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William Ciemny

Vice President

Business Transformation

Outsourcing

IBM

David J. Closs,

Ph.D.

The John H. McConnell

Chaired Professor of the

Eli Broad College of Business,

Department of Marketing and

Supply Chain Management

Michigan State University

Oliver Costa

Trent University

Jim Davidson

President

iWheels Dedicated Logistics

Jennifer Harrington

Trent University

Stirling Lafrance

Trent University

Alan Law,

Ph.D.

Associate Professor of Sociology

Trent University

Warren Neel,

Ph.D.

Executive Director

Corporate Governance Center

University of Tennessee

Christopher D. Norek,

Ph.D.

Founding & Senior Partner

Chain Connectors, Inc.

Peruvemba Ravi,

Ph.D.

Supply Chain Management Faculty

School of Business and Economics

Wilfrid Laurier University

Nicholas Seiersen,

P.Log. M.B.A.

Senior Manager

KPMG

The Official Magazine of The Logistics Institute

Volume 11, Issue 5, December 2005

P M 4 0 0 3 2 6 0 2

Global

Transportation

Trends

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800-663-6331

To effectively manage your supply

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5

Announcements

6

Contributors

9

Editorial

10

Outsourcing: The Definitive Trend in

Supply Chain Management

When asked to identify business and technology trends specific to logistics, outsourcing is top of mind with most of us in the industry. As more manufacturing companies embrace best practices as powerful weapons in their fight for competitive advantage, outsourcing supply chain management becomes a compelling option for maximizing performance and bottom line results.

13

2005 Canadian Logistics Labor Market

Survey: Employability

This is the third in a series of articles based on a 2005 labor market survey conducted by Trent University and the Toronto-based Logistics Institute. This feature focuses on employability – the initiatives, processes and accreditations an individual uses to secure employment and advance in the field of logistics.

19

A Conversation with Rob Carter,

Executive Vice President and CIO,

FedEx Corporation

In this interview, questions raised by LQ’s Executive Editor, Nicholas Seiersen, and Advisory Board Member, Chris Norek, Ph.D., cover a wide variety of technology topics. Rob Carter’s answers cast an insightful perspective on trends and best practices in technology.

22

Understanding the Mathematics of

Supply Chain Management

Besides helping you to understand and question some of the mathematics underlying supply chain software, knowledge of supply chain mathematics may also make it possible to develop superior solutions in-house. If you are interested in understanding the far-reaching applications and value of mathematical tools to solve problems associated with the performance of your supply chain, you can start here.

26

Sarbanes Oxley: Some Unintended

Consequences

The sweeping U.S. legislation should lead to best practices for managing spending, contracts, supplier and procurement

information and overall corporate compliance. However, here’s another perspective on how companies may be interpreting these laws and some of the unforeseen consequences.

28

Supply Chain Outsourcing in the

Era of On Demand

An increasing number of companies are seeing the supply chain as the front line to grow revenue and reduce their costs through improved operations in a global economy. Here’s a look at some of the hurdles global businesses must mitigate to grow from the perspective of a practitioner who has helped transform IBM’s supply chain.

CO N T E N T S

LQ

2 4 6 37 42 8 10 12 14 0 Age M e a n Y e a rs w o rk e d i n f ir m

Figure 7: Age and firm hopping

ANOVA = .00 1.0 22 1.7 65 38 130 1.8 27 3.1 3.0 32 4.7 3.2 37 5.8 5.1 42 8.7 6.3 47 9.9 37 42 6.1 52 9.6 5.4 57 9.4 6.6 62 10.9 0.0 65+ 12.3

Announcement:

We are pleased to announce Jeanette Polenychko has taken on the position of Sales Manager (U.S.), for Logistics Quarterly (LQ) Magazine. In her new role, Jeanette will be responsible for USA based sales and marketing. Jeanette's experience in logistics includes marketing and advertising campaigns at LeanCor LLC, a third party logistics firm based in Florence Kentucky. Jeanette will be working with LQ's U.S. Director of Sales, Robert Martichenko, president of LeanCor LLC. Jeanette holds a BA in Elementary Education, from Michigan State University. Jeanette can be reached at [email protected] 859-283-9933 extension 126

3

LQ™ December 2005

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5

LQ™December 2005

LogisticsQuarterly.com

LQ™ ADVISORY BOARD

David J. Closs, Ph.D.

Department of Marketing and Supply Chain Management, Michigan State University Executive Editor, LQ

Karen Cooper

Senior Media Relations Specialist, FedEx Canada Ltd.

Jim Davidson

President,

iWheels Dedicated Logistics

Bruce Danielson

Executive Communications Manager, UPS

Russ Dixon

Senior Manager, TNT Logistics North America

Russ J. Doak

Director, Global Logistics, Kodak Graphics & Communications.

David Faoro

Director, Supply Chain The International Group, Inc.

John Firmino

Vice President, Director Solutions and Execution Standards, Ryder Canada Benjamin Gordon Managing Director, BG Strategic Advisors Thomas J. Goldsby, Ph.D. Associate Professor, Supply Chain Management, University of Kentucky

David Griffith

VP Global Supply Chain Management, BAX Global

Joe Grubic

Senior Manager, Alliance/Network Management, Nortel Networks Global Logistics

Rob Hamilton

Planning, Timing & Control Manager, DaimlerChrysler George Kuhn Executive Director, CIFFA Robert Martichenko President, LeanCor James Mahoney

ategic Business Development Executive,

GeoLogistics Corporation

Jeff Moore

Managing Director, Lakeside Logistics Inc.

Mark Morrison,

Senior Vice President of Business Development, TNT North America

Tom Nightingale

Vice President, Corporate Marketing, Schneider National, Inc.

Christopher Norek, Ph.D.

Senior Partner, Chain Connectors, Inc.

Peruvemba S. Ravi

Assistant Professor, Wilfrid Laurier University

Kurt M. Ritcey

Partner, Deloitte Consulting

Nicholas Seiersen Senior Manager, KPMG Executive Editor, LQ Michael Snedden Manager of Distribution Operations, IBM-Canada Ltd. Thodore Stank, Ph.D.

John H. Dove Distinguished Professor of Logistics, University of Tennessee

Volume 11 Issue 5

PUBLISHER & EDITOR Fred Moody

[email protected]

CPLI PRESIDENT & EDITORIAL DIRECTOR Victor Deyglio [email protected] CREATIVE DIRECTOR Craig Allen [email protected] COPY EDITOR Bill McOuat [email protected] ADVERTISING SALES Jeanette Polenycho Marketing and Sales Manager [email protected] Robert Martichenko

U.S. Marketing Director [email protected] CIRCULATION & WEBSITE DEVELOPMENT Bill McCarvell

[email protected]

ACCOUNTING Christine Raffan, CGA

Independant Accountant [email protected] LQ™

2 Bloor Street W., Suite 100, Box 473, Toronto, Ontario, M4W 3E2, Telephone: (416) 461-8355 Toll Free: 1-800-843-1687 Fax: (416) 465-7832 Email: [email protected] THE LOGISTICS INSTITUTE

160 John Street, Suite 200 Toronto, Ontario M5E 2E5

Logistics Quarterly (LQ™)

(ISSN 1488-3309)

is published six times annually by LQ™ Inc. LQ™ is written for professionals in logistics.

Subscription Services at: www.LogisticsQuarterly.com

Canada Post Publications Mail Sales Agreement Number: 40032602. CANADIAN POSTMASTER: send subscription orders, address change notices and undeliverable copies to

LQ™, 2 Bloor Street West, Suite 100, Box 473,

Toronto, Ontario, Canada M4W 3E2

EDITORIAL POLICY The opinions expressed in this publication do not necessarily reflect the policy of The Logistics Institute or LQ™ Inc. The editors reserve the right to select and edit material submitted for publication. Not responsible for unsolicited material. LQ™ Inc. is a Toronto-based corporation and publisher. All rights reserved © by LQ™ Inc. 2005. Reproduction without written permission of the publisher is forbidden. LQ™ welcomes your comments, letters to the editor, or written submissions for consideration. (LQ™ is available on-line at: www.LogisticsQuarterly.com)

WE ARE HONORED to announce the following new participants have accepted LQ’s invitation to join its Advisory Board:

THOMAS J. GOLDSBY, Ph.D., University of Kentucky.

Professor Goldsby’s areas of research include logistics strategy and supply chain integra-tion. He has served as a logistics analyst and researcher in the corporate and public sectors and has received awards for his teaching and research. He has published articles in several academic and profession-al journprofession-als including the Journprofession-al of Business Logistics, International Journal of Logistics Management, International Journal of Physical Distribution and Logistics Management, Management Science, Supply Chain Management Review and Journal of Operations Management. He currently serves as a member of the Council of Logistics Management, Ameri-can Society of Transportation and Logis-tics, and Warehousing Education and Research Council.

JAMES (JAMIE) MAHONEY, Strategic Business Development Executive, Logistics and Supply Chain Management,

GeoLogistics Corporation

Jamie Mahoney has more than 20 years of transportation, logistics and supply chain leader-ship experience guiding top-tier companies in building global brands and ser vices. An accom-plished corporate strate-gist and marketer, his vision and expertise in global business development have driv-en notable business growth in diverse markets.

Offering a blend of global marketing insight, operational strength and supply chain innovation, his achievements and derived consulting value have been recog-nized by Fortune Global 100 companies. His supply chain thought leadership during eight years of overseas ex-patriot assign-ments has left long-standing impact and best practices that continue to deliver ROI. During his three years with Tibbett & Britten Americas as Director of Business Development for Latin America, he led

teams in supply chain consulting, mergers and acquisitions (M&A) and post merger integration (PMI) processes. As Managing Director of Latin America Strategic Advisors (LASA), he consulted to senior executives on M&A activity and supply chain best practices.

Mr. Mahoney has started and grown four companies, all of which he has sold or merged into others. In his current assignment as V ice President at GeoLogistics Corporation, he manages the business development and supply chain operations for large global accounts. He is a sought after speaker in global supply chain innovation.

Mr. Mahoney received his B.S (Cum Laude) in Transportation from Massachu-setts Maritime Academy, studied for his MBA at Salem State College (Massachu-setts) and has completed executive level programs at M.I.T’s Center for Transporta-tion and Logistics and The Logistics Institute (TLI) at Georgia Tech. He is cur-rently the Professional Development and Marketing Chair on the Executive Commit-tee of the Council of Supply Chain Management Professionals (CSCMP).

JEFF MOORE, Managing Director, Lakeside Logistics Inc.

The fourth Moore generation in our industry, Mr. Moore carries on his family’s tradition of leadership and innovation in transportation. In partner-ship with Chris Magill, Mr. Moore founded Lakeside Logistics in 1986. In 1999, Mr. Moore and Mr. Magill repositioned Lakeside from the transaction-based freight business to long term relationship supply chain management accounts. Mr. Moore has a Bachelor of Business Administration and holds the P.Log desig-nation. He is an active member of the Council of Supply Chain Management Professionals (CSCMP).

LQ’s Advisory Board performs a pivotal role in directing LQ’s business and editorial practices to ensure it continues to be a source of ideas for leadership in logistics and transportation. LQ’s Advisory Board members enable LQ to build on its tradition of being a publication written by professionals for professionals in the field of logistics and supply chain management.

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LogisticsQuarterly.com

6 LQ™December 2005

DECEMBER CONTRIBUTORS

LQ’s mandate to provide “Ideas for Leadership in Logistics,” is clearly evidenced this

issue with articles written by professionals and logisticians

from America and Canada who are leading and transforming

business by creating new roadmaps and definitions for leadership in this exciting field

.

OUR CONTRIBUTORS

WILLIAM G. CIEMNY is Vice President, business transformation outsourcing, IBM Business Consulting Ser vices. Appointed to this position in March 2005, Mr. Ciemny is responsible for worldwide sales and development for IBM’s supply chain business transformation outsourc-ing (BTO) solutions. This is a new busi-ness for IBM that encompasses trans-forming and in some cases operating aspects of the supply chain for enterprise clients with focused offerings in direct procurement, global logistics, product design and supply chain optimization. Prior to this appointment, Mr. Ciemny was group Vice President for Siemens Medical Solutions for the healthcare mar-ket. In this position he was responsible for building a world class ser vices organi-zation with more than 2000 employees worldwide. Mr. Ciemny was also the process owner for Siemens internal supply chain where he established performance metrics to ensure the effective integration of the company’s internal customer rela-tionship management and product lifecy-cle management processes.

Mr. Ciemny originally joined IBM in 1994 to establish a strategy and a business plan for the development of the IBM Global Ser vices’ enterprise resource planning (ERP) practice. Shortly after the launch of the practice, which has since received indus-try accolades as the leading ERP services practice, Mr. Ciemny was promoted to Vice President.

Mr. Ciemny also held a variety of posi-tions at SAP America Inc, Computer Horizons Corporation and General Electric. He is a graduate of Philadelphia College of Textiles and Sciences in Philadelphia, Pennsylvania, with a B.S. degree in Com-puter Management and a minor in mathe-matics.

DAVID J. CLOSS, LQ Executive Editor: Dr. Closs is the John H. McConnell Chaired Professor of the Eli Broad College of Business, Department of Marketing and Supply Chain management, Michigan State University. He has consulted with more than 100 of the world’s Fortune 500 corpo-rations regarding logistics strategies and systems. He is an active member of the Council of the Supply Chain Management professionals.

JIM DAVIDSON, President, iWheels dedi-cated Logistics, began his career in logistics at The Ford Motor Company in 1963 work-ing in all aspects of logistics for 17 years. Mr. Davidson joined TNT in 1983 and held vari-ous management roles, including roles in operations, staff, administration and gener-al management for a number of different divisions. He also served as the TNT board member representing North America at their European-based board meetings. He has served on the executive of the Canadian General Motors Supplier Council as well as Executive Vice President of the ATA Council of Logistics located in Alexandria, Va.

WARREN NEEL, Ph.D., recently returned to the University of Tennessee to establish a Corporate Governance Center and is serving as its Executive Director. Until February 2003, he was Commissioner of the Tennessee Department of Finance and Administration, managing a $20 billion budget.

Prior to joining the State Cabinet, Dr. Neel served as Dean of the College of Busi-ness Administration at the University of Tennessee in Knoxville and in the Cabinet of Governor Lamar Alexander.

His academic career began in the University of Tennessee’s Department of Management where his research focus was on corporate policy. Dr. Neel has served on

nine corporate boards and currently is a board member of a NYSE and NASDAQ-listed company. His board experience has included chair roles on a variety of commit-tees including audit, compensation, nomi-nating, and governance, in addition to hav-ing chaired special committees conducthav-ing fraud audits, acquisitions, mergers, and the sale of the business. Dr. Neel’s primary cor-porate governance interest is the distribu-tion of power between the board and the CEO/Chairman.

PERUVEMBA RAVI, Ph.D., is a member of the Supply Chain Management faculty group in the School of Business and Economics at Wilfrid Laurier University. Professor Ravi holds a B.Tech. in Chemical Engineering from the Indian Institute of Technology in Delhi, India, an MBA from the Indian Institute of Management in Calcutta, India, an MS in Operations Research from the University of Rochester in Rochester, New York, and an MSBA and Ph.D. in Operations Management from Washington University in St. Louis, Missouri. Prior to joining Wilfrid Laurier University, Dr. Ravi was a visiting faculty member at the University of Missouri-Columbia. Dr. Ravi’s research interests include logistics and supply chain manage-ment, the marketing-manufacturing inter-face, and scheduling. He was awarded the Petro-Canada Young Innovator Award in 2001 and holds a research grant from the Natural Sciences and Engineering Research Council of Canada. Dr. Ravi is a member of numerous professional societies, including the Institute of Industrial Engineers, The Production and Operations Management Society, Decision Sciences Institute, Canadian Operations Research Society, and Institute of Operations Research and the Management Sciences.

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LogisticsQuarterly.com LQ 7

™December 2005

Supply Chain Strategies December 7 - 9 Toronto

Leadership Strategies Feb 15 - 17 Toronto

Logistics Process Diagnostics February 27 - March 24 Online

Professional Ethics March 8 - 10 Vancouver

Supply Chain Strategies March 22 - 24 Toronto Integrated Logistics Networks On Demand Online

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NICHOL AS SEIERSEN, B.Sc.(Hons.), M.B.A., P.Log. LQ Executive Editor: Mr. Seiersen is a Senior Manager with KPMG, based in Toronto, Ontario. He specializes in Supply Chain consulting, with particu-lar attention to Strategic Sourcing and Supply Chain Planning & Operations. Mr. Seiersen is the Canadian lead for Supply Chain at BearingPoint. Mr. Seiersen holds a B.Sc. (Hons.) in Biochemistr y and an M.B.A. in Industrial Management. He teaches executive development courses at top Universities in Europe and Nor th America. He has written for numerous publications in North America and Europe on ePurchasing, Logistics, Supply Chain Management and Cost-to-Ser ve. He is the past President of the Toronto Roundtable of the Council of Logistics Management, (now CSCMP), Vice President of the French Logistics Association (ASLOG), and a member of the European Logistics Association Business Management Com-mittee.

These authors contributed to the 2005 Canadian Logistics Labor Market Survey featured on page 13.

JENNIFER HARRINGTON is a recent Sociol-ogy graduate (B.A. Hons.) from Trent Univer-sity specializing in religion. She played many roles on the research team with a particular focus on questionnaire design and data analysis.

STIRLING LAFRANCE is a recent Sociology graduate (B.A. Hons.) from Trent University. Mr. Lafrance led the team that produced the research results. He recently accepted an internship with a national social policy agency.

OLIVER COSTA is a recent Sociology gradu-ate (B.A. Hons.) from Trent University spe-cializing in philosophy. Mr. Costa’s primary roles on the research team extended to ques-tionnaire design and data analysis.

DR. ALAN LAW is an Associate Professor of Sociology at Trent University in Peterbor-ough, Ontario. He specializes in applied social research across a broad array of policy arenas and has been conducting research on the Canadian logistics labor market since 1996. Professor Law teaches the Applied Social Research course by facilitating stu-dents through funded research contracts from negotiation of an RFP through final reporting and presentation.

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LQ™December 2005

LogisticsQuarterly.com

EDITORIAL

LAST MONTH I HAD THE PRIVILEGE to welcome speakers, delegates and sponsors to LQ’s inaugural Executive Exchange at the Toronto Board of Trade on November 10th. It was an honor to be part of this prestigious program, one that included many important speakers and delegates who contributed to this valuable exchange of ideas on best prac-tices and global trade.

This program was predicated largely on a discussion paper and the themes developed by David J. Closs, Ph. D., of Michigan State University and LQ’s Executive Editor, and John T. Mentzer, University of Tennessee. Key executive perspectives on these themes were also featured in LQ’s Transportation Forum (Volume 11,Issue 1,2005).LQ’s Advisory Board and the direction of Dr. Closs played an important part in shaping the overall program for LQ’s symposium. I also appreciate the contributions of Victor Deyglio, president of the Toronto-based Logistics Institute, who helped to hone the program, and collaborated on the development of this exciting day.

LQ’s Executive Exchange provided an international forum to exchange ideas between leaders from Canada and the United States. It brought together a distinguished group of prominent academics and practitioners of supply chain management from some of the most forward-thinking and largest corporations in North America. This group discussed the critical issues of business and supply chain management in today’s global environment. The primary subjects addressed at LQ’s symposium followed four main themes that were carefully considered by the best minds of our day. They were: How can C-Level Executives (CXOs) Find Value in Logistics and Supply Chain Management?; Global Trade: More and More Risk – Is it Worth it? And What to do About it?; Driving Logistics Performance: Can Metrics Get You Where You Have to be? The Risks and Pitfalls, What Role Do Best Practices Play?; Successful Relationships in a Transborder /Global Economy.

One of the most inspiring presentations of the day was pro-vided by our luncheon speaker, Alan Gershenhorn, President, Asia, Europe, Middle East and Africa, UPS Supply Chain Solutions. As lifelong students of leadership we are always interested in knowing more about what makes a leader who inspires confidence, hard work and vision, while others with equal capabilities do not attain the same results in business.

The dialogue from leaders who joined us at the roundtables for discussion on November 10th and our speakers often shared a common view – leadership is often defined by the way people face adversity.

This was clearly articulated by Mr. Gershenhorn’s opening remarks. “I have a quote here from a sport columnist, Jim Taylor,who once wrote ‘Goal tenders are three sandwiches shy of a picnic’.” He added: “Primitive man learned…that when something hard and potentially lethal comes toward you at a great velocity you get out of its path. I think that is what global commerce feels like today. It is an unstoppable force that can take your breath away and it can be lethal if you are not pre-pared for the challenge and opportunity.And,like a goalie,you need to put yourself between the puck and the goal.”

Mr. Gershenhorn, who is a former president of UPS Canada, discussed the challenges of global supply chains, particularly the growing importance of China as an exporter and its role as an investor and importer. He noted that China had displaced Canada in October 2005 as the U.S’s main trading partner.

China’s drive to grow its exports is part of a long-term plan to raise living standards as it works toward closing the gap between its well-to-do urbanites in eastern China and the agrarian class located in the interior. It is the world’s most aggressive investor due to its drive to feed its manufacturing sector.“The Asian dragon is snapping up minerals and oil and other commodities in every corner of the world,” he noted.

Global supply chains have heightened the risk of disruption and drive the need for multiparty collaboration and coordina-tion.Technology,the use of all modes of transportation,manag-ing high fuel costs and cost containment, traintransportation,manag-ing and devel-opment, are some of the key elements of global supply chains that he identified.

In this context, the growing use of outsourcing across the supply chain will also help companies preserve their capital for new product development and growth.

Identifying such crucibles and defining the opportunities for leadership to transform businesses and supply chains across North America was an important part of this Executive Exchange.We are looking forward to executives again sharing their practical applications and business acumen in the face of converging global challenges at LQ’s next symposium, now scheduled for April 20 2006.

An Executive Exchange

of Ideas for Leadership

By Fred Moody

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LogisticsQuarterly.com

10 LQ™December 2005

Focus.

Outsourcing permits a manufacturing compa-ny to focus on their core business. Logistics is a high vol-ume, dynamic customized business that grew out of the maturing of back-office procurement cost reductions. It’s not what most manufacturing companies are generally best at. When manufacturers delegate the nitty-gritty of supply chain management to a qualified specialist, they have the luxury of focusing on what makes them unique – their product and how it satisfies their customers’ needs.

Expertise.

Acquiring logistics expertise internally can be very time-consuming and expensive. Best practices can have a very short shelf life.What works today may not work tomorrow. For this reason alone, SCM is best handled by logistics experts who have acquired the skill and resources to move quickly and manage change to their client’s advantage.

The Definitive Trend in Supply Chain Management

OUTSOURCING

By Jim Davidson

When asked to identify business and technology trends specif ic to logistics, outsourcing is

top of mind with most of us in the industry. As more manufacturing companies embrace best

practices as powerful weapons in their f ight for competitive advantage, outsourcing supply

chain management (SCM) becomes a compelling option for maximizing performance and

bottom line results. With time, outsourcing will become an industry standard, growing in

presence by as much as 50 percent during the next f ive to ten years

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LQ™December 2005

LogisticsQuarterly.com

Fewer capital expenditures.

Working with a leading logistics provider can significantly reduce capital expenditures.The need to purchase and maintain a trans-portation fleet, equipment and distribution centre disap-pears when an innovative logistics supplier has global net-works and facilities ready to respond to a manufacturer’s every need and the needs of their customers. Increasingly, logistics professionals are capable of getting the job done without appearing obvious to the customer. The very best in the business do everything they can to look just like the client on a good day.From wearing their uniform to driving trucks with their corporate colours and logo, an experi-enced LLP blends in with the operations of their client.The customer’s customer can’t tell the difference.

Cost reductions.

By delegating SCM to the experts, fixed costs can become variable costs. Better operating practices drive higher productivity, thus lower costs. Use what is needed as it’s needed and pay for it accordingly. Nothing more. Nothing less.

Visibility.

Supply chain LLPs give a manufacturer the power to see their inventory as it flows through the supply chain. Materials and products make the necessary connections and everyone in the supply chain is ready when needed to receive shipments and pass on the goods. The manufacturer need not be hands-on for the process to work. A competent LLP does all the tracking, recording and reporting. Consequently, the manufacturer always knows where things are and is in a position to proactively manage their business without the significant investments in systems and partner connections.

Key Performance Indicators (KPI). We all

know how costly bad practices can be.Whether it is premi-um transportation incurred, service issues or excess mate-rials carried as “in-transit inventory”, we all have a respon-sibility to identify and eliminate gaps in performance. Experienced LLPs play a vital role by providing manufac-turers with all the information they need to better manage their businesses.

Having briefly described the benefits of outsourcing, let me address directly those readers who are about to select a third party LLP, either now or in the near future. There are a few obvious considerations that need to guide your decision, along with some industry specific features, that an accomplished LLP will possess that may not come readily to mind. For those who need to know, here’s my “insider’s” checklist:

Trust.

Trust is the backbone of every business rela-tionship, for good reason.We need to trust our suppliers to do effectively what we can’t do ourselves.When choosing a logistics provider, you are essentially putting them between you and your customer. Consequently you must choose a company you can truly depend on to do what they say they will do, to establish and maintain an open and honest relationship, and treat your customers as well or better than you would treat them yourself.

Capability. Capabilities and trust go hand in hand.

Trust is built when a supplier delivers what they promise. The salesman’s axiom of under-promise and over-deliver comes immediately to mind. However, the supplier you really want to recruit is an LLP with the ability to employ best practices consistently at the highest levels.

Resources.

In today’s market driven economy, logis-tics has become less about low-cost warehousing and cheap freight and more about managing information. Is your LLP in a position to know your operational demands and limitations? Can they quickly gain insight into your business needs and meet them consistently? Do they pro-vide business analysis? Can they manage information and resources for continuous improvement? Also, don’t hesi-tate to judge a potential LLP by the company they keep.Do they have a global network of carriers in all modes of transportation? Do they implement the latest analytical software to track, report and evaluate all supply chains activities? Do they put in that extra effort that tells you they really care about your organization and your customers?

There’s a lot to consider when outsourcing. There’s noth-ing more constant than change. As a result of this pro-found reality, logistics is no longer exclusively about busi-ness tactics designed to reduce transportation and distri-bution costs. It has become a part of a company’s overall strategic plan, discussed and evaluated at the highest executive levels. It commands increasing investment of time, money and resources, and rightly so. What is more important than getting your product to the right place, at the right time at the right cost?

So choose your LLP carefully and with confidence. Set the agenda and let your logistics supplier manage the process. As your company soars to new heights, let your logistics provider be the air traffic controller.You’ll reach your goals faster and with greater economy. After all, you don’t want to be the one explaining to your customer why your widget costs more when it could have cost less with innovative, outsourced supply chain management.

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Current Guides and Research

Who’s Who in North American Logistics

and Supply Chain Management

Who’s Who In International Logistics—

Armstrong’s Guide to Global Supply Chain

Management

An Overview of Warehousing in North

America—Market Size, Major 3PLs,

Benchmarking Prices and Practices

Bigger and Better—3PL Financial Results, 2004

Trends in Third-Party Logistics Provider

Supply Chain Systems Purchasing,

Deployment and Use

Consulting Services

Logistics Outsourcing Needs Analysis

and 3PL/4PL Selection

3PL Merger and Acquisition Advisory Services

Supply Chain Systems/Software

Evaluation and Selection

Transportation Practitioner and

Expert Witness Services

Supply Chain Network Analysis and Design

3PL Marketing Strategy Review and Planning

Extended Information Service (E.I.S.)

Who’s Who in Logistics?

Who’s Who in Logistics?

In business since 1980, Armstrong & Associates, Inc. has become a recognized

leader in supply chain market research and consulting.

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RMSTRONG

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Employability

2005 C ANADIAN LOGIS TICS L ABOR MARKET SURVEY:

This is the third of a series of three articles showing the results of the 2005 labor market survey

conduct-ed by Trent Appliconduct-ed Social Research on behalf of the Canadian Professional Logistics Institute. The first

focused on compensation (salaries and bonuses).The second focused on recruitment and retention, that

is, the variety of ways in which an individual locates his or her vocation, as well as the methods and

procedures the employer engages in to preserve that employee’s employment status – including provision

of non monetary benefits. This article focuses on ‘employability’ - defined as the initiatives, processes and

accreditations the individual has pursued to secure employment and advance in the field of logistics.

The web based survey was sent out to approximately 3000 practitioners from CPLI mail lists during

February 2005. Five hundred and sixty one valid responses were received, representing a response rate of

approximately 19%.

Employability

Soft Skills

Throughout the project employa-bility is defined as the processes the individual has engaged in to become more mobile in the logis-tics industry.

To what extent does education specialization make a difference to job performance?

In an attempt to understand how logisticians are becoming mobile the survey examined the effect of educa-tion specializaeduca-tion on certain aspects of employment performance.

The survey asked personnel how relevant they found their education specialization to the performance of: overall job performance, interper-sonal aspects, business strategy aspects, reading and writing aspects, quantitative aspects and technical aspects. Relevance was rated on a scale of one to five: one not at all rel-evant, and five as crucial.

Figure 1: Relevance of education

specialization to ‘overall job

performance’

Figure 1 demonstrates that those with a specialization in logistics find their education specialization most rel-evant to overall job performance. Business and commerce graduates also find their degree to be very helpful in performing in the logistics industry.

Figure 2: Relevance of education

specialization to ‘interpersonal

aspects’

Figure 2 again illustrates that those with an education in logistics find their training to be highly relevant to per-forming interpersonally in their career. However, personnel in both business and commerce and social sciences and humanities find their degrees to be highly relevant to interpersonal aspects in the workplace.

Figure 3: Relevance of education

specialization to ‘business strategy

aspects’

Figure 3 reveals that those with a business and commerce degree rate their educational background to be highly relevant to performing business strategy aspects. Those with a logistics background also find their specializa-tion to be relevant to performing busi-ness strategy aspects.

Figure 4: Relevance of education

specialization to ‘reading and

writing aspects’

Figure 4 illustrates that those with an education in the social sciences and humanities find it to be highly relevant to the performance of reading and writing aspects of their vocation. A specializa-tion in logistics and business commerce were also deemed relevant to reading and writing aspects of job performance.

By Jennif er Har r ingt on, Stir ling Lafr ance, Oliver Cost a and Alan Law (Tr ent Univer sity)

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Figure 5: Relevance of education

specialization to ‘quantitative

aspects’

Figure 5 demonstrates that personnel with a logistics and business commerce background find it to be highly relevant to the performance of quantitative aspects. Those with an applied and pure science degree also find their spe-cialization to be relevant.

Figure 6: Relevance of education

specialization to ‘technical aspects’

Figure 6 shows that those in logistics find their logistics specialization to be very relevant to performing technical aspects in their career. Those educated in the applied and pure sciences and business and commerce also find their specialization to be relevant to techni-cal performance in their career.

The focus group suggested that an undergraduate educational specializa-tion, whether it is logistics or applied sciences does not guarantee employ-ment in the logistics industry. However, a specialization in business commerce or logistics will be helpful in gaining ini-tial entry into the logistics industry. A specialization in logistics is also benefi-cial in that it will help decrease the amount of time the individual spends at the lower management and operational levels of the corporate hierarchy. Those without the logistics centered special-ization will, as a result, have a longer career path. This being said, at the upper levels of management the spe-cialization becomes less important, and the ability to add value to the supply chain more so. An educational back-ground in logistics or business may help personnel get their foot in the door, but hard work, experience, expertise, and devotion are what create upward

mobil-0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 4.0

4.33 3.89 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 5 3.15 3.1 Science (applied and pure)

Social Sciences and Humanities 2 61 49 1 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Education specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 2: Relevance of education specialization to ‘interpersonal aspects’

3.82 3.77 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 2.66 3.61 Science (applied and pure)

Social Sciences and Humanities 1 61 49 1 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 3: Relevance of education specialization to

‘business strategy aspects’

3.86 3.91 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 2.75 2.88 Science (applied and pure)

Social Sciences and Humanities 2 61 49 1

FIGURE 1

FIGURE 2

FIGURE 3

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ity. Employability was also examined through the lens of firm hopping. Firm hopping was calculated by dividing the number of years of experience person-nel have in logistics by total number of firms worked for. Resulting in, average number of years worked for a particular firm. In order to better understand firm hopping we attempted to answer:

Are young people “firm hopping” (shifting employers) more than older people?

Figure 7: Age and firm hopping

Figure 7 compares age and average years worked for a particular firm. As the line of best fit demonstrates, as age increases so does the number of years worked for a firm. The interpretation focus group suggested that a possible explanation for this is that as personnel become older they are less inclined to change firms. At an older age logisti-cians have established themselves at the upper levels of management, and as a result have established a position within the firm and have a sense of loy-alty towards the firm which they are working in. Younger logisticians may, unlike their senior counterparts, be required to firm hop in order to sample and learn as many aspects of the supply chain as possible, increasing their chances for upward mobility in the cor-porate hierarchy.

Figure 8: Number of years with firm

by firm size

Figure 8 is broken down by firm size and number of years with a particular firm. Those that are employed at small-er firms firm hop more often than those working at larger firms. The interpreta-tion focus group suggest that a possible interpretation of these results is that

0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 4.0

4.33 3.89 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 5 3.15 3.1 Science (applied and pure)

Social Sciences and Humanities 2 61 49 1 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 5: Relevance of education specialization to

‘quantitative aspects’

4.02 3.96 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 3.69 3.29 Science (applied and pure)

Social Sciences and Humanities 2 61 49 1 0.5 1 1.5 2 2.5 3 3.5 4 4.5 0 Specialization R e le va n ce ( 1 = n o n e /5 = cr u ci a l)

Figure 6: Relevance of education specialization to

‘technical aspects’

4.04 3.5 Logistics Specialization Business/ Commerce 1 57 18 1 Anova = .00 3.54 2.47 Science (applied and pure)

Social Sciences and Humanities 2 61 49 1

FIGURE 4

FIGURE 5

FIGURE 6

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logisticians working at larger firms have more opportunities for internal promo-tions, whereas those in smaller firms have to change firms in order to find new opportunities, retain a higher salary, or be challenged in new and exciting ways. Furthermore, logisticians may stay at larger firms because the firm itself, its brand essence, is seen as an industry badge of honour. Working at a larger more recognized firm is an integral part of a highly mobile and employable career path. The next ques-tion we endeavored to answer was:

To what extent is firm hopping affect-ed by firm size, industry, gender, job level, and P.log?

Figure 9: Industry and number of

years with a firm in logistics

Figure 9 demonstrates what person-nel in which industries in logistics firm hop more often. Those in the public sector and manufacturing firm hop the least often, whereas those in business services firm hop the most often. Probable interpretations for those in manufacturing firm hoping less often may be that the manufacturing industry is characterized by large firms which are complex and multi-layered, allow-ing for greater internal upward mobility. In the public sector, firm hoping occurs least frequently. Those in the public sec-tor have a greater degree of job security and are able to attain tenure.

Business services as an industry thrives on meeting new clients,network-ing, and being faced with a variety of employers. Business services are also highly profit oriented, and as a result work is often contract based and there-fore those logisticians in business serv-ices are continually finding new employment opportunities with firms that may have previously been clients.

2 4 6 37 42 8 10 12 14 0 Age M e a n Y e a rs w o rk e d i n f ir m

Figure 7: Age and firm hopping

ANOVA = .00 1.0 22 1.7 65 38 130 1.8 27 3.1 3.0 32 4.7 3.2 37 5.8 5.1 42 8.7 6.3 47 9.9 37 42 6.1 52 9.6 5.4 57 9.4 6.6 62 10.9 0.0 65+ 12.3 1 2 3 4 5 6 7 8 9 0 Firm Size M e a n N u m b e r o f Ye a rs w it h F ir m

Figure 8: Number of years with firm by firm size

6.82 7.52 Small (under 250) Medium (250-500) 4.9 86 132 5.0 Anova = 0.01 8.78 Large (over 500) 5.8 199 10 2 6 4 8 0 M e a n N u m b e r o f Ye a rs w it h F ir m

Figure 9: Industry and number of years with a firm in logistics

Avona = 0.00 10 7.04 33 2.7 5.37 Transportation, Storage and Warehousing Wholesale and Retail Business Services 4.6 101 8.07 Manufacturing 112 5.7 SD=6 57 7.03 10.45 Public Sector 91 6.18 4.6 12 Main

FIGURE 7

FIGURE 8

FIGURE 9

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Figure 10: Gender and number of

years with a firm in logistics

Figure 10 compares firm hopping by gender. The graph demonstrates that females stay with their firms for shorter periods of time, firm hoping more often. Both the literature review and the focus group suggest that women encounter the glass ceiling. A result of this unrecog-nized barrier is women firm hopping more often. Women are forced to do this in order to retain a higher salary or climb the corporate hierarchy. Further interpre-tations may be that women may also firm hop more often in order to ensure the stability of their home life. Women may leave a firm in order to find one with a more comprehensive benefits program, or may choose to leave a firm in order to support a partner’s career in a new location.

Figure 11: Job level by number of

years with firm

Figure 11 shows the frequency of firm hopping by job level. This data suggests that those who occupy positions in mid-dle management firm hop less often, whereas those in the operational sector firm hop the most often. The focus group suggested that those in middle manage-ment firm hop less often for a variety of reasons. At the middle management level there is a great deal of opportunity and variety of tasks to be completed. As a result, those that wish to move vertical-ly must commit a significant portion of their career path to undertaking these roles. Further, middle managers in this survey had a mean age of 45 years and as a result may be in a position where they are less inclined to change firms. There is also a very finite number of posi-tions in upper management, those that are unable to penetrate into upper

man-1 2 3 4 5 6 7 8 9 0 Gender M e a n N u m b e r o f Ye a rs w it h F ir m

Figure 10: Gender and number of years with firm in logistics

8.45 Male 329 5.55 T-Test = 0.00 6.2 Female 85 4.90 1 2 3 4 5 6 7 8 9 0 Position in Firm M e a n N u m b e r o f Ye a rs w it h F ir m

Figure 4.11: Job level by number of years with firm

8 9.4 Top/Upper Management Middle Management 4.71 93 182 6.0 Anova = 0.00 7.3 5.1 Lower Management Operational 5.02 69 64 3.98 10 1 2 3 4 5 6 7 8 9 0 P.Log. Status M e a n N u m b e r o f Ye a rs w it h F ir m

Figure 12: P.Log status number of years with a firm in logistics

8.25 Have P.Log. 315 5.4 Avona = 0.017 6.84 Non-P.Log. 116 5.4

FIGURE 10

FIGURE 11

FIGURE 12

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agement may end up fixed in middle management roles. Those in the opera-tion sector tend to be younger and may firm hop more often in order to attain a more holistic knowledge of the supply chain, which in the end will help the logistician to gain a higher degree of employability in the logistics industry. Top and upper level manager may firm hop in order to seek out a firm which will remunerate them more competitive-ly. It is also probable that they are head hunted more often, and as a result find firm hopping less strenuous.

Figure 12: P.Log status, number of

years with a firm in logistics

Figure 12 juxtaposes P.Log. status and number of years with a firm. The data from the survey suggests that those that have a P.Log. designation firm hop less often than their Non-P.Log. counterparts. The interpretation focus group suggests that this may be because P.Logs. are retained more aggressively by their employers. P.Logs.are also older,and as a result more established in their current

position, and therefore less likely to firm hop. Finally, P.Logs. at the upper levels of management are challenged more and as a result find their work more fulfilling, making them less inclined to firm hop.

The final research question we attempted to address was:

What is the relationship between firm hopping and salary?

Figure 13: Income in 2005 and

number of years with firm

Figure 13 shows years with a particu-lar firm and income. The line of best fit shows that as years with firm increase so does salary. Our data therefore suggests that firm hopping does not automatical-ly correlate to an increase in salary. A possible explanation for this is that stay-ing in one firm allows for the accumula-tion of experience and expertise which is rewarded by a higher salary.

Employability conclusions

Within the section of employability and soft skills we found that an educa-tion specializaeduca-tion affects job

perform-ance in a variety of ways. A specializa-tion in logistics is highly relevant to inter-personal aspects and overall job per-formance. An education in business and commerce is very useful in performing business strategy aspects. The attain-ment of a social sciences and humani-ties degree is crucial to reading and writ-ing aspects. Also, a degree in applied and pure sciences is beneficial when performing technical and quantitative aspects. With respect to firm hopping our survey yielded the following results; young people firm hop more often than older people; personnel in smaller firms firm hop more often than those in larger firms; and individuals in business servic-es firm hop the most, whereas those in the public service firm hop the least. We also found that the glass ceiling forces women to firm hop more often than men. Moreover, middle managers firm hop the least often compared to those in operations who firm hop most fre-quently. Non-P.Logs change firms more often than P.Logs. Finally, we found that firm hopping does not translate to a higher salary.

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Income ($ ‘000)

M e a n N u m b e r o f Ye a rs w o rk e d i n f ir m

Figure 13: Income in 2005 and number of years with firm

ANOVA = 0.00

25 27.5 33.5 37.5 43.5 47.5 53.5 57.5 63.5 67.5 73.5 77.5 83.5 87.5 93.5 97.5 105 115

FIGURE 13

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©2005 Ryder System, Inc. All rights reserved.

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Nicholas Seiersen

, Senior Manager, KPMG

Please comment on last-mile visibility. How do you ensure visibility and traceability of deliveries, particularly when they exist in your network or take low-tech delivery methods?

We believe strongly in the signature element and the role that it plays. We have just launched a new array of signature services that are designed to enhance proof of delivery.These signature services range from the ability to hand off a ship-ment to a company’s manageship-ment office, or the office in your apartment complex,or neighbor.Or the shipment may require delivery to a specific individual, or an individual over 18 years of age. Much of what we are doing in our signature services has to do with custodial control and creating an electronic record of where and when those hand-offs took place.

There are parts of the world where others work on our com-pany’s behalf.They are called our Global Service Participants (GSPs). In these cases, we have created wonderful technology interfaces that drive the hand-off of information to GSP agents who apply practices to meet our specific requirements. As a result, they collect nearly the same class of information that FedEx employees collect.

We provide them with a comprehensive set of tools to ensure these processes are met.For example,we provide them with hand tools and tracking devices that allow them to cre-ate proof of delivery and scan records to crecre-ate a complete view of the transit of shipments.

How are the increasing demands for Proof of Delivery doc-umented in the Sarbanes-Oxley Act (SOX) regarding rev-enue recognition affecting the way you work with your clients’ systems? What are the most challenging aspects of bringing greater systems transparency?

Our signature service can be a very specific and powerful means of proof of delivery. For example, we can create high-value oriented controls focusing on the hand-off of ship-ments to ensure that delivery is executed in a direct and spe-cific way.The controls could be set to disallow delivery on an indirect signature from anyone other than the intended recip-ient. So inside of our signature services, which we have launched and will continue to roll out, we will continue to specify a great deal of differentiation on what kind of signa-ture we must collect.

Chris Norek

, President, Chain Connectors

Do you have an opinion on Enterprise Resource Planning (ERP) systems versus Best-of-Breed in utilizing supply chain technology?

Many organizations have the culture, discipline and mind-set to incorporate an ERP solution that is probably an 80 per-cent fit for their requirements but that’s not always sufficient. When an 80 percent fit is not enough, it is important to have the discipline not to radically change components to cus-tomize the solution. If you cross that line and begin too much

In this inter view, questions raised by LQ’s

Executive Editor, Nicholas Seiersen, and

Advisory Board Member, Chris Norek,

Ph.D., cover a wide variety of technology

topics. Rob Carter’s answers cast an

insightful perspective on trends and best

practices in technology.

A CONVERSATION WITH

Rob Carter

Executive Vice president and CIO,

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customization you are often in a situation where you might well have chosen a best-of-breed solution instead.

That (best-of-breed) may require more integration and interfacing, but it will likely come closer to meeting 90 per-cent of your requirements. You may need to dedicate more resources to work on integration, but as a result you will have the tools that fit some fairly rigid requirements your organiza-tion views as essential and which you are not willing to be flexible about.

What percent of total technology implementation efforts are accounted for by back-end systems integration?

That would depend on whether you are integrating an ERP. The modules in an ERP are designed to talk to each other. Obviously, they must reach out and touch some supporting systems, but at the end of the day it is a lower percentage at that point because the interfaces come as part of the pack-age. If you are implementing a best-of-breed approach, you can have a significant level of integration interfacing and back-end work to make it all work cohesively. This would be the majority of the work you would need to perform - ensur-ing these thensur-ings work together and with the other systems that require you to feed information into them.

What mistakes do you make sure you avoid in selecting and implementing supply chain software?

This is a very important consideration. I have often seen executives make the assumption that you can gather data from disparate sources and count on the integrity of the infor-mation.This is an important concern when some of the data, in supply chain scenarios, is from outside of your company’s four walls.A lot of people assume that shipment notifications and tracking information from various suppliers and trans-portation services will have the same level of accuracy as a FedEx shipment.

Often, this is not the case. There are strong providers of information and many companies that offer different levels of information. But some providers can not necessarily give us the data that really lets us help our customers plan their man-ufacturing cycles and inventory cycles. So data integrity is a huge area of concern, and we spend much time understand-ing the sources of information and how reliable they will be. The other primary concern, in my opinion, and possibly the most significant pitfall is the non-vanilla implementation of ERPs. Most of the large ERP disasters that have occurred and I can say that at FedEx we have not had any of these -have been quite visible in our industry. In these cases, compa-nies have brought in big-packaged ERPs and then set about to make major modifications to them because they are unwilling to change their business processes to match that software’s solution. These kinds of approaches tend to be extremely costly and often result in failure.

How are you advising your clients on RFID issues?

We feel that RFID is going to be a very significant tech-nology for the industry generally, and particularly for the supply chain field.There are, however, a significant number of root issues in the Electronic Product Code (EPC) stan-dards that need to be addressed beforehand. For example, EPC standards are oriented to the passive RFID tag – com-monly known as “slap-and-ship.” Frankly, the readability and programmability of those RFID tags is not yet reliable enough to drive a solid supply chain implementation. It will get there. There is a strong belief on our part that many of the solutions that our customers require will help drive the industry and facilitate its evolution away from passive RFID tags, which are defined in the EPC standards today, to active tags that are battery-powered and put out a stronger radio signal.

These tags are also called sensor-array or sensor-based tags. They are dynamic in nature, much more readable and from greater distances. They are dynamic because they can produce a product’s history, provide real-time information about the product’s current situation and, if required, respond. They could tell us, for example, whether a product has been exposed to light and what temperature range a product has been exposed to on its journey. They could also alert us based on whether the temperature range exceeds a certain point, either high or low, and they can tell us if there have been velocity changes in the delivery process for prod-ucts. For example, was the delivery process stopped abruptly in mid stream? These are the kinds of things that sensor tags are likely to bring to the party, including Global Positioning (GPS) that can tell us exactly where a product is,virtually any-where worldwide.

We are working with EPC, as a member of the EPC Consortium, and we are a member of MIT’s consortium for RFID Technologies, to look at those technologies and articu-late and define their current and future applications. According to a Gartner Consulting forecast, passive tags will not reach the height of their usefulness until sometime between 2015 and 2020.

Interestingly, RFID is turning out to be a 3-15 technology instead of a 2-10 technology. (Footnote 1)

There is still a great deal that needs to be achieved.These tags must produce a stronger and clearer signal.The ability to read them needs to become much more discrete. Today, most of the reading takes place at the pallet level and is extrapolated to the entire shipment based on advanced shipment notification – or an ASN Record. An ASN record traditionally indicates what to expect in a bulk shipment, but the reality is that a lot of things can happen to a ship-ment and you could end up receiving something that does not reconcile with what you had expected to receive, based on the ASN records.

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How much RFID Technology are you currently using and experimenting with? Do you have a different RFID focus than you want your customers to have?

We do a lot with RFID. Often, this is not done with what people classically call RFID tags.Almost all of our tractor-trail-ers, for example, have RFID tags on the side of them -- a bat-tery-powered re-useable tag that provides full automation of yard management, signaling the arrival of tractor-trailers when they come into a yard and scheduling their use when they off-load. This technology tells us when the trailers are available for re-load, plus it dispatches them as “on road.”

In addition, an RFID key system is used in approximately 40,000 of our company’s courier vehicles. The RFID key sys-tems offer huge productivity enablers. For example, the vehi-cle unlocks when the driver approaches and locks and when the driver leaves. Drivers can get in, start the vehicle and go without looking for keys.This is also being used in the passen-ger car world. Mercedes, Porsche and other car manufactur-ers use this – it’s a key system called “enter-and-drive.”

In today’s world of security requirements it is imperative for us to know which employees should have access to certain parts of airport ramps and facilities,for example.So we use RFID proximity cards to allow certain employees to access specific areas. It also offers a great record of who went where, when.

Those are all RFID technologies that we have become accustomed to. I would characterize them as fairly active technologies that have an ability to be easily read and they are more discrete in their ability to be read.

What have been your efforts to create seamless supply chain event management systems with partners so that at hand-off points there is still visibility?

An interesting story about supply chain handoffs and seamlessness is the supply chain surrounding iPod.You can go to Apple.com and place an order for an iPod, have it cus-tomized with your name lasered onto it, and you can see this take place. It is an exchange of information. IPods are made for Apple at original equipment manufacturers (OEMs), gen-erally in China in the Pearl River Delta region and Shanghai. Through Apple.com, you can see your iPod order being built, entering the transportation system and into the custody of FedEx for delivery. Orders are flown from the OEM into the United States and delivered through our FedEx ground home delivery network. This is an exciting way to see how flat the world has become and how a seamless supply chain func-tions. If you did not know the mechanics behind your order of an iPod,you might speculate this involves only one compa-ny. But three companies, at the least, are involved.

What types of executive dashboards do you provide for your customer base to quickly gauge the performance of their supply chain?

We provide a tool called FedEx InSight™. It gives you visi-bility on all of your FedEx inbound shipments, from a lot of different perspectives, regardless of whether you knew some-one shipped you something or not. Based on how you regis-ter for Insight, you can see all of the FedEx shipments des-tined for your office, for example, on any day of delivery.

This is a great kind of dashboard technology. For instance, we have a customer that conducts medical tests on the west coast of the United States.Typically,the customer sends sample collection kits to physicians all over the country.Physicians col-lect these samples and send them in to be tested at this cus-tomer’s facility. It is important for these physicians and their patients to receive the test results in a timely manner.The test-ing facility must staff its office and build their responsiveness to these incoming samples based on the volume they receive on any given day. FedEx InSight provides the testing facility and many other customers with a valuable tool to allow them to plan their work and see the things coming their way.

What kind of alerts do you provide when there are glitches in your deliveries so that customers can plan for the changes rather than be surprised?

We have capabilities to help customers keep things on schedule and recover from unforeseen challenges.When we need to provide notice, for example, on things that are beyond our control, such as customs delays, we have launched an advanced notification system which operates across the complete supply chain to ensure that if the prom-ised date for a delivery will not be met, no matter the reason, there’s a notification. From Email notification to a message system on your pager, whatever you subscribe to, you will be notified of these delays.

We continue to grow the profile of this advance notifica-tion system to track packages and help customers garner more information. FedEx InSight provides all of this informa-tion,from delivery to exceptions.We are also examining alerts to cell phones, Blackberries, and other options in order to build our portfolio of those classes of alerts and notifications.

How much additional budget did you set aside for technol-ogy improvements in 2005 over 2004?

Approximately a billion dollars is invested annually.So I do not feel constrained in my technology budget. I believe the more important issues pertain to the effective prioritization of those incredible resources for the maximum benefit of FedEx. Instead of asking for additional budget, I may ask for better support on prioritization, on governance processes and business alignment.The support would help ensure that what we are spending money on is the most effective use of IT capital and people to improve the customer experience, drive top line revenue and increase productivity through the use of technology.

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I

n today’s global economy, firms located in various parts of the world collaborate to form supply chains that com-pete with other supply chains to meet the needs of cus-tomers.The process of coordinating activities and decisions across a supply chain is very complex, with rewards accru-ing to chains that then emerge as leaders in the global mar-ketplace. Academic researchers and scholars have devel-oped a powerful array of mathematical tools to address issues and solve problems associated with the coordination of members of a supply chain. This article focuses on these mathematical tools. While a complete discussion of supply chain mathematics cannot be compressed into this brief article, a few key tools used by supply chain management researchers will be examined with comments on their appli-cability and limitations.

The Queuing Theory is an important tool used to model many supply chain problems. It is used to study situations in which customers (or orders placed by customers) form a line and wait to be served by a service or manufacturing facility. Clearly, long lines result in high response times and dissatisfied customers.The Queuing Theory may be used to determine the appropriate level of capacity required at manufacturing facilities and the staffing levels required at service facilities, over the nominal average capacity required to service expected demand without these surges. Statistical methodologies are used to make predictions

about the level of consumer demand and the extent of unpredictability of consumer demand. They form the basis of Statistical Process Control techniques used for the moni-toring of quality levels. Data mining techniques – based partly on statistical tools – are used to look for patterns and relationships in a body of data. One important application of data mining is in the analysis of marketing data to deter-mine consumer behaviour patterns.

Simulation is used to study situations characterized by uncertainty. Simulation involves the creation of a model of a system based on specific assumptions about system behav-iour and information about probability distributions associ-ated with various variables. By running simulations, it may be possible to determine the best values of various system parameters, subject to the underlying assumptions. The main advantage of simulation is that it can be used to study extremely complex systems that cannot be easily modelled by using other mathematical tools. It must, however, be emphasized that the recommended solutions are a function of the quality of the model and the underlying assumptions. Flawed assumptions will lead to flawed recommendations.

Mathematical programming includes linear program-ming, nonlinear programprogram-ming, and integer programming. A mathematical programming problem consists generally of an objective (often the maximization of profits or the mini-mization of costs) and a set of constraints (for instance, a

By Peruvemba S. Ravi,

Ph.D.

Besides helping you to understand and question

some of the mathematics underlying supply chain software, knowledge of supply chain

mathematics may also make it possible to develop superior solutions in-house. If you are

interested in understanding the far-reaching applications and value of mathematical tools

to solve problems associated with the performance of your supply chain, read on.

Understanding the

Mathematics of

Supply Chain

Management

(24)

LogisticsQuarterly

References

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