APICS

January/February 2012 Volume 22 | Number 1

APICS MAGAZINE

Proactive risk management

Enhancing operational efficiencies
The health care supply chain
Superior employee education
RISK PREPAREDNESS/MAINTENANCE, REPAIR, AND OPERATING SUPPLIES

Ideas and innovations in operations and supply chain management

JANUARY/FEBRUARY 2012
 LAST CHANCE
TO PREREGISTER FOR THE
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EXPAND YOUR
CREDENTIALS
WITH THE APICS CPIM DESIGNATION

The APICS CPIM gives you

the tools you need to protect your
organization’s bottom line and cash flow.
Make your next career move one that will propel
you along your career path and make you a front-runner
in today’s highly competitive job market.

With the APICS CPIM, you will have:

• The tools to effectively manage global supply chain activities where
suppliers, plants, distributors, and customers are located around the world.

• The knowledge to apply principles ERP software is based upon, including

lessons covering various functions within a company (for example, purchasing,
planning, finance, engineering).

• The proven knowledge and organizational skills to strategically streamline operations.

Earning the APICS CPIM designation shows a commitment to the profession that leads
to a sense of accomplishment, demonstrates value to your employer, enhances earning
potential, and provides a path to career advancement.

Visit apics.org/cpim or call APICS Customer Support

at 1-800-444-2742 or +1-773-867-1777 for more information.
APICS magazine January/February 2012 Volume 22 | Number 1

27 30

Features Cover STory

27 Top-Tier Master Data 34 Your Resilient Supply Chain
Management By Mohanish Makharia;
By Arthur Raguette Gerhard Plenart, PhD; and
Ramanan Sambukumar
Drive bottom-line savings
and streamlined operations. Achieve a flexible, scenario-based
supply chain.

30 Health Care and Supply

Chain Management 38 The Rules of Knowledge
Strategy Acquisition
By John M. Donnelley, By Lucio Zonca, CPIM, CSCP
CPIM, C.P.M. Institute a commitment to
Learn from the health care education and training at all levels
industry to reduce waste at your of the organization.
organization.

2 January/February 2012 | APICS magazine

 34 38

“There is a high risk of supply chain disruption arising from the inability to replace parts.”
page 27

Departments
18 Management Perspective
4 From the CEO
20 Software Review
5 From the Editor
23 Relevant Research
6 APICS Report
46 Case Study
7 Ask APICS
48 Lessons Learned
8 2012 APICS Board of Directors
10 Membership Matters
Resources
12 Industry Watch
42 Supply Chain Directory
14 Building Blocks
43 Index
15 Lean Culture
45 Product Showcase
16 Working Green
17 Enterprise Insights

APICS magazine (ISSN 1056-0017) is published bimonthly by APICS The Association for Operations Management, 8430 West Bryn
Mawr Ave., Suite 1000, Chicago, IL 60631-3439. Phone: (773) 867-1777. Canada Post International Publications Mail (Canadian Distribution)
Sales Agreement No. 571423. Periodicals postage paid at Chicago, IL, and additional mailing offices. Subscriptions: $65 per year U.S., $77
Canada/Mexico, $93 elsewhere. Copyright © 2012 by APICS. All rights reserved. Printed in the United States of America. POSTMASTER:
Send address changes to: APICS, 8430 West Bryn Mawr Ave., Suite 1000, Chicago, IL 60631-3439.

APICS magazine | January/February 2012 3

 From the
CEO

A Focus on Strategy
Last year, the APICS research depart- it enough and not executing against it APICS magazine is published by
ment conducted several large-scale reliably. APICS The Association for
surveys of operations and supply chain Soft skills. On average, performance Operations Management
management professionals to discover and opportunities improve when 8430 West Bryn Mawr Avenue
Suite 1000
their attitudes and opinions on four key soft skills—such as communications, Chicago, IL 60631-3439
topics in the field today. The surveys relationships, and trust—improve. Phone: (800) 444-2742 or (773) 867-1777
Fax: (773) 409-5576
highlighted the areas of sales and opera- In practice, “soft” means difficult to Email: [email protected]
tions planning (S&OP), supply chain firmly define or quantify. Production, apics.org

strategy, supply chain risk, and supply inventory control, and supply chain Sharon L. Rice
Publisher
chain sustainability. We are releasing the and operations management generally
analyses and findings of these surveys demand “hard” skills, but the sur- Editorial
as APICS folios, and we hope that the rounding contexts and enabling skills Jennifer Proctor Elizabeth Rennie
entire APICS membership and commu- are soft. Many professionals struggle Editor in Chief Managing Editor
nity will benefit from the results of this with soft skills and the ability to work Christopher Jablonski
important research. with unstructured data. For example, in Staff Editor

While the New Year is just begin- information technology, unstructured

ning, we already have slated a new set of Design
data such as photographs and audio
Emma Castañeda Hwa Kim
surveys to be conducted in 2012. At this files do not neatly align with the struc- Art Director Designer
time, it’s only fitting to take a look back tured world of databases. Lara Kocab
at the reports of 2011 and explore some Strategy as competitive advantage. Designer
of their most notable discoveries. In hot and emerging strategic areas,
The management gap. There exists a such as the four topics explored in the Advertising
large gap between upper management research surveys, increasing the speed Tom Lasch
[email protected]
and those involved in the day-to-day to maturity and proficiency deliv- (440) 247-1060
tasks of running production. Senior ers an edge in productivity, supply
management remains focused on high- chain performance, business process Editorial Advisory Board
level ideas, while those on the shop improvement, and many other areas. Richard E. Crandall, PhD, CFPIM,
CIRM, CSCP
floor center their attention on execu- Ultimately, the real gain comes in the Appalachian State University
tion. Essential leadership must come form of sustained competitive advan- Philip E. Quigley, CFPIM, PMP
from those in management positions, tage. Competitors may be able to copy Computer Science Corporation
particularly regarding supply chain products, equipment, and services, but Randall Schaefer, CPIM
and production visibility and S&OP. they cannot copy the ability to execute Randall Schaefer Consulting

Transparency of data and decision strategy. Publication in APICS magazine does not constitute
an endorsement of any product, service, or material
making at the right levels, contexts, and The research suggests that the future referred to, nor does publication of an advertisement
frameworks is vital. of supply chain and operations manage- represent an endorsement by APICS or the magazine.
Strategy and tactics. The traditional ment rests in successful execution of All articles represent the viewpoints of the authors
and are not necessarily those of the magazine or the
focus in operations and supply chain strategy. To become adept at strategy publisher. Letters to the editor will be published at the
management is on tactics. But there is requires flawless implementation, agil- discretion of the editor.
increasing demand on our profession- ity, and responsiveness to details. These Canada Post International Publications Mail Product
(Canadian Distribution) Sales Agreement No. 1220055.
als for becoming involved in high-level are the skills that matter to profession-
decisions—the strategies necessary for Subscriptions: APICS magazine is circulated to all
als in our field, today and beyond. members of APICS as part of their membership fee.
managing S&OP, risk, sustainability, For all others, the subscription rate is $65 annually ($77
and the supply chain. Many in our field in Canada and Mexico, $93 for other international or
overseas delivery). To subscribe, call APICS customer
may not fully understand the differ- service at (800) 444-2742 or (773) 867-1777.
ence between tactics and strategy; or Single copies within the US are $8, outside the US,
they may be aware of some functions of Abe Eshkenazi, CSCP, CPA, CAE $12 (payable in U.S. currency). Contact APICS
strategy but are guilty of not referencing Customer Service, (800) 444-2742 or (773) 867-1777.
Chief Executive Officer
Printed in the United States of America.

4 January/February 2012 | APICS magazine

 From the
Editor

The Pulse of the Workforce

APICS Board of Directors Much of the world is facing a “workforce In a time when everyone’s hurting—par-
Chair of the Board paradox.” Distressing levels of unemploy- ticularly the arts—we are fostering the next
Marc Harris, CPIM, CSCP
ment persist, while businesses of all types generation of concertgoers through inno-
Chair-Elect and sizes face a serious gap between vative programming, engaging events, and
Robert Boyle, CFPIM, CIRM, CSCP
the number of open jobs and workers interactive educational opportunities with
Secretary-Treasurer
Mondher Ben-Hamida, CPIM, CSCP capable of filling them. CSO musicians. One recent initiative was
Directors
These contradictory trends are all the introduction of on-stage seating, which
Luis Barcon, CPIM, CIRM, CSCP over the news. I recently read a story allowed audiences to hear concerts from
District Director, Terra Grande District in Oregon Business, in which author a new and exciting perspective. During
William Bickert Linda Baker wrote about her experi- recent performances of Beethoven’s Fifth
Director-at-Large ences visiting the Oregon Leadership Symphony, listeners were able to purchase
Norman Carmichael, CPIM, CSCP Summit, which focused on boosting tickets for seats right behind the musicians,
Director Southwest District
job growth in the state. She noted that face-to-face with the conductor. The seats
Bintong Chen, Ph.D. many employers offering well-paying sold extremely well, particularly to Pulse
Director-at-Large
jobs can’t find people to fill them, citing members, who enjoyed having a distinctive
Rick Donahoue, CPIM, CSCP Kraft Foods as an example. “Summit position on stage. In the end, the CSO con-
District Director, Mid-Atlantic District panelists offered several explanations,” nected with these young people by offering
Paul Howatt Baker wrote, including the fact that food them something special that, hopefully,
District Director, Canadian District processing is not considered “sexy” and will keep them coming back.
Vadim Kapustin vocational training hasn’t kept up with There is considerable upside potential
Director-at-Large new technologies. here—and perhaps even a lesson or two for
Jerry Kilty, CFPIM, CIRM, CSCP A few weeks ago, CBC News out of operations and supply chain management
District Director, Southeast District Canada reported that tool and die shops professionals seeking to cultivate a capable
Al Kuebler in Ontario are facing an imminent lack labor force. It’s time to devise new and
Director-at-Large of labor. “High school students aren’t inventive ways to reach students, educators,
Merri Rich, CPIM
choosing the trades,” CBC’s correspon- and parents. APICS offers its Scholars won-
District Director, Pacific Western District dent explained, adding, “Ontario could derful opportunities to attend educational
Dana Riess, CPIM
face a shortage of more than 300,000 events, build contacts, and prepare to enter
Director-at-Large skilled workers in 10 years.” the workforce after graduation. You can help
Most experts agree that overcoming by becoming an APICS Scholar coordinator,
David Rivers, CFPIM, CIRM, CSCP
District Director, Northeast District this labor force mismatch hinges on get- mentoring, or lending support as a donor.
ting young people interested in technical To learn more, visit apics.org/scholars.
Jason Wheeler, CPIM, CSCP
careers—and keeping them interested. There are talented young people out there
District Director, Great Lakes District
This idea has been on my mind both curious about a new experience—help them
Tammy Williams, CPIM, CIRM, CSCP during and after work hours lately, as find it.
District Director, Heartland District
I am currently serving on the board of
directors for the Charlotte Symphony Welcome, Nathaniel!
APICS Corporate Congratulations to APICS magazine
Orchestra (CSO) Pulse here in North
Chief Executive Officer
Carolina. Pulse is an affiliates group for editor in chief Jennifer Proctor and her
Abe Eshkenazi, CSCP, CPA, CAE
young people who share a passion for family, who welcomed baby boy Nathaniel
Magazine Contact
Jennifer Proctor music and a commitment to the arts. John Kasik on November 26.
The organization’s goals are to develop
APICS The Association for a broader audience, promote volun-
Operations Management teerism, and support the mission of the
8430 West Bryn Mawr Avenue CSO. I became involved with Pulse after
Suite 1000
Chicago, IL 60631-3439 singing with the symphony for the past Elizabeth Rennie
Phone: (800) 444-2742 or (773) 867-1777 five years. Managing Editor
Fax: (773) 409-5576
Email: [email protected]
apics.org
APICS magazine | January/February 2012 5
APICS
Report

Start 2012 on the Right Track

Visit apics.org/folios to download APICS Folios and select the
It’s time to embark on a path of professional growth with a fresh members-only Practices and Challenges research reports for
set of personal and organizational goals. Your APICS member- further reading.
ship will support you on your journey. Start by taking advantage
of the APICS Career Goal Review, a free resource for planning APICS member savings
and goal setting. To try out this tool, visit apics.org/2012goals. Your APICS membership enables you to save up to 25 percent
on APICS educational events, certification review courses and
New in 2012: APICS CSCP Learning System maintenance programs, testing fees, and various other training
and exam aids. To learn about these and other membership benefits, visit
The APICS Certified Supply Chain Professional (CSCP) apics.org/membership.
Learning System and exam have been enhanced in 2012 to
help you better leverage best practices, techniques, and tech- APICS educational events
nologies that can maximize your organization’s efficiency and APICS conferences give you the opportunity to improve your
improve the bottom line. To learn more, visit apics.org/cscp. functional knowledge, network with operations and sup-
ply chain management professionals from across the globe,
APICS CPIM program and take advantage of groundbreaking research and industry
More than 100,000 operations and supply chain management knowledge. Make it a goal to experience at least one of the fol-
professionals have earned the APICS Certified in Production lowing APICS events.
and Inventory Management (CPIM) credential, the standard
of professional excellence in operations management. APICS 2012 APICS Asia Supply Chain & Operations conferences
CPIM provides an in-depth understanding of production and April 2–3, 2012
inventory processes in the internal operations of your organi- Seoul, South Korea
zation. Learn more at apics.org/cpim. Grand Hyatt Seoul

APICS career tools April 5–6, 2012

APICS members have access to a wide array of career Shanghai, China
resources, including white papers and archived webinars. Just Shanghai Marriott Hotel Hongqiao
released are APICS Career Packs, which can help you define
your career path or fine-tune your company’s hiring strategies. APICS and IBF present Best of the Best S&OP
Each pack includes job descriptions, career paths, and compe- conferences
tency models by title for supply chain and operations manage- May 10–11, 2012
ment careers. Download them today at apics.org/careerpacks, London, England
and learn more about career tools at apics.org/careers. Renaissance London Heathrow Hotel

APICS Folios June 14–15, 2012

Assess risk, develop your organization’s supply chain strategy, Chicago, Illinois, USA
and understand how you can successfully implement and Hilton Chicago
grow your sales and operational planning process with APICS
Folios. The three APICS Folios are 2012 APICS International Conference & Expo
• APICS S&OP Folio: How to Be an S&OP Champion October 14–16, 2012
• APICS Supply Chain Strategy Folio: Make the Most of Denver, Colorado, USA
Supply Chain Strategy Colorado Convention Center
• APICS Supply Chain Risk Folio: Protect Your Business
with Risk Management. To learn about these valuable educational conferences,
visit apics.org/events.
APICS members have exclusive access to additional research
on these topics. Understand the experiences of professionals in
these critical areas and the opportunities and pitfalls to watch for.

6 January/February 2012 | APICS magazine

Send APICS your operations or supply chain Ask
management questions at [email protected].
APICS
By Jonathan Thatcher, CSCP

Looking to the Outside shared conclusion that a response has a

high probability of occurrence.
Extrinsic forecast models take a wide perspective While the aggregate view is not ideal
for short-term or precision forecast-
ing, even short-lead-time products and
Reader H.Y. writes, “My team’s forecasting model is not very sensitive to services can be sensitive to extrinsic fac-
socioeconomic trends. How can I use these data in forecasting?” tors. For example, weather is a common
extrinsic forecast element. If the big pic-
ture is the only concern, then forecasting
To achieve your goals, your team mental processes, standards, and costs, would only examine the four seasons
should engage in extrinsic forecasting. while innovations from labs and devel- as repeating weather cycles. But, on any
“Extrinsic” means coming from the out- opment pipelines can suggest when given day, an unexpected rainstorm or
side. At most organizations, this refers to new releases will hit the marketplace. heat wave can shift customer demand up
the wider economy. Extrinsic forecasting These factors affect product develop- or down.
is most useful for evaluating the external ment schedules, release cycles, and The same holds for economic factors:
conditions common to supply chains, even remanufacturing demand for old For example, even during periods of
large markets, and geographies. The components. economic slowdown, there may be areas
forecast horizon and scope are necessar- Begin by collecting macro-level data experiencing expansion.
ily long and broad, as the model presents of interest, such as economic or demo- Blending extrinsic forecasts with local
a bigger picture than even traditional graphic trends. Often, this information or short-term forecasts helps create a
long-range forecasts—one that reveals the is freely available on national economic, more accurate view of the near term or
enablers and inhibitors to overall demand trade, and statistics departments. Other the local picture. Try to gather mean-
and supply. factors to examine include import and ingful, representative samples of both
Extrinsic forecasting depends on the export trends, sales per employee, and quantitative and qualitative data to create
aggregate picture. Even in areas where total production value. These serve as useful extrinsic forecasts. Compare the
it is difficult to accurately forecast indi- high-level baselines to compare your findings. Look for correlations, historical
vidual items, it is reasonably possible organization to historical averages. patterns, and useful data points that can
to forecast the aggregate. Aggregate With these data in hand, consider refine projections.
trends tend to move in repeating, long- using the Delphi technique as the first Further refine your forecast by consid-
running cycles. step in your forecasting. Also known ering questions such as: What story do
Common elements in extrinsic fore- the extrinsic fac-
casting models include macroeconomics Examining these factors can help tors tell? Where
factors, such as inflation, unemployment has the organi-
rates, currency values, interest rates, anticipate changes and find the zation arrived
and economic expansion and contrac- optimal timing to introduce from? Where is
tion. Examining these factors can help it now? Where
anticipate changes and find the optimal
products and modify prices. might it end up
timing to introduce products and modify if long-running
prices. Extrinsic models also include as “panel consensus,” this consists of trends stay in place? How likely are
macro-social demographic data, such as polling experts representing a cross sec- those trends to remain in place? Review
average ages, generational differences, tion of locations, responsibilities, and your analysis regularly, and continue to
preference patterns by region, and trends cultures about subjects such as trends update it every year, quarter, and month.
in immigration and emigration. These in geographic supply and demand. Eventually, you will see the past, present,
factors can influence broad customer The experts independently submit and future of your forecasts as a single,
decision-making patterns. their answers and reasoning to a panel unified concept.
In industries heavily dependent on manager, who in turn asks the panel-
information technology, macro- ists to evaluate the likelihood of each Jonathan Thatcher, CSCP, is director
technological change and development response. Panel members may begin to of research for the APICS professional
is an extrinsic forecast component. see new perspectives, and the process development division. He may be
Technical advances can change funda- can cycle a few times before reaching a contacted at [email protected].

APICS magazine | January/February 2012 7

APICS Introduces the
2012 Board of Directors

APICS is pleased to present the 2012 APICS Board

of Directors. These dedicated volunteers bring
diverse points of view to the leadership body,
and these varied perspectives will drive the
strategic direction of APICS in the coming year.

The 2012 APICS Chair, Marc Harris, CPIM,

CSCP, and the members of the board look forward
to a year of APICS leading the marketplace by
providing the finest educational training, world-
class certifications, and comprehensive resources
to an international network of accomplished
operations and supply chain management
professionals.

Marc Harris, CPIM, CSCP

Chair of the Board

Robert Boyle, Mondher Ben-Hamida,

CFPIM, CIRM, CSCP CPIM, CSCP
Chair-Elect Secretary-Treasurer

8 January/February 2012 | APICS magazine

DIRECTORS

Luis Barcon, CPIM, William Bickert Norman Carmichael, Bintong Chen, Ph.D. Rick Donahoue, Paul Howatt Vadim Kapustin
CIRM, CSCP Director-at-Large CPIM, CSCP Director-at-Large CPIM, CSCP District Director, Director-at-Large
District Director, Terra District Director, District Director, Canadian District
Grande District Southwest District Mid-Atlantic District

Jerry Kilty, CFPIM, Al Kuebler Merri Rich, CPIM Dana Riess, CPIM David Rivers, CFPIM, Jason Wheeler, Tammy Williams,
CIRM, CSCP Director-at-Large District Director, Pacific Director-at-Large CIRM, CSCP CPIM, CSCP CPIM, CIRM, CSCP
District Director, Western District District Director, District Director, Great District Director,
Southeast District Northeast District Lakes District Heartland District

APICS
Channel Partners

Asia Pacific
(22)
North Europe
America (32)
(226)

Middle East &

Africa
Central and (17)
South America
(8)

www.apics.org

APICS magazine | January/February 2012 9

Membership
Matters

APICS Affiliation Gives Helena Drenth

Since becoming an APICS member, I now

a Competitive Edge
feel I have hope for the future. In today’s
very competitive job market, having an
APICS certification will make me stand
out from the pack.

Editor’s note: Congratulations to Erica Jehling, CSCP, winner of the first- John Edwards
ever APICS magazine essay contest. Jehling won for her poignant and APICS provides a vast body of knowl-
compelling description of how her APICS affiliation has helped build and edge and guidance. [It has] helped us
sustain her career. Essays were judged by the APICS District Manager and develop and improve formats to address
Voice of the Customer committees. Thanks to everyone who submitted compliance issues … and enabled us to
entries, excerpts of some appear here. reevaluate our way of doing business.
With the introduction of sustainability
to the APICS Operations Management
Erica Jehling, CSCP Body of Knowledge Framework, all our
At 23, I knew a few things outside interview last year, I was drilled on
bases are covered.
of college textbooks: I liked manu- the definitions of kanban, vendor-
facturing, traveling to China, and managed inventory, incoterms, and
Kayla Gerry
solving problems. However, the job challenges with sales and operations
Not only have I learned a great deal
positions that catered to these pas- planning. After I answered these
from volunteering on a student chap-
sions were unattainable due a lack questions with ease, the interviewer
ter board of directors, but I have also
of experience on my young résumé. said, “Out of the 30 people I have
built up a network of mentors, profes-
A chance encounter with an APICS interviewed, you have the least years
sional acquaintances, and peers—as
advertisement, touting the statisti- of experience, but are the most
qualified.” This compliment made me well as lifelong friends—through my
cal career advantages of achieving
realize that APICS members might APICS affiliation.
an APICS certification, changed
everything. assume that this jargon and these
I attended the Toronto conference, methodologies are second nature, Lisa Graham
a bit skeptical of the potential ben- but when compared to the applicant My APICS membership has become a
efits. However, every single mem- pool, this competitive education puts gateway to learning from others who
ber I spoke to relayed testimonies us in the top 5 percent. have discovered successful strate-
of tangible gains, such as résumés As a young professional, suggest- gies. The APICS tools and resources
landing at the top of the pile and ing and taking leadership initiatives are easily accessible, enabling me to
faster-than-normal salary increases, to implement new ways of trans- quickly respond to challenges with
thanks to APICS. After attaining the forming supply chain and becoming versatility, adaptability, and efficiency.
Certified Supply Chain Professional lean has made senior management I am grateful to my fellow APICS
(CSCP) certification myself, I real- view me as a key player. APICS members for the spirit of teaching
ized that, for an individual truly monthly meetings provide fuel for others the lessons they’ve learned.
passionate about supply chain, the me to brainstorm these sought-after
career boosts were just icing on the strategies, and I always walk away Varun Jindal, CPIM
cake. The real rewards for being an inspired with new ideas that ensure I The Certified in Production and
active APICS member are the daily am an asset to my company. Inventory Management (CPIM)
benefits I get through the value of I am now achieving my career recognition letter sent by APICS to
the education, the continued deepen- goals well beyond my peers. My my employer enhanced my image and
ing of understanding of supply chain, APICS affiliation has given me both visibility across the organization and
and marked improvements in my tangible and intangible benefits to helped me get greater responsibilities. I
problem-solving abilities. my career development, enhanced was awarded with the responsibilities of
APICS members strive to be the my image as a professional, and pro- assisting the president of my company
best in operations management, vided me with the heightened sense in corporate planning, strategic initia-
often meaning they take for granted of achievement that I carry into tives, and operations, which would have
their wealth of knowledge. During an every task I approach. not been possible otherwise.

10 January/February 2012 | APICS magazine

 We encourageTo comment
you to shareon thisAPICS
your article, send
stories.
a message to [email protected].
Visit apics.org/membershipmatters today.

Matthew Johnson, CPIM Kyemba McMillian John Skelton, CPIM

In every way, CPIM certification was Knowing APICS means knowing what Therein lays the truth for the aspiring
the educational foundation on which it takes to be efficient and effective. operations management professional:
I have built my career and personal Regardless of the current economic
portfolio. The certification provided Glenn McMurray, CPIM environment, opportunities for the
insight into a broad spectrum of busi- APICS helped change my career from practitioner who can effectively market
ness functions that fueled my intel- employee to owner. Beyond that, the him or herself—and back up the hype
lectual fire for continuous education. CPIM training allowed me to grow with ability to perform—remain virtu-
the company to a leaner, more flexible, ally limitless. I have further come to
John Kanet more successful operation. understand that APICS, through its
My affiliation with APICS has had a unsurpassed body of knowledge, can
profound impact on my 38-year career Amechi Ndee, CPIM, CSCP offer enlightenment to both companies
in operations management. It has With [my] CPIM and CSCP designa- and professionals who struggle to find
opened doors for me professionally and tions, top managers in my company the right path.
significantly added to the quality of my have taken notice of me and even
teaching and research. Now it is having identified me as a talent that needs to Kenneth Stuff, CPIM, CIRM
a similar impact on the young people I be nurtured and developed. APICS Each time [I sought employment], my
am entrusted to develop. has given me the platform on which to involvement with APICS has been a
build my career by providing me with factor in landing a new position and
Suresh Kosana, CPIM, CIRM the knowledge of what the best profes- keeping my search time to a minimum.
APICS helped me move from the role sionals in the field think about real-
of a software engineer to an enterprise world situations in the ever-changing Dave Turbide, CFPIM, CIRM,
resources planning business analyst, a global market. CSCP, CMfgE
role I absolutely love. The APICS Certified Fellow in
Joseph O’Neill Production and Inventory Management
Mark Madal, CIRM Next time someone asks the question (CFPIM) designation … helped assure
It was time to start giving back to the why, instead of giving them the classic prospective clients that I had the right
organization that provided me the “we have always done it this way,” I can skills and knowledge to offer. My
knowledge to advance my career. In provide an answer using the logic and Certified in Resources Management
1992, our local APICS chapter pro- methods learned during APICS train- (CIRM) and CSCP designations added to
vided certification education, and my ing. Amazing, you can teach an old dog that credibility as my career and APICS
company provided the venue for the new tricks! have evolved to keep up with develop-
classes. I was proud to teach many of ments in manufacturing management
these courses and see the students begin Kaushik Rana, CSCP and the systems that support them.
a journey of improvement in their own Senior management has noticed the
careers. change in my knowledge level and Dothang Truong, CSCP
value I am providing to clients. I was I successfully passed the exam and
Pradipta Datta Majumdar, promoted in July 2011 to take on became a CSCP in 2008. But more
CPIM higher responsibilities and lead cli- importantly, I found my way back to my
APICS has definitely helped me develop ent engagements. I now have a team career success. The certification brought
a strategic advantage by just looking at working with me to provide supply me not only the practical knowledge
problems from a different perspective chain transformational service offer- and expertise in the subject, but also the
… APICS affiliation has been a new ings. I would like to attribute this connection with other members whose
beginning for me. success to APICS. real-world experiences really benefit me.

Sherri Mallak, CPIM Gary Smith, CPIM, CSCP

My APICS knowledge has enhanced I have transitioned from student to
my skills and made me more aware practitioner to teacher, but will always
of continuous improvement and best remain a student. APICS means always
practices that I can target in my own learning, and that is the secret to build-
organization. ing and sustaining a career.

APICS magazine | January/February 2012 11

Industry
Watch

Automation the Quality Inspection Capture app for iPhones, iPads, and
Dematic introduces Automatic Speed Control, a control Android-based tablets and smartphones. The application is
system for sensing and making computerized adjustments to designed to support the production part approval process with
conveyors and sorters to accommodate throughput volume mobile data collection, reporting, and filtering. It records
based on demand. The solution reduces energy use, equip- information such as job, operation, and part numbers;
ment wear, noise levels, and maintenance requirements while product descriptions; tool specifications; and previous and
extending the life of the sorting system, improving package current sample data, then cross-checks these with data
control, and reducing operating costs. The system is ideal for from an enterprise resources planning system and uploads
factories, warehouses, and distribution centers. to an external server.

Hostway and Cognent have partnered to provide cloud-

based, managed data services for enterprises, including
web hosting, virtual private servers, and multiple scal-
able server environments. The services range from small
business websites to feature-rich, root-access-level control
with instant deployment and scalability. The partner-
ship provides high-availability infrastructure backed by a
100 percent network uptime service level agreement and
round-the-clock live technical support.

Red Lion
unveils the
ProducTVity
Bar coding Station, a system
Datalogic Scanning has released the Gryphon GM4400 cord- for collecting,
less reader, a scanner for one-dimensional, two-dimensional, recording, and
and stacked bar codes. Features include an ergonomic form displaying key
factor, non-flickering red performance
illumination, easy transi- indicators and
tion between standing and machine status
handheld modes, four-dot messages on
visual aiming, and image televisions, com-
capture for identifying puter monitors,
poor codes and damaged and projec-
packaging. The reader is tors. The tool
designed for the ware- interfaces and communicates with devices such as motion
house, specialty retail, controllers, motor drives, programmable logic control-
point-of-sale, government, lers, bar code scanners, and more. Features include a fully
banking, and health care programmable graphical interface, data logger, log file
sectors. synchronization, email and text alerts, and monitoring by
a networked computer
Enterprise or smartphone.
Cheetah Software Systems has made available Cheetah
Operations Simulator, a cloud-based software tool for Mobile computing
analyzing operational changes and monitoring performance. Advantech has
The software enables users to evaluate what-if scenarios and announced the avail-
answer questions regarding equipment requirements, order ability of TREK-753, an
capacity, and terminal network sizes. It also can use production in-vehicle data termi-
data to simulate a day’s work in one hour and create a route nal suitable for harsh
analysis spreadsheet comparing actual versus simulated results. environments. Features
Guardian Business Solutions announces the release of include configurable

12 January/February 2012 | APICS magazine

 News items may be submitted to [email protected].
High-resolution, color photographs are encouraged.

power on/off delay, flat-panel touch screen, accessible Rockwell Automation’s PlantPAx process automation system
external storage port, and analog video input port. The now gives users the ability to manage plant-wide operations
mobile terminal meets military standards for vibration and with a single platform. The solution offers integration of criti-
shock, can withstand extreme temperatures, and is suitable cal rotating assets—such as compressors, pumps, turbines, and
for use in long-haul trucks, fuel trucks, ambulances, fire fans—in order to improve shop floor performance, prevent
trucks, and other heavy vehicles. unplanned shutdowns, and protect expensive machinery. In
addition, the tool links intelligent motor devices to a unified-
Tompkins Associates unveils the Tompkins Mobile Dashboard, control architecture, which can improve asset availability,
a software application for smartphones and tablets that integrates operational efficiency, and energy management.
mobile devices with material handling and warehouse control
systems. It enables managers and warehouse personnel to see Transportation and logistics
real-time overviews Reed Transport Services and TMS Logistics have partnered
of equipment and to provide logistics and transportation services to shippers.
shipment statuses. Specific offerings include third-party logistics and freight
The application management, shipper-focused technology, brokerage ser-
features summa- vices, and trucks and private fleets throughout the contiguous
ries of operational United States.
status, summaries of
equipment health, Warehousing
detailed status by area Optical Cable Corporation has made available 10-gigabit,
and component, and multimode fiber optic distribution riser cables for ware-
customer-specific housing applications. The cables have high-speed voice and
screens. data capabilities for the requirements of automated material
handling systems, enterprise resources planning systems, and
Radio frequency identification large distribution centers. Features include high strength-to-
TAGSYS and ICM Airport Technics have partnered to pro- weight ratio, helically stranded core, temperature resistance
duce and supply end-to-end bag drop systems for the aviation for refrigerated warehouses, and a strong crush resistance.
industry. The systems include radio frequency identification
and other self-service capabilities, including an electronic Load Systems International introduces Load Moment
paper display to provide visual information and facilitate fast Indicator, a tool for measuring rod and bore side pressures
bag drop-offs for international flights. Other features include a from lift cylinders
touch screen monitor and weigh-scale conveyor for additional of hydraulic cranes.
self-service functions. Transducer data is
transmitted remotely
Shop floor to an external display.
Hamilton Caster has released the PB1108, a one-ton Features include the
capacity platform truck, which used design for manufac- ability to import and
ture and assembly and export calibration data
lean principles in its and load charts through
construction. Features a USB drive; large, sun-
include a sturdy, all- light-readable display;
steel frame; kiln-dried onboard data logger;
hardwood deck for and at-a-glance report-
noise reduction and ing of crane geometry,
damage prevention; working load limit, wind
and easy-rolling rub- speed, and more.
ber tires. The pre-
mium wheels reduce
operator fatigue and
the related risks of
injuries.

APICS magazine | January/February 2012 13

Building To comment on this article, send
a message to [email protected].
Blocks
By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP

Spotlight on Your efficiency often is an order winner. While it

is difficult to set efficiency and productivity

Processes
targets—largely because customer expecta-
tions are constantly changing—the key to
success does not depend on targets, but
on dynamic, end-to-end supply chain vis-
The value of keen attention to quality ibility and real-time information sharing.
and efficiency Essentially, organizations need to manage
the five key flows of products and services,
information, cash, materials, and labor.
W. Edwards Deming once said, “Poor quality and low productivity can’t be
beaten with zero-defect slogans and targets because the solution lies in the Positive focus
system, not the workforce.” Some of you may work in companies that
struggle to overcome challenges caused
by poor quality and inefficiency. Perhaps
Your company’s processes are the that can guide you in these endeavors. you’ve tried all types of shortcuts using
bedrock of its competitive advantage. As However, it’s important to keep in mind zero-defect slogans and targets—yet the
such, if you aim to deliver value to your that, because each process has natural vari- problems persist. Consider the experience
customers, these processes must have ations and its own dynamic, each presents of one Chinese joint venture where high-
two basic attributes—quality and effi- specific challenges. It’s unrealistic to try to quality, highly efficient production seemed
ciency. Customers seek and evaluate value improve quality by chasing the latest fads unattainable. The business used slogans
propositions, and there is no substitute for and buzzwords. Nor should you depend and reward or punishment systems, which
a thorough understanding of process effec- on internal campaigns and slogans to shore yielded even worse results. The workforce
tiveness. Of course, highly trained frontline up your quality management practices. was labeled as poorly trained and inca-
employees and an organizational culture of Now let’s consider cost efficiency. There pable. However, upon closer examination,
continuous improvement also are essential. is a relatively small market segment in it was discovered that processes were out-
How can organizations infuse quality which customers want and will pay for dated or just plain wrong. By focusing on
into their operational processes? There highly customized and expensive prod- the processes, quality and efficiency were
are many statistical process control tools ucts. However, for the other 90 percent, attained in a relatively short time—with the
same people.
Granted, in some cases, poorly trained
employees can contribute to poor results.

DO YOU HAVE WHAT IT TAKES? Organizations in this situation may try

to deceive the customer—and they may
get the first sale. But soon will come the
Be an APICS Magazine Author returns, the bad press, and the declining
sales. In the long term, Deming will be
As an APICS magazine reader, you proven right!
value the high-quality information, case
studies, and best practices you access in John P. Collins, CFPIM, CSCP, is chief
these pages. executive officer for Nichols Brothers
Boat Builders. He may be contacted at
The editors of APICS magazine and
[email protected].
APICS Extra encourage you to submit an
article for publication.
Eric P. Jack, PhD, CFPIM, CSCP, is associate
dean at the University of Alabama–
Birmingham. He may be contacted at ejack@
Visit apics.org/magazine to learn
more about APICS author’s guidelines, uab.edu.
feature article specifications, and
editorial procedures.

14 January/February 2012 | APICS magazine

To comment on this article, send Lean
a message to [email protected].
Culture
By Ron Crabtree, CIRM, CSCP, MLSSBB

requirements, none of which are

An Elementary Exercise documented, the task requires careful

examination.
• The procedure to document, sched-
Opportunities abound in public education ule, and pay substitute teachers is
convoluted. It requires a lot of manual
paperwork and decision making, and
Recently, I met with a group of public school superintendents in Southeast plenty of mistakes happen. Double-
Michigan. The goal was to help them embrace best practices in operational checking and adjusting entries to get
excellence and lean six sigma. While there, I also informed them they were financial data right is the norm. But
wasting 30 to 50 percent of every dollar they spend. how much of this adds value? The
only requirement is to ensure the right
substitutes are in the right rooms at
Needless to say, that statement was not We interview subject matter experts for the right times.
met with enthusiasm. The administrators a high-level review of key administrative • The district is above average in its
claimed they were lean and had been processes and to instruct in the areas use of technology to boost learning
squeezing the most out of every dollar where the biggest short-term opportuni- efficiency, but there is much work
for years. And, from their perspective, ties exist for improvements and further to do regarding mundane activities
they are partly correct. The majority cost reductions. We also closely examine such as grading papers and tests. A
of public school districts in Michigan the financial aspects of the district to large amount of manual recording
are moving to privatization of many understand where money is spent and to is required with current methods to
functions not central to education, such estimate the impact of a full deployment capture student achievement.
as transportation, janitorial and main- of operational excellence and lean six
tenance, and food services. Add to this sigma methods. Making tough choices
waves of staffing cuts, class size increases, There are many areas where sig- During my first meeting with school
and requiring administrators to perform nificant improvements can be made to board members, I asked: What
multiple functions. While these efforts reduce the cost of operations without would you do if you discovered it
may have produced meaningful savings, sacrificing the quality of desired out- was possible to do everything you do
they are not sufficient to solve all finan- comes. Following are some examples: today with 30 percent of the current
cial issues. Not only are they risky, but • Even though bus drivers are out- administrative and support. And no
they do little or nothing to improve the sourced to save on payroll and retire- decrease in outcomes or enrollment?
processes themselves. ment, total costs of transportation To my elation, the board members
Though the superintendents were can be reduced further. This includes did not shrink from this question for
largely dismissive, I gave them each a equipment, maintenance, and fuel fear of political backlash. They gave
copy of Driving Operational Excellence costs. careful thought as to how, as the lead-
and suggested they read the chapter • While janitorial services and building ers of the school district, they might
“Challenges for the Future,” written by maintenance are privatized, further manage that change.
James Hardin, a 40-year veteran of pub- savings can be realized by applying As this story is still developing, I
lic education. After a few months, one lean concepts such as total productive plan to share more. In the meantime,
superintendent of a successful district maintenance and overall equipment if you are interested in collaborating
reached out to take me up on my offer of effectiveness. with me on the quest to apply opera-
a free assessment. • Administrative processes are not tional excellence and lean six sigma
The assessment examines people, documented or mapped out so in public education, you know how to
culture, processes, and enabling technol- that efficiencies can be identified, reach me.
ogies. This includes interviewing school and there are virtually no measure-
employees at all levels and in all func- ments taken at the process level. For Ron Crabtree, CIRM CSCP, MLSSBB, is
tions. We seek to learn about the culture example, the enrollment process president of MetaOps and coauthor of
of the district, as well as employees’ for new students comprises more four books on operational excellence. He
opinions about their work, what’s hard, than 20 steps and uses expensive also writes an online magazine; runs an
the degree of teamwork present, where and overworked school counselors. online radio show; and teaches, presents,
improvements are needed, and what staff Considering that every school in the and consults. He may be contacted at
people see as roadblocks to change. district has different processes and [email protected].

APICS magazine | January/February 2012 15

Working To comment on this article, send
a message to [email protected].
Green
By Antonio Galvao, CSCP

Ideas for Reducing operating companies have information

technology systems in place to monitor

Food Waste
shrinkage (the loss of products
between purchase from suppliers and
the point of sale due to theft), damage
in transit or in stores, administrative
Real-world ways to feed a growing planet errors, and failure to sell perishable
goods before their sell-by dates.
The second component is consumer
The world has a food problem, and it isn’t solely—or even primarily—at- education aimed at building awareness
tributable to having too many mouths to feed. In fact, the amount of food of things people can do to ensure a
the world currently produces would be enough to feed every one of the longer life for the food they purchase.
roughly nine billion people who are expected to inhabit the planet by The donation component of
2050, which is about two billion more than there are today. Delhaize’s plan starts with contributing
unmarketable, but safe and edible
food—primarily nonperishable
Rather, the problem is the amount of From a sustainability point of view, items—to food banks. If food is no
food we waste. According to a United wasting so much food also is a major longer fit for human consumption,
Nations study, it comes to about 1.3 squandering of resources, including the company sends it to farms to be
billion tons every year, or roughly one- water, land, energy, labor, and capital. used as feed for livestock. The third
third of all the food produced on the A 2009 article published in PLoS component involves converting
planet. The cruel irony underlying this One calculated that wasted food unmarketable, inconsumable food to
profligacy is the fact that every year, 5.6 accounts for almost one-quarter of all either compost or energy.
million children starve to death. That’s freshwater used in the United States. It’s important to emphasize that
more than 15,000 children a day—a In addition, rotting food in open waste is not confined to the retail link
needless tragedy that is playing out in landfills releases substantial quantities in the modern food supply chain;
both the developed and the developing of methane, a greenhouse gas with a rather, it exists in every link of that
world alike. climate-warming potential 20 times chain. Each of those links—from
greater than carbon dioxide. producers, processors, and packagers
The root causes of food waste run to distributors and retailers—
the gamut from marketing to logistics have both the opportunity and
to consumer ignorance. A recent responsibility to take waste out of their
report from the Swedish Institute for systems. And that makes collaboration
Food and Biotechnology pointed out among them all the more important.
that consumers in rich countries often Since we launched this department
are encouraged to buy more food three-and-a-half years ago, we have
than they need. Generally speaking, repeatedly made the connection
these people also fail to plan their food between sustainability and the
purchases properly and throw away food elimination of waste. Nowhere is this
when best-before dates have passed. more conspicuously clear than in the
The good news is that responsible context of food. For that reason, it is
businesses are taking aggressive action more effective to reduce food waste
aimed at tackling the food waste than increase food production in order
problem. Delhaize, a Belgium-based to feed a growing world population.
global food retailer, has developed It is not only the right thing to do, but
a three-tiered approach to the issue, also makes good business sense.
which involves prevention, donation,
and conversion. Antonio Galvao, CSCP, is vice president
Prevention has two components, value chain Europe at Diversey, now part
the first of which is designing waste of Sealed Air. He may be contacted at
out of its system. All of Delhaize’s [email protected].

16 January/February 2012 | APICS magazine

To comment on this article, send Enterprise
a message to [email protected].
Insights
By Dave Turbide, CFPIM, CIRM, CSCP, CMfgE

Adaptable Inventory even further left—and have the lengths of

the connecting lines represent the indi-
vidual lead times. Draw a vertical line
Supply and demand meet at the decoupling point at the order lead time. Any crossing line
indicates what activity must be ongoing
and what inventory must be on hand to
The goal of most manufacturers is to reduce inventory, but not at the risk support it when the order is placed. The
of increased shortages. The key is to have the right amount of the right correct quantity of inventory (or order
inventory at the right time and place. size for ongoing activity) is the amount
necessary to support demand through
the interval until the next replenishment
In a make-to-stock environment, the supply is synchronized with demand, and arrives (plus a safety stock buffer).
customer expects immediate shipment only a small amount of inventory serves as Inventory located anywhere but a
once the order is received and processed a buffer for any minor deviations from the decoupling point serves only to mitigate
by the supplier. On the other hand, in coordinated flow. That’s the theory, any- the effects of variation—unexpected
a pure make-to-order environment, way—in reality, it is necessary to maintain scrap or rejects, shrinkage, inaccurate
the customer is willing to wait through buffer inventory to keep product moving counts, or late-changing demand, for
the full manufacturing cycle before the to customers while addressing sources example. This buffer against variation
product is shipped. But, most manu- of chaos such as economic order quanti- and uncertainty traditionally is safety
facturers lie somewhere between these ties, rejects, scrap, inaccurate records, late stock; but, in theory, buffer inventory
two extremes—an environment where deliveries, and late schedule changes. at the decoupling point is sufficient to
the customer lead time is less than the Any company focusing on inventory accommodate variation. A thorough
full manufacturing cycle but more than reduction first should understand where understanding of decoupling points and
immediate shipment. its decoupling points are and plan to the dynamics of supply and demand will
In anything but the ideal make-to- stock at those points according to supply show you what inventory to keep, where
order scenario, inventory provides the and demand. For example, if the typical it should be, and how much you need to
decoupling point—the location in a distri- customer expects shipment two weeks keep production running smoothly.
bution network that creates independence from receipt of order, inventory should
among processes—between supply and be held at the part or assembly stage that Dave Turbide, CFPIM, CIRM, CSCP, CMfgE,
demand. Inventory is pulled from the signifies two weeks before order comple- is a New Hampshire-based independent
decoupling point at the pace of demand, tion. One simple way to determine this consultant and freelance writer and
while replenishment into the decoupling is to mark the bill of materials on its president of the APICS Granite State
inventory occurs at the pace of supply. In side—end product on the right, major chapter. He may be contacted at
the perfect lean, demand-driven world, assemblies to the left, and subassemblies [email protected].

Network with APICS Online

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APICS magazine | January/February 2012 17

Management To comment on this article, send
a message to [email protected].
Perspective
By Philip E. Quigley, CFPIM, PMP

Meaningful Lessons carefully create a plan to build the

processes necessary to accomplish

from Apple
this goal.
Competent, motivated employees
who know their specialty and can
work with others effectively also
The value of integrating innovation and operations are essential. Tomorrow’s successful
businesses will be the ones that find
these people, nurture them, and keep
As I write this department, there still are countless articles being published them. There’s going to be a lot of
on Steve Jobs and his imaginative genius for design, innovation, and new competition, so it won’t be easy.
products. And although everything being said certainly is true, Apple The supply chain should be built
would not be where it is today without also having a superb operations and around an outstanding cadre of sup-
supply chain management organization. pliers—those who understand lean
operations, continuous improve-
ment, and teaming. And perhaps
Consider the sheer number of true 20 years ago (for example, co- most importantly, companies must
iPhones and iPads produced: That location) and is more true now that view operations as a strategic neces-
requires a well-oiled machine. Combine teams are global. sity. Too many business leaders say
that with the actual launches and • Build a great team. Apple design- they believe this, but their actions do
the number of products available ers, supply chain professionals, not reflect that principle.
on a global basis, and it’s even more manufacturing engineers, and I wish you luck as you work to
impressive. supply personnel work effectively implement these key tasks.
The Bloomberg Businessweek article together. Problems naturally arise;
“Apple’s Supply Chain Secret? Hoard but they are managed. Together, Philip E. Quigley, CFPIM, PMP, is a
Lasers” paints an interesting picture of all of these groups have created a senior application portfolio manager
the company’s supply chain. There are highly effective entity that achieves for Computer Sciences Corporation. He
valuable lessons therein, which every superior on-time delivery in quanti- teaches at Chapman University’s Argyros
operations or supply chain manage- ties of millions on a global basis School of Business and Economics and
ment professional should learn: with high quality and cost control. California State University at Fullerton. He
• Pick a good leader. Steve Jobs These aren’t good teams; they are may be contacted at [email protected].
selected Tim Cook as the supply great ones.
chain vice president. He came from It’s also important to note that
a first-class supply chain operation Apple’s principles are not all that revo-
(IBM). Cook was experienced and lutionary—the company just applies
competent, and he built a compe- them consistently.
tent organization around him.
• Break the rules. Apple flies material The takeaways
around the world instead of just via So what does all of this mean for
ocean shipping. This offers all sorts us non-Apple people? First, take
of speed advantages and means operations seriously—especially the
Apple takes space on planes that partnership between engineering and
then is unavailable to competitors. supply—to master the fast and con-
• Work with your suppliers. Apple tinuous launch of new products. Any
sends teams to supplier locations company that is going to survive and
in order to overcome design and prosper in the next century will mas-
production concerns—with team ter innovation and deliver a constant
members often spending weeks or stream of new products and services
months working to smooth out any on a routine basis. A new product
issues. True innovation requires or service every quarter likely will
face-to-face interactions. This was be the minimum. It’s imperative to

18 January/February 2012 | APICS magazine

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Software
Review
By Réginald Soubry

Smarter Inventory consumption of critical items whose

forecasting horizons are longer than the

Management
resupply time (typically between 24 and
36 months) and when preparing calls to
renew long-term contracts for certain
product groups such as hardware, sani-
Forecasting public transportation needs with the tary materials, and clothing. With better
complete software package forecasts, we can guarantee minimum
order quantities throughout the course
of the contract and forewarn suppliers
The Montreal Transit Corporation operates a mixed fleet of 1,680 of needs in advance. This translates into
conventional buses and 84 nine-car subway trains to serve the people better prices, shorter lead times, and
of the island of Montreal. We maintain our fleet of vehicles through eight more reliable delivery.
bus depots, one bus overhaul shop, one bus body shop, one metro major
overhaul shop, and two metro minor repair shops. In 2010, the American Installation and support
Public Transportation Association named the Montreal Transit Implementation was performed over
Corporation the Outstanding Public Transit System in North America. a four-month period, including some
modification to enable integration
with our inventory management
Here in the supply chain group, reorder points, and order lot sizes of system. When performing setup, there
our mission is to meet or exceed all existing items. In the past, recal- is a full array of configurations for the
service performance commitments culation of item parameters was done data table, forecast parameters, trend
to the company’s operating units. only when we experienced recur- hedging, numeric precision, and other
In other words, we need to have the ring stockouts. Mechanization of the functions. Documentation is simple
right part, in the right place, at the recalculation process enables us to and straightforward, and we were
right time, and at the lowest overall maintain optimal inventory for the provided with a full tutorial.
cost. We must be able to define the service levels identified for each item as We contact Smart Software through
optimal trade-off point between the a function of the item’s yearly reclas- calls and emails and have found that
cost of holding inventory and the sification into A, B, C, or safety, for response and resolution times range
operational availability of equipment. example. As a result, we do not rely as from immediately to one or two busi-
To accomplish this, we acquired the heavily on intuition to identify trends. ness days, depending on the sever-
SmartForecasts software suite, which We also use SmartForecasts as a ity of the issue. The support staff is
we hoped would optimize our new standalone planning system to forecast friendly and extremely knowledgeable
and spare parts inventories and better
manage availability and parts distri-
Figure 1: SmartForecasts automated forecasting system
bution within our network.

Program functionality
SmartForecasts is graphically simi-
lar to any Windows-based product
and is intuitive to learn and use. The
program runs on local systems and
integrates with IMAFS—our inven-
tory management, optimization,
and planning suite—which uploads
historical data and parameters to
SmartForecasts and receives forecast
information back. (See Figure 1.)
IMAFS then performs monthly and
yearly recalculation of safety stocks,
Users can select from several forecasting methods and parameters.

20 January/February 2012 | APICS magazine

 To comment on this article, send
a message to [email protected].

about the product. mine the stock level necessary to meet the historical data on the fly, which
desired service levels. is a great time saver.
Best features Forecast results can be presented
For regular demand forecasting, one numerically or graphically, highlight- Shortcomings
of SmartForecasts’ most effective ing historical trends and demand While more of a challenge than a
features is automatic method selec- patterns to facilitate comprehen- shortcoming, we have found that
tion with least error for each item, sion. (See Figure 3.) It is possible to interfacing with a database requires
which is chosen from six time series graphically correct abnormalities in computer skills greater than the aver-
forecasting methods. This allows for
fast preliminary forecasting of a great
number of items without having to Figure 2: Intermittent-demand forecasting
manually determine in advance which
is the best method to use for each one.
SmartForecasts also provides
another interesting feature in
intermittent-demand forecasting,
which estimates the consumption
over the lead time by using a propri-
etary method, whereby samples of
historical data produce thousands
of demand forecast scenarios. (See
Figure 2.) It then is possible to deter-

Product summary

Product name
SmartForecasts

Type of program
Forecasting and planning suite
A proprietary method is used to forecast stock items with intermittent demand.
Vendor
Smart Software Figure 3: Displaying information graphically
Four Hill Road
Belmont, MA 02478
+1-617-489-2743 or
1-800-SMART-99
smartcorp.com

System requirements
Microsoft Windows operating
system
Pentium 4 with at least 512 MB
RAM or better recommended

Viewing forecast data graphically illustrates trends such as seasonality.

APICS magazine | January/February 2012 21

Industry
Watch

age user possesses. While the program

supports easier-to-perform Excel Vendor comments
uploads and downloads, a database
link needs to be set up by someone The Montreal Transit Corporation needed to reduce and optimize its parts
proficient in database management. inventory. This required a radically improved approach to forecasting
demand and consumption patterns, especially for the sizeable portion of
Proven results parts that experience intermittent demand. Intermittent demand, where
SmartForecasts has greatly improved many periods of zero demand are interspersed with periods of seemingly
the quality of our stock management random inventory consumption, is exceptionally difficult to forecast.
parameters by relying on best-of- Services and spare parts are prone to the phenomenon, which presents a dif-
breed, objective predictions rather ficult planning challenge. A highly specialized, effective demand planning
than simply averaging the past, and it solution that addresses all types of demand enables organizations to safely
has enabled us to react rapidly when reduce their inventory investments while maintaining or improving service
demand patterns change. The software levels. This is precisely the value the Montreal Transit Corporation found in
was instrumental in Montreal Transit SmartForecasts.
Corporation achieving an increase of Users of SmartForecasts experience nearly 100 percent accuracy in their
18 percent in parts availability (to 94 ability to meet defined service levels. Users can satisfy service level require-
percent), with a net reduction of parts ments for critical items with long replenishment lead times or set lower
in stock of $4.4 million CAD (to $29.2 inventory levels for less crucial parts that can be replenished more quickly,
million). It also has enabled us to more and they can do this with confidence.
quickly and accurately forecast any None of this would be possible if the software did not integrate well with
specific item. Here in the supply chain existing supply chain and enterprise resources planning (ERP) systems.
group, demand forecasting is an inte- SmartForecasts is completely non-intrusive and able to easily transmit and
gral part of our stock management best return demand forecast, safety stock, and other results to these systems.
practices. SmartForecasts helps meet Additionally, Smart Software’s import/export module practically eliminates
our customers’ needs and fulfill our the need for any information technology team involvement in data exchange.
mission of having the right parts at the Best-in-class demand forecasting and inventory optimization solutions
right time and the lowest cost possible. such as SmartForecasts help fulfill mission-specific mandates and more
general requirements such as increased cash flow. SmartForecasts provides
Réginald Soubry is senior analyst, material the functionality to deliver better results, faster payback, and higher return
management and logistics development, on investment at a lower total cost of ownership than alternatives offered as
for the Montreal Transit Corporation. He part of an integrated ERP solution.
currently works with materials management
systems and operations. Soubry may be
contacted at [email protected].

Sound
Off Share Opinions and
Viewpoints
Tell the editors of APICS magazine what you think.
APICS magazine welcomes your participation in our editorial
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22 January/February 2012 | APICS magazine

 Relevant
To comment on this article, send
a message to [email protected].
Research
By Richard E. Crandall, PhD, CFPIM, CIRM, CSCP

In the Right Space Stam 2003). In phase space, a point

attractor is depicted as a single plot
on a graph. This is because the system
The power of chaos theory tools for business success behavior remains consistent over time.
The pendulum attractor, also referred to
as a period attractor, resembles an orbit
The use of chaos theory in management research has been confined mainly when drawn in phase space. The torus
to a metaphorical approach. However, it’s becoming more common for attractor is a more complex pattern
operations and supply chain professionals to adapt some of the mathematical that forms an orbit and contains points
concepts inherent to chaos theory for use in the business world. within it, thus resembling a doughnut
when graphed. Finally, the strange
attractor, sometimes called a fractal, is
Chaos is not a condition of ran- It cannot be determined on a lasting a complicated pattern that exists when
domness or disorder, but a state basis, but can be forecast into the near the system is in chaos.
whereby phenomena that appear to be future (Lorenz 1993).
unrelated actually follow an unknown These two characteristics represent a Examining firm performance
or hidden pattern (Smith 2002, good starting point; however, there are through phase space
Tetenbaum 1998, and van Staveren other components that should be noted: An application of phase space analysis—
1999). The relationships among the bifurcations, which are points in the a mathematical tool of chaos theory—
variables in a chaotic system exist, but behavior of a system where the outcome can be applied to managerial analysis.
are “rather vague and, at best, difficult can oscillate between two possible val- Time-series data are required, as they are
to discern” (Kiel and Elliott 1996). ues in alternating time periods; positive the primary domain for studying chaotic
Chaotic systems possess two char- feedback, which moves the system away behavior (Haynes, Blaine, and Meyer
acteristics: sensitive dependence to from its original state to a new state; 1995; Hudson 2000) and are necessary
initial conditions and unpredictability and attractors, which are patterns that to acknowledge the iterative process that
in the long run. form when the behavior of a system is occurs in the system over time. Iterations
Sensitive dependence to initial plotted in phase space. increase the magnitude of deviations,
conditions. Lorenz (1993), a meteo- Phase space is an area in which all causing final outcomes to be quite differ-
rologist, noted that a slight change in possible states of a system are repre- ent from starting points. It is the impact
the initial input of data brought about sented and can be used to examine of positive feedback that makes the
vastly different results in his weather performance history. When points are system shift.
model. This now famous occurrence
led to the popular “butterfly effect”
illustration. Lorenz also discusses
another system that is sensitive to
Identifying performance shifts in a visual manner
initial conditions—the path of sleds is perhaps the greatest contribution of phase space,
descending a snowy slope. In this while interpreting their collective meaning is the
example, he illustrates with diagrams
how seven sleds can end up in dif- greatest challenge to decision makers.
ferent stopping areas at the bottom
of a hill, even though they may have
started their descent within ten cen- joined by a line in chronological order, In phase space, system properties
timeters of each other. The paths the a pattern develops that can resemble are plotted at a point in time. With
sleds take change depending on the a point, orbit, or something more each iteration, another plot is made,
location of small humps or moguls unusual. The atypical pattern is referred which eventually results in a pattern
along the route of descent. to as a strange attractor (Lorenz 1993). (an attractor) when the plots are joined
Unpredictability in the long run. Attractors range from being fairly in chronological order by a line. The
This characteristic simply explains simple to vastly complex. pattern of a time series that looks
how we are more likely to accurately Four types of attractors have been haphazard actually may have a hidden
predict certain events in the short identified: point, pendulum, torus, and structure to it if looked at it in a differ-
term. Take, for example, the weather: strange (Barton 1994, Hudson 2000, ent manner. For example, mechanical

APICS magazine | January/February 2012 23

Figure 1: The four quadrants of a phase space plot in the “growth” quadrant. This would
be an example of a point attractor.
Conversely, if sales declined by $400
Quadrant 2 Quadrant 1 and net income decreased by $200 each
period, the result would be a point
Unusual—sales decrease, income Growth—sales increase, income
attractor in the “full decline” quadrant.
increases increases Now, think about an instance where
• Not desirable, but possible in • Most desirable in the long run sales and net income vary, such as in a
the short run • Majority of points should fall
• Points falling in this quadrant in this quadrant for the firm
seasonal business. The phase space plot
for this example would show as a series
Y-axis: change in net income

are unusual to be sustainable

of points oscillating back and forth
between the “growth” and “full decline”
quadrants. Obviously, this implies that
a point in the “full decline” quadrant
is only temporary and that movement
Quadrant 3 Quadrant 4 back to “growth” is imminent.
Consider another example of a
Full decline—sales decrease, Partial decline—sales increase, period-two attractor using real data.
income decreases income decreases The company (Company A, a major
• Not desirable, but possible in • Not desirable, but possible in
the short run the short run
retail firm) exhibits a consistent, two-
• Not sustainable in the long run • Points falling in this quad- phase oscillation from the upper-right
rant should be investigated to the lower-left quadrants, an indica-
tion that sales and net profits are mov-
ing in a normal cyclical pattern. Figure
2 illustrates Company A’s performance
in phase space.
X-axis: change in total sales Figure 3 depicts Company A data
graphed in the traditional manner.
This has two advantages over the phase
systems have been examined in phase and change in net income. (See Figure space diagram in Figure 2: It shows
space using position and velocity, while 1.) To determine the change in total that net income does not result in a
ecological systems have been studied sales (x-axis coordinate), the difference loss during any fiscal period, a feature
in terms of the population size of a between present total sales for the fiscal that is unavailable in phase space; plus,
species (Briggs and Peat 1989). In medi- quarter and total sales for the previous the graph is more visually appealing by
cal research, Reidbord and Redington quarter is calculated. The same proce- showing the position of total sales rela-
(1992) constructed a phase space with dure is used to determine the change tive to net income.
heart rate and patient behavior state as in net income (y-axis coordinate) using On the other hand, the phase space
study variables. In public administra- the net income (loss) figures. graph has two advantages over the
tion research, Kiel (1993) constructed Figure 1 depicts the two study vari- traditional graph. First, each plot
an attractor in phase space using time- ables, change in total sales (x-axis) and represents the state of the two vari-
series data involving labor costs associ- change in net income (y-axis). Note that ables—total sales and net income. The
ated with service requests. Priesmeyer the upper-right quadrant would be the plot is a representation of the state of
and Baik (1989) examined revenue most desirable for the firm, as it indi- the organization at a particular time or
and profit changes among retailers and cates consecutive periods of increasing phase. Second, it shows more sensitiv-
identified attractors in phase space. total sales and net income. ity to changes in system behavior, as
Suppose a company was able to evidenced by the shape of the attractor.
Understanding phase space increase sales for three fiscal periods It’s interesting to note that, of the
Total sales and net income can be by $400. Meanwhile, it increased net three examples of phase space attractors
examined as they appear in phase income by $200. If this oversimplified described previously, none exhibits a
space, where there is a need to capture situation were graphed in phase space, state of chaos. Both period-two attrac-
variables as the change in total sales it would be plotted as one single point tor examples are not sensitive to initial

24 January/February 2012 | APICS magazine

 To comment on this article, send
a message to [email protected].

Figure 2: Company A phase space diagram Figure 3: Company A data in a traditional

through 38 fiscal quarters time-series format
Changes in quarterly income (millions)

Total dollars (millions)

Quarterly total sales Quarterly net income
Changes in quarterly sales (millions) Time

conditions, as their consistent orbits managers and employees. Then, over phase space that is difficult to deter-
bring back the system into a predict- some period, the chains would diverge mine. It is impossible to predict what its
able pattern. This disproves the second and evolve into very different entities. attractor in phase space would look like
condition—that it is unpredictable in It is the iterations that would make the over the next year. Compare this with
the long run. Hence, there is no chaos. chains different and thus sensitive to the period-two attractor of Company
their initial conditions. Indeed, only A. With this company, we can say with
Identifying the chaos in a computer simulation can such a some degree of confidence that its
Consider a fictional pizza chain that scenario be evaluated. phase space cycle is likely to continue
uses chaos theory to track its perfor- As a proxy to isolate sensitive its pattern.
mance variables of sales and income. dependence to initial conditions, one
The business identifies a strange attrac- could consider case studies of actual What does a chaotic system
tor in its 10-year operating period. companies. Firms are constantly being tell us?
When leaders examine the evolution formed, but only a few survive for a There are three reasons why it is benefi-
of the system in two-year increments, substantial period. Many pizzerias have cial to understand that a time series is
the graph displays a different pattern come and gone. Virtually every chain chaotic:
(attractor) from the previous phase started with only one restaurant, some 1. The beginnings of a chaotic
space graph. It is impossible to predict growing large (Pizza Hut), and some system are easier to identify in
the quadrant in which the next fiscal not (our fictional pizza company). Most phase space. Because phase space
period will fall and the pattern the pizzerias are single proprietorships. Yet, is sensitive to system changes,
system will take in the future. In an they all began the same way—with an performance is haphazard in terms
original study, it was concluded that the idea, some capital, and a single store. of which quadrant it will land next.
time-series data display the character- The sensitive dependence to initial This pattern is clear in a normal
istics of chaos (Crandall, Crandall, and conditions comes into play when we see time-series data graph.
Parnell 2011). how the thousands of pizza restaurants 2. A chaotic system may reveal that
This conclusion meets the two key have evolved into different forms. Our something unusual is occurring.
chaos criteria: sensitive dependence to example company started as other res- The pizza store example illustrates
initial conditions and unpredictability taurants did, but it emerged differently. a number of points that would
in the long run. Proving the first condi- As for the second condition—unpre- fall in the “unusual” quadrant,
tion is impossible, as it would necessi- dictability in the long run—the data indicating a decrease in sales and
tate the assessment of two almost com- support this conclusion with the fic- an increase in income. While not
pletely identical pizza chains. Only a tional pizza restaurant. The haphazard necessarily dysfunctional, this
few differences between the two chains or strange shape of the attractor would situation is out of the norm, as one
would be permissible, such as different indicate a pattern of firm movement in would expect income and revenues

APICS magazine | January/February 2012 25

 to be positively correlated. Using lems similar to the “unusual” quadrant, Review 53 (2), 143–153.
phase space diagrams would enable but from a different angle. A number of 7. Kiel, D.L., and E. Elliott. 1996. Chaos theory
managers to reveal the unusual culprits could explain why increases in in the social sciences: Foundations and
more clearly. revenues are not translating into prof- applications. University of Michigan Press.
3. A chaotic system can serve as an its—from ineffective cost controls to a Ann Arbor, MI.
early warning. Traditional time- boost in the intensity of competition 8. Lorenz, E. 1993. The Essence of Chaos.
series data can indicate when there that requires price reductions. The key University of Washington Press. Seattle,
is a performance problem. Because here is for strategic managers to identify WA. Mergent Online (mergentonline.com/
of its sensitivity to shocks, phase the causes so that remedial action can companyfinancials).
space can help identify early on if a be taken. 9. Priesmeyer, H. and Baik K. Richard.
problem is emerging in a way that Examining each quadrant inde- 1989. “Discovering the patterns of chaos,”
traditional time series cannot. pendently is not a difficult exercise. Planning Review 14–21.
Look back at Figure 1. The “growth” The complexity emanates from the 10. Reidbord, S.P. and D.J. Redington. 1992.
and “full decline” quadrants are intui- movement of an organization across “Psychophysiological processes during
tive. Over the long term, income tends quadrants over time. Identifying insight oriented therapy: Further investi-
to rise and fall with revenue, and performance shifts in a visual manner gation into nonlinear psychodynamics,”
most companies seek a position in the is perhaps the greatest contribution of Journal of Nervous and Mental Disease 180,
“growth” quadrant. They attempt to phase space, while interpreting their 649–657.
develop their businesses by increasing collective meaning is the greatest chal- 11. Smith, A. 2002. “Three scenarios for apply-
sales and, ultimately, profits. Remaining lenge to decision makers. ing chaos theory in consumer research,”
in this quadrant could be viewed as Phase space is not meant to replace Journal of Marketing Management 18,
inherently desirable for most firms. traditional approaches to time-series 517–531.
In contrast, “full decline” is nearly analysis; rather, it supplements under- 12. Stam, C.J. 2003. “Chaos, continuous EEG,
always the least desirable position. standing of business performance. and cognitive mechanisms: A future for
Income steadily declines, ostensibly due Hence, the use of chaos theory is not clinical neurophysiology,” American Journal
to decreases in revenues. Firms in this a superior approach to analysis but of Electroneurodiagnostic Technology 43,
quadrant might seek to increase income another tool in a box of techniques to 211–227.
by cutting costs. But this can be counter- aid management analysis. 13. Tetenbaum, T.J. 1998. “Shifting paradigms:
productive if doing so negatively affects From Newton to chaos,” Organizational
product quality, service, or other factors References Dynamics 26 (4), 21–32.
that drive revenues. 1. Barton, S. 1994. “Chaos, self-organization, 14. Van Staveren, I. 1999. “Chaos theory and
The “unusual” quadrant is counterin- and psychology,” American Psychologist 49 institutional economics: Metaphor or
tuitive. Businesses here enjoy an increase (1), 5–14. model?” Journal of Economic Issues 23 (1),
in income while revenues decline. This 2. Briggs, J., and Peat, F.D. 1989. Turbulent 141–166.
could be a short-term phenomenon Mirror: An Illustrated Guide to Chaos Theory
that results from aggressive cost cutting. and the Science of Wholeness. Harper & Richard E. Crandall, PhD, CFPIM, CIRM,
The relationship between revenue and Row. New York, NY. CSCP, is a professor at Appalachian State
income is a critical one, as manag- 3. Crandall, W.R., R.E. Crandall, and J. Parnell. University in Boone, North Carolina. He may
ers must struggle to discern effective 2011. “Using Chaos Theory to Understand be contacted at [email protected].
and ineffective approaches to reducing Firm Performance: A Phase Space Analysis.”
expenses. SEINFORMS Proceedings. For a free bibliography of other references
For example, a cut in the advertising 4. Haynes, S., D. Blaine, and K. Meyer. 1995. on this subject, contact the author at
budget might be appropriate if promo- “Dynamic models for psychological assess- [email protected].
tional efforts do not result in sufficient ment: Phase space functions,” Psychological
increases in revenue, but inappropriate Assessment 7 (1), 17-24.
if sales decline precipitously as a result. 5. Hudson, C. 2000. “At the edge of chaos: A
Distinguishing between these possibili- new paradigm for social work?” Journal of
ties is a complex challenge, but one that Social Work Education 36 (2), 215–230.
executives must tackle. 6. Kiel, D.L. 1993. “Nonlinear dynamical
The “partial decline” quadrant is analysis: Assessing systems concepts in a
intriguing. This space involves prob- government agency,” Public Administration

26 January/February 2012 | APICS magazine

Top-Tier Master Data Management
Adding value to MRO and
strategic sourcing initiatives
By Arthur Raguette

The current tumultuous economic situation and ever-intensifying competi-

tion in the global market have a significant impact on organizations around the
world. As such, it is imperative that companies enhance business and operational
efficiencies, reduce spending, and increase profitability. Optimizing the mainte-
nance, repair, and operating (MRO) supply chain is one meaningful way to drive
bottom-line savings.
MRO tools are at the heart of the indirect supply chain and play an important
role in the production life cycle. The MRO supply chain thus presents a valuable
opportunity for cost reduction, cost avoidance, and improved productivity. Many
businesses in the past have focused such efforts on direct materials and capital
spending instead of MRO supplies, which traditionally are viewed as having little
potential for savings. But manufacturers are starting to take a closer look at their
MRO supply chains—with favorable results.
Of course, this intensified focus on optimizing MRO brings to light the numer-
ous challenges involved. With manufacturing facilities spread across multiple
locations, operations and supply chain management professionals find it dif-
ficult to control their MRO spend without a standard framework in place. Lack
of inventory visibility hinders asset use and prevents efficient application of
resources. It also creates excessive costs and expenses for equipment repair and
replacement, leads to low productivity, and gives rise to bloated inventories. Plus,
there is a high risk of supply chain disruption arising from the inability to replace
parts, which can lead to lost opportunities for revenue generation.
The supplier side of the story also is quite similar. For organizations that have
a global reach, it is extremely difficult to standardize sourcing strategies, as every
location differs in the nature and size of the supplier base as well as production
needs. Lack of visibility into the supplier base gives rise to maverick spending and
inefficient sourcing and procurement strategies, negatively affecting the bottom
line. For example, without accurate supplier master data in place, parts might
be procured from blacklisted suppliers, thus increasing the risk for equipment
failures.
Another challenge is the existence of multiple enterprise resources planning
(ERP) and other legacy systems and applications that manage the MRO master
data across the organization. These systems differ from location to location and
through cross-functional departments in terms of data conventions and stan-
dards, as well as how the data are created and maintained on an ongoing basis.

APICS magazine | January/February 2012 27

 This leads to a lack of communication and collaboration • inability to manage spend and reduce total MRO
that masks visibility into the MRO inventory and reduces the consumption.
effectiveness of sourcing and procurement strategies. With such MRO scenarios playing out every day all over
the world, there is a pertinent need for master data manage-
Master data challenges ment to cleanse historical master data, optimize the indirect
The list of obstacles is always growing. But all these challenges, supply chain and sourcing initiatives, and streamline data
when traced back to their points of origin, reveal a single root governance across the organization.
cause—bad master data. The issues with master data arise from
the structure of the organization itself. Businesses today are Master data management
built around a number of mergers and acquisitions and use Master data is one of the most crucial elements in the MRO
diverse ERP and legacy systems. Production and manufactur- supply chain, and it needs to be managed effectively. Master
ing plants sprawl across various geographies and locations data management is a comprehensive strategy to determine
across the globe, and each plant contains many machines with and build a single, accurate, and authoritative source of a
large numbers of moving parts. Many people over many years company’s information assets and deliver this on demand as
service or repair the machines and purchase replacement parts a service. An effective initiative comprises two key parts—
for them. A large quantity and variety of consumable MRO historical data cleansing and ongoing data management.
items get used every day in operations procured from numer- Historical data cleansing incorporates the following four
ous suppliers. Materials are dispersed across several ware- elements:
houses, with every division following different sourcing and, in • Classification comprises creating a structure for the
many cases, inefficient strategies. master data based on globally accepted coding stan-
Clearly, enormous amounts of inaccurate master data dards—such as UNSPSC, eCl@ss, and the like—or any
pile up. The bulk of material, supplier, customer, and prod- other standard or proprietary systems. Unstructured MRO
uct master data is inaccurate, inconsistent, unclassified (or material and supplier attribute information is parsed from
misclassified), and outdated. This leads to degradation in data text fields into attribute fields. This helps users distinguish
reliability—and these data are essential for any organization and categorize all the parts in the master data.
that wants to optimize its MRO and strategic sourcing initia- • Normalization and enrichment ensure that the mas-
tives. Several negative business outcomes stem from failure ter data are accurate and that the relevant material and
to control and manage MRO item and supplier master data, supplier attributes—both critical and noncritical—are
which include standardized and incorporated, thereby facilitating the
• bloated inventory and high obsolescence location of the particular data in the master data.
• invisible and undocumented inventory • In the last step, de-duplication, users identify and remove
• high inventory carrying costs any repeats within the MRO material data, which strips
• increased plant downtime and reduced productivity the master data of any inherent redundancies.
• fractured sourcing and procurement processes and weak These four steps can help operations and supply chain
compliance managers harmonize existing legacy MRO data across all

28 January/February 2012 | APICS magazine

 tools are at the heart of the indirect
supply chain and play an important
role in the production life cycle.

systems, applications, and organizational units of an The value to MRO and sourcing strategies
enterprise and gain better visibility into the material and Master data management depends on both historical data
supplier bases leading to efficient MRO asset manage- cleansing and ongoing data management to reap maximum
ment and supply base rationalization. But historical data benefits from—and add significant business value benefits
cleansing is only half the battle; the bigger challenge is to to—the MRO supply chain and strategic sourcing initiatives.
maintain accurate MRO master data on an ongoing basis. A successful master data management initiative delivers
Ongoing data management involves sustaining qual- many business value benefits to the MRO supply chain of an
ity data and creating a framework for the creation, use, organization, which include
access, and maintenance of data across the organiza- • MRO supply chain optimization
tion, leading to enhanced operational efficiencies and • efficient sourcing strategies and significant spend
improved sourcing strategies. It is very important to the reduction
success of the project to implement an effective and effi- • greater process and contract compliance
cient ongoing data management tool. • enterprise visibility enhancement and efficient enterprise
There are many challenges involved in managing risk mitigation
master data on a continuous basis, which is unique to the • inventory optimization and effective materials handling
MRO supply chain. The enormous scale of activities, their • streamlined operations, increased productivity, and
geographical reach, and enterprise-wide diversity among greater profitability.
the different business and production units in the supply By perfecting master data management, operations and
chain are some of the major obstacles. While legacy data supply chain managers are able to realize immense value
harmonization guarantees that a benchmark is created and better manage the complex and ever-shifting challenges
for the data quality, it is important that the entire plan be of our current global economy. The impacts of effective
replicated for the ongoing data management process. master data management on MRO and strategic sourcing
Ongoing data management implements a framework initiatives can drive considerable bottom-line savings and
for the continuing creation, modification, and mainte- help users achieve significantly enhanced business and
nance of data. Any new data entry across any division operational efficiency.
or unit of the enterprise will be classified and enriched
as per the standards defined for the legacy data. As the Arthur Raguette is vice president of Zynapse, where he spearheads
first step, rules have to be specified to identify and col- the global strategic partner development, industry alliances, and
lect the data. In the second step, the taxonomy and basic new business initiatives. He may be contacted at [email protected].
framework for data storage are crafted and put in place.
And finally, a data governance model has to be defined To comment on this article, please send a message to
and implemented. This involves monitoring and manag- [email protected].
ing the master data life cycle right from the point of data
creation all the way to its complete decommission or
termination.

APICS magazine | January/February 2012 29

Health Care
Department
Titles

and Supply Chain

Management Strategy
Essential opportunities to enhance the bottom line
By John M. Donnelly, CPIM, C.P.M.

26
30 January/February 2012 || APICS
January/February 2012 magazine
APICS magazine
 To comment on this article, send
No matter how you feel about current health a group
The central materials message tostock
orders [email protected].
inventory. When
care laws and regulations or how they may the reorder point—the level of inventory that signals replen-
ishment—is reached, a reorder process begins. This may
change, one thing is certain: Health care has involve a material requirements planning order suggestion, an
undergone a transformation. How it moves automatic reorder, or a stock requisition that is converted to
forward will be critical to how it operates as a purchase order. Replenishment systems can be as simple as
an industry, and supply chain management visual and manual reorders or a fully automated system that
will have a new and important role to play in maintains a perpetual inventory. The process is not unique to
health care and is, in fact, quite similar to other industries.
health care’s emerging dynamic. Non-stock inventory is material ordered for a specific
There are two forms of routine inventory ordered in health department or location. The expense is recognized at the time
care—stock inventory and non-stock inventory. Stock inven- of receipt. The materials are not on a perpetual inventory—
tory is material purchased and stored in a central location. though the specific location may have a system that accounts
The material is considered inventory, and it is expensed as it for the quantities on hand—and often are repeatedly ordered.
is issued to departments that request it. Non-stock material They may be items that are used in multiple areas, but this
is purchased for a specific location or department, and the material is “owned” by the requesting location. Quite often, the
expense is recognized upon receipt. ordering, stocking, and counting of non-stock inventory fall
on either a resource nurse or a health unit coordinator whose
primary focus is patient care, not materials management.

Industry transformation
In the past, the traditional health care organization was
focused on stand-alone hospitals. Over the last 20 or 30 years,
however, they have shifted into loosely affiliated systems or
become formal parts of a hospital corporation. Loosely affili-
ated health care systems generally enable individual hospitals
to manage themselves, and the negotiation of purchases is
handled by the central health systems in order to take advan-
tage of the combined volumes generated by multiple hospitals.

APICS magazine | January/February 2012 27

31
Department
Even with this system, the individual departments in each by centralizing the point of purchase, thus enabling health
Titles
hospital often operate independently of the same departments care organizations to leverage increased volume and negotiate
in other hospitals within the same system. Each department better pricing.
orders and maintains its own inventory. Typically, each hos- Of course, there are other elements beyond price. One is
pital within the system also operates on its own tier and has the cost of issuing a purchase order. According to Health Care
different pricing for the same products from sister facilities Purchasing News, Broward Health in Fort Lauderdale, Florida,
within the same system. was able to cut in half its total number of purchase orders
However, a concept that is growing in health care today is from 32,000 to 16,000 annually, which resulted in a savings of
self distribution. While the idea is new to professionals in this $390,000 per month, or $2,400,000 annually.
industry, self-distribution models in other businesses are use- Another element of potential cost reduction is product
ful in redefining supply chain management in health care. standardization. When an organization standardizes the num-
According to the ber of items carried
Firestone-Callahan in inventory, overall
& Associates report inventory exposure
“Health Systems: is reduced. Health
Consolidated Services care systems thus
and Logistics,” there would have more
are three basic models cash available to
for self distribution in focus on patient care
health care systems. and operations versus
Each can be custom- Supplies are the inventory on the
ized to optimize inven- shelves. Furthermore,
tory and customer second-greatest minimizing inventory

expense for hospitals

satisfaction. The first has the additional
is a central distribu- benefits of reduc-
tion plan that is owned
and run by the health
after labor. ing up-front costs,
decreased incidence
care system. The of item obsolescence,
second is a completely and freeing up space
outsourced opera- used for storage and
tion run by a third- warehousing.
party logistics (3PL) Moving the
provider or a medical materials manage-
supply distributor. The ment to a central
third model involves or self-distribution
a collaborative effort model also offers the
among unaffiliated opportunity to move
systems, which develop and operate a central distribution traditional non-stock items to the central distribution opera-
operation under a joint-venture arrangement. tion. This frees up clinicians who perform supply chain activi-
An example of the first model is Providence Health System’s ties, such as inventory and ordering, to focus on patient care.
Oregon division, which operates its own central service It also enables supply chain management personnel to focus
center in Portland. The service center enables Providence’s on their core specialties with the aim to reduce expenses,
Portland operation to reduce costs through efficiencies and effectively manage stock, and consolidate items.
standardization. One central distribution model run by a 3PL Lastly, when seeking to minimize expenses, freight and
is that of Iowa Health Systems, which uses Owens & Minor logistics costs also must be considered. Many leading-edge
to manage its dedicated distribution center. The decision to supply chain management organizations are turning their
outsource the central distribution and logistics functions attention to inbound freight, which can produce significant
came about because Iowa Health systems wanted an expert to savings.
manage the operation. A joint-venture example is the Swedish
Medical Center in Seattle, which partnered with Providence A healthier future
Health Services of Renton, Multi-Care Health Systems of As hospitals and health care providers become more squeezed
Tacoma, and the Washington Hospital of Wenatchee to create on revenue generation—and Medicare and Medicaid reduce
a 59,000-square-foot distribution operations center that helps payments in the next few years—professionals in this industry
cut costs by combining purchases. must look beyond traditional methods and, instead, consider
All of these methods of centralizing the purchasing and dis- the supply chain as a key means to improving the bottom line.
tribution of health care supplies have a common objective—to Effective supply chain management fulfills customer
reduce expense. The most evident way to achieve this goal is requirements by matching demand with supply and accom-

28
32 January/February 2012 || APICS
January/February 2012 magazine
APICS magazine
 To comment on this article, send
plishes this with little-to-no inventory. By linking the major fear of reduced controlaor
message
changingto [email protected].
responsibilities. There also
business functions and managing costs across the entire sup- needs to be significant purchasing volume to warrant the cost
ply chain, an organization can begin to maximize value-added of establishing a central or self-distributing operation, even if
activities and reduce and eliminate waste. This can be accom- it is run by an outside or 3PL firm.
plished through inventory reductions and increases in turns, Another essential element is a central purchasing organiza-
alongside suppliers working to reduce costs for all parties and tion to coordinate the requirements of the various locations
managing various aspects of the business, including logistics and to maintain the standardization and inventory reduction
and distribution. efforts.
According to “Reducing Health Care Costs through Supply Finally, dedicated supply chain management staff and
Chain Management” from Knowledge magazine, supplies are managers are essential. An operation of this magnitude is not
the second-greatest expense for hospitals after labor. This is something that a stockroom supervisor should oversee. The
justification enough for hospital and health care professionals emerging technologies and the discipline required to continu-
to focus on managing the supply chain and engaging supply ally look for ways to remove waste require people who have the
chain experts. These people may or may not come from the experience and education to move the organization forward.
health care field, but they should be ready to push the enve-
lope and think creatively. John M. Donnelly, CPIM, C.P.M., has more than 25 years
This type of operation requires a centralized item master experience in supply chain, materials, and operations
that gives locations access and eliminates duplicate items at management, having served as director of materials, operations
different costs. An enterprise resources planning system that manager, materials manager, manufacturing systems manager,
enables multiple organizations to share a common database director of procurement services, and more. He is the president
is important. As is so often the case, commitment from the of the Dayton APICS chapter. Donnelley may be contacted at
top down is essential—without it, there is no opportunity for [email protected].
success.
The organization also must employ successful change To comment on this article, send a message to
management practices. This type of change inevitably leads to [email protected].

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APICS magazine | January/February 2012 29

33
 When designing supply chains, the focus
often is on optimal use of resources, offshoring and
outsourcing non-value-added activities, institutionalizing Just-
in-Time systems, and investing in technology. While these new
business models have resulted in more efficient and responsive
systems, the supply chain risk profile has been altered signifi-
cantly. Many corporations are left vulnerable. Caught unaware,
even the most successful global organizations can suffer major
loss of revenue, market share, and consumer trust.
Broadly defined, a supply chain disruption is an unusual
spike or steep fall in either demand or supply, leading to a
vast imbalance. According to Jossi Sheffi, director of the MIT
Center for Transportation and Logistics, “The essence of most
disruptions is a reduction in capacity and, therefore, inability to
meet demand.”

Real-world response
Cisco rode the technology wave in the 1990s to become the
market leader in the network component business. When the
tech bubble burst, demand slowed significantly. Cisco did not
have the capability to track the inventory of products across
its geographically spread supply system. Business leaders had
no experience managing a downturn. Systems were designed
for high responsiveness and high inventory buffers. Lack of
tracking capability resulted in significant inventory accumula-
tion—which, in a bust market, led to the eventual write-down
of $2.2 billion in 2001 alone.
Based on limited success of prior launches, Apple acted
conservatively while launching its PowerBook. But the market
received the product well, and Apple was caught with a supply-
side shortfall. The company had $1 billion in unfulfilled orders,
which resulted in loss of consumer confidence and a huge hit
to its stock price.
Sumitomo Metal Industries was the sole source of brake
shoes for Toyota’s domestic cars in 1995 when the Kobe
earthquake struck. Sumitomo’s operations suffered, and
Toyota—working with a lean manufacturing system that had
no buffers—had to halt production. Toyota lost the opportu-
nity to produce 20,000 cars, costing an estimated $200 million
in revenue. Similarly, during Japan’s recent tsunami and nuclear While operations and supply chain managers focus on
crisis, the automaker had to delay the launch of two models and efficiency and responsiveness in traditional “business-as-usual”
suffered an estimated production loss of 140,000 vehicles. environments, they should be flexible enough to quickly switch
Following the September 11, 2001, tragedy, Walmart execu- their operation scenarios to adjust for disruptions. A scenario-
tives noticed a significant increase in the sales of US flags, lapel based strategy for disaster-proofing with a focus on conse-
pins, and other patriotic objects. The world’s largest retailer quences will not only minimize damage to the bottom line, but
immediately locked up all available supply resources, leaving also can help score wins over debilitated competitors.
stores such as Kmart and Target out in the cold.
Why do some companies do so much better than others in What is a resilient supply chain?
times of disruption? The answer lies in the ability to detect the Disruptions happen for various reasons, and the nature and
disruption and swiftly act upon it. While these events cannot be timing of their impacts also fluctuate. A labor union problem
predicted accurately, their major impacts can be narrowed down can be anticipated, but a terrorist attack is completely unforesee-
to one of five areas, including able. A fire in a factory can halt operations immediately, while
• supply failure the outbreak of an epidemic in a supply zone could have subtle
• manufacturing operations failure consequences that will take more time to set in. Companies with
• logistics failure resilient supply chains—and those that take proactive risk-
• information and technology failure mitigating steps—can anticipate issues more effectively than
• workforce unavailibility. their peers and delay and minimize the end results.

26
34 January/February 2012| |APICS
January/February2012 magazine
APICSmagazine
 Your Resilient
Supply Chain
Lessons in reducing exposure
and mitigating risk
By Mohanish Makharia,
Gerhard Plenert, PhD,
and Ramanan Sambukumar

In Figure 1, company B has instituionalized a business con- Disasters that ultimately lead to chaos often result from mis-
tinuity plan and invested in visibility systems for early detec- aligned company departments and functions. In such situa-
tion of disruptions; company A has not. When a disruption tions, centralized decisions based on real-time information
occurs at point T, company B is able to discover it at point from all sources are crucial. It’s essential to institutionalize
B1 and recovers from the disruption rapidly, minimizing the a contingency management team that will direct all actions
impact. Company A detects the disruption only at point A1 during times of disruption. This team must be comprised of
and takes a longer time to recover. senior people who can exercise influence over the various
Effective business continuity plans enable users to assess decision makers of the company.
the vulnerability of the company to supplier and manufactur- Philips was a major supplier of semiconductors to Nokia
ing operations failures, logistics failures, workforce unavail- and Ericsson in 2000 when a fire at a plant in Albuquerque
ability, and information and technology disruptions. They destroyed chips for millions of cell phones. Nokia immedi-
also help create accurate what-if scenarios and assess the ately set up a troubleshooting team to assess the full impact
capability to respond to disruption. When creating a business and find alternatives. They rapidly sourced three of the five
continuity plan, it’s necessary to engineer a clear, actionable affected chips from within their existing supplier network,
contingency plan for failures of any supply chain pillars. Also with a five-day lead time. A senior management team also
make sure to identify key thresholds for executing risk- worked out a deal with Philips to help source the remain-
mitigating decisions, such as sourcing from alternate part- ing two parts. With these efforts, Nokia was able to make all
ners, channels, and manufacturing and distribution systems. customer shipments in time.

APICS magazine | January/February 2012 27

January/February 2012 35
 Unfortunately, Ericsson took weeks
to respond to the situation and, by that

(loss of revenue, profitability, or market share)

time, lost most of the market capacity to Stage 1:
Business as usual
Stage 2:
Recovering from a supply chain disruption
Stage 3:
Business as usual
Nokia. The impact was devastating for
Ericsson, which took a $2.34 billion loss
in its mobile phone division, due to not Resilience— Agility— Recovery—

Business impact
only component shortages, but also a Proactive Early detection Damage
supply chain and quick control
poor product mix and marketing failures. risk mitigation response to through last
minimize line of defense:
damage insurance cover
How to prepare for supply
chain disruptions Effect of swift
In addition to a successful business action as per BCP +
Effect of effect of capacity and
continuity plan, there are further essential visibility inventory buffers
steps to effective risk mitigation. systems

technology. It’s important to invest

in information systems that improve T Discovery B1 A1 Recovery B2 Recovery A2
real-time visibility of used and spare Time
capacities and inventory in the entire Impact of supply chain disruption on organization A, which has no risk mitigation system
system—including those of suppliers. Impact on organization B, which has mitigated supply chain risk and is continuously
Institutionalize supply chain intelligence monitoring for disruptions

systems, including exception-event-plan-

ning systems designed to discover inci- Figure 1: Supply chain risk mitigation framework
dents that cross the threshold of normal
operating parameters. Employ the power
of social media for early detection of dis-
ruptions. Dell, known for its pioneering Proactive: plan for Reactive: minimize
work in supply chain, uses social media Post-recovery
disruption damage
to interact with customers, thus enabling
• Conduct enterprise- • Paradigm shift with less • Reevaluation of the
it to improve reaction time and be more level supply chain risk emphasis on efficiency supply chain to assess the
responsive to market needs. assessment and more emphasis on following parameters:
Flexibility. Standardize components • Make risk adjustments business continuity ◦ effectiveness of the
Strategic

to total cost of sourcing • Sanction supplies from business continuity

as much as possible to derive aggregation equations reliable alternative plan
benefits and reduce overall inventory and • Design actionable busi- sources and employ ◦ effectiveness of early
ness continuity plans alternate transport disruption detection
engineering costs. In a volatile market, covering all failure nodes and manufactur- systems
attempt to postpone the customization scenarios ing facilities in case the ◦ validity of total cost
• Identify authorities for preferred options fail of ownership/sourcing
of a product until after receiving the cus- decision making during (risks associated with equations
tomer order. Identify the next-best alter- disruptions the alternate sources ◦ resilience of the
natives as backups for the most vulnerable • Invest in improving should be divorced from supply chain to
capacity and inventory those borne by primary future disruptions
supply chain nodes. visibility sources)
sourcing. Supply chain decisions
should not be made on the basis of tradi- • Supplier selection • Diagnose all the impacts • Prepare a disruption
based on to the supply chain once report that covers
tional costing models, but rather, on the ◦ risk-adjusted total a disruption has been failure points as a
total cost of sourcing equations that are cost to source identified result of disruption,
◦ supplier’s business con- • Invoke the business con- cause and effect analy-
adjusted for the expected value of supply
Operational

tinuity plan strength tinuity plan to ensure sis, and comparative

chain risk. • Identify alternate suppliers safety of employees and analysis of disruption
testing. Conduct regular mock drills with different operating continuity of operations performance through
conditions • Take swift action to em- industry peers
for likely disruption scenarios to evaluate • Maintain higher buffer lev- ploy available capacities • Systematic loss report-
preparedness. els for critical components within the organization ing to mitigate issues
• Continuous monitor- and supplier network through insurance
Critical components and supply ing of supply chain for • Constantly monitor the coverage as a last line
chain nodes. Segment inventory in levels disruptions situation of defense
• Backup of information
of criticality based on unit cost, sourcing, systems
manufacturing options, and lead time to
restock. Maintain progressively higher
buffer levels for critical segments. Before the disruption During the disruption After the disruption
supplier selection and monitoring.
Screen critical suppliers based on their
Figure 2: Framework for building a resilient supply chain
risk scores, and mandate the selected

28 January/February 2012 | APICS magazine

36 January/February 2012 | APICS magazine
 It’s essential to institutionalize a contingency management
team that will direct all actions during times of disruption.

ones to institutionalize a realistic business Minimizing the damage Mohanish Makharia works for the supply
continuity plan. Test the relevance and When a disruption has been detected, a chain group at Wipro Consulting Services.
dependability of suppliers’ plans. Conduct rapid shift from an efficiency-maximiz- He may be contacted at mohanish.
regular meetings or teleconferences with ing scenario to one based on main- [email protected].
key suppliers to get their opinions and taining business continuity is critical.
feedback on potential disruptions. Senior management must be involved. Gerhard Plenert, PhD, is a practice partner
supply chain intelligence. It is vital The business continuity plan needs to for Wipro Consulting Services, specializing
to keep an eye on each country or be invoked and risk mitigation strate- in supply chain and lean six sigma practices.
region for threats and trends that gies operationalized. Once the impacts He may be contacted at gerhard.plenert@
will affect the supply chain: weather, of the disruption are assessed, customer wipro.com.
port and transportation worker strikes, commitments should be reevaluated in
fuel prices, currency exchange, infla- the new demand-supply scenario. Ramanan Sambukumar leads the distributed
tion, labor rates, pending legislation, The frequency and severity of sup- supply chain organization for Wipro
political elections, natural disasters, and ply chain disruptions has increased Consulting Services. He may be contacted at
more. Constantly monitor the supply tremendously in the past two decades. [email protected].
chain for exception events and assess A resilient, flexible, and scenario-based
their potential impacts. Watch supplier supply chain provides a competitive To comment on this article, send a message
quality, raw material price, and market edge: It is not a choice, but a business to [email protected].
demand variations. Finally, employ imperative.
historical data for operations planning,
and avoid certain regions in certain

APICS
times. For example, Florida ports are
subject to hurricanes from June to
November. Perishables or other time-
sensitive goods may need to exclude
extra
South Florida ports from their distribu-
tion networks through these months.
As can be seen from the disruption APICS Extra Live: Building a Disaster-proof
cycle in Figure 1, efforts can be classi-
fied in three phases:
supply chain
1. Proactive steps before the disruption Presented by: Attend APICS Extra Live to gain deeper insight into the
occurs—building a resilient sup- Mohanish Makharia January/February APICS magazine article “Your Resilient
ply chain, addressing all identifed Member, supply chain group Supply Chain.” The authors will discuss how unpredictable
Wipro Consulting Services events such as natural disasters can damage revenues,
disruption impacts, and investing in profitability, market share, and brand image, and they
early-warning systems. Gerhard Plenert, PhD will demonstrate techniques that minimize the impact of
2. Reactive steps when the disruption Practice partner disruptions.
has occurred and been detected—act- Wipro Consulting Services
In this APICS Extra Live, you will learn
ing with agility to expedite recovery.
Ramanan Sambukumar • the components of a resilient supply chain and
3. Post-recovery steps—performance Leader, distributed supply chain strategies for overcoming barriers
reporting, reevaluating the supply Wipro Consulting Services • strategies to prepare for supply chain disruptions and
chain, and recovering losses through how to come out ahead
Date: February 22, 2012 • methods to enable resiliency, including establishing
insurance claims.
Time: 1:00 p.m.– clear lines of authority and proactive planning
While the strategic vision must take • how to build risk into decision making by coupling key
2:00 p.m. ct
a top-down trajectory, operational risk indicators with key performance indicators.
activities need to be implemented from
the bottom up. Based on the efforts
required before, during, and after a
disruption, Figure 2 presents a compre-
RegisteR online at apics.oRg/extRa.
hensive framework to build a resilient
supply chain.

APICS magazine | January/February 2012 29

January/February 2012 37
Department
Titles

The Rules of
Knowledge Acquisition
Designing the right employee training program for your business

By Lucio Zonca, CPIM, CSCP

Employee education and training must be strategic, cost- Determining training needs
justified undertakings. Every proposed program should be A proper assessment of training needs helps prioritize
evaluated from the start with a thorough benefit-cost analysis. resources to ensure they are available to address the most
Benefits include improved customer satisfaction; better critical issues. This can take the form of a company-wide
product or service quality; reduced scrap, rework, or return periodic assessment, in which the analysis provides data for
inventory; improved productivity; increased employee an annual training plan and budget. Or, it might be the simple
retention; and a more flexible workforce. Costs include observation that an employee does not know how to perform
trainee salaries, lost production time, facility expenses, an assigned task. Methods to determine needs include tests,
educational materials, trainer fees, and—perhaps most surveys, checklists, simulations, self-assessments, performance
importantly—the tangible and intangible consequences of observations, individual or group interviews, brainstorming,
not training. and focus groups.
The decision to embark upon a training program is just In order to meet the needs of trainees, it is important to
the first step in successful completion of the entire process. clarify early what the training program should contain and
I have consulted and performed training at various multi- establish a clear intended learning outcome. A good outcome
national corporations, and following are the key steps and is characterized by the acronym SMART: It must be specific,
lessons I learned. manageable, attainable, relevant, and time-specific.

26
38 January/February 2012 || APICS
January/February 2012 magazine
APICS magazine
 To comment on this article, send
a message to [email protected].

Illustration by Dmitri Jackson

Designing the training program The aim of the training also can factor into group composition.
One of the most important tasks is selecting a trainer. These For example, if the intent is to inform trainees about a broad
professionals need to be precisely that—trainers, not simply topic, such as changes in regulations, then a large-scale semi-
experts in their fields. Seek an instructor who comes from the nar with participants at all levels of hierarchy and experience
same profession as the trainees, as it will increase his standing could be appropriate. In this situation, interactions among
with the audience and create a greater corresponding impact participants would be limited, and the learning process would
on attitudes and values. One caveat I have found when using not be hampered by the heterogeneity of the participants. But
experts not local to the environment is they may lack under- a session on developing skills or influencing attitudes—in
standing of domestic laws and policies. Be sure to provide these which interaction is a primary condition for success—might
individuals with summaries of the appropriate regulations. be better served by a small, homogenous group.
Composition of the training group has great influence on The targeted participants have a great influence on the
communication and cooperation. In general, participants are level of knowledge or skills required and on determining the
most at ease in homogeneous groups with people at a similar appropriate training method. Most people prefer taking an
level in the business hierarchy and who possess comparable active role in training activities, so the program should have
knowledge and experience. In mixed groups, trainees are more a clear and practical approach and respect their knowledge,
reluctant to express opinions and ask questions. experience, and motivations.

APICS magazine | January/February 2012 27

39
Department
Titles

Malcolm Knowles, in The Adult Learner, writes that trainees hours solely during the face-to-face instruction period. There
• need to know why they should learn something may be considerable benefit in requiring participants to perform
• deeply want to be self-directed some form of preparatory work. One way to get trainees thinking
• become ready to learn when they experience a need to early is by distributing in advance any printed materials, such as
know or when they can perform more effectively and case studies or domestic policy documents that will be discussed.
satisfyingly Visual aids such as PowerPoint presentations, computer graph-
• enter into a learning experience with a task-centered or ics, whiteboards, flip charts, videos, handouts, and other physical
problem-centered orientation objects help your audience understand the structure of your
• are driven to learn by both extrinsic and intrinsic presentation. The intended learning outcomes will guide the deci-
motivators. sion on which materials will work best. Use visual aids to
Meanwhile, David Kolb theorizes that people go through • transmit ideas with more effect
four phases when learning. The learner 1) has an experience, • help trainees absorb information
2) reflects on the experience, 3) develops abstract theories • focus attention and maintain interest
based on the experience, and 4) applies what he or she has • break up lectures and add variety
learned. The application of the knowledge in turn creates • assist the trainer in preparation
another experience, and the cycle begins anew. Kolb’s model • keep the speaker and the audience on track
can help in understanding how people react to different • support memorization using summaries of key points
types of training. Some gravitate toward hands-on learn- • standardize presentations involving a number of trainers at
ing (phases 1 and 4), while others favor abstract thinking different locations.
(phases 2 and 3). PowerPoint slides are a great way to ensure participants are
Training is about not only exploring and absorbing new active in a discussion because they provide questions and visual
knowledge, but also digesting it. Therefore, any good train- models or demonstrations of critical subjects. Flip charts are
easy to use, and they are a practical way
to track participant feedback. When

Training is about not only using flip charts, ensure you are writing
legibly and in big, bold, capital letters.
Try not to write and speak at the same
exploring and absorbing new time. And always prepare in advance
for practical issues that can prevent

knowledge, but also digesting it. an effective presentation and might

adversely affect the trainees’ confi-
dence in the trainer. Ensure early that
trainers are prepared with any equip-
ing program must contain elements to ensure the trainees ment needed to begin on time and that everything is working
process the new ideas, such as role-playing, case studies, and properly.
simulations. These hands-on activities will assist those who Lastly, be aware that the presence of trainees with visual or
do not respond well to abstract theory. auditory disabilities will require adapted materials.

Designing the training environment Delivering the training

Some learners might be anxious about opening up in group The actual delivery of the training generally is conducted
discussions. Therefore, aim to make the training environment in the form of a trainer-led session. Too often, this means a
as comfortable as possible. Try strategies such as welcoming lecture or presentation. But other forms are more effective
people as they arrive, providing coffee, issuing name badges, in certain situations. For example:
and having the training team mix with participants during • Learner-controlled instruction—where the learner
breaks and meals. has considerable influence over what is taught, how it
Time also is a resource that greatly affects the training. Keep is taught, and the pace of instruction—works well when
the sessions short, and provide adequate breaks. Remember that participants are geographically distant or when there is
most people’s maximum attention span is around 20 minutes, only one person to train at any given time.
and ensure that sessions are broken up with some form of activ- • experiential training focuses on experiencing the
ity at 20-minute intervals. Another question regarding time is effects typically encountered in real-life situations and
whether trainees are expected to cover the intended learning can take the form of games, simulations, or role-playing.

28
40 January/February 2012 || APICS
January/February 2012 magazine
APICS magazine
 To comment on this article, send
a message to [email protected].

It is most appropriate for training softer, interpersonal participants’ changed behavior? This usually requires a
skills areas. quantitative analysis of the organization’s outcomes pre-
• Case studies illustrate the application of study content training versus post-training.
and show how different approaches can be used to solve It is vital that employees begin using the knowledge and
problems. They also can stimulate intense discussions and skills gained in the training session immediately. If they
idea sharing. don’t, only a small portion of the experience is likely to
When beginning a training session, establish appropriate be retained. Positive reinforcement helps—both during
ground rules to ensure trainees understand their responsibili- training to shape the participants’ behavior and when the
ties. Do not always assume each trainee is a willing learner. trained person begins using the new skills on the job. In
Lay down the law at the start to prevent misunderstandings the end, it is essential to retain a commitment to ongoing
later. Consider discussing topics such as the following: education and training from all levels of the organization,
• expectations regarding attendance. During training, as they are a means for supporting strategic goals and
address the issue of students disappearing early by circulat- objectives.
ing forms at the end of a session.
• timing and schedules. Explain that the timetable is not Lucio Zonca, CPIM, CSCP, is an independent consultant based in
merely a guide, and stress that starting and finishing top- Singapore. He may be contacted at [email protected].
ics promptly is essential to completing the entire training
program. To comment on this article, send a message to [email protected].
• participation. Underscore the idea that small-group training
in particular requires active participation.

Evaluating the training

Assessment is essential in determining
whether the training program met the
objectives of the plan. Additionally,
every training program should require
measures to assess its effectiveness,
results, and outcomes.
There are four different levels of
evaluation:
1. reaction. Were the participants
pleased with the training? What
did they think of the design of the
program? What did they think of
the delivery methods, the facili-
ties and equipment, the trainer’s
qualifications, the selection of the
participants, and (of course) the
course content?
2. Learning. Did the participants
learn what was intended add to the
beginning of training? This usually
is determined by a written test or
another form of examination.
3. Behavior. Did participants change
their conduct and performances after
training to desired levels? On-the-job
performance assessments can evalu-
ate this metric.
4. results. Was there a positive effect
on the organization resulting from

APICS magazine | January/February 2012 29

41
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Email: [email protected]
IFSworld.com/us

Product: IFS delivers software to make enterprises more agile by streamlining four core strategic processes: service & asset management,
manufacturing, supply chain and projects. IFS develops, supplies, and implements IFS Applications™, a component-based extended ERP
suite built on SOA technology. IFS provides software solutions that serve manufacturing, project-based and asset-intensive industries. We
thrive in complex environments and with businesses that strive to be agile.
IFS Applications is a pioneer in providing business software based on actual business processes. Companies can reconfigure the software on
the fly, enabling them to adapt quickly to changing market conditions. And because IFS Applications is component-based, customers need
only deploy the functionality they require and implement it step by step, adding new components as their business changes or expands.

HighJump Software
6455 City West Parkway
Eden Prairie, MN 55344
TF: (800) 328-3271
Email: [email protected]
highjump.com

Product: HighJump™ Warehouse Advantage

Strengths: HighJump™ Warehouse Advantage offers advanced warehouse management functionality to manage even the most complex
distribution environments. This powerful WMS helps to ensure fast, accurate fulfillment through directed, optimized workflow, utilizing the
most advanced wireless and bar code technologies, including RFID. The HighJump warehouse management system executes strategic pro-
cesses such as receiving, put-away/flow-through, inventory management, order processing, replenishment/pick/pack, loading and shipping.
And with its uniquely flexible architecture, the system is easy to personalize, without changing source code.

42 January/February 2012 | APICS magazine

supply chain Directory

Smart Software, Inc

4 Hill Road
Belmont, MA 02478
PH: (617) 489-2743
Email: [email protected]
smartcorp.com

Product: Smart Software is the innovative leader in enterprise demand forecasting, planning, and inventory optimization. Our SmartFore-
casts® and SmartCollaborator™ solutions help companies worldwide manage the future of their business. You’ll increase forecast accuracy,
reduce inventory levels, improve customer service, and save millions of dollars annually-because with Smart Software, you see what’s next!
For 25 years, we’ve helped thousands of planners and inventory managers worldwide and pioneered many forecasting and planning solu-
tions in the marketplace.  We make demand forecasting and collaboration fast, easy, and accurate and our patented,  Intermittent Demand
Forecasting technology for hard to forecast items continues to set the highest standards of accuracy and ROI performance for our customers. 

The Support Group, Inc. – Austin

5010 Doss Road
Austin, TX 78734
PH: (800) 798-9862
www.supgrp.com/kenandy

The Support Group, now a Kenandy partner, is bringing manu-

facturing management to the cloud. Kenandy Manufacturing Cloud has the core capabilities you need to
manage your manufacturing operations, supply chain, and distribution channels. The Support Group has
the experience you can trust to get you implemented quickly with the capabilities to meet your requirements.
All this delivered on Force.com, salesforce.com‘s enterprise cloud computing platform, for advanced social
and mobile features.
Kenandy and Manufacturing Cloud and associated logos are trademarks of Kenandy, Inc. Salesforce.com and Force.com are
trademarks of salesforce.com, inc. in the United States and other countries.

Company Index The following companies appear in this issue of APICS magazine either as part of
the editorial content or as a paid advertisement. Note: Advertisers appear in bold.

Advantech 12 Nokia 34–35

Apple 18, 34 Oldcastle 46
Billtrust 46 Optical Cable Corporation 13
Burger King 48 Owens & Minor 31
Cheetah Software 12 Philips 34
Cisco Systems 34 Red Lion 12
Cognent 12 Reed Transport Services 13
Datalogic Scanning 12 Rockwell Automation 13
Demand Works demandworks.com 41, 42, 45 Smart Software smartcorp.com 20–22, 43, 45
Dematic 12 Sumitomo Metal Industries 34
Ericsson 34–35 TAGSYS 13
Hamilton Caster 13 Target 34
HighJump Software highjump.com 42 The Support Group supgrp.com/kenandy 43, 45
Hostway 12 TMS Logistics 13
IBM 18 Tompkins Associates 13
ICM Airport Technics 13 Toyota 34
IFS youragilesuccess.com 33, 42, 45 Walmart 34
Kmart 34 APICS Career Center apics.org 6
Load Systems International 13 APICS Conferences 6
Material Handling Industry of America modexshow.com C2 APICS CPIM 6,10–11
McDonald’s 48 APICS CSCP 6,10–11
Montreal Transit Corporation 20–22 APICS Membership 6,10–11

APICS magazine | January/February 2012 43

Now available!

Key subject areas

• Sustainability in the supply chain • Processes
• Risk management • Project management
• Advanced manufacturing and • Scheduling
service technology • Strategy
• Emerging operations technologies • Supply chain
• Planning and control

The 2011 update to this popular publication includes new sections on the preeminent topics of
sustainability and risk management, highlighting emerging areas of corporate social responsibility,
closed-loop manufacturing, and disruption risks.

What’s new in the APICS OMBOK Framework

Sustainability in the supply chain Risk management
This all-new section focuses on topics including This updated and expanded section examines
the triple bottom line, sustainable new product the critical need for risk mitigation tools and
development, green six sigma, carbon footprint knowledge by industry professionals and
analyses, reverse logistics, and the United discusses the different types of risks inherent in
Nations Global Compact. supply chains. New content covers strategies for
identifying, assessing, mapping, and mitigating
risks and weighing the frequency of an event
against the aggregate severity of the loss.

Access your free electronic copy of the APICS OMBOK Framework

to benefit from an accessible and organized master document for
the operations and supply chain management communities.
Visit apics.org/ombok.
44 January/February 2012 | APICS magazine
P roduct S howcase

Sales and Operations Planning Software Agile ERP for Complex, Demanding Industry

IFS delivers software to make enter-

Smoothie® is the
prises more agile by streamlining four
industry standard core strategic processes: service &
solution for desktop asset management, manufacturing,
and server-based supply chain and projects. IFS devel-
sales and operations ops, supplies, and implements IFS
planning that’s used Applications™, a component-based
by many of the best global companies. It is available in extended ERP suite built on SOA
a range of editions, but all Smoothie solutions feature technology. IFS provides software
solutions that serve manufacturing, project-based and asset-
Pivot Forecasting® and Pivot Planning®, proprietary intensive industries. We thrive in complex environments and
technologies that make it possible to seamlessly plan with businesses that strive to be agile.
at any level of aggregation and along any dimension
IFS Applications is a pioneer in providing business soft-
like product, channel or customer. Retire your spread- ware based on actual business processes. Companies can
sheets and contact Demand Works for highly accurate reconfigure the software on the fly, enabling them to adapt
forecasts, collaboration, time-phased multilevel inven- quickly to changing market conditions. And because IFS
tory planning, and S&OP. Applications is component-based, customers need only
deploy the functionality they require and implement it step
Demand Works Co. by step, adding new components as their business changes
PO Box 627 or expands.
West Chester, PA 19381
PH: (484) 653-5345 IFS
Email: [email protected] 300 Park Blvd., Ste.555
demandworks.com Itasca, IL 60143
PH: (888) 437-4968
Email: [email protected]
IFSworld.com/us

Demand Planning, Forecasting, Inventory SOCIAL MRP

Optimization Social Manufacturing built for the Cloud

Smart Software The Support Group,

is the innova- now a Kenandy
tive leader partner, is bring-
in enterprise ing manufacturing
demand forecasting, planning, and inventory optimization. management to the cloud. Kenandy Manufacturing
Our SmartForecasts® and SmartCollaborator™ solutions Cloud has the core capabilities you need to manage
help companies worldwide manage the future of their your manufacturing operations, supply chain, and
business. You’ll increase forecast accuracy, reduce inven- distribution channels. The Support Group has the expe-
tory levels, improve customer service, and save millions rience you can trust to get you implemented quickly
of dollars annually-because with Smart Software, you see with the capabilities to meet your requirements. All
what’s next! this delivered on Force.com, salesforce.com‘s enter-
prise cloud computing platform, for advanced social
For 25 years, we’ve helped thousands of planners and
and mobile features.
inventory managers worldwide and pioneered many fore-
casting and planning solutions in the marketplace.  We The Support Group, Inc. – Austin
make demand forecasting and collaboration fast, easy, PH: (800)798-9862
and accurate and our patented,  Intermittent Demand www.supgrp.com/kenandy
Forecasting technology for hard to forecast items con-
tinues to set the highest standards of accuracy and ROI
Kenandy and Manufacturing Cloud and
performance for our customers.  associated logos are trademarks of Ke-
nandy, Inc. Salesforce.com and Force.com
Smart Software, Inc
are trademarks of salesforce.com, inc. in
4 Hill Road the United States and other countries.
Belmont, MA 02478
PH: (617) 489-2743
Email: [email protected]
smartcorp.com     

APICS magazine | January/February 2012 45

Case To comment on this article, send
a message to [email protected].
Study

A Better Approach appreciates the Billtrust team’s ability to

scale the solution as Oldcastle’s back-
office operations become integrated
Streamlining accounting operations with new business units. Scalability also
is essential if the ERP system experi-
ences changes in functionality or if
CHALLENGE: Consolidate and simplify billing functions additional Oldcastle operating compa-
PRODUCT SOLUTION: Billtrust nies become consolidated.
COMPANY: Oldcastle Architectural Products With Billtrust, Oldcastle
FACILITIES: Headquarters in Atlanta, Georgia Architectural Products’ complex
OPERATION: Manufacturer of masonry, lawn, garden, and paving products invoices were consistently accurate.
Further, Billtrust was successful in its
efforts to encourage customers to adopt
The challenge electronic billing. Formerly, less than 10
Oldcastle is one of North America’s largest tracking functions. Billtrust seemed like percent of Oldcastle’s customers used
building products and materials manu- a good fit, but Garrett wanted to be sure electronic billing, but that number has
facturers. The company offers a full array the company was up to the challenge. increased to 30 percent and contin-
of building materials, and its products are She provided the Billtrust repre- ues to grow. For those customers not
sold both directly and through partner sentative with a flash drive containing engaging in electronic billing, Billtrust’s
retailers. The company’s manufactur- examples of the complicated mix of CustomerCare portal has enabled them
ing footprint, distribution network, and operating compa-
numerous operating companies give it nies, logos, billing
wide marketplace reach, but also pose addresses, and cus-
unique challenges to billing. Some of tomer requirements
Oldcastle’s operating companies used their that Oldcastle
own billing procedures and systems, fur- demanded. In two
ther increasing the need for streamlining. days, the Billtrust
At one such division, Oldcastle representative
Architectural Products, leaders decided returned with well-
to convert to an enterprise resources designed, accurate,
planning (ERP) system and create a busi- readable invoices
ness unit dedicated to shared services for that accommodated
billing and other core business functions. the multiple bill-
Invoicing was outsourced to a print-and- ing entities, logos,
mail facility. facilities, and A packaging machine operator observes equipment.
The shared services team began receiv- addresses. Garrett
ing customer complaints about misdi- was impressed and agreed to take on the to track the delivery of billing docu-
rected invoices shortly after implementing Billtrust solution, which comprised a ments and payment activities. Garrett
the plan. “It didn’t work out,” says accounts comprehensive suite of outsourced bill- estimates the company has saved 25
receivable manager Tracy Garrett. “We ing services, including electronic billing percent on postage fees.
have a variety of division billing require- and US Postal Service mail options, a “Billtrust has been there to help us
ments, including more than 20 different web-based bill-archiving system, and a design and implement a sophisticated,
logos and addresses and a need to generate customer service portal. accurate process with the added bonus
invoices to many customers with multiple of reduced costs and happier custom-
billing recipients, so it gets complicated.” The results ers,” Garret says. “We couldn’t be more
According to Garrett, the Billtrust imple- pleased with the results of our partner-
The solution mentation was a major overhaul. “[We ship.” With Billtrust producing accurate,
Garrett discovered Billtrust, which transformed] our decentralized, labor- timely invoices, the Oldcastle team can
offered a full range of electronic and intensive, back-office billing operations focus on other accounts payable and
paper billing solutions, design services, into an efficient, streamlined electronic customer service functions, improving
and a web-based customer portal with invoice delivery model,” she says. She cash flow and client satisfaction.

46 January/February 2012 | APICS magazine

 NEW EDITION WITH MORE THAN
300 NEW TERMS AND DEFINITIONS

Define Your Career Path

with the APICS Dictionary
Access the valuable terms and definitions to improve your
productivity today.
channel partners—Suppliers, manufacturers, distributors, and retailers
who form a supply chain to make and distribute a set of products. dynamic
kanban—An alternative use of kanban methodology to create an automatic
launching of a purchase order to a supplier. Dynamic kanban is used as an
element of the manufacturing execution system to allow for Just-in-Time
APICS members: Order your free printed copy of the APICS
Dictionary, 13th edition, today. As a benefit of your APICS
deliveries to production. demand planning—Using forecasts and experience
to estimate demand for various items at various points in a supply chain. Several
forecasting techniques may be used during the planning process. Often, families
of items are aggregated in doing this planning. Aggregation also may occur

membership, you receive the APICS Dictionary, 13th edition,

by geographical region or by life cycle stage. Forecast demand is compared to
actual demand in order to measure and increase forecast accuracy. See: demand
management. inbound logistics—The group in charge of moving materials
from suppliers or vendors into production processes or storage facilities; or,
the actual movement of such material. key performance indicator (KPI)—a
financial or nonfinancial measure, either tactical or strategic, that is linked to
specific strategic goals and objectives. materials handling—The movement of
items from one point to another inside a facility or between facilities. strategic
variables—The most important variables that effect the business environment
ThirTeenTh ediTion in one of the following formats:
APICS Dictionary
and business strategy. These are typically the economic situation, population
demographics, changes in technology and government policies. triple bottom
line (TBL)—Measuring the economic, social, and environmental consequences
of a firm’s activities. visibility—The ability to view important information

• Printed version of the APICS Dictionary, 13th edition

throughout a facility or supply chain no matter where in the facility or supply

The APICS
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the core terminology
and emerging
vocabulary you need • PDF download copy of the APICS Dictionary, 13th edition
to speak the same
language across
your supply chain.

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chain the information is located. warehouse management system (WMS)—A
system that manages all processes that a warehouse carries out. These processes
include receiving, picking, and shipping. continuous process improvement
Download the APICS Dictionary, 13th edition, and save it to
(CPI)—A never-ending effort to expose and eliminate root causes of problems:

your desktop to ensure you’re never without the terminology

small-step improvement as opposed to big-step improvement. Syn: continuous
improvement. See: kaizen. lean production—A philosophy of production that
emphasizes the minimization of the amount of all the resources (including time)
used in the various activities of the enterprise. It involves identifying and eliminating

that enables you to communicate across the office and the

non-value-adding activities in design, production, supply chain management, and
dealing with customers. Lean producers employ teams of multiskilled workers at all
levels of the organization and use highly flexible, increasingly automated machines
to produce volumes of products in potentially enormous variety. It contains a set of
principles and practices to reduce cost through the relentless removal of waste and
through the simplification of all manufacturing and support processes. Syn: lean,
lean manufacturing. (NOTE: “Lean” definition only says “Syn: lean production.”)
operations management—1) The planning, scheduling, and control of the activities
supply chain.
that transform Advancing
inputs into Productivity,
finished goods and innovation,
services. 2)and Competitive
A field of study thatSuccess
focuses on the effective planning, scheduling, use, and control of a manufacturing
or service organization through the study of concepts from design engineering,
industrial engineering, management information systems, quality management,
production management, inventory management, accounting, and other functions

APICS DICTIONARY PRINTED VERSION

as they affect the operation. product life cycle—1) The stages a new product
goes through from beginning to end (i.e., the stages that a product passes through

Request a bound copy of the new 13th edition of the APICS

Dictionary today. Keep the latest edition of the APICS
APICS MEMBERS: Request Dictionary at your desk to ensure you have easy access
your free printed or to the latest terms and definitions used in the operations
e-download copy of the APICS
Dictionary, 13th edition,
management profession.
at apics.org/freedictionary.
MORE THAN 4,000 TERMS
The APICS Dictionary, 13th edition, includes more than 300
new terms, giving APICS members access to both the core
and emerging terminology necessary to speaking a common
language across your supply chain.

Not an APICS member? Join APICS today to begin receiving valuable

member benefits including the APICS Dictionary, 13th edition, APICS
magazine, and more. Visit apics.org/join now.
Lessons To comment on this article, send
a message to [email protected].
Learned
By John Damm, CPIM, CSCP, PMP

Food for Thought

Super-sized prospects for tomorrow’s workforce

When the economy finally does pick guage. The employees

up again, many experts suggest it will are capable of dealing

Illustration by Terry Colon

be difficult for operations and supply with difficult custom-
chain managers to find the right workers ers in stressful, rushed
because a post-recession environment will settings. They handle
require new and different types of skills. lines of cars at drive-
Hearing this, one might think the future is through windows and
grim for US manufacturing. But I disagree: lines of people at cash
I see manufacturing activity everywhere, registers. Defects are
and I am convinced there will be talented rare and corrected
people looking for companies where they instantly. The workers
can contribute and hone their skills. thrive in an ever-
For example, when I take my family out changing environment
to fast-food establishments, I see numer- and deal with new
ous similarities between the operations at menu introductions
McDonald’s and Burger King to those at and other modifica-
manufacturing companies. Consider the tions that result from changes in con-
definition of “manufacturing” from the sumer preferences, government regula- ing economy turns around. There is a
APICS Dictionary: “a series of interrelated tions, or competitive forces. disciplined labor pool out there for the
activities and operations involving the Some APICS magazine readers may taking. These flexible workers are learn-
design, material selection, planning, pro- not find merit in comparing burger ing procedures and responsibility, they
duction, quality assurance, management, assembly to auto assembly. But perhaps are familiar with a customer-first attitude,
and marketing of discrete consumer and it’s time to stop focusing on the low wages and many are sure to be eager to learn
durable goods.” and low status of fast food and begin traditional manufacturing. Our factories
I see all of this in the fast-food industry. learning from the excellent processes, are going to be just fine.
I see make-to-stock and make-to-order disciplines, forecasting, and general
activities, order taking, facilities manage- operations skill we can find there. Those John Damm, CPIM, CSCP, PMP, is an
ment, operations management, customer who disagree may point out the compara- e-commerce manager at Lexmark. He is a
service, returns processing, special orders, tive simplicity of inventory management member of the APICS Bluegrass Chapter,
and inventory management. I see team- in the fast-food world. While the end where he serves as vice president of
work, work cells, assembly lines, and pull product is mostly made-to-order, all the education. Damm may be contacted at
signals. I see cross-trained workers and ingredients are sufficiently repetitive to [email protected].
demand variations. And I contend these be managed with simple reorder points.
are manufacturing jobs that have been The workers know when and where to Do you have an anecdote that teaches,
simplified by well-thought-out processes, replenish the meat patties, ketchup pack- enlightens, or amuses? Consider sharing it
procedural disciplines, poka-yoke, auto- ets, and so on. While orders for these with the readers of APICS magazine. Stories
mation, and high-quality employees. ingredients have short lead times, it does should be approximately 700 words. Email
Just imagine what we could learn about not mean the environment is any less submissions to “Lessons Learned” editor
forecasting and demand planning from applicable. After all, don’t operations and Randall Schaefer at [email protected].
a Wendy’s, Pizza Hut, or Taco Bell. The supply chain managers strive to achieve
environments are safe, clean, and quiet. In simple reorder signals supported by short
the United States, people of all ages and lead times?
nationalities work in these facilities, many I no longer worry about having enough
of whom speak English as a second lan- skilled workers when the manufactur-

48 January/February 2012 | APICS magazine

Discover What You Need to
Know about S&OP
EXPLORE THE S&OP EXPERIENCES AND RECOMMENDATIONS
OF INDUSTRY PROFESSIONALS, AS WELL AS CHALLENGES,
BEST PRACTICES, AND ADVICE
APICS and IBF set out to uncover what’s really The APICS S&OP Folio: How to Be an S&OP
going on with sales and operations planning Champion is your guide to S&OP success. This
(S&OP). Nearly 15,000 supply chain and 24-page folio is informed by the APICS S&OP
operations management professionals were survey results and report and includes S&OP-
invited to take part in a survey. The results of related insights from the most successful
this survey inform the 2011 S&OP Practices companies, practical advice from industry
and Challenges research report and the APICS experts, and articles from the award-winning
S&OP Folio: How to Be an S&OP Champion. APICS magazine.

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from the most successful companies, practical advice, and articles from the award-
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Learn more or access this valuable research at apics.org/research.

Valuable S&OP research to help you maximize your

effectiveness in the S&OP process

• Free to the public: 2011 S&OP Practices

and Challenges executive review
• APICS members-only research report:
2011 S&OP Practices and Challenges
• Purchase: APICS S&OP Folio: How to
be an S&OP Champion

APICS magazine | January/February 2012 49

Enhance Your Value with Supply
Chain Expertise
Master and implement supply chain
best practices with the APICS
Certified in Supply Chain Management
(CSCP) program.
Demonstrate your ability to add value across the supply chain to
your current and prospective employers. The 2012 APICS CSCP
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practices that can enhance your organization’s bottom line and
improve your earning potential.

APICS CSCP Exam and Learning System

Updated for 2012
The 2012 APICS CSCP Learning System has been updated and reorganized to
offer deeper integration of day-to-day best practices, techniques, and
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■■ APICS Fundamentals of Supply Chain Management
■■ APICS Supply Chain Strategy, Design, and Compliance
■■ APICS Implementation and Operations.

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average 11 percent more than their uncertified counterparts.
Source: apics.org/research.

Now is the time to earn the APICS CSCP designation. Discover

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