in the field of retail research, which largely has examined business-to-consumer relationships in the past. Craig and his co-authors moved upstream in the supply chain to focus exclusively on the relationship between supplier service levels and retailer demand. By conducting a field experiment at Hugo Boss, Craig and his team were able to quantify the impact of a supplier boosting its fill rate, or the percentage of a customer order satisfied by a shipment. Specifically, an increase of only 1% in supplier fill rate lead to an 11% increase in retailer demand.

What does this mean for suppliers to retailers? Even the best ones, Craig and his team found, can fuel substantial increases in retailer demand by working toward incremental service-level gains. And those who ignore this link are missing out on a prime opportunity to boost profit and grow market share.

Check out the Management Sciences research portal for more on the latest work from Fisher’s top-ranked operations faculty.

Summit speakers talk lean, supply chain, “EQ” in new podcasts

Miss this year’s Leading Through Excellence summit or looking to revisit it?

eric olsen cal poly
Cal Poly Prof. Eric Olsen, who hosted a workshop and breakout at this year’s summit and is featured on the “Manufacturing Tomorrow” podcast.

COE once again has partnered with the Ohio Manufacturing Institute on its semi-monthly Manufacturing Tomorrow podcast to feature speakers from the three-day summit in its two latest editions. In the dual editions of the summit-centered podcast, you’ll hear Executive Producer Kathryn Kelley interview summit speakers:

  • Cary Dunston, CEO of kitchen and bath cabinet manufacturer American Woodmark Corp., a featured breakout speaker for his insights on leadership and emotional intelligence;
  • Derek Browning, director of consulting services for LeanCor Supply Chain Group, who presented a breakout on supply chain excellence;
  • Eric Olsen, director of Central Coast Lean and a professor at California Polytechnic State University, who ran a popular workshop on facilitating lean and offered a breakout session on the “power of lean habits;”
  • and Mark Reich, COO of the Lean Enterprise Institute, who hosted a breakout session on hoshin planning.

You can check out the first round of the podcast interviews, featuring Dunston and Browning, here, while round two – with Olsen and Reich – can be found here.

COE regularly partners with OMI to bring speakers to Manufacturing Tomorrow. Past COE collaborations have resulted in podcasts interviewing Goodyear’s Norbert Majerus, COE Executive Director Peg Pennington, Snap-On Inc. CEO Nick Pinchuk and more.

The full Manufacturing Tomorrow podcast archive is available on iTunes.

‘On Demand’ event Feb. 24 looks at supply chain impact of shifting consumer trends

prime now
Courtesy Amazon.com

With fourth-quarter and year-end financials for online retail juggernaut Amazon.com set to be released Feb. 2, industry watchers were abuzz with a statistic from digital commerce watcher Slice Intelligence: More than half of all 2016 growth in e-commerce came from Amazon alone.

This dominance is the latest sign that Amazon is growing as an industry disruptor, shaking brick and mortar retail to its core and reframing what it means to be competitive – and to win. Amazon’s most headline-grabbing move of late – Prime Now one-hour delivery – demonstrates that what’s propelling the company along is a relentless push to satisfy customer demand with lightning speed and unprecedented convenience.

Indeed, a shift toward instant-gratification customer demand is transforming the supply chain as we know it – and for a variety of industries. In the space of several years, Uber has turned the personal transportation trade on its ear and become a model of disruption, leading the Wall Street Journal in 2015 to state “There’s an Uber for Everything Now.” In the traditional world of goods production and fulfillment, consumer product giants such as Procter & Gamble Co. are undertaking vast strategic overhauls of their distribution models.

These changes roiling in the operations, logistics and supply chain management worlds pose huge challenges to companies just as they present opportunities. The Center for Operational Excellence has teamed up with the Fisher College of Business Operations and Logistics Management Association for a look at this trend through a half-day Supply Chain Symposium event called “On Demand,” set for Friday, Feb. 24, from noon to 3:30 p.m. At this event, attendees will have the opportunity to hear from leaders at companies including Nestle USA, DHL and Amazon about how they’re working to keep pace with demand and stay competitive.

adrian kumarThe first speaker at the event is Adrian Kumar (pictured, right), VP of Solutions Design, North America for DHL. Kumar leads a team of 50 engineers and supply chain professionals to drive growth and continuous improvement across the US and Canada. He’ll be discussing how changing consumer trends are changing the traditional fulfillment model along with the economics behind the model, crowd-sourced delivery. Kumar also will highlight the shift to regional and local fulfillment centers and the challenges in addressing short supply chain lead times.

michael coburnThe keynote speaker at the event is Michael Coburn (pictured, right), head of customer-facing supply chain for Nestle USA. Coburn, a nearly 30-year Nestle veteran, will introduce the concept of short-shelf-life products and their impact on products and customers. By presenting Nestle case studies, he’ll also illustrate their challenges and complexities along with the evolution of the short-lead-time supply chain space.

The event, open to COE members and Fisher graduate students, will wrap up with a discussion panel where Kumar of DHL will join Rob Precord, project manager, supplier-facing supply chain at Nestle and Matthew Fein, an operations manager at Amazon in Columbus.

Registration is open now for this event, which will take place on Fisher’s campus.

New Fisher program seeks to fill pipeline of women supply chain leaders

While only about two in every five undergraduate supply chain-focused students at universities are women, they hold a scant 3 percent of executive-level leadership roles at Fortune 500 companies. The Management Sciences department at Fisher College of Business this fall has launched a new initiative seeking to grow those numbers at both ends of the pipeline.

pathways scholars
This year’s Pathway Scholars with representatives from Motorists, Wendy’s QSCC and Management Sciences.

The department this academic year welcomed its first round of scholars in the Pathways for Women’s Excellence in Supply Chain program, a group of eight first-year undergraduate women at Fisher College of Business. Each student has received a $2,500 scholarship, funded by this year’s Pathways Scholars sponsors: Columbus-based Motorists Insurance Group and Wendy’s Quality Supply Chain Cooperative.

Management Sciences Department Chair Ken Boyer said he worked to launch the program for reasons both personal and practical. He’s the son of one of the first women to earn a bachelor’s in mechanical engineering from the University of Wisconsin 60 years ago.

“Barriers to women in a variety of professions have been greatly reduced in the intervening decades,” Boyer said. “Unfortunately, this is far different from saying there are no challenges.”

Indeed, data from research firm Gartner shows women staff only 20 percent of supply chain leadership roles at the director level and higher. This comes as the nation’s supply chain workforce faces a troubling shortage as waves of baby boomer retirements crest.

Krista Pohlman, senior director of program management for Wendy’s QSSC, said developing the company’s talent pipeline was a key motivator in signing on to fund the Pathways Scholars program.

“We really want to be a world-class supply chain organization,” Pohlman said. “To collaborate with Ohio State in an effort to bring more women into this industry is something we’re immensely proud of.”

Ralph Smithers, assistant VP of Associate and Community Engagement at Motorists, said the company approached the opportunity with similar goals.

“We’d like to increase the number of women in the supply chain management field, and it’s a great opportunity to work with Fisher on this,” he said.

The scholars in the program, in addition to their funding, connect with mentors from Motorists and QSSC over the course of the year and receive coaching from Fisher professors. They also connect with supply chain organizations through several exclusive events hosted throughout the year. Already this fall, the students have toured Wendy’s and Wendy’s GSCC, attended a National Association of Women Business Owners conference, and met with supply chain leaders from JPMorgan Chase & Co., Nestle USA and DSW Inc.

Ultimately, Boyer said, the participating students will be well-positioned to find supply chain leadership roles as they enter the workforce.

For information on the Pathways program and sponsorship, check out its website or contact Ken Boyer at boyer.9@osu.edu.

Upcoming supply chain event keynote wins major industry award

Don’t just take it from us that our featured keynote for next month’s Center for Operational Excellence supply chain event is a big deal.

chris caplice
Chris Caplice

The Council of Supply Chain Management Professionals at its annual conference in Orlando this week awarded Dr. Chris Caplice the Distinguished Service Award, the most prestigious honor around for supply chain professionals. Caplice, the executive director of the Massachusetts Institute of Technology’s Center for Transportation and Logistics, is the keynote at COE’s Oct. 21 supply chain forum. Registration is open now, though seating is restricted to employees of COE member companies.

Speaking of Caplice, CSCMP CEO Rick Blasgen said that Caplice “from his involvement in education, to his innovative work in identifying and developing technologies that have contributed to the improved efficiency and effectiveness of transportation, logistics, and supply chain processes … has had a dramatic impact in shaping the supply chain discipline as we know it.”

Caplice has contributed to our growing knowledge on supply chain management from the industry and academic side, placing himself in what CSCMP calls an elite group. In addition to his MIT role, he has worked at Logistics.com, Sabre Holdings, the Virginia Military Institute and the U.S. Army, where he served as an officer.

At COE’s event next month, Caplice is addressing a serious challenge for many organizations today, which lack supply chain designs that can suitably adapt to disruptions. He’ll be highlighting four oncoming trends – miniaturization, virtualization, decentralization and digitization – that will alter the competitive landscape as companies devise new ways to serve their customers. This session will provide supply chain managers and others with new insights as they rethink assumptions in their partner selection, distribution network design, and chosen service platforms.

Read more about the event here or register now.

Fisher students in 1st wave of new professional certification

A group of undergraduate operations students at the Fisher College Business bear the distinction of being the first in the world to earn a new professional certification seen as a stepping stone another key resume-booster.

A total of 15 Fisher students recently passed a version of a new exam through the American Production and Inventory Control Society (APICS) to earn the “Global Supply Chain Associate” (GSCA) designation. This brand-new designation is the culmination of a year’s work among faculty at several universities nationwide, including Andrea Prud’homme, a clinical faculty member at Fisher who also serves as an associate director for the Center for Operational Excellence. The Fisher students took part in a test launch of the program, which is set to roll out internationally this fall .

Prud’homme said a key motivation in creating the GSCA designation was the fact that undergraduates often don’t have the time or money to pursue the well-known Certified Production and Inventory Management (CPIM) designation.

“This gets them started should they wish to pursue CPIM certification,” Prud’homme said. “Additionally, many of the companies that hire our undergraduates provide incentives and support for new hires to become CPIM-certified.”

Team building, problem solving take center stage at 2016 COE summit

The Center for Operational Excellence’s flagship annual event has more than a few things in common with the fast-paced racing world featured in the kickoff to the fourth-annual Leading Through Excellence summit.

In the span of three years, COE’s April Leading Through Excellence summit has grown to a gathering of nearly 400 process excellence leaders from around the world: 50 companies, a dozen workshops and tours, 20 breakout sessions, four dynamic keynote addresses, and countless insights across three days aimed at helping organizations harness the power of process improvement.

Here’s a look back at the event:

PIT action

Leading Through Excellence began with a bang as nearly 100 attendees plunged into the high-paced world of pit crew racing, guided by Mooresville, N.C.-based training ground Performance Instruction & Training (PIT). The session’s focus on handoffs, coordination and standard work drove home the importance of having a high-functioning team for Cheryl Cole of KeyBank, which sent 17 employees to the conference. “We can all benefit from what we experienced from PIT,” she said. “Teams tend not to be aware of the significance of being in sync.”

PIT team
Team-building emerged as the heart of Leading Through Excellence, where a number of companies brought upwards of 15 employees. “Getting a team together, you start bouncing ideas off each other,” said attendee Linda Schaefer of COE member Clopay. “You get more people involved, the excitement builds, and great things always come of that.”

Markovitz

Operational excellence isn’t bound by the Japanese words that make the foundations of lean. Author Dan Markovitz (A Factory of One, Building the Fit Organization) in his workshop offered a jargon-free look at continuous improvement that’s at the heart of his own passion to break down barriers to understanding. “If we could speak to them using analogies and metaphors that make sense to them, all the sudden we don’t have to go uphill,” Markovitz told COE in a pre-summit interview.

Cardinal

Longtime COE member Cardinal Health Inc. hosted a “train the trainer” workshop hosted by Luis Loya (pictured, middle) that modeled the health-care company’s own best practices in teaching lean practices.

SRI
Off-site tours during Leading Through Excellence ranged from a trip to Anheuser-Busch InBev’s massive Columbus brewing facility to a trip through the production line at COE member Abbott Nutrition. Here, Ohio State’s own Spine Research Institute demonstrates its trailblazing work in studying back problems, a hugely costly yet widely misunderstood workplace ailment.

Ben Cook
After hosting two high-paced rounds of pit crew training simulations on the first day of Leading Through Excellence, Performance Instruction & Training’s Ben Cook took to the stage to kick off a full day of breakout sessions. Before a crowd of nearly 400 people from 50 companies, Cook illustrated PIT’s “think inside the box” philosophy, that’s hinged on driving precision from a highly functioning team and reducing human error as much as possible. “The problem is the human element – that’s what happened with us as pit crew members. If we break down, then we lose the race; the car’s not gonna lose the race for us anymore.”

Hagene
True leaders don’t bark answers – they ask questions that help dig to the root of the problem. Attendees practiced asking effective questions in a packed session hosted by lean expert Margie Hagene.

Guru
More than half of all breakout sessions at Leading Through Excellence are hosted by industry leaders, sharing stories of what worked, what didn’t – and how we can all learn from it. Pictured is Guru Vasudeva, SVP and Enterprise CTO at COE member and summit sponsor Nationwide, who shared his own “day in the life of a lean leader.”

Aravind
The balance of the breakout sessions at Leading Through Excellence are hosted by Fisher College of Business faculty members sharing their own research. Pictured is Prof. Aravind Chandrasekaran, who offered insights he gleaned from working with high-tech manufacturers facing sudden – and potentially cataclysmic – shifts in project scope.

Dumas
Matt Dumas (pictured, above) of COE member Honda R&D said the summit is “a great event for a team. To have more of the organization thinking about lean and understanding these principles makes it that much easier to take it back and work together to apply it.”

Catapult
Lead summit sponsor MoreSteam.com gave attendees a hands-on taste of process design principles with a catapult workshop that had participants taking a “MacGuyver” approach and facing off in friendly competition.

Murli
Longtime lean leader Joe Murli in his keynote address offered his decades-in-the-making perspective on the lean management system. Of the summit, he said “this isn’t just leading-edge thought, but edge of the envelope thinking here. It’s little things that we can pluck off the tree and bring back to put into what we’re already doing. That makes it much more powerful.”

Kalman
Connecting an organization’s purpose and mission down to day-to-day work can be a formidable challenge for any company. David Kalman of Root Inc. in his popular breakout session showed attendees how visuals can help close that gap.

Gino
Harvard Business School researcher and professor Francesca Gino, author of the book Sidetracked, guided attendees through the wild world of decision making, where our hard-wired instincts often stand in the way of the right calls. “We are human beings,” Gino said. “Often we start with a plan, a clear goal, and we take the time to come up with a clear action plan. When we look at the outcome, we’re often a little bit off target.” Knowing how to counteract the unconscious biases and instincts we possess, Gino said, can lead us to better decision making, she said.

Volunteers
The behind-the-scenes action at Leading Through Excellence was fueled by more than three-dozen Fisher College of Business undergraduate students, graduate students and staff members, who served as volunteers and introduced speakers throughout the event.

Henry
Accidental Creative founder and acclaimed author Todd Henry closed out Leading Through Excellence, urging the audience to ask: “How are you bringing yourself to the table every day as a leader? A brilliant idea is not enough – in order to succeed, you have to develop your voice as a leader and you have to help your team develop its voice.”

Want to see more? Check out the full album of summit photos on our Flickr site. And mark your calendar for Leading Through Excellence 2017, April 11-13.

Research spotlight: The hidden price tag of supplier reliability

nate craig
N. Craig

by special contributor Nathan Craig, asst. prof. management sciences, Fisher College of Business

The retail shopping experience today is one of incredible convenience for customers and extraordinary complexity behind the scenes.

Customers have grown accustomed to the seemingly sleight-of-hand ease with which many retailers stock shelves and fill online orders, while their supply chains are under increasing pressure to keep up. For suppliers and retailers alike, a blip that keeps a shelf empty or stalls a shipping date is an invitation for competitors to creep in—or for customers to take aim on social media.

Retail, in short, has never been better positioned to deliver the multi-channel experience customers crave. But the stakes have never been higher. One slip in the journey from factory floor to customers’ hands costs time, money and brand loyalty.

Major supply chain disruptions—natural disasters and strikes, to name a few—might catch headlines, but they’re rarely the culprit behind empty shelves. The kinds of problems that wreak the most havoc, we’ve found, might surprise you.

Correctable and costly

warehouse
Courtesy Argentus.com

Our research, published in the Journal of Operations Management, comes after years of examining how retailers can better leverage their vast supplier networks to improve the end consumer experience. These opportunities are exciting and lucrative. An earlier collaboration that examined supplier management practices at Hugo Boss found that increased supplier reliability can increase both demand for a brand and the supplier’s profit, even in the face of expense-adding measures that strengthen the supply chain.

Modern retail techniques such as online ordering, in-store pick-up, and pack-by-store distribution pay dividends in a fast-paced industry with razor-thin margins. But executing these practices is challenging, creating chances for suppliers to miss the mark. Even if the retailer properly forecasts demand, products can get stuck in supply chains.

We spent months scouring data on supplier errors at a major distribution center (DC) for a 700-store retailer—for anonymity’s sake, we’ll call this big-box chain Omega. Examining a full year of Omega’s orders from its suppliers, we found about 7 percent of all orders suppliers delivered deviated from Omega’s specifications. Less than half of these, however, were “classical” errors such as late delivery and short quantities. The majority of the errors involved the complex labeling, packaging, and information exchange requirements that support modern retail supply chains.

These errors are correctable, but doing so costs time and money. If a supplier doesn’t properly document an inbound shipment, it can’t run through the retailer’s automated receiving system. Instead, the retailer’s employees must manually inspect and identify the shipment. Products with incorrect price tags, packaging, or display elements (like hangers) must be adjusted by the retailer’s employees before hitting the selling floor.

Research in the retail arena has paid little attention to these correctable errors, which we’ve found are more frequent than others and come with substantial costs. Rework time and labor hours for correctable errors alone, we calculated, could cost around 5 percent of the Omega DC’s annual operating budget. That’s close to $25 per product per year on average across hundreds of thousands of items. Extrapolating from Omega to the retail industry suggests that these errors cost retail supply chains billions of dollars annually.

Chargeback, move forward

If retailers have had difficulty determining the financial impact of these frequent, correctable errors, they’ve had even more when it comes to properly recouping costs from errant suppliers.

Retailers’ chief weapon in reducing the immediate cost of supplier errors is the so-called chargeback, which docks supplier revenue after errors and can shave up to 10 percent off the supplier’s top line. Our research found the Omega DC’s supplier chargebacks often under- or overestimated the cost of rework, even when doling out millions of dollars in penalties per year.

Hitting the mark on chargebacks not only could stabilize retailer revenue but avoid the contract disputes endemic in these arrangements. To help retailers get there, we’ve analyzed the kinds of products most harmed by fulfillment errors and found a way forward for retailers working to balance fluctuations in supplier performance with their own inventory holding policies.

Margin matters

The answer for each product is far from clear-cut and entails a number of factors, all of which have a complex interplay. How much does it cost to hold the product? How tight is the margin? How damaging to the retailer is it to have pent-up, unsatisfied demand?

Understanding how all these factors interact lets the retailer maximize its improvement efforts and helps prevent knee-jerk reactions to improving supplier performance. Depending on the product and supplier, a retailer might benefit more from simply padding inventory than burning time and money on boosting reliability.

With a global network of hundreds of thousands of suppliers making the modern retail machine run, it pays dividends for retailers to be efficient and effective as they keep apace with customer demand. Especially when one wrong bar code can do so much damage.