A birthday present for our soon to be 6 year old son was being delivered by UPS. Initially their site said (according to my mother-in-law) that it had been delivered on our porch on Thursday. When my wife called UPS on Friday to say that it was not delivered she was told, “Mack Brady called and requested it be returned to sender.” My wife pointed out that Mack Brady was 5 years old and expecting that box to contain lots of LEGOs from his grandparents. He was unlikely to make the call much less request that the package be returned to sender.

It was delivered 5 days (3 business days) later.

I find this experience very interesting as we seek to learn valuable service delivery,  supply chain, and life lessons.

SHIPPER-CARRIER RELATIONSHIPS

First, as a logistician and Supply Chain professional, I am reminded that shippers (the company in this case selling the LEGOs) are often at the mercy of the carrier (in this case UPS.)  They enter into a contract, expecting in good faith that UPS will deliver the package to the customer.  In fact, there is an expectation on the part of the shipper that the carrier will, if necessary, make several attempts before requesting that the customer come to them. ¹  In this case, UPS not only failed to deliver the product on the behalf of the shipper, they then created a rather interesting backstory for why they failed to deliver.

IN TRANSIT VISIBILITY (ITV)

In addition, this story speaks to the importance of accurate tracking of packages.  There are two parts to the tracking issue that confuse me.  First, the fact that the website tracking initially reported delivery to the porch is interesting, since the package was not actually delivered.  ²  Initially, we believe the online tracking to be accurate.  Our whole business operation is based on accuracy in reporting.  The shipper expects the carrier to deliver the package and provide updated information along the way as necessary.  The carriers themselves rely on accurate ITV to know where their drivers and trucks are at any given time, and provide assurance to customers and shippers that they are providing appropriate care for their items.  And finally, ITV provides receivers (in this case my 5 y.o. nephew) a sense of security knowing that, even if a package has not yet arrived, it is safely on it’s way and that the carrier know exactly where it is.

Given the importance of ITV, the systems are designed to ensure and  enhance accuracy through barcode readers and digital signatures.  When these systems fail, and they will, carriers should not respond with finger pointing, or cover-ups, but rather work to understand the cause of the failure and attempt to once again poka-yoke the process.

HONESTY IN SERVICE RECOVERY

The failure of in-transit visibility unfortunately led to the next, and perhaps more disturbing to anyone in this profession, reaction by the carrier’s representative.   As I am sure you are all thinking by now (and as my sister-in-law pointed out to the Customer Service Representative (CSR) from UPS) 5 y.o.s generally don’t ask for their much anticipated birthday presents to be “returned to sender.”  So this strikes me as a serious “CYA” ³ moment.  I suspect that, more often than not, this line works on their customers. ⁴   Now, we can’t know where the decision was made to “adjust” the record like this (or is it “falsify?”)  It could be that the driver mistakenly marked “left on porch” when delivering another package and that, upon arriving back at the distribution center realized he/she still had a package on the truck–and thus covered the tracks.  Or it could be that the CSR, in an effort to deflect blame away from UPS, confabulated on her own?  (I highly doubt this one is the case, but it’s possible.)

Just as “in transit visibility” relies on accurate reporting of information to enhance decision making, so does customer service, and service recovery.  One does not help the business by covering one’s tracks.⁵  Admittedly not every bad experience will result in a blog post such as this one–and that is all the more reason for carriers to be ever vigilant.  If given a choice between carriers, and you have had an experience where a carrier (or anyone, really) has been dishonest in their dealings with you, are you more, or less, likely to choose that carrier?  Decisions are often made on trust–trust that items will be delivered, and trust that firms will make every effort to make good when they don’t.  When one has a negative experience such as this, then one is more likely to perhaps go with a less reliable, or more costly, provider that they can trust.

When faced with our own failures, I learned a valuable lesson from my earliest military mentor, Dave Morris (@nicheguy on twitter.)  You step up, admit your failure, and work to make it right.⁶  I have generally found that at a personal level people respond almost in shock that someone is willing to take responsibility for the own actions, and more often than not, you are provided that second chance.  Firms would do well to create a culture that rewards stepping up, and taking responsibility, rather than making things worse by fostering cover-ups.

When people are honest with you about their failures and their successes, you are more likely to trust them.

CONCLUDING THOUGHTS

I am not calling for a boycott of UPS or any carrier.  I am simply pointing out that future decisions are based on past experiences, and negative experiences carry more weight that positive ones. An old military aphorism seems appropriate here: “One oh, Sh*t wipes out a thousand ‘atta-boys’!”  Being able to “blame” people only goes so far, but being willing to take the blame certainly is better than attempting to blame the customers themselves.

We will never know the true genesis of the tale delivered in lieu of the package, but what we can know is this–UPS as an entity ends up taking the hit.

Share your thoughts–am I too harsh on UPS for this?

They do use a very timely approach, expressing the perfect order in terms that would satsify Ralphie, from the Christmas movie classic “A Christmas Story.” The article is well worth your read.

I welcome any thoughts you might have on how we can better use technology in business education, and specifically how we can better prepare students to use technology in the “real world” when they graduate.

Alas, all is not as clear when assessing the economy. In fact, a “weak dollar” has some significant benefits–especially for the “average” American.  And, for those readers here for Supply Chain information, the impacts of the dollar are felt throughout.

When the dollar is weak, it means that a dollar can buy less of a good or service produced in a foreign nation. BMWs and Computers can be more expensive. The costs to produce haven’t gone up, but rather the relative cost to produce when exchanging currencies. The result is we pay more (and buy less) imported items. keep in mind this also means the price of oil increases. This not only impacts us at the pumps but also increases the cost to transport goods. if the cost to transport goods goes up, consumers are more likely to purchase locally. (And this can mean locally produced since the cost to transport is most likely included in the price.)

But, it also means that goods and services produced in the United States are now more affordable in markets overseas. This means that, assuming we produce goods/services that people want, we start to export more.

Result? Imports–down. Exports–up.

What else does this mean? It means that here at home “American made” once again becomes a sign not only of (we hope) quality but perhaps affordability. Consumers may be paying more for everything, but if “American made” products are once again affordable (relative to the no longer “cheap” imports) then demand for these products should increase at home, as well as abroad.

Win! If demand for US made products goes up, we will find that production will increase. When production increases, employment increases. To top it all off, if energy prices continue to climb, the benefits of “off-shoring” (low labor costs, lessened regulations, among others) starts to be off-set by the increasing costs making “re-shoring” more plausible. Jobs come home.

One final note. I mentioned a few times the increasing costs of oil, and the impact on the pump. What would the silver lining be here? Think “Green.” Market forces (the “invisible hand” of Adam Smith) tend to be the best shaper of policy. Better than government, and far more successful that any promises of any politician seeking to create “Change.” I won’t speak for you, dear reader, but as you know I have started to look for alternative energy sources in my daily life, starting with a hybrid automobile. As petroleum prices increase¹
consumers start clamoring for alternatives. This creates markets² for alternatives.  Once the demand for alternatives reaches a point where the demand makes production viable, we will see alternatives flourish.  We are already seeing this with hybrid autos.  We are seeing the early signs of this in other energy sources as well, including solar and wind. But these discussions belong in another post.

Is it all buttercups and roses?  No.  There are disadvantages to a weak dollar.  Overall prices do go up.  Trips overseas become more expensive. I never argued that there weren’t disadvantages.  It just seemed that it was time to point out that there are some significant advantages to this shift in the dollar.

“Reading Rainbow Moment” To read more about strong, and weak, dollar performance, check out the Federal Reserve Bank of Chicago’s site and specifically their page discussing this very topic.

^1. note, I don’t say fossil fuels. Read more here)

^2. market refers to the group of consumers or organizations that is interested in the product, has the resources to purchase the product, and is permitted by law and other regulations to acquire the product.

• Runs on compressed air
• Seats 5
• Will cost about $5,000 (that’s £2,500, imagine what it will be like if the dollar gets stronger!)
• Will be licensed to manufacturers to produce locally
• uses fuel only on long drives to heat the air

Sounds pretty ingenious, eh? And the article points out that “producing no emissions at all in town.”

I like a couple aspects of this car. First, I do like a $5K car. An affordable car! And the use of compressed air, on the face, has me saying “w00t!” It would appear that, from an environmental perspective, we have at least removed the various particulate contaminates from the local air. In fact, I was pleased to see the article specify no emissions “in town” since obviously producing the energy to compress the air will in most places result in some emissions.

I am also quite intrigued with the “produce locally” concept. Unfortunately, that will mean that the cost to manufacture will be different depending on locale, so the actual price of a car will vary widely by market. But then again, as we look at global supply chains we see once again the pressures of transportation costs pushing back to either larger inventories, local production, or both.

There are a few questions left open, as I await it’s delivery to the US.

• Will US Manufacturers step up to the idea of “make locally?”
• Will US Citizens buy a “ride” that isn’t all “pimped out?”
• Will the vehicle pass the US’s strict safety requirements?
• Will “gas” stations still only charge a quarter for their air?

The article itself mentioned the issues of the amenities, and the issue of safety. It is not clear from the article that the creator of the car understands all the issues with safety. According to the BBC:

Mr Negre says there’s no issue with safety – if the air-car crashes the air tanks won’t shatter – they will split with a very loud bang. “The biggest risk is to the ears.”

This does beg the question of impact safety, roll-over safety, and so forth, but it’s a start!

I suppose we wait, and see.

Obviously I have had an interest lately in fuel economy, and alternatives to the status quo. These are not driven simply by an altruistic vision of the future, but by rather practical personal and business considerations. Considerations that one can see in the supply chain. That said, I would like to invite your thoughts, in more of a conversational vein.

Perhaps you can share your thoughts on the impacts on supply chains of:

• Local food producers gaining a foot-hold in the market
• higher fuel prices as driven by crude oil prices
  • Consider off-shoring in this discussion. Labor prices drive production off-shore. Will fuel prices bring them back?
• alternative, native-grown fuel sources
• transportation routes devoted to moving crude oil
• transportation networks designed to move grains and grasses
• Economic impact of alternative fuel sources
  • If demand for fuel shifts to biomass, what would the impact be on crude oil prices?

I would recommend that you also visit the blog of “Imperfect Mommy” specifically where she outlines the benefits of local eating.

I look forward to reading your thoughts.

I tell myself this is healthy. This is a good thing. That I am keeping my body healthy. And yet, I can’t help but wonder about the efficiencies of a system that makes clean and pure water available to drink, out of half-liter bottles.

There are a number of concerns here, almost all of which touch on environmental issues, but are also at their heart “supply chain” issues. For instance, if we are shipping cases of water, we are moving tons, literally tons, of water by truck. This uses resources that could perhaps be used, or even saved, to move other things. What resources? Well, the obvious resource is fuel required to power the trucks. In addition, the bottles of water take up space in trailers that could, perhaps, have been used for transporting some other good.

And then, of course, there are the issues of storage. Storage at the bottling plants, at the distribution centers, and finally storage at the retailer. A friend of mine used to work at a bottler, and she had told one of my classes that, to prepare for the busiest months of summer, they started stockpiling bottled water in January. This required that they seek “off site” contractor storage, just to store bottles of water! When you think about this, the costs just keep adding up. Obviously, the bottler incurs an additional cost when they have to pay a contractor for storage. But they also have to pay to transport the water to the 3PL (third part logistics provider’s) warehouse. Again, using fuel, and trucks. Finally, they have at least one additional step moving the water from that warehouse to the retailer, but more than likely bringing it back to their own distribution center first.

And of course, being a good conservative, seeking to conserve resources, I think we should also practice reuse, and recycling. This requires a collecting of the bottles, shipping them to a processing facility, and then sorting and melting them. Can you see the use of resources tied up now, heading both directions in this supply chain? All for the delivery of bottles of water?

A recent Wall Street Journal column by the Numbers Guy (Carl Bialik) tackles deals with the purity of the shipping container used for bottled water–the bottle!

Bialik point s out that “Nestlé claims it offers the lightest half-liter bottles in the U.S. market.”As he usually does, he tackles the statistics, and the numbers, behind the assertions. His quest? To determine if their claims are accurate. I decided to look at a slightly different angle. By reducing the weight of the bottle, what impact does that have on the logistics tail–the supply chain?

Bialik was provided the numbers by Nestlé, and since he trusted their data (gathered by Tragon) I will as well. Let’s assume that everyone uses normal, everyday water, and that any minerals added “for taste” are inconsequential to the issue at hand, the weight. We can be reasonably certain that a half-liter of water weighs a half-kilogram, or 500 grams. This then is our baseline. the lightest bottles (the new Nestlé bottles) weight 12.26 grams, and the heaviest ones weight 25.94 grams.

Simple math shows that reductions from the heaviest bottles (Fiji) to the lightest, will reduce transportation weights by 2.6%. Of course, not every bottle shipped is a Fiji bottle, and Nestlé has not replaced every bottle sold. The actual reduction in weight transported would be less, and thus the environmental and supply chain impact reduction would be less, as well.

What to do? Obviously the first solution is to drink more tap water. If at home, get a water filter. I have a Pur faucet filter, but any would work. Just go check out the selection at your local Wal*Mart or Target.

Might I also suggest we take a page out of the athletes’ book and start using reusable water bottles. Nalgene is the bottle of choice among the swimmers I know, but they are certainly not the only manufacturer. Just be sure to get a high quality water bottle to protect against the leaching of chemicals from the plastics and into the water, and thereby into you.

There are other positive stories coming out, including restaurants finally providing tap-water again, rather than insisting on selling you bottled water. I will work to update these stories on occasion as well. In the meantime, share with me your ways of reducing the logistics footprint, and thus both the environmental impacts, and the costs of logistics!

From the paper:

“Podcasting” has taken the technological and hobbyist worlds by storm, allowing for the creation of highly specialized audio (and now video) productions for delivery over the internet. This sort of capability has found its way into the classroom and into courseware, allowing professors to deliver a wide range of content to their students. (King, et al., 2006) This paper discusses the background of podcasting, the technology that enabled it, and how podcasting can be used to enhance supply chain courses with a “blended” or hybrid learning experience.

In addition to the podcast recording of the presentation, I am including the pdf of the paper, as well as the PowerPoint slides from the presentation.

Let me know what you think of it, and as always, leave comments, or send me a voice mail at the number listed in the contact section!

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DC Velocity has published a great article pointing out the way in which logistics (and by extension, supply chain management) comes through time and time again–and occasionally with a high profile effort. In this case, the author writes about the logistics efforts that were essential to the successful roll-out of the latest, and final, Harry Potter book.

I mention the author, Peter Bradley, focuses on the logistics necessary to deliver 12 million books in quantities large (and small) around the globe for a single, timed, opening. This of course goes beyond a simple planning and execution initiative. It required coordination, as Bradley mentions, between the publisher, and a network of transportation providers (carriers.) He writes:

Scholastic’s success was no act of magic. Rather, it was a carefully planned and executed distribution effort that required close collaboration among members of the company’s logistics team and a core group of carriers.

Planning for the rollout began in January, even before Scholastic had the finished manuscript. Internally at Scholastic, the project would require tight coordination among members of the logistics staff and their colleagues in sales, purchasing, customer service, and manufacturing. Yablin points to Ed Swart, director of operations, and Francine Colaneri, vice president of manufacturing and procurement, as key partners and team members.

The close collaboration also extended to Scholastic’s logistics partners: J.B. Hunt, Combined Express, Yellow Transportation, and ActivAir. J.B. Hunt, one of the nation’s largest truckload carriers, moved the majority of the books—all but about a million of the copies. Hunt operated in partnership with Combined Express, a Bensalem, Pa. based logistics and trucking company that specializes in publishing and retail shipping. Yellow Transportation, a major LTL carrier, handled domestic LTL shipments. ActivAir, an international forwarder that specializes in book and magazine distribution, managed international shipments to 32 destinations in 29 countries.

I would like to point out that contemporary to this initiative was the release of the much-touted iPhone. That release required a delivery between 4 and 6 pm local time, for a store opening of 6 in the evening. Another opportunity for logistics to shine.

Let’s not lose sight of the importance of collaboration across the supply chain for both of these products. In both cases, there was a line in the sand–a promised delivery date for large scale release. Satisfactorily meeting these dates required not only a close coordination of “in house” production but also coordination among all the suppliers that provide key elements to your product. In the case of the iPhone, there are many components that make up the phone, from numerous suppliers. According to their analysis (as reported in RFDesign)these suppliers include: South Korea’s Samsung (The processor core), German-based Infineon (providing the RF and broadband functions), and National Semiconductor (a single chip.) In addition, the most exciting part of the iPhone, the multi-touch screen, has many providers:

It is believed by iSuppli that the supplier for the touchscreen module in the model torn down by iSuppli was Balda, with its partner TPK Holding. It is believed by iSuppli that the iPhone LCD display itself is multi-sourced through Epson Imaging Devices, Sharp and Toshiba Matsushita Display Technology. The cost of the LCD used in the iPhone is estimated at $24.50, representing 9.8% of the 8 Gbyte version’s costs. source: RFDesign http://rfdesign.com/rfic/iphone-isuppli-components-0712/

Coordinating such a complex, and global, supply chain and ensuring pinpoint accuracy in delivery (both spatial and temporal) shows how a collaborative supply chain can truly deliver.

Last posting, I put a story up about SAP releasing V 5 of their SCM software. I commented there on the need for software to support supply chain collaboration, among other things. It was pointed out to me by a colleague that the book, “Why ERP” presents an implementation of an SAP ERP system that failed. I have yet to read the book, but it is now high on my reading list (and I encourage those of you interested in these things to do as well.)

Hey, I make it easy for you–I am linking this posting to the Amazon site for this book. But not to get you to buy it, because if that was my goal I would have figured out a way to get a kickback. I wanted to actually link to the comments reviewing the book, like the one quoted above. It appears that this book is fairly common required reading, and that students don’t like it. Don’t believe me? Go read the comments!

This was doubly interesting to me, since it combined the ERP discussion with a discussion on evaluations by students. Over at the blog “Confessions of a Community College Dean” the Dean is trying to figure out ways to evaluate his faculty. This is often stymied by the fact that students’ evaluations are, well, sometimes less than constructive. Note, I say sometimes.

In these reviews of the book you will find there to be constructive critiques. These critiques say things like:

“Do not read this book if you are an expert on SAP or very familiar with ERP systems. This is little more than a text book put in the form of one large example.” (Hmmm one CASE example can be quite rich in individual exmplars used for discussion and study. But still, good critique.)

CAUTION: This book (actually a novel) is good only for those who do not know anything about ERP. Finish this quickly and move on to more detailed stuff like MISSION CRITICAL by Thomas Davenport. (again, the usefulness is challenged, but at least the commentator provides an alternative.)

and, Perhaps the best review:

This actually is a good read. It kept my interest for a full 2 hours, which is what is took to read it. The case study is real and on the mark. It illustrates that even if SAP is being widely adopted in your industry (in this case furniture), it may not be the right solution for you. In this instance, SAP (or the SAP implementation approach) was wrong because the company, whose business model was “make to order”, tried to cut time and costs by directly implementing a configuration which worked well for a company that has a very limited (few part numbers with minimal change) product line.

The author also did a realistic job in presenting the politics of the situation. The company president wanted an easy integration under a tight deadline. The IT geek wasn’t interested in the business model and wanted a showcase quick installation. The marketing guy wasn’t interested in the details and wanted to showcase the installation. The book’s hero is a healthy skeptic, who is trying to understand ERP, its benefits, and how it fit his company’s business.

Based the book’s title, I thought I was picking up another SAP marketing book. But it is not that at all. It’s objective and deals with business issues. No ABAP, idocs, and organization elements here.

My recommendations for anyone writing a review or a critique, including critiquing a course or an instructor? They are quite simple really:

1. Provide positive feedback if at all possible. What did you like, and why? The why is important because it helps to know how to develop future information in a way that worked well previously. Criticism need not be negative, or even pointing out weaknesses. Sometimes people need to be told the good things.

2. Be critical, with a positive attitude. Say things like “While I appreciate XXX, it didn’t work well, because…” Again, the because, or the why, is critical to helping the professor or author provide a fix for things later.

3. Understand the purpose of what you are critiquing. If you are critiquing a course, and the course is on advanced astrophysics, don’t criticize the lack of creative writing assignments. Alternatively, if you are in an MBA program, regardless of the quantitative rigour of the individual course, you should have an expectation that students will be expected to communicate clearly–after all, you are there to be better managers.

So, remember: criticism should be given with the intent of improvement, and while it may have been cathartic for the reviewer to write: “I wouldn’t even make paper airplanes with this book – because they would suck too. When millions of books were burned in WWII, why did they miss this one?” they certainly provided nothing to the discussion.

The Prof

Postscript: (In fact, the paper airplane comment was followed by a recommendation to read “The Goal” by Goldratt. An excellent book, but with a completely different message/intent. This reviewer apparently missed point number three.)