Vietnams developing role

APICS MAGAZINE
APICS MAGAZINE

Talent strategies evolve

Take a different approach to lean

FPO
FEATURE
EMERGING
METRICS/RISK
ECONOMY/TALENT
MANAGEMENT MANAGEMENT

Technology encourages
employees to promote
March/April 2016 | Vol 26, Num 2

facility safety
SEPTEMBER/OCTOBER
MARCH/APRIL 2016
2015
Shape the Future
of Supply Chain
Volunteer for the 2017 APICS or APICS Supply Chain Council Board of Directors

Board members devote their time, energy, and ideas to lead the association forward and in turn,
lead the supply chain community to greater success. If you possess a breadth of experience
and vision and have an interest in the career advancement and education of supply chain
professionals, or if you would like to recommend someone who can provide these leadership skills,
please submit a nomination to the APICS or APICS Supply Chain Council Board of Directors.

Nominations are due April 1, 2016. View position descriptions, policies,

and the application at apics.org/nominate.
APICS and IBF present:

June 16-17, 2016 | Chicago, Illinois

SAVE THE DATE!
Now in its ninth year, the Best of the Best S&OP Conference
is the leading global gathering of the some of the brightest
minds in supply chain. Join us in Chicago for two days of
world-class educational sessions to find new ways to implement
and improve the S&OP process at your organization.

Learn more and register online

at apics.org/best.
FEATURES March/April 2016, Volume 26, Number 2

36
An Emerging Economy
By Julien Brun
Manufacturers and suppliers are expanding
into Vietnam.

CASTING

42
FOR
Casting for Talent
TALENT
By Karen Huelsman
Workplace needs give rise to creative
hiring methods.

COVER STORY

48 Illustration: iStock/enotmaks
Speak Up
By Jennifer Storelli
apics.org/magazine 43

Employees access new tools to keep their

facilities safe.

54
Zoom Out to Build
Up Lean
By Joyce Warnacut
48 March/April 2016

A different perspective may lead to

better results.

ountless articles in trade publications

have bemoaned the lack of quantifi-
able results and diminishing returns
derived from lean initiatives based on
waste elimination. But few of these sto-
ries have suggested that having a micro-level focus
on individual products and operations actually may
be part of the problem. Perhaps it is time to look
at the process from a macro levela point of view
that considers the variation to provide insights
about which lean tools to use. For instance, those
that enable professionals to study the problems
of variation, capacity, and the interaction of people
and machines can help users focus on the appli-
cation of those tools in order to produce real
results. Seeing lean from the macro level makes it
possible to effectively evaluate the relative effects
of various scenarios, understand the system
impact, and determine where to focus efforts in
order to achieve the benefits sought.
To meet these objectives, it is first necessary to
APICS magazine (ISSN 1056-0017) is published bimonthly by APICS, 8430 West Bryn Mawr Ave., Suite 1000, establish what should be measured, the ultimate
objective, how to measure it, and how success will
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2 March/April 2016
 DEPARTMENTS

4 Editorial Staff and Board of Directors

6 From the CEO

7 From the Editor

8 Feedback

9 APICS Supply Chain Council Update

page 22
10 Corporate Spotlight

Many companies struggle to 14 Membership Matters

leverage S&OP in the face of 16 Industry Tools

activist investor pressure.
page 26 18 Beyond Horizon

20 Building Blocks

21 Ask APICS

22 Enterprise Insights

24 Lean Cuture

26 Sales and Operations Planning

28 Working Green

page 35 30 Customer Experience

31 Executive View

32 Relevant Research

Digital Exclusives 35 Management Perspective

Look inside theAPICSmagazine
tablet app for bonus content: 59 Case Study
Find more skills gap insights.
Hear an interview with the APICS 60 Lessons Learned
career coach.
Check out a worker safety infographic.
To access the digital exclusives, search
for APICS mag in the App Store and on RESOURCES
Google play.

23 Index

apics.org/magazine 3
EDITORIAL STAFF AND BOARD OF DIRECTORS

EDITORIAL APICS BOARD OF DIRECTORS

Editor in Chief Chair of the Board
Jennifer Proctor William E. Bickert
Senior Manager of Publications Chair-Elect
Karen Huelsman Steven Georgevitch
Managing Editor Treasurer-Secretary
Elizabeth Rennie William Householder
Associate Editor Directors
Jennifer Storelli Erica Benisch, CPIM, CSCP
Keith Connolly
DESIGN Antonio Galvao Costa, CSCP
Bates Creative Mark Holmes, CTL
Bhaskar Majee, CSCP
ADVERTISING Steven Melnyk, PhD
Tom Lasch Clark Ponthier, CPIM
tlasch@larichadv.com Michael Wasson, CSCP
+1-440-247-1060
Ginny Youngblood, CSCP, CPIM
EDITORIAL ADVISORY BOARD
Richard E. Crandall, PhD, CFPIM, CIRM, CSCP APICS SUPPLY CHAIN COUNCIL
Appalachian State University President
Shari Ruelas, CPIM, CSCP
Philip E. Quigley, CFPIM, PMP
Chapman University APICS CORPORATE
California State University at Fullerton Chief Executive Officer
Abe Eshkenazi, CSCP, CPA, CAE
Randall Schaefer, CPIM
Randall Schaefer Consulting Magazine Contact
editorial@apics.org
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4 March/April 2016
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FROM THE CEO
Peering into the
Global Future
F
or Chinese supply chain professionals, 2016 is off to a
turbulent start. Although the Chinese government contin-
ues to report overall growth, many experts say the nation
is in a manufacturing recession. At the end of last year, its
industrial production posted one of the weakest gains in the last
quarter-century. Since then, the Chinese tin-producing indus-
try, which has been one of the largest in the world, announced
manufacturing cutbacks in late January. Chinese markets are in
disarray, and near-term outlooks are less than optimistic as other
Asian countries vie for shares of its production. (See page 36.)
These issues are not isolated to China or even Asia, however.
Because the countrys manufacturing is an engine for growth
around the world, what happens in China will surely affect supply
chain professionals in many other nations.
In January, I visited China and met with current and poten-
tial partners. I learned more about what Chinese supply chain
professionals are experiencing and explained how APICS can
be of service to them and the companies they support. This trip
went hand in hand with the recent work of the APICS and APICS
Supply Chain Council boards of directors. Together, were creating
a long-term strategy for the organization, and China is an impor-
tant part of that vision.
Prognosticating and planning
As part of these efforts, we have enlisted the help of Brian David
Johnson. Johnson was the first futurist on staff at Intel and currently
serves as the futurist in residence at Arizona State Universitys Center
for Science and the Imagination as well as a professor in practice at its
School for the Future of Innovation in Society. He is using his unique
skill set to help us futurecast.
But what is futurecasting? As he describes it, its not so much about
predicting the future as determining a vision of the future. In this
6 March/April 2016
case, this vision is one that APICS can work
to build.
Our planning for the future is focusing
on people influenced by supply chainnot
just professionals, but also our customers
customer and ultimately the public at large.
To determine this vision, were conducting a
series of exercises and talking to a variety of
experts, including economists and sociolo-
gists. We are asking the following questions:
Who is affected by supply chain?
What are their experiences like today?
What will their experiences be like 10
years from now?
What do they want for the future?
What does APICS need to do to satisfy
their needs, advance the practice, and
support the greater good?
There is no doubt that our society is
changing. The global economy continues
to be chaotic, with predictions of another
recession on the horizon. Todays technol-
ogy is not only an enabler, but also a force
for change. Our understanding of these
dynamicsand how they affect those
touched by the supply chainand our
responses to them will shape our future as
an organization. We continue to explore
how developing supply chain professionals
and supply chain organizations can advance
economies and ultimately improve lives. As
supply chains become increasingly impor-
tant, so does the work we do together.
While APICS is thinking about its plans
for the years ahead, you might want to think
about your own vision for the future. Where
will your supply chain career take you? How
will you contribute to the future of supply
chain? Stay tuned as we continue to share our
visions; we look forward to hearing about
yours as well.
Abe Eshkenazi, CSCP, CPA, CAE
Chief Executive Officer

Essential
Employees Only
A
bout 20 years ago, when I was in college, I took a class called
The Sociology of the Future. I remember both important
and trivial things we discussed in that course: the hive
mind, or the concept of community thinking that has grown even
more relevant; Soylent Green, which was an old movie even then;
and artificial intelligence.
Artificial intelligence and robotics remain hot topicsin our
households, in movies, and in economic dialogue. First, theres
the way we use robots and technology at home. For me, I am
dreaming of a Roomba, the vacuum-cleaning robot, to automat-
ically come and suck all of the kids crumbs away. But with its
high price tag, I must satisfy myself with a more classic model
my husband with our regular old push vacuum. As far as phone
technology goes, theres no way I can make do with our classic
landline. I love my iPhone. However, Siri isnt anywhere close to
being a personal assistant. In fact, she cant even call my mom
when I ask. All this is to say that I dont think shes on the verge
of taking my job.
Second, and more prevalently, we see robots in movies. In one
movie alone, Star Wars: The Force Awakens, theres a whole heap
of robots, including C-3PO, R2-D2, and BB-8. Even in this fantasy
world, the robots might save the day, but they arent capable of
taking over the galaxy.
Here on Earth, the World Economic Forum is telling a different
story. According to The Future of Jobs report, the convergence of
artificial intelligence, machine learning, robotics, nanotechnology,
3-D printing, and genetics and biotechnology is fueling a fourth
industrial revolution. The global workforce is expected to expe-
rience significant churn between job families and functions, the
authors surmise.
The forum estimates that 5.1 million jobs will be lost between
2015 and 2020 because of these labor disruptions. Further, it
FROM THE EDITOR
estimates 7.1 million jobs will disappear
overall during this time period. Hardest hit
will be functions in office and administra-
tion, manufacturing and production, and
construction and extraction.
So, whats left? Growth functions over
the next five years include business and
financial operations, management, and
computers and mathematics. Although
the World Economic Forum warns that, in
almost all industries, technology and other
advances are shortening the shelf-life of
employees existing skill sets, there are
abilities that will gain greater importance.
Those predicted to be in the most signifi-
cant demand by 2020 are
complex problem solving
critical thinking
creativity
people management
coordinating with others.
In short, across industries and occupa-
tions, those talents in greatest demand will
be the ones that robots cant do.
Its time for us to stop fearing that we will
be replaced and start determining how to
make ourselves invaluable to the work-
force. One critical answer that is knitted
throughout the World Economic Forum
report as well as APICS and other resources
is continuous education. We all need to
consider how lifelong learning can help us
embrace the aforementioned skills and inte-
grate them into our career lives. Likewise,
we must learn how to free up our time for
these more complicated tasks by letting
machines replace what they can in our jobs.
Experts say the future is coming, whether
Siri understands them or not.
Jennifer Proctor
Editor in Chief
apics.org/magazine 7
FEEDBACK

Reader Insights
and Observations
Connected issues
After reading the article "Cutting Ties" [by The digital dimension
Philip E. Quigley, CFPIM, PMP,] in the I really love the APICS magazine tablet app.
November/December 2015 issue, which talked Its a much better medium than paper, and
about disconnecting from the connected world it allows me to get through the magazine
in relation to the Sony data breach, I had some in a more effective manner. Plus, the video
thoughts closer to home that I wanted to share. blogs offer a nice interactive element.
The reasons for the Sony data breach came
up as a two-fold problem in your article. You Take care,
mentioned the companys survival of the scandal and public relations John H. Capron, CPIM
nightmares that hurt the brand, but also that its network had been oblit- President
erated by the hackers. Mid-Hudson Chapter
As an 11-year supply chain veteran and a member of a small-to-midsize
enterprise, I am living through the second issue, albeit in a different
way, as an emerging leader in an aging organization with a lack of
technological refresh. Not only do I feel the need for our information
technology department to assure systems integrity through security,
but I also face the threat of the much more likely issue of a veteran in a
mission-critical department retiring or leaving the company. In fact, we
are living through this now, as our enterprise resources planning (ERP)
system architects have both left the company in the past three years via
retirement and termination. Without a clear path to new-world systems
like SAP or Oracle, our organization has struggled to understand every
part of the complex ERP [system] that these two folks built. Animation attraction
Four years ago, my unit, through a peers project management, The animation of the flame jumping from
converted our material requirements planning (MRP) system to a new one match to the next for the Enterprise
system that is outside of our ERP [system]. As we have enhanced the new Risk Management in the Global
MRP engine with 2015 capabilitiesand changed project leads (I took Marketplace article in the July/August
over for my peer)my fears have become that we could have a serious 2015 tablet app edition was fantastic! The
process or knowledge gap when converting our systems over to SAP in article content is great, but the spontaneity
the forseeable future. I have begun the work to define our core functional of the animation really made me want to
roles and map our supporting processes and systems so that when the read the article.
time comes, or if we face a lottery-winning exodus, the organization can Great magazine and content overall. It is a
be prepared for the future on that day. I find this necessary, but it seems great ongoing benefit of APICS membership.
like someone else in the organization should have already thought of this.
Maybe you could use the Sony case study as an example of why Regards,
we should conduct our own contingency planning in marketing, Orestes Peristeris, CSCP
finance, supply chain, and so on, so that when the need arises Head of Strategic Operations
however unexpectedwe can be ready. Value Logistics
How are my peers in the APICS world coping with this issue? I
cannot be the first.

To comment on an APICS Thanks,

magazine article, APICS Chris Serafin
e-newsletter, or APICS
webinar, send a message Team Leader, Global Supply Chain
to feedback@apics.org. Tessco Technologies

8 March/April 2016
 APICS SUPPLY CHAIN COUNCIL UPDATE

Making a Global Health and Humanitarian Supply

Chains at the Health and Humanitarian

Multicultural,
Logistics Conference, which was hosted by
the University of Pretorias Gordon Institute
of Business Science in South Africa in

Multi-Industry
November 2015. Together with PwC and
Imperial Health Sciences, the APICS SCC
polled participants about the challenges fac-

Difference
ing global health and humanitarian supply
chains and brainstormed ideas to guide the
mission of the new forum. The results are
outlined in the below infographic.
Forum to help humanitarian supply chains Based on these results and the insights gath-
ered from the workshops brainstorming ses-

T
he APICS Supply Chain Council (SCC), in partnership with
PricewaterhouseCoopers (PwC), is introducing a new special
focus forum, Strengthening Global Health and Humanitarian
Supply Chains, to identify solutions to some of the most pervasive chal-
lenges facing health and humanitarian supply chains. The forum plans
to engage commercial companies, government agencies, international
organizations, non-governmental organizations, and academia.
Representatives from APICS SCC affiliate and sponsor organizations
also aim to contribute a body of knowledge about strategies to improve
supply chain performance in targeted countries, identify success factors,
share findings through a public website and LinkedIn group, and contrib-
ute to global multicultural and multi-industry improvement.
In conjunction with this effort, the APICS SCC hosted a work-
shop titled Applying Private Sector Leading Practice to Strengthen
sion, the APICS SCC determined that two areas
of focus for the forum should be to increase
the availability of skilled human resources and
support last-mile infrastructure, including
warehousing and transportation capacities.
Forum leaders hope to address these issues by
offering mentorship, sharing best practices for
human resources support in the supply chain
arena, and creating supply chain toolkits to
guide last-mile infrastructure improvements.
Employees of APICS SCC affiliate and
sponsor organizations are invited to apply for
the global core team. Other levels of partici-
pation will be offered for both member and
nonmember organizations.

What are the biggest challenges faced by global health What are the incentives for the private
and humanitarian supply chains? sector to participate in health and
humanitarian supply chains?
Availability of skilled human resources 38%
Funding 23% 1. Profit
Infrastructure 19%

Data availability 15%

2. A
 ccess to developing
Other 4% markets

What projects should the forum consider undertaking

in the near term? 3. Building brand
awareness
Human resources capacity building 20%

Mentorship programs 13%

Supply chain toolkit development

4. C
 orporate social
27%
responsibility
Compiling and publishing best
27%
Illustrations: flaticon

practices from different supply chains

Benchmarking 7%

7%
5. Economic empowerment
Other
of local communities

apics.org/magazine 9
CORPORATE SPOTLIGHT
Emphasis
on Talent
APICS education enables superior
employee development
C
arlisle Interconnect Technologies (CIT) is a St. Augustine,
Florida-based designer and manufacturer of high-performance
wire and cable, including optical fiber. Medical, satellite com-
munication, military and defense, industrial, and test and measurement
industries use its products. The company also specializes in harsh-
environment interconnect contacts, connectors, cable assemblies,
installation kits, racks, and shelf assemblies.
A few years ago, the supply chain team at CIT faced rapid growth
through acquisition, organic expansion, and the implementation of
a new enterprise resources planning system intended to standardize
business systems across CIT plants. At the time, supply chain activ-
ity was conducted at the local level, with limited training for supply
chain associates. Decision makers knew that an improved strategic
focus was necessaryspecifically one that would center on develop-
ment programs, enriching and retaining associates, and attracting
new talent to the organization.
Developing the skills and capabilities of your companys supply
chain associates is critical to your future success, says Steven
Morgan, CPIM, CSCP, director of CIT supply chain operations.
We wanted to make our associates better in order to help drive our
business to be better.
CITs journey began with six sigma define, measure, analyze,
improve, control (DMAIC) and plan-do-check-act (PDCA).
Then, lean tools were employed to assess the situation; identify
needs; and advance, track, and sustain the growth of supply chain
employees. The company encouraged staff to take advantage of
APICS resources.
The fundamental principle is that supply chain leaders own
the development and growth of our associates, says Mark Smith,
CIT vice president of supply chain and information technology
(IT). He also notes that senior leaders were very supportive of
the skills-improvement project, with Carlisle Corporate funding
employees APICS enterprise membership fees as well as training
books and other materials.
The APICS Certified in Production and Inventory Management
(CPIM) program is a cornerstone of the initiative. APICS training
is conducted using self study, online study with Fox Valley Technical
College, in-house training, and local APICS chapter offerings. CIT
class attendance at the start almost entirely consisted of supply chain
associates, but more participants now are coming from engineer-
ing, sales, customer service, operations, finance, IT, and other areas.
Together, they are learning how key concepts link together and how
the work they do is integrated into the overall business system.
10 March/April 2016
It is not uncommon to see employees
given five hours a week to study for their
exams, take exams during work hours,
meet at lunch to study, take practice tests
together, and attend quarterly APICS
training during work hours, Morgan says,
adding that APICS training is hosted at
many facilities to maximize participation.
Leaders of the initiative place high value
in soft skills, so the program was designed
to help associates enhance competencies
such as personal development, negotia-
tion aptitude, team building, and more.
CIT supply chain associates also attended
APICS educational events including the
Best of the Best Sales and Operations
Planning Conference and the APICS
annual conference. In fact, at APICS 2015
in Las Vegas, representatives from CIT
were honored on stage when the company
received the APICS Corporate Award of
Excellence in Education for its noteworthy
employee advancement success.
Concepts in action
The following overview explains the specific
DMAIC and PDCA processes CIT used.
Define: At CITs various plants, pro-
fessionals found a lack of common
understanding of and training about key
concepts, definitions, and supply chain
activities as well as inconsistent or highly
variable job titles and duties. In addition,
improvement was needed in the overall sup-
ply chain strategy for associate development
and training.
Measure: Current processes and tools
were collected, measured, and examined.
This included specific job accountabil-
ities; plant-level supply chain develop-
ment; organizational training plans; and
individual development plans, including
the required skills, education, certifica-
tions, experience, and training needed for
each position. We explored the oppor-
tunities for growth, promotion, progres-
sion tracks, and cross training for supply
chain associates, Smith explains. Out of
roughly 300 supply chain associates, there
were 169 job titles among all plants. Only
two people had their CPIM designations,
and only four associates had any indus-
try-standard professional certification.

Analyze: Initial analysis showed that quick growth led to an
inadequate overall strategy and reduced coordination among
plants supply chains. In addition to the large disparity among job
descriptions, titles, and responsibilities, there was no formal sup-
ply chain training conducted at an organizational level. Supply
chain associates were intelligent, hard-working, committed, and
wanted to learn more, but they werent sure how to proceed,
Morgan says. And plants had strong processes and executed well,
but they had performed limited work to standardize processes,
tools, or training.
Improve: CIT professionals from all around the organization
collaborated to establish an improvement strategy. Ben Draper,
CPIM, a master production scheduler, says he immediately saw the
organization differently. I started noticing significant opportu-
nities to improve our processes, he explains. At the same time,
I was able to see several things we did very well. I tried to use my
knowledge from working on the floor along with my CPIM to
enhance our core competencies and resolve any issues that hinder
our performance.
A Carlisle Interconnect Technologies kaizen team participates in an
APICS training challenge.
Control: CIT continues to measure progress against targets
and key performance indicators. In addition, a supply chain audit
measures progress and ensures that individual and organiza-
tional development plans are integrated and mutually supportive.
Complementary processes and scorecards confirm that CIT brings
in new supply chain associates who fit the culture and who are
willing to continuously develop personal competencies and skills.
In addition, the company has rolled out an internal supply chain
leadership development program to provide internships, rotations,
and other opportunities for college students or graduates who want
to explore career opportunities in supply chain.
Plan: The new development strategy involved forming a conceptual
layout of standard supply chain positions, descriptions, and account-
abilities. This outline incorporated APICS training for different levels
of responsibility in the supply chain organization. Then, the findings,
costs, and expected outcomes were shared with leadership in order
Elizabeth Rennie
to gain support. Next, a rough timeline for
the program was created, keeping in mind
that continuous improvement likely would
be needed along the waysomething Smith
says was a key point.
Do: In this phase, APICS Career Packs
were used to establish standard respon-
sibilities, accountabilities, and require-
ments in order to reduce titles to 30 initial
standard supply chain jobs and their
descriptions. Minimum training require-
ments also were built into the job descrip-
tions. Lastly, career tracks were estab-
lished that clearly illustrate horizontal
and vertical progression pathways so that
supply chain associates understand how
to grow, learn, and progress all the way to
vice president of supply chain, if desired.
These documents were shared with lead-
ership and supply chain associates.
Check: Assessments were set to measure
and identify gaps for each associate. This
helps managers develop training plans and
review progress periodically. At this point,
we were able to identify the areas where we
could start associate development, Morgan
says. APICS provided key resources and the
body of knowledge to meet this need for us.
Act: First, APICS training was employed
to help close gaps in conjunction with other
initiatives. Then, even more PDCA was
used. We encouraged the use of standard
job descriptions for posting available career
opportunities, checked assessments and train-
ing matrices as we visited the plants, shared
examples among the plants, and continued to
look for opportunities to improve the useful-
ness of the tools, Smith explains.
Winning outcomes
Both Morgan and Smith say they are
surprised and impressed by the number of
associates enthusiastically participating in
the training and the range of organizational
areas these employees represent. Our plants
got really excited and started seeing immedi-
ate value in the education, Smith says. They
really valued the [education] they were
receiving, and this has promoted improved
internal collaboration and understanding.
Employees who complete the program
benefit from new skills, job promotions,
and other performance rewards. Friendly
apics.org/magazine 11
CORPORATE SPOTLIGHT Elizabeth Rennie

competition and recognition by peers, managers, and supply chain

leaders are seen more and more with each module test passed. It is
absolutely amazing when all people are speaking the same language
and understanding key supply chain concepts, says Chacy Smith,
CPIM, a former supply chain manager who recently was promoted
to director of operations. The productivity level and efficiency it
creates are powerful. I have seen positive things happen in pro-
duction control, inventory, demand planning, purchasing, and
customer service. It creates teamwork and really boosts employees
self-confidence in the jobs they are doing.
She adds that the idea of studying at first was a little scary because
many CIT employees had been out of school for quite a while. To
overcome this, supply chain leaders organized associates into study
groups so they could support one another. The groups discovered
strengths, offered encouragement, and cheered for each other at exam
time. Every six months, employees received a recognition certificate
and $50 gift card for each module passed. CIT associates say this
became a part of the cultureso much so that, as new people join the
team, they immediately ask when they can begin the program.
Manny Funderburk, CPIM, a master production scheduler, says
that this group education initiative promotes teamwork every day.
The ability of personnel to think as one has a profound impact on

It is absolutely amazing when all people

are speaking the same language and
understanding key supply chain concepts.

productivity, he explains. When everyone uses the same vocab-

ulary and understands the same concepts, it makes the business
more responsive. Ideas begin to flow more freely, and solutions to
problems are more readily apparent.
Does your organization exhibit supe-
In addition to these qualitative results, CIT is showing several
rior performance and dedication to
measurable benefits. Specifically, on-time delivery has improved advancement in supply chain and
from 87 percent to 96 percent, slow-moving and obsolete inventory operations management? Enter the
have been significantly reduced, and cycle counts are revealing more APICS Corporate Awards of Excellence,
precise results. Working capital also continues to improve each year. and your company could be honored on
Morgan says the productivity increases and advancements stage at APICS 2016 and featured in the
in on-time-delivery, working capital management, scheduling, pages of APICS magazine.
customer service, and integration are a direct result of APICS There are two categories: The
assistance, tools, and knowledge. He adds that CIT employees also Education Award of Excellence recog-
are better able to help customers and suppliers drive process and nizes commitment to productivity and
progress based on the application of
business improvements. In particular, key customers are recogniz-
educational concepts, competencies,
ing the planning, scheduling, and inventory management skills and
and best practices from the APICS body
competencies that CIT supply chain associates have gained. of knowledge, and the Innovation Award
Elizabeth Rennie is
managing editor for
Our partners see the value our associates bring across the entire of Excellence recognizes achievement
APICS magazine. She supply chain, and this is promoting better collaboration, he says. We in developing strategies and tactics
may be contacted at pride ourselves on providing services and product when performance to meet and overcome challenges
editorial@apics.org.
matterswhich means our people really matter. As our associates and risk. To learn more, visit apics.org/
gain their APICS education, the light goes on in their eyes as they see awards or contact Elizabeth Rennie at
To comment on this editorial@apics.org.
article, send a message the difference the APICS education program is making. And we as a
to feedback@apics.org. company see the difference too.

12 March/April 2016
Showcase Your Success
APICS CORPORATE AWARDS OF EXCELLENCE

2016 Call for Entries Now Open

APICS announces the launch of the 2016 APICS Corporate Awards of
Excellence Call for Entries. The awards recognize organizations with
superior performance and dedication to advancement in the fields of
supply chain and operations management.

There are two categories for consideration Call for Entries

Opens April 4, 2016
THE EDUCATION AWARD OF EXCELLENCE recognizes an organizations
Enter and learn more at
commitment to productivity and advancement based on the application
apics.org/awards.
of educational concepts, competencies, and best practices from the
APICS body of knowledge.
Deadline
Award submissions are due on or
THE INNOVATION AWARD OF EXCELLENCE recognizes an organizations
before May 27, 2016.
achievement in developing strategies and tactics to meet and overcome
challenges and risk in the changing industry landscape.
MEMBERSHIP MATTERS
Flexible and
Connected
APICS body of knowledge traverses
professionals career path
I
Jeremy Burek,
CPIM, CIRM, CSCP
Director of Information n his career, Jeremy Burek, CPIM, CIRM, CSCP, has moved
Technology Applications through different supply chain areas but always found that
Kellogg Company
APICS membership and education helped him connect the
dots along the way.
I joined APICS in 1999 while I was an employee for Intel
supporting production planning design and configuration during
the initial rollout of SAP at its global manufacturing facilities,
he explains. At the time, Burek was familiar with the benefits
of APICS certification and membership from his supply chain
management courses at Michigan State University. Joining APICS
and obtaining APICS certification was a way for me to continue to
grow my base of knowledge, network with like-minded individ-
uals, stay current with process and technology advances, and also
help validate my knowledge with my current employer and poten-
tial future employers.
After working at Intel, Burek moved to Kellogg Company in
2008. There, he transitioned to multiple leadership roles support-
ing different functional areas. He began his Kellogg career at the
companys Oak Brook, Illinois, location as director of procure-
ment and manufacturing applications. Next, he became director
of enabling applications supporting the procurement, finance, and
human resources departments. He most recently served as director
of application outsourcing, spearheading the task of outsourcing
the global sustainment of the Kellogg enterprise resources planning
(ERP) environment.
As Burek established his career in supply chain; production plan-
ning; and information technology (IT), specifically enabling supply
chain operations, he says he found an enormous amount of value
in understanding the processes of supply chain and the needs of
supply chain users.
The APICS body of knowledge has applied to my work very
differently throughout my 20 years of work experience, he explains.
Starting out as a production planner, I leveraged the body of
knowledge to ensure I was performing the right functions in my job
and I was using the best-known methods. As I moved into the IT
Jennifer Storelli is side of the supply chain, which also entailed a lot of business process
associate editor for
APICS magazine. She
redesign, I used it as a baseline with my business partners to ensure
may be contacted at we werent needlessly customizing the solution and also validate the
editorial@apics.org. business processes were industry standard.
No matter where his career takes him next, Burek says he is confident
We encourage you that APICS has prepared him for the future. I find myself well posi-
to share your APICS
stories. Visit apics.org/ tioned for success, either continuing my career within IT or transition-
membershipmatters. ing back to the [production planning and procurement] business.
14 March/April 2016
Jennifer Storelli
Sharing success
As an APICS volunteer, Burek strives
to help others in their career paths and
support the future of supply chain talent.
I have volunteered in the past for APICS,
most recently as a mentor at the annual
conference in 2011, he says. For APICS to
be successful, membership needs to con-
tinue to grow and continue to bring in new
and younger members. Mentoring college
students just entering the workforce will
help drive their engagement and future
growth within APICS.
Burek adds that mentoring these students
has been a fulfilling experience for him as
a professional. I think volunteering for
APICS provides a different perspective than
your normal job responsibilities, he says.
It allows an individual to deliver results
and provide input into something that will
benefit the greater good.
As a member of the APICS Chicago
Chapter, Burek also enjoys attending local
and national meetings for the personal and
professional networking opportunities they
The APICS body of
knowledge has applied to
my work very differently
throughout my 20 years
of work experience.
provide. He has found similarly beneficial
networking opportunities at the APICS
annual conference, meeting with presenters
and their companies to learn how he can
do his job better and help his company
improve its operations.
Burek says he is excited about the future
prospects APICS will offer him on his
career path and looks forward to his con-
tinued membership and involvement for
years to come.
TAKE YOUR SUPPLY CHAIN TO NEW HEIGHTS

APICS 2016 offers three days of end-to-end

supply chain learning through powerful
keynote speakers, relevant educational
sessions, behind-the-scenes facility tours
and endless networking.

Join over 2,000 professionals from the worlds

brightest companies and leave equipped
with the insights and knowledge to elevate
your supply chain performance.

REGISTRATION OPENS IN APRIL

Learn more at apicsconference.org
INDUSTRY TOOLS
Automation
Rootstock Software released its Mini-Picker
solution for 3-D bin picking of small indus-
trial parts. The Mini-Picker is available with
the Universal Robots UR5 collaborative
robot, which is designed to be easy to deploy
and re-deploy as production needs change.
Combined, the solution enables companies
to automate machine loading and unload-
[1] ing, boost production rates and machine
use, and enhance returns on investment, the
company says.
Enterprise management
IFS launched an update to its IFS Applications
9 software suite to add new features to speed
processing and enhance ease of use. The new
version is equipped with the IFT In-Memory
Advisor, which enables users to run analytical
queries hundreds or thousands of times faster
than before. It also includes updates to its
manufacturing component, such as enhance-
ments that enable users to access production
[2] issues directly from the IFS Manufacturing
Visualizer, which also has been equipped with
new charts to optimize production planning.
The IFS Financials component has been
updated with extended support for group
consolidation, including advanced analysis
of consolidated balances using IFS Business
Analytics. Lastly, the new layered application
architecture will make IFSs quarterly updates
faster to implement, the company says.
LZ Lifescience created a manufacturing
execution system (MES) specifically for the
[3] global pharmaceutical industry: Shopfloor-
Online Lifescience Edition. The new solution
is based on Lighthouse Systems Shopfloor-
Online web-based MES, which has been
used across a variety of sectors to track plant
operations and ensure that materials flow
smoothly. The online production management
system also can help companies achieve
right-the-first-time manufacturing and faster
product release. [1]
Material handling
Big Lift debuted two lift truck models based
on emerging material-handling trends. The
Big Joe PDSR (pictured) has a 3,000-pound
load capacity and can lift loads as high as 13
[4] feet. The AC-powered walkie-reach truck
16 March/April 2016
also has power steering; sideshift; integral
tilt; proportional controls for lift, lower, and
extend and retract; and a compact chassis
for operating in small spaces. The Big Joe J2
Joey low-level order picker features a 2,000-
pound total vehicle capacity and the ability
to lift 1,500 pounds as high as 6 feet. It also
includes power steering, an ergonomic
mini-mast, and an industrial battery
compartment as standard. [2]
Crown Equipment designed a Battery Health
Monitor to help manage lead-acid battery
powered forklift fleets. The Bluetooth-enabled
Battery Health Monitor tracks individual
battery performance during operation and
transmits the information to personnel
in real time through Crown Equipments
InfoLink wireless fleet and operator
management system. In turn, users can make
more proactive decisions when batteries
begin to fail, such as how to recharge them,
and track them as assets. In addition, the
Battery Health Monitor can alert managers
when the temperature of a battery exceeds
a predetermined threshold and compare it
with additional data such as water levels or
last equalization. With this information,
companies can create profiles for each battery,
determine which batteries work best for
different applications, and ensure optimal
battery performance. [3]
Gorbel released the newest of its intelligent
lifting devices, the Easy Arm 660, which incor-
porates Gorbels G-Force Intelligent Lifting
technology with the body of an ergonomic
articulating jib crane. With a load capacity of
up to 660 pounds and reach of up to 14 feet,
the free-standing, plug-and-play lifting solu-
tion is applicable for a variety of uses, includ-
ing placing automobile engines and loading
large plates into computer-numerical-control
machines. It also can lift at speeds as fast as 45
feet per minute for high-production environ-
ments and includes a built-in float mode for
exact positioning. [4]
Measurement
Automated Precision (API) added its vProbe
contact probing option as an accessory for the
Omnitrac 2 laser tracker. The vProbe features
a hidden-point measurement function that

enables the operator to measure inside and
behind objects at a distance of up to 80 meters.
This reduces the number of tracker moves nec-
essary to complete measurement, the company
says. The solution also boasts a full 360-degree
roll to accurately measure hard-to-reach angles
and cavities as well as the highest measurement
accuracy of any API probing device, with as
low as 55 microns of volumetric 3-D error. The
lightweight, wireless device can operate for up
to 6 hours on a single battery charge. [5]
Mobile computing
Advantech announced its PWS-870 fully
rugged tablet PC with Windows 10 Mobile
Enterprise. The tablet offers enterprise-
grade security and compatibility with Azure
Cloud Services and can connect to external
displays with a mouse and keyboard for a
PC-like experience. Designed for field service
management, manufacturing execution
systems, mobile outdoor operations, and
fleet management, the tablet features an Intel
Core processor with integrated graphics and
a high-brightness 10.1-inch HD multi-touch
screen for use in direct sunlight. It also has two
USB 3.0 ports, one USB 2.0 port, an audio jack,
an HDMI connector, front- and rear-facing
cameras, a 1- and 2-D bar code reader, and a
near-field communication reader for in-field
data collection.
Printing
HP unveiled two new HP DesignJet
technical printers for printing, scanning, and
copying in architectural, engineering, and
construction applications. The DesignJet T830
transportable multifunction printer (pictured)
includes a damage-resistant body designed
to withstand challenging mobile job sites. Its
36-inch-wide, built-in scanner enables users
to modify and scan documents in the office
or at construction sites from a mobile device.
The HP DesignJet T730 printer shares many of
the same features as the T830 and includes an
automatic sheet feeder, off-axis ink delivery, an
Econofast print mode to save ink and time, a
detachable stand for easy transportation, and a
built-in WiFi network for easy connectivity. [6]
Shop floor
Hamilton Caster and Manufacturing
launched a new polyurethane-tread wheel
Featuring the latest products and services from supply chain and operations management companies
series: DuraGlide. Hamtilons DuraGlide
wheel rolls up to 40 percent more easily than
other polyurethane wheels and performs
well at high speeds and outdoors. With a
1-inch-thick tread and a heavy-duty cast-
iron core, the wheel can support extra-heavy
[5]
loads. In addition, the thick tread enables it
to run much cooler than other polyurethane
wheels, reducing the chances of wheel
failure. Hamiltons DuraGlide wheel is
available in various sizesincluding 6-,
8-, 10-, and 12-inch diametersand with
load capacities ranging from 1,600 to 8,000
pounds per wheel. [7]
TestEquity released its new Model 123HS
Temperature/Humidity Chamber as a
single-stage, budget-friendly version of its
Model 123H test chamber. The Model 123HS [6]
features a temperature range of -35175C,
a humidity range of 1095 percent, and 2.3
cubic feet of workspace. In addition, a heated
multi-pane viewing window eliminates fog
and condensation without a manual wiper,
and two 4-inch access ports let users attach
wires and sensors to the test sample through
both the left and right sides of the chamber.
The unit can be plugged into any 120-volt,
20-amp outlet and includes a stainless-steel
vapor generator assembly that is double
protected against low-water and over-
temperature conditions. [8]
[7]
Tracking and labeling
Dynamic Systems announced the release of
the latest version of its Specialized Inventory
Management with Barcode Accuracy
(SIMBA) Seafood System, SIMBA 2016.
SIMBA is designed to track, label, and ship an
unlimited number of products with specific
species and characteristics, automatically
generate bills of lading, and verify shipments.
The system uses bar codes to capture product
information, including weight, size, color,
and grade, and store it in the Simba Inventory
database to provide real-time, accurate
inventory balances. During distribution,
SIMBA tracks the placement of items into
a specific van for full traceability. The
enhanced SIMBA 2016 includes traceability [8]
functionality to track a product to a specific
geographic area and boat through re-boxing Send media releases to editorial@apics.org.
and processing. High-resolution, color photographs are encouraged.
apics.org/magazine 17
BEYOND THE HORIZON
David J. Frayer is director
of executive development
programs at Michigan
State Universitys
Eli Broad College of
Business. He may be
contacted at frayerda@
broad.msu.edu
Judith M. Whipple
is a professor in the
Department of Supply
Chain Management
at Michigan State
Universitys Eli Broad
College of Business. She
may be contacted at
whipple@broad.msu.edu.
Patricia J. Daugherty is
professor and Bowersox-
Thull chair in logistics
and supply chain
management in the
Department of Supply
Chain Management
at Michigan State
Universitys Eli Broad
College of Business.
She may be contacted
at daugherty@broad.
msu.edu.
To comment on this
article, send a message
to feedback@apics.org.
18 March/April 2016
Creating Value
in Integrated
Supply Chains
Why procurement and sourcing goals must
be redefined
A
s part of the ongoing collaboration between Michigan
State Universitys Eli Broad College of Business and
APICS, the Beyond the Horizon research project is inves-
tigating how the field of supply chain management will evolve.
Following interviews with hundreds of executives from more
than 50 firms from around the world, some recurring topics
emerged regarding value. Specifically, interviewees contemplated
three things:
1. How can firms unlock greater levels of value in todays supply
chain environment?
2. How can businesses move beyond the boundaries of func-
tional optimization?
3. What should be the roles of procurement and sourcing in
value creation?
From these interviews, Beyond the Horizon research team mem-
bers identified a number of opportunities to create value through
integrated supply chains. Many of these opportunities require deeper
consideration regarding the role and impact of suppliers and how they
are positioned and managed by procurement and sourcing teams. In
particular, respondents described five actions necessary to create value
and enhance procurement and sourcing impact, which include
understanding value
creating strategic impact
expanding relevant scope
facilitating co-creation
earning preferential treatment.
For many supply chain professionals, especially those with pro-
curement and sourcing responsibility, value is defined by the ability to
generate cost savings. Although cost-reduction strategies are impor-
tant, they are not the only approach to generating value. Supply chain
professionals have the ability to influence revenue through ideation
with suppliers and by gaining access to innovative technologies,
better-quality products, and improved service. Supply chain profes-
sionals also influence assets through consideration of insourcing and
outsourcing strategies as well as improved inventory velocity.
Value and collaboration
Value is a multidimensional concept that provides procurement
and sourcing professionals with a wide range of options for
contributing to business objectives. During the interviews, one
executive reported shifting focus from
price and cost to value and time. This
change was driven by the recognition that
suppliers may offer much greater potential
when engaged collaboratively in pursuit
of goals that are meaningful to customers
(not just internal functional metrics).
The research also has suggested vast
opportunities for supply chain professionals
to facilitate co-creation and development
of integrated product and service solutions.
Organizations must move toward a new
understanding that value comes from the
ability to combine knowledge and capabilities
in new and compelling ways. As one inter-
viewee reported, It starts with co-creation
the strategic understanding that you are
building something collaboratively.
This perspective was reinforced by another
respondent, who said, [It] is important to
try to figure out how to extract more value
out of a relationship to help us meet our joint
business goals.
Likewise, another person commented,
Suppliers can become part of the solution.
The challenges for many supply chain
organizations include not only understanding
and defining value, but also creating strategic
impact. Connecting supplier capabilities to
customer requirements and developing value
propositions that are unique and compelling
are critical, particularly when driven by more
integrative, end-to-end thinking. If the pro-
curement team is focused on cost reduction,
and the need for cost reduction is not directly
aligned with customer value propositions, is
the activity truly strategic?
Organizations are challenging conven-
tional wisdom every day. For example, one
respondent suggested that her supply chain
organization is focused on giving customers
the innovation they want and need, not just
delivering on a generic cost-reduction goal.
Another interesting challenge for
procurement and sourcing organizations
is how to expand their relevant scope of
responsibility to widen the opportunity
for value creation and strategic impact.
When supply chain professionals remain
locked in silos with functional metrics
and limited visibility or responsibility
for end-to-end, integrative processes, the
value potential is limited.
 David J. Frayer, Judith M. Whipple, and Patricia J. Daugherty

For example, the earlier that firms can engage critical suppliers in
the innovation and co-creation processes, the more likely it is that an
innovation will succeed. As one executive indicated, It takes a long
time to design a final product, so we want to integrate our suppliers
as much as possible into our early designs in order to get it right the
first time.
Supply chain executives also reported expanded opportunities for
value creation in new product development and after-sale service and
support areas. The ability to bring together supplier expertise to work
on challenges beyond traditional procurement and sourcing reach is a
new horizon for many organizations.
The last value-creation approach mentioned in the interviews was
the concept of being a customer of choice. The idea that customers
have choice is widely accepted in business. However, suppliers having a
choice as to which customers they work with is less common. In order
to attract the best suppliersthose that have capacity and capability
to co-create and drive higher levels of value and talent and the greatest
ideasorganizations must learn how to become preferred customers.
One executive recommended asking suppliers directly if you are
their best customer. Another reported, We are known for caring
about our suppliers.
As consolidation reduces the number of
superior suppliers, organizations must think
about attracting top firms. This perspective
is increasingly important today when limited
supplier capacity is becoming a critical con-
straint in many industries. In these situations,
trust is key to earning preferential treatment.
Takeaways
If the goal is to create value in integrated supply
chains, then the research suggests that procure-
ment and sourcing professionals must redefine
traditional value concepts, improve strategic
impact, extend scope of responsibility, drive
co-creation, and become customers of choice.
Beyond the Horizon will continue to
investigate these and other issues critical to
organizational success. If you have questions
or would like to participate in the research,
send an email to msu_scm_research@
broad.msu.edu.

APICS EXTRA LIVE

The Seven Macro Developments
Reshaping Supply Chain Management
Presented by: Date:
Steven A. Melnyk April 13, 2016
Professor of Operations and Time:
Supply Chain Management 1:00 p.m. Central
Michigan State University

Attend this APICS Extra Live webinar to discover the seven key advancements, shifts, and events influencing both management
style and action and how the implications of these macro developments will change the future of supply chain management.
Participants will gain key insights into the effects of:

n the internet of things n the emergence of the experiential

n the disparate ages between the supply chain
populations of developed and emerging n advances in digital and autonomous
countries and the resulting implications technology
for services needed and available talent n the increasing demand for
n increasing volatility of oil and fuel cybersecurity.
n the swing of purchasing power to the East

Register at apics.org/extralive.

apics.org/magazine 19
BUILDING BLOCKS John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP

Survival and beyond

However, are the standard operational
performance measures of efficiency and
profitability enough in an era of increasing
customer mindfulness of sustainability?
Chicken Little might contend that these

Innovation is not nearly the

competitive differentiator
it was just a few years ago.

issues promise to significantly disrupt a

number of industriesincluding those just
mentioned. For example, the interest in
electric cars has gone past the fad stage into a
viable customer-satisfying alternative. If this

Preemptive
trend continues, more businesses will have to
embrace sustainability in order to survive.
There are some other big questions that

Management
leaders in many sectors, particularly auto-
motive and power production, soon will
have to address:

Gets Results
What will happen to the financial and
intellectual investments in the design
and production of internal combus-
tion engines?
Seeing and acting beyond the status quo What will happen to the factories and
the people in them that were estab-

I
n a Building Blocks article from several years ago, we contended
that Chicken Little was an operations guy because he recognized
that disruptive events quickly can create an environment where the
status quo is not only ineffective but, in some cases, also harmful to
a businesss survival. That department was written in 2008 during a
period of serious market declinea decline that brought about many
changes in how we work and, for some, where we work.
Much has happened in the last eight years. Numerous businesses
John P. Collins, CFPIM, have become leaner by using many of the typical supply chain and
CSCP, is president of operations management tools. Speed, cost, and quality have been
Sustainable Solutions.
He may be contacted at
joined by flexibility as basic business requirements. Some would say
jcollins@ssi-spm.com. innovation is not nearly the competitive differentiator it was just a few
years ago.
Eric P. Jack, PhD, CFPIM, Those businesses that have adapted to the changing marketplace
CSCP, is dean of the have done well. The automotive sector is an excellent example of
Collat School of Business
at the University of
responding effectively to customer expectations. The oil industry was
lished to build engines that represent a
core competency?
How will the utility industry respond
to the calls for shifting energy gener-
ation from gas to electricity for eco-
friendly vehicles?
One of the most valued characteristics of
a great supply chain and operations manage-
ment professional is the ability to see beyond
the current skyline to the challenges that are
approaching far off in the distance. Do you
and your business have a strategy in place
for effective responses to these shifts? More
importantly, are you looking beyond reaction
to a truly proactive approach?
Photo: iStock/nicolas_

Alabama at Birmingham. able to turn a prediction of possibly running out of oil into a boom of
He may be contacted at availability now approaching an oil glut. Coal is recognized as one of
ejack@uab.edu.
the earths most abundant resources, and its low cost makes it attractive
as a source of fuel for power generation around the world. Keeping
To comment on this
article, send a message these industries operating at maximum efficiency and profitability is
to feedback@apics.org. firmly within the control of supply chain and operations managers.

20 March/April 2016
Jonathan Thatcher, CSCP, CAE
Doomed to
Repeat History?
Preventing normalization of deviance keeps
firms honest
Reader R.S. writes: I am working on my degree, and, in one of my
classes, weve talked about some of the business scandals of 2015. Many
are similar to scandals from years ago that I have read about in my
studies. With all of todays business information, automation, regulation,
and best practices, why do companies keep making the same mistakes?
S
tandards and policies sometimes feel like constraints when you
are tasked to deliver the impossible (or what seems impossible).
In reality, they are allies and guardrails that keep people and
organizations away from harm. The phrase normalization of devi-
ance describes the condition of businesses behaving contrary to their
standards and policies, thereby triggering serious error and scandal.
Unfortunately, this behavior can persist for years. Once caught and
corrected, it still can emerge again in a repeating cycle.
One reason companies fail to learn from such consequences is that
human nature frequently prefers short-term solutions and often fails
to evaluate long-term costs. It is all too common for staff to believe it is
more important to deliver on requirements and projects than to respect
organizational standards and policies. This is a near-sighted condition.
Violating standards and policies brings larger liabilities than not achiev-
ing a deliverable or project.
Economist Thomas Sowell proposed the concept of stage one and
stage two thought. Stage one thought considers only the immediate
consequences of an action. For example, someone might think: If I
break safety standards, I finish the project faster. I do not care about
any other consequences. Stage two thought requires considering both
the immediate and long-term consequences. Stage two therefore would
reject breaking safety rules because of the larger consequences versus fin-
ishing a project faster. Stage one and stage two analysis often present very
different perspectives. A business manager or leader must think in stage
two terms and be aware of the risk of stage one thought among staff.
But this is only one element of a wider problem. Normalization of
deviation actually exhibits a repeating life cycle in many organizations.
Here is a typical step-by-step pattern:
1. M  anagers set high-stakes, unrealistic, or near-impossible requirements
and propose achievement through innovation, flexibility, and the right
people. Although they promise rewards for those who deliver, manag-
ers also imply that those who fail will face career repercussions.
2. The words innovation, flexibility, reward, and consequences
create the perception that managers will not ask how the objective
is met.
3. T
 he concept of innovation becomes breaking standards and policies
to deliver the requirements.
ASK APICS
4. D  elivery of the requirements occurs without
immediate, negative consequences. (This
may be due to luck or inadequate oversight
or leadership.)
5. T  he lack of negative consequences launches
a perception and practice of breaking stand-
ards as a repeatable solution.
6. I nnovation flows into protecting the solu-
tion from existing standards and polices.
Justifications such as, Other people are
doing it, so it is normal practice; We can
ignore the rules because we are different; or
The standards and policies must be out of
date because no harm comes from breaking
them, become common. This stage of the
life cycle can grow into an insular subculture
within the organization.
7. A sudden change, such as a new leader,
whistleblower, or disaster finally exposes the
normalization of deviance. Investigations
prevent any further practice. Current man-
agers learn the lessons in the short term.
Step seven is critical. Managers and leaders
must create a long-term lesson learned.
Otherwise, normalization of deviation
will repeat.
Staff at all levels of an organization must
stand watch against normalization of deviance
and reject it as a shared value. An organization
should be self-aware enough to recognize
where its cultures and behaviors risk encourag-
ing normalization of deviance, for example
high-stakes, high-pressure requirements
set with weak oversight
blind spots to detecting risky insular sub-
cultures and silos
inadequate leadership in investigating
or analyzing potential violations
of standards
widespread tolerance of Its not
my problem.
Finally, managers should investigate and
institute procedures to ensure deviances are
not repeated. As part of this effort, its impor-
tant to remind staff that upholding approved
processes is paramount and to reward Jonathan Thatcher,
CSCP, CAE, is director
individuals for compliance. This can help keep of research for APICS.
everyone on the straight and narrow. He may be contacted
at askapics@apics.org.
Send APICS your supply
chain or operations
management questions
at askapics@apics.org.
apics.org/magazine 21
ENTERPRISE INSIGHTS
Following the
Bread Crumbs
Traceability is key to successful recalls
N
o company wants to have its products recalled. However, if a
recall is necessary, the priority is to minimize the ramifica-
tions and complete it as quickly and efficiently as possible.
Certain industriessuch as consumer packaged goods, pharmaceu-
tical, and automotive, among othersare well acquainted with the
need to properly accomplish recalls. However, many other industries
also are at risk, and they might not even know it.
A quick perusal of recalls.gov reveals a startling array of US
products that have joined the ranks of the recalled, and others are
apt to follow. Even businesses that are highly unlikely to be involved
in a recall are beginning to take notice of the potential problem and
taking action to mitigate any such risk.
Outside of addressing the cause of a product issue, a suc-
cessful response to a recall depends on traceability. With good
records of material sourcing, product manufacturing, distri-
bution, and all of the steps in between, a company can clearly
identify where each component and material came from, what
products contain the problematic materials, and where those
products ended up. The best possible outcome for the producer
is to be able to use this information to limit the number of
22 March/April 2016
recalled products to the smallest popula-
tion possible. If there are gaps or uncer-
tainties in the inventory transaction trail,
more batches must be recalled to assure
complete capture of all products that
could possibly have been affected.
To illustrate, lets say a product is
recalled because of a safety issue. Once the
problem is identified, the producer must
determine the cause of the failure. Initial
research identifies a defective component
as the problem. Further testing then reveals
that a specific batch of this component
from a specific purchase is the culprit.
After notifying the supplier, so that it
can do its own fact-finding and tracing,
The best possible outcome
for the producer company
is to be able to use this
information to limit
the number of recalled
products to the smallest
population possible.
the producer must identify all product
lots that contain parts from that specific
component lot. Next, the search moves
in a downstream direction to see where
each affected product lot ended upfrom
finished goods through the distribution
chain to individual dealers, distributors,
and customers. Obviously, this requires
detailed record-keeping and robust data
management and search capabilities to
check these records.
Information investment
Virtually every inventory, enterprise
resources planning, and warehouse manage-
ment system is capable of capturing the raw
data, including simple inventory transac-
tion history with sufficient identification
Photo: iStock/retrorocket
such as serial numbers, lot numbers, order
numbers, and important dates. Additional
information from production and quality
must be readily relatable to specific lots and
orders to complete the audit trail. This is
something that is difficult, if not impossible,

to recreate after the fact, though. The data must be collected and
stored in an appropriate database at the time the transactions occur
in order to be valid and supportable.
It is important to understand that recalls are a supply chain issue
and not at all limited to the producer of the faulty product. Any
company making any material, component, or assembly that goes
into another productno matter how many links removed they
are from the customer end of the supply chaincan be involved in
the recall process. Collecting detailed traceability data at all of these
levels might seem like an unnecessary expense, but when a recall
comes out of left field and challenges the traceability of products
and materials, its value will be apparent.
To further bolster the business case for traceability, keep in mind
that such data also is important for engineering studies, prod-
uct-improvement efforts, and supplier qualification and perfor-
mance measurement. And it's critical when responding to com-
plaints or lawsuits.
Establishing the infrastructure for traceability, maintaining solid
audit trails, and performing mock recall exercises are good invest-
ments in supply chain risk avoidance and mitigation, even if you
never expect to face an actual recall. Its like buying insurance: The
best possible outcome is that you never have to make a claim.
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.
Accenture 32, 42
Advantech 16
Agility 36
American Trucking Associations 48
Archer Daniels Midland 59
ARENA 16
Automated Precision 18
Big Lift 16
Blue Ocean Robotics 16
Carlisle Interconnect Technologies 10
Crown Equipment 16
Dynamic Systems 16
Easy Tiger Sourcing 36
Equipment Depot 48
Gorbel 16
Hamilton Caster and Manufacturing 16
HP 16
IFS 16
Imperial Health Sciences 9
Institute of Business Forecasting & Planning 26
Intel 6, 14, 36
Kellogg Company 14
Kelly Services 42
Kenco Management Services 48
LaborVoices 48
Lighthouse Systems 16
Dave Turbide, CFPIM, CIRM, CSCP, CMfgE, CDDP
Dave Turbide, CFPIM,
CIRM, CSCP, CMfgE,
CDDP, is a New
Hampshire-based
independent consultant,
freelance writer, and
president of the APICS
Granite State Chapter.
He also is a Certified
in Production and
Inventory Management
and Certified Supply
Chain Professional
master instructor and
Fresh Connection
trainer. Turbide may be
contacted at dave@
daveturbide.com.
To comment on this
article, send a message
to feedback@apics.org.
LZ Lifescience 16
Masan Group 36
Material Handling Institute modexshow.com C4
PricewaterhouseCoopers 9
Redbubble 42
Rehrig Pacific 48
Reliable Source Industrial 48
Seditex Vietnam 36
TestEquity 16
Theodore Alexander 36
Tradeshift 59
Transportation Resource Associates 48
Universal Robots 16
APICS 2016 15
APICS Best of the Best 1, 10
APICS Board of Directors C4, 4, 6
APICS Corporate Awards of Excellence 10, 13
APICS CPIM 10, 42, C3
APICS CSCP 29, 42
APICS CSCP 15, 25
APICS Extra Live 19
APICS Magazine Tablet App 5
APICS SCOR 26
APICS Supply Chain Council 6, 9, 26
apics.org/magazine 23
LEAN CULTURE
Change
That Sticks
A road map for transformation
W
hen facilitating or leading a change effort, its essential
that the people involved buy into the initiative; that they
adjust their behaviors accordingly; and that, in the end,
the transformation is sticky. This means that the improvement is
sustainable long after it is put into place.
The amount of rigor to apply depends on the nature of the change
at hand. The three key factors to consider are level of complexity, size
of the organization and number of people involved, and stakes for
success. Once the people involved have determined the appropriate
level of rigor and agreed to maintain it, its time to begin.
There are 10 phases that must be carried out when working
toward sustainable change:
1. Initiate the vision for change.
2. Identify and analyze stakeholders.
3. Evaluate overall readiness.
4. D
 evelop a charter and guiding coalition with SMART (simple,
measurable, achievable, reasonable, and trackable) goals.
5. Evaluate stakeholder influences on success.
6. Create a code for change.
7. Assess barriers and risks.
8. Develop actions to mitigate barriers and risks.
9. Create a plan for implementing the sustainable change.
10. Deploy and institutionalize the sustainable change.
1. Initiate the vision for change. In this phase, team members
should agree on the change statement, success factors, and scope.
Clearly describe in 20 words or less what the change is going to be
about. From there, come up with at least three success factors that
describe what success will look like. These also should be fairly short
statements and ideally will include something tangible and measur-
able. Think about people, process, and technology. Finally, deter-
mine the scope, focusing on who and what processes are affected.
2. Identify and analyze stakeholders. Think about the three
groups most commonly involved in organizational change: internal
stakeholders, external suppliers, and external customers. The
venerable RACI model is useful here. RACI describes the people
who are responsible for doing the work to achieve the change, who
are accountable for the correct and thorough completion of the
change, who should be consulted about the change, and who are
informed about progress.
3. Evaluate overall readiness. The three keys to sustainable
change are the level of discomfort, the vision achieved, and the
skills associated with effective implementation. Each of these can
be scored on a scale from 1 to 100 percent and then multiplied
together to identify the overall sustainable change factor. Begin by
24 March/April 2016
determining the level of discomfort from
1 to 100 percent. If people generally dont
see a need, it should get a very low percent-
age; if everyone is up in arms demanding
something be changed now, the score could
be close to 100 percent. Then, using the
same scale, evaluate the degree to which
the vision of the change is clearly under-
stood. Do people know what they must do
personally for this change to be successful,
and how they will measure results? If not,
then it's obviously going to receive a low
percentage. For new change initiatives, this
is often the case, and it is therefore incum-
bent on facilitators and leaders to close that
gap quickly. Finally, assess the level of skills
present in the organization to effectively
implement the change. If it requires entirely
new skills, assign a low percentage. On the
other hand, if those involved already possess
the necessary skillsand its just a matter of
instilling discipline to implementthen the
percentage should be high. Keep in mind
that a very low score doesnt necessarily
mean disaster, but sustainable change will
demand that stakeholders raise the numbers
over the long run.
4. Develop a charter and guiding coa-
lition with SMART goals. At a minimum,
this phase should include the previously
established change statement, success
factors, and scope; project name; change
summary; a list of process owners and
sponsors; any necessary background infor-
mation; success measures; and a timeline
with key milestones. Next, create a guiding
coalition composed of the top change
sponsors and representatives of key stake-
holder groups. These likely will be people
from the responsible and accountable
RACI classifications. If the change will
affect any organized labor, representatives
from this group should be included as well.
The guiding coalition then should set the
SMART goals. Identify two to five specific
objectives that describe sustainable success
for the organization with exact measure-
ments and timelines for their realization.
Again, the categories of people, process,
and technology are useful to consider here.
5. Evaluate stakeholder influences on
success. Go back to the RACI matrix and
consider each of the stakeholder groups

again. At this stage, there will be a great deal more clarity
around the change, which will help team members evaluate
the influence of each stakeholder group. Indicate whether
each group has low, medium, or high influence on the out-
come of the change. A low rating would suggest little or no
power to influence change. The support of such people isnt
needed; the change can happen without them. A medium
rating suggests the group has power to influence success.
These stakeholders are affected significantly by the proposed
change. Finally, assign a high rating to those with a large
influence on success. Their support will make or break the
change effort. Consider interviews or surveys to help under-
stand the degree to which each group can influence change.
Use the data to evaluate each stakeholder group on a scale
of positive or negative responses. This also provides a good
sense for the work required in order to close gaps where any
responses are more negative than positive.
6. Create a code for change. In this phase, its time to develop
a basic code of honor and conduct related to the change made.
This process involves rounds of brainstorming to capture the
types of behaviors that will support the change and those that
get in the way. From there, the team should develop a short list
of behaviors that are desired in the future. These statements
should outline what it means to be part of the team support-
ing change. It also may be necessary to document how com-
pliance with the behaviors will be judged. For each violation
of the code, there needs to be a specific set of consequences.
This measure is particularly important when its necessary to
significantly change peoples values in order for the change to
be successful and sustainable.
7. Assess barriers and risks. Make a two-column matrix
about the barriers and risks to sustainable transformation
identified in the earlier steps. The left column itemizes the
significant roadblocks.
8. Develop actions to mitigate barriers and risks. For each
of the left-column items, thoughtfully consider the best actions
to mitigate them. Go back to the RACI matrix of stakeholders
remembering there can be subgroupsand add them to the
right column with their associated mitigation actions. The
majority of these will be related to some form of communica-
tion, but dont fall into the trap of believing that good commu-
nication alone ensures success. (That said, failing to effectively
communicate will doom the change effort to failure.) For each
stakeholder classification, identify who specifically should be
considered in the implementation of the mitigation actions.
It is not uncommon to find that a single mitigation action can
influence many different groups.
9. Create a plan for implementing the sustainable change.
Armed with the specific actions required to ensure sustainable
success, create a work breakdown. Effective implementation
plans should recognize that the nature of change is never a
one-and-done effort. Remember that communication works
best when delivered via multiple mediums and with multiple
Ron Crabtree, CIRM, CSCP, SCOR-P, MLSSBB
messages around common internal themes.
Defining a clear objective statement, selecting
the right team members to implement it,
and bringing them together to brainstorm
how to approach implementation are vital.
Each action description should specify the
task, responsible people, deadline, a method
to capture status, and next steps for ongoing
reviews and project management purposes.
10. Deploy and institutionalize the sus-
tainable change. At this stage, the guiding
coalition and the SMART goals come back
into play. As teams implement the many
actions needed for the change to suc-
ceed, they must continually monitor and
manage the process. It also is the guiding
coalitions job to uncover and quickly react
to issues that are blocking progress. During
the planning stage and initial weeks of
implementation, the guiding coalition
should meet weeklyor at least every
other weekuntil the change initiative
demonstrates maturity. Quarterly reviews
are recommended until the transformation
is fully institutionalized as the new way of
doing things.
Make sure to update position descrip-
tions to reflect the new state of business.
In addition, performance appraisals,
scorecards, and metrics must be aligned
with the desired future state. Likewise,
standard operating procedures and train-
ing materials should be updated to reflect
the change state.
As with all transformation initiatives,
remember to celebrate success. Rewarding
the people involved demonstrates that
they are valued by the organization and
incentivizes these team members to own Ron Crabtree, CIRM,
CSCP, SCOR-P, MLSSBB,
the change. When these steps are imple- is chief executive officer
mented effectively, employees will stick of MetaOps, a master
MetaExpert, and an
with it, thus making the transformation organizational transfor-
truly sustainable. mation architect. He is
the author or coauthor
of five books about oper-
ational excellence and
the online magazine at
MetaOpsMagazine.com.
Crabtree also teaches,
presents, and consults.
He may be contacted at
rcrabtree@metaops.com.
To comment on this
article, send a message
to feedback@apics.org.
apics.org/magazine 25
SALES AND OPERATIONS PLANNING

Warding plans to execute value and growth strate-

gies. What has become even more critical is

Off Activist
advancing resilience and internal dynamics
to face market demands, short-term inves-
tor actions, and the media cycle in order to

Investors
deploy and execute the plans.

The role of S&OP

Sales and operations planning (S&OP)
Sharp S&OP makes a good defense enables companies to leverage strategy
deployment, financial planning, and active

S
earch activist investor on the internet, and you will learn that
this term defines an individual (or group) who purchases large
numbers of a public companys shares or tries to obtain seats
on a board with the goal of effecting a major change. You also will find
numerous articles about major, seemingly successful companies being
forced to implement those changes.
This past January, it happened to be US department store chain
Macys that was pressured to sell off real estate after the retailer
announced low sales and plans to lay off 4,800 employees. Back in
December 2015, two companies where I spent a good deal of my
careerDuPont and The Dow Chemical Companydeclared they
would merge, largely as a result of activist investor pressure. The
new, combined company is to be named DowDuPont. The list goes
on: Mondelez International, Kraft Heinz, PepsiCo, and many more
Fortune 1000 businesses are facing significant shifts.
An October 2015 article in The Wall Street Journal examined 71
activist investor campaigns. The story, Are Activist Investors Helping
or Undermining American Companies? concluded, Activism often
improves a companys operational resultsand nearly as often doesnt.
The challenge, which is made more transparent in the new normal
after the shock of the Great Recession, is gaining support and driving
ownership and engagement by the corporate
team. It also helps professionals achieve short-
term gains that keep activist investors from
sidetracking growth and value strategies.
Unfortunately, many companies struggle
to leverage S&OP as a differential approach in
the face of activist investor pressure. Adding
to the problem is the fact that very few large,
complex companies have mastered the com-
plete integration of financial planning and
analysis with integrated business planning.
Activist investors are smart and capable
people focused on the price of the invest-
ment and with an entirely outside-in per-
spective. They are not nostalgic about past
success or looking for ways to support long-
term growth the way venture capitalists and
value investors would be. Figure 1 shows
this outside-in view of future stakeholder
value as the primary objective. This often is
what activist investor campaigns highlight
as the problem with current strategies and

Strategy
deployment Commercial
and execution impact
Functional Stakeholder
planning and
decisions future
Resources Financial Operating value
and asset impact impact
capability
Image courtesy of OBB Solutions.

Complexity S&OP Outcomes

Figure 1: Complexity, development, and performance

26 March/April 2016
 Peter Murray, CIRM

S&OP process focus points

"Which of the following areas are you currently focusing on?"
Forecast and demand planning
Capacity planning 50%
Inventory
Integration with financial planning 37%
What-if scenarios 20%
New products 39%
All of the above 22%
Not sure 1%
Figure 2: "Which of the following areas are you currently focusing on?"
management teams. Complexity, on the left, is always portrayed
by activist investors as bad. But strong leadership teams might
be able to harness good complexity as a competitive advantage.
S&OPwhen done wellsits in the middle and drives reduc-
tion in bad complexity by targeting the most effective ways to
view and plan the business by end-to-end segments that enable
improved strategy deployment and execution.
Furthermore, there is no question that a financial evaluation
through an integrated business planning lens shows value,
which activist investors might take into consideration. Yet, a
2012 joint APICS and Institute of Business Forecasting and
Planning research study about S&OP progress revealed that only
37 percent of respondents indicated they focus on integration
with financial planning. (See Figure 2.)
The report goes on to state: Strong financial integration should
ideally be a part of the S&OP process. However, this can be difficult
to achieve in practice. Financial departments may have different
forecasting and analysis processes. The survey showed this [as] a
priority, not necessarily a practice. Specifically, S&OP practice
should always roll up (combine data into fewer summary reports)
to the business units or organizations financial projection.
In addition, the survey discovered that financial professionals
whether chief financial officers or other finance leadershave owner-
ship of the S&OP process at only 2 percent of organizations.
Best impressions
In the May 2014 Harvard Business Review story How to Outsmart
Activist Investors, authors Bill George and Jay W. Lorsch write:
Their game is simple: [Activist investors] buy stocks they view as
undervalued and pressure management to do things they believe
will raise the value, such as giving more cash back to shareholders or
shedding divisions that they think are driving down the stock price.
With increasing frequency they get deeply involved in governance
demanding board seats, replacing CEOs, and advocating specific
business strategies.
Although the article notes that multiple studies have shown that
activism succeeds in raising share prices, the authors said they
remained unconvinced that hedge fund
activism is a positive trend for corporations
and the economy. In fact, we find that it
72% reinforces short-termism and excessive
attention to financial metrics, George and
59% Lorsch write. They urge companies facing this
scenario to
have a clear strategic focus
stick to it
perform against declared goals in the
short run.
In addition to those objectives, sustain-
ing the process effectively also requires
the following:
Do not overlook the critical connection
between integrated planning and inte-
grated execution.
Remember that in our hyper-connected
and data-rich world, the outside-in
thinkers are always looking at you.
Activist investors constantly run ana-
lytics and models in search of oppor-
tunities. When you know what to look
at and how to do the math, the oppor-
tunities are clear. The APICS Supply
Chain Council Supply Chain Operations
Reference (SCOR) model is an excellent
framework for these efforts.
Get beyond a singular focus on balanc-
ing supply and demand. Although very
important, its an outcome of a well-run
process, not the main goal.
Master the relationships among
strategy, financial levers, and strategic
attributes in order to drive the most
effective processes and operating
metrics. Less is often more, as large and
Peter Murray, CIRM,
complex companies tend to struggle is a consultant and
with too many metrics. practitioner in sales and
operations planning,
Achieve and maintain the engagement of demand planning,
corporate-level leaders and the board in and supply chain
management. He also
both business planning and execution. served on the
Executive teams must know they can APICS board of directors
confidently project plans, scenarios, and for two years, helped
develop the APICS
alternatives to external stakeholders. Certified Supply Chain
When activist investors come on the Professional program,
and is an active
scene, the result typically is a battle of volunteer with the APICS
smart, experienced, capable people who Supply Chain Council
have access to many resources and lots of and the Institute of
Business Forecasting.
ideas. S&OP can even the game considera-
bly and help an organization demonstrate
To comment on this
that it has a strong team, clear vision, and article, send a message
market-winning strategy. to feedback@apics.org.

apics.org/magazine 27
WORKING GREEN
A World
of Progress
Recognizing the universal achievements
in Paris
L
ast December, representatives from nearly 200 countries
came together in Paris to hammer out an agreement aimed
at curtailing global warming. Specifically, the objective of the
21st Conference of Parties (COP 21) was to limit global warming
to less than 2C compared with pre-industrial levels. The stakes
were high, with the prevailing view asserting that global warming
in excess of 2C would threaten the very existence of the planet.
After two weeks of intense negotiations, a deal was reached
for the first time in history, uniting the participating countries
in an agreement to tackle climate change. The major tenet of the
agreement is to keep the rise in global temperatures well below
2.0C (3.6F). Well below means a rise in global temperatures of
1.5C or less. Whether this ambitious goal proves to be effective in
curbing global warming remains to be seen.
According to the Climate Action Tracker, an independent,
science-based analysis produced by four climate research organ-
izations, the projected average warming by the year 2100, based
upon the agreed targets per country, would be 2.7C. That increase
would simply be too much to head off the disastrous consequences
of global warming.
Pledges by countries to cut carbon emissions, which are a
Antonio Galvao, CSCP, major cause of climate change, are voluntary under the Paris
is the vice president
of global logistics agreement. Nonetheless, that agreement prescribes a progress
building efficiencies at assessment in 2018 and every five years thereafter. This review
Johnson Controls. He
may be contacted at mechanism, leaders of participating countries believe, will create
antonio.galvao@jci.com. an incentive to reduce emissions. The belief is that no country
will want to be exposed as failing to do its part in this critically
The views and opinions important global effort.
expressed in this article Although a measure of skepticism remains, it is clear that the
are those of the author
and do not necessarily Paris agreement is a step in the right direction. As Kumi Naidoo,
reflect the official executive director of Greenpeace International, averred: The Paris
policy or position of
Johnson Controls.
agreement is only one step on a long road, and there are parts of it
that frustrate and disappoint me, but it is progress.
The progress made in Paris also includes an objective to achieve
Mike Dries is a retired
business journalist zero net emissions of carbon dioxide sometime between the years
and corporate commu- 2050 and 2100. In other words, the emission of greenhouse gases
nications executive now
working as a freelance
resulting from human activity would be limited to the amount
writer. He may be that trees, soil, and oceans can naturally absorb. Signatories to
contacted at the Paris agreement believe this will spur the development of new
mjdries23@gmail.com.
technologies and a gradual shift away from fossil fuels toward
renewable sources of energy.
To comment on this
article, send a message In the week before COP 21, Microsofts Bill Gates and
to feedback@apics.org. Facebooks Mark Zuckerberg launched a new global initiative
28 March/April 2016
Antonio Galvao, CSCP, and Mike Dries
aimed at increasing investments in
clean energy. The effort, called the
Breakthrough Energy Coalition, also has
enlistedthe support of Amazons Jeff
Bezos, Virgin Groups Richard Branson,
and Alibabas Jack Ma.
According to Breakthrough Energy
Coalitions website, countries participating
in its innovation mission will facilitate
large funding commitments for basic and
applied research. The coalition also will
invest in early-stage companies that have
the potential to help us reach an energy
future that produces near-zero carbon
emissions and provides everyone with
affordable, reliable energy.
Solving the clean energy problem is an
essential part of building a better world,
Zuckerberg wrote in a Facebook post. We
won't be able to make meaningful progress
on other challengeslike educating or
connecting the worldwithout secure
energy and a stable climate."
Making headway
Clearly, the countries that signed the
Paris agreement believe what the scientific
community has been saying for some time
now: The planet simply cannot endure
unchecked increases in average temper-
atures. That consensus alone provides a
basis for optimism, even if pledges to rein
in global warming are voluntary. If the
will is there, which hadnt been the case
previously, the way to a secure planet will
become clearer.
Major corporations and other businesses
already are looking for ways to reduce
waste and be more efficient. This makes
good business sense and is good for the
planet. With the public and private sectors
on the same page, the likelihood of pro-
gress is enhanced considerably.
Achieving the objectives of the Paris
agreement, especially the commitment to
keep global warming below 2C, will take
relentless focus and a lot of hard work. On
this long journey, every step matters.
Now is the Best Time
to Become a CSCP
Staying industry-relevant is the key to success in supply chain management.
That is why the Certified Supply Chain Professional (CSCP) Learning System has
been extensively updated to help you prepare for your CSCP exam with confidence.

What is new about the CSCP Learning System?

n New content accessible via e-Reader and e-Download

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n

n Techniques for Taking APICS Exams video included

Expand your career potential. Learn more at apics.org/CSCP2016

CUSTOMER EXPERIENCE
Switch On or
Turn Off?
Employee perception can make all
the difference
I
n the last two Customer Experience departments, I have
explored the importance of listening to your employees as well as
your customers, particularly during periods of turmoil or organi-
zational change. I discussed the spillover effectthe tendency of one
persons emotions to affect how others feeland why that concept
validates the idea that putting employees first essentially translates
into putting customers first too.
Usually, when people talk about employee centricity, its consid-
ered from the companys perspective: Companies should do this we advocates for what we were doing and
or companies should do that. But in this department, I would like
to consider what an employee-centric culture looks like from the
employees perspectiveactually, from my perspective.
Many years ago, I worked for an organization that I refer to
frequently when talking to people about customer centricity. I very
much liked my time at this company for five reasons that were quite
clear to me at the time.
1. Communication: At this business, the information flowed freely
from the top down and the bottom up. I always felt like I was in the
know about what was happening within the organization, whether
it was about our product, our financials, organizational issues and
challenges, or our staff members. Everyone believed in the power of
transparency, and they demonstrated this ideal every day.
2. Vision and purpose: Correspondingly, everyone knew
the firms vision and goals. We all felt good about, and had a
sense of pride in, working together to make sure the company
achieved its objectives.
3. Appreciation and feeling valued: I always say that I enjoy
working for small businesses because one person can make a differ-
ence. At these types of businesses, your ideas, suggestions, thoughts,
and opinions are valued, taken into consideration, and often imple-
mented. That was definitely the case at this organization.
4. Recognition: Employees at this business were acknowledged for
their contributions on a regular basis. There were celebrations for
achievements and jobs well done. We all knew where we stood and
how we contributed to the bigger picture. Together, we were building
something meaningful.
Annette Franz Gleneicki
is author of the blog CX
5. Camaraderie and collaboration: Although they don't neces-
Journey. She may be sarily have to go hand in hand, its easy to think about camaraderie
contacted at annette. and collaboration in concert at this particular company. My fellow
gleneicki@gmail.com.
employees and I were a close-knit family. We worked together; we
played together.
To comment on this
article, send a message These five factors were important to me at the time, and they still
to feedback@apics.org. are today. Yes, there were some rough patches, but those were the
30 March/April 2016
Annette Franz Gleneicki
kinds of challenges that ultimately strength-
ened bonds and the company as a whole.
However, after some time there, I began to
think that there was greater growth ahead of
me and more to be achieved professionally. I
chose to leave. As I look back on that decision,
it occurs to me that there were some unfortu-
nate issues that had developed at the organiza-
tion that contributed to my departure.
First and foremost, the trust between
employer and employee, manager and staff
person, needed improvement. It wasnt
always a two-way street. The lesson I
learned here was to trust the people around
me until they give me a reason not to. Then,
its probably time to move on.
When trust fizzled, so did respector
maybe it was vice versa. No longer were
building. No longer were we passionate about
the cause.
Leadership was another area of down-
fall. Executives seemed to forget that the
employees were hired for a reason. Its so
important to employ the right people and let
them do what they do best. Set the course,
outline the vision and purpose, and then
set them free to execute. When leaders dont
empower and believe in the capabilities
of their employees, often these people no
longer want to be followers.
Companies are in business for a reason:
to create and nurture customers. This
hinges on integrity and doing the right
thing. When company leaders lose sight of
that, or when the organization no longer
operates with the customers best inter-
ests at its core, then its time to look for
an opportunity at a business that is truly
customer and employee centricactually,
perhaps human centric is the best way to
describe this.
For a while, my colleagues and I were
truly passionate about the work we were
doing at this company. We were enthusiastic
about what we were building. But through
a series of missteps, that culture crumbled,
and the excitement waned. And perhaps as
you would have thought, that company no
longer exists.
Gary A. Smith, CFPIM, CSCP
Touting Supply
Chain Value
Great leaders make the most of their circles
of influence
I
n many organizations, supply chain management is viewed as an
administrative function. In such instances, its typically the oper-
ations division that receives the lions share of the budget, capital
funding, and upper management attention. However, as supply chain
professionals, we know that our activities add value and that imple-
menting supply chain best practices positively affects the bottom
line. We also understand that, by balancing demand and supply
and keeping inventory low and fill rates high, our companies can
significantly reduce total costs. This is not lost on our counterparts
in operations or on executive managers. Yet, these colleagues do need
to be reminded from time to time about the benefits effective supply
chain management provides. This is where we must become skilled,
passionate lobbyists for our own cause. We must learn to tout supply
chain influence.
Exploring influence
Influence is the ability to effect change in what othersboth inside
and outside of our span of controldo and how they think and act.
When I was a consultant, I would test an idea by identifying the influ-
encers within a clients organization and then informally discussing
the notion with them. I then would modify the concept (or go back to
the drawing board) based on those conversations. Interestingly, most
of the time, these influencers were not the leaders of their organiza-
tions; they were managers or even among the hourly ranks. I call these
people organic leaders. Organic leaders are the go-to people in a
company. They are the ones you can rely on to get something done or
to provide the back story of a process. They always seem to have the
answers to your questions. And they are powerful internal influencers.
When you can influence organic leaders, it becomes much easier to
get the rest of the business on board. Keep in mind that influence is part
of change management. It is a method to sell ideas to others. Begin by
becoming an expert in one or more areas. This can be done by
studying and reading about the subject
volunteering for project-leadership roles
obtaining a certification
being active in professional organizations
publishing articles in an area of expertise
developing a training program for your department
making presentations within and outside your organization.
Influence, especially influence of organic leaders, is a key
ingredient in creating culture change. As such, your approach
must be genuine, and you must share knowledge freely without
expecting something in return. When attempting to increase your
EXECUTIVE VIEW
influence, you dont want to be seen by
others as a threat or an empire builder.
The goals should be to optimize processes
and expand your influence for the good of
the organization. Be a collaborator, not a
conqueror, and remember that the primary
objective is to continuously improve the
supply chain.
Speaking supply chain
Excellent influencers must be excellent com-
municators. They are comfortable speaking
one-on-one and in small and large groups.
They communicate effectively in writing by
organizing arguments logically; using clear,
concise language and proper grammar; and
keeping concepts simple in order to elicit the
appropriate responses from readers. (Its also
helpful to employ a skilled editor!)
Communicating your vision and ideas
should be done in three dimensions:
down through the organization so that
everyone understands why we do what
we do; across the business so that other
departments see the value supply chain
management provides; and up through the
executive ranks so that supportoften in
Be a collaborator, not
a conqueror.
the form of necessary funding for capital
projectscan be secured. Always main-
tain your personal integrity and keep your
messages simple. Listen more than you
speak, and ask questions so that you fully
understand the issues.
Finally, be sure to include influencers
from both inside and outside your organi-
zation in your own circle. Doing so helps
you develop a referral network that you
can call on when needed. Likewise, you
will become part of their networks so they Gary A. Smith, CFPIM,
can draw upon your expertise, further CSCP, is vice president
of the division of supply
enhancing your status as a great influ- logistics for New York
encer. And great influencers make great City Transit. He may
supply chain leaders. be contacted at gary.
smith@nyct.com.
To comment on this
article, send a message
to feedback@apics.org.
apics.org/magazine 31
RELEVANT RESEARCH
Worker Shortage
or Skills Gap?
Numbers reveal the scope of the issue
A
s baby boomers reach retirement age, supply chain and
operations management professionals are increasingly
talking about the labor shortages apparent in most facets
of business. Some companies might be feeling these pressures
more strongly than others, though, which brings up the question
of whether industry is actually experiencing a labor shortage or a
skills gap. To determine this, lets examine where labor shortages
and skills gaps are being reported, what could be causing them,
and what is being done to address them.
Is there manpower?
A logical place to start when analyzing a labor shortage is pop-
ulation growth. From 1950 to 2012, the world population grew
by 4.5 billion people, with Asia contributing 60 percent of that.
In the century from 1950 to 2050, the United Nations and other
experts expect the global population to grow by 253 percent to
8.9 billion people. Again, Asia is expected to hold a population
majority, but the populations of Mexico, Central, and South
32 March/April 2016
America and Africa are expected to grow
by 400 percent and 700 percent, respec-
tively, in that century.
However, population growth is
expected to slow to 9 percent from 2050
to 2150. Thats still an increase of 837
million people, but it pales in compar-
ison to the previous centurys growth.
Africa is the only region expected to con-
tribute meaningful growth in the term,
with Europe forecast to experience an
18 percent population decline, and Asia;
Mexico, Central, and South America;
the United States and Canada; and
Oceania each expected to have 13 percent
population growth or less. Although
a slowdown in population growth is a
plus when it comes to food supply and
environmental damage, it is a minus for
the workforce.
In the near term, the bigger issue is
that the population is aging. In 2015,
12.3 percent of the population was age
60 or older. That amount is expected to
grow to 16.5 percent by 2030 (United
Nations 2015). An aging population does
indicate quality food supplies and med-
ical care in addition to a prolonged life
expectancy, but it decreases the percent-
age of working-age people in the popu-
lation. In terms of specific regions, Table
1 shows that Europe and North America
will continue to have the oldest popula-
tions, and Africa; Mexico, Central, and
South America; and parts of Asia will
continue to have the younger populace.
For example, Japan is an exception to
Asias younger population, with one in
four Japanese being 65 or older. Because
the country has historically been a closed
society, it is unlikely that immigrants
could help lower the average age. Instead,
the country uses technology to pro-
long the working careers of its citizens
(Schlesinger and Martin 2015).
Both the population distribution and
the age of local populations suggest that
there may be a labor shortage in indus-
Photo:iStock/JJPan
trialized countries even while there is a
surplus in developing countries. This may
create a geographical mismatch of supply
and demand unless something is done to
correct the imbalance.
 Richard E. Crandall, PhD, CFPIM, CIRM, CSCP

Total population Age 60 and older Percent of total

2015 2030 2015 2030 2015 2030

World 7,342,439 8,499,424 900,906 1,402,405 123 16.5

Africa 1,193,463 1,672,810 64,447 105,387 5.4 6.3

Europe 738,548 733,851 176,513 217,220 23.9 29.6

Mexico, Central,
633,232 719,994 70,922 120,959 11.2 16.8
and South America
North America
358,601 396,966 74,589 104,799 20.8 26.4
(US and Canada)

Oceania 39,279 47,292 6,481 9,553 16.5 20.2

Table 1: The worlds aging population (United Nations 2015)

In anticipation of the changing demographics, Africa already
is being viewed as a future area for more extensive development,
according to industry writer Adrienne Selko.
While Africa offers tremendous opportunities, US com-
panies should be prepared to build the infrastructure needed
to make and transport their goods. Much like China 30 years
ago, Africa possesses the key ingredients for high growth:
rising urbanization and a growing middle class. This fact
has not escaped the global economy as foreign direct invest-
ment (FDI) into the continent surged to $128 billion (up 136
[percent]), hitting an all-time high in 2014. Coal, oil and gas,
as well as manufacturing, were the most attractive sectors,
accounting for 38 [percent] and 33 [percent], respectively, of
the total announced FDI last year, according to the Financial
Times' 2015 Africa Investment Report. Other sectors receiving
significant funding were telecommunications, media and
technology, financial services, consumer products and retail,
according to the Ernst & Young Attractiveness Survey Africa
2015. Real estate, hospitality, and construction saw healthy
investment, and the agriculture sector is showing promise as
well (Selko 2015).
Despite the future possibilities, a new report warns that, in
the short term, unemployment will continue to rise as the global
economy enters a new period combining slower growth, widening
inequalities, and turbulence.By 2019, more than 212 million people
will be out of work, up from the current 201 million (International
Labor Organization (ILO) 2015a). This is the opposite of a labor
shortage. The ILO reports that the employment situation has
improved in the United States and Japan, but it remains difficult in a
number of advanced economies, particularly Europe (2015a).
What are the options?
Based on this, if we assume that job demand will increase at
least as fast as the population grows, we need to determine
the best way to supply the increasing
demand. To do this, two basic questions
need to be answered.
1. S hould we move the means of produc-
tion to the areas where workers will
be available?
2. S hould we move the workers to the areas
with productive capability? Does this
alternative offer a better solution?
Because neither of these alternatives is
attractive, it brings us back to one of our
original questions: Is there a labor short-
age or a skills gap? In the United States,
do we have enough people to do the work
if they had the appropriate skills? An
Accenture (2013) survey found that 46
percent of businesses surveyed reported
a skills gap, meaning they did not have
the employee skills needed to compete
effectively in the coming years. A more
recent survey by Business Roundtable
found that 52 percent of member CEOs
considered the skills shortage to be
either problematic or very problem-
atic in their US operations (Business
Roundtable 2014).
Shifting skills
Further intensifying the skill shortage is
the changing concept of work. The ILO
reports that employment is shifting from
the traditional idea of a full-time job to
part-time and contract work. This is seen
in both advanced economies and developing

apics.org/magazine 33
RELEVANT RESEARCH Richard E. Crandall, PhD, CFPIM, CIRM, CSCP

economies, which are opting for more informal work arrange- References
ments. Nearly 60 percent of wage and salaried workers worldwide 1. Accenture. Accenture 2013 Skills and
are in either part-time or temporary forms of wage and salaried Employment Trends Survey: Perspectives
employment (International Labor Organization 2015b). on Training. Accenture.com (2013).
In addition to job instability, the skills required have moved 2. Business Roundtable. Closing
from physical to cognitive. We are well into the Information Americas Skills Gap: A Business
Age, which is characterized by an emphasis on computers and Roundtable Vision and Action Plan.
digital information. It no longer is enough to be physically BusinessRoundtable.org (2014).
capable of assembling parts and working with products you can 3. International Labor Organization.
see and touch. Instead, employees have to work with assets they World Employment and Social
cant see. OutlookTrends 2015. International
Business Roundtable (2014) reports that the skills gap issue Labor Organization (2015a).
will grow more acute as the economy recovers and unemploy- 4. International Labor Organization.
ment falls. Many of the currently unemployed workers are not World Employment and Social
ready to fill many of todays high-skill, high-demand manu- Outlook: The changing nature of jobs.
facturing and service jobs. As labor force participation con- International Labor Organization (2015b).
tinues to decline because of demographic shifts, the search for 5. Schlesinger, J. M., and Martin, A.
highly skilled employees will become more desperate. Although Demographic Destiny: 2050: Graying
Business Roundtable notes that organizations have markedly Japan looks for a silver lining. The Wall
increased their training budgets, these efforts alone will not erase Street Journal (2015).
the skills deficit. To build the workforce needed for 21st century 6. Selko, Adrienne. Africa: The World's
jobs, more must be done now. Next Logistics Hot Spot. Material
Handling & Logistics (2015).
Where to go next 7. United Nations. Worlds Population
In reality, it has long been the case that recent college graduates Ageing 2015. United Nations (2015).
cannot fulfill most high-level job needs. That is why experienced
workers are generally considered more productive and valuable
than inexperienced ones. To close the skills gap, there needs to be
continued and improved alignment of educational programs with
industry needs.
Organizations should think of obtaining workers as a supply
chain management issue. Just as they establish supply chains for
materials and components, they should develop sources for their
workforce to ensure an adequate flow into the organization to sus-
tain its viability. When you build partnerships with governments,
universities, other employees, and talented individuals and apply
their different perspectives and experiences to solving this prob-
lem, you can achieve a greater outcome than any single participant
could have achieved on its own. This working-together approach is
needed to meet the challenges faced by the 21st century workforce.
By bringing together all of the entities affected by the skills gap,
Richard E. Crandall, PhD,
CFPIM, CIRM, CSCP, is
organizations can make a real difference for their workforces and in
a professor emeritus our worlds prosperity.
at Appalachian State
University in Boone,
North Carolina. He is the For a free list of more than 100 related annotated references,
lead author of Principles contact the author at crandllre@appstate.edu.
of Supply Chain
Management, Second
Edition. Crandall may be
contacted at crandllre@ Check out the APICS magazine tablet app for exclusive
appstate.edu. digital content about how employers, government,
universities, and individuals can help close the skills gap.
To comment on this To access the digital exclusives, search for APICS mag
article, send a message in the App Store and on Google play.
to feedback@apics.org.

34 March/April 2016
 Philip E. Quigley, CFPIM, PMP
Steer Clear of
Office Politics
Keeping information technology tasks
on course
A
s supply chain and operations management professionals, we
often are involved in information technology (IT) projects such
as software implementations, software and system upgrades,
solution integrations, and so on. All of these undertakings comprise
multiple processes, departments, and people, which means there always
will be politics involved. In theory, all projects also have corporate senior
management participation. And there should be an executive committee
composed of senior executivesideally, vice presidentsthrough which
difficult policy or organizational issues can be resolved.
Unfortunately, when problems are taken to the executive com-
mittee, they almost always become political. Time is spent talking,
maneuvering, and compromising. The committee rarely makes fast
decisions. If you are lucky, studying and evaluating the issues takes a
few days. If you are unlucky, the process could last months. During
this time, work on the initiative isnt getting done, and the critical
path and schedule are affected.
To address these challenges, the executive committee must be
managedstealthilyby a few key people on the IT project team.
The project manager will need the support of certain supply chain
and operations managers in order to keep things under control and
moving along. And this must be achieved without creating civil wars
among departments.
Supply chain and operations roles
Supply chain and operations management professionals can effect pos-
Photo: iStock/Pali Rao
itive change in a few ways. First, they should have a consensus with the
project management team about how executive committee issues will
be handled. This starts with everyone agreeing about how to use formal
project procedures.
All modern projects will have a risk management or a problem
process. Risks and problems should be formally identified and logged
MANAGEMENT PERSPECTIVE
into the project management office system.
Then, on a weekly basis, the statuses should be
reported until resolved. In addition, peoples
names can be assigned to each of the tasks;
likewise, executive committee members can
be named if the problem is assigned to them.
A formal, written procedure that identifies
when issues will be escalated to the executive
committee is very helpful.
The next step in this agreement is for supply
chain and operations managers to reach
consensus about exactly how team mem-
bers will work through the tasks. Again, its
crucial to prepare formal, written analysis and
recommendations that include options for
the executives to review. The team also must
have its own recommendation about which
alternatives to select. Total quality manage-
ment techniques can be helpful during this
phase because they facilitate a detailed problem
description, potential solutions, an explanation
of associated costs, and more.
Scaling the hurdles
Sometimes, team members find themselves
in the midst of a fundamental disagreement.
In such circumstances, they should commu-
nicate this to the executive committee and
request a more senior-level review. In this
way, the problem or risk can be identified,
its impact realized, alternatives studied, and
recommendations made. The best result is
a timely, good final decision that leads to a
successful IT project.
In contrast, some teams are hesitant to rec-
ognize when its time to ask for senior-level
help. Perhaps people dont want to be seen
by executives as weak, indecisive, or incapa-
ble of handing issues on their own. Perhaps
everyone realizes they are facing a hot-button
issue, so they duck for cover and hope the
problem will go away. But problems dont
just go away. If left unresolved, the project Philip E. Quigley, CFPIM,
will drag on, weeks or months will be lost, PMP, is senior project
manager at Ingram
money will be wasted, and management will Micro and an adjunct
be unhappyand thats not good for anyone professor in the depart-
ment of management
on the project team. at California State
The bottom line is this: When people act like University, Fullerton. He
the professionals they are, team members can may be contacted at
pquigley@fullerton.edu.
effectively identify risks and problems, analyze
them, present them, and force a decision to be
To comment on this
made. Thats the best way to keep politics out article, send a message
of the important work at hand. to feedback@apics.org.
apics.org/magazine 35
Photo:iStock/Lquang2410

March/April 2016
36
Manufacturers and suppliers look beyond
China to Vietnam

By Julien Brun

Vietnams young and relatively inexpensive workforce, stable

political structure, and long coastline with several deep ports
make it an attractive location for manufacturers and suppliers.
Rather than venturing farther into China, businesses are noticing
that Vietnam offers cost controls, risk diversification, and access
to new markets.
Vietnams manufacturing has been on the upswing in the last
several years, according to Bloomberg Business. The publication
reported in April that the countrys purchasing managers index
(PMI) has been above 50 every month since August 2013. By
comparison, economic activity in Chinas manufacturing sector
as measured by the PMI contracted for eight months within the
same period, and Thailands PMI declined for 22 months through
January 2015.
Vietnam also enjoys a decade-long China-plus-one status as
a Southeast Asian country that serves as an alternative to China
for global manufacturers concerned about being concentrated in
one place. In some cases, even Chinese companies are setting up
factories in Vietnam, taking advantage of lower production and
labor costs.

apics.org/magazine 37
 China has much better productivity, but its los-
ing its edge, says Director Frank Vossen of Seditex
Vietnam, a quality-control consulting service in Ho
Chi Minh City, Vietnam. This is indicated by the
decline in Chinas PMI measuring the economic health
of its manufacturing sector, he says. Vietnam is
gaining an advantage on China with certain products;
however, the problem in Vietnam is that the quantities
are often smaller, Vossen says.
Still, the Vietnamese have some catching up to do in
several areas. One major difference between Chinese
and Vietnamese suppliers is that Chinese vendors seem
to be a lot more street-smart, says Florian Beranek,
chief technical adviser to the United Nations Industrial
Development Organization (UNIDO).
Local Vietnamese manufacturers lack the sophis-
tication required in sourcing practices. We support
the local industry in sourcing raw materials, but often
there is a lack of skill in how to source, Vossen says. In
addition, the currently low labor costs will eventually
rise with inflation, and an underdeveloped infrastruc-
ture limits transportation and energy availability.
Start with strengths
In spite of these challenges, manufacturing currently is
the center of Vietnams growth, composing 67 percent of
the countrys gross domestic product (GDP). In addi-
tion to a strong base in furniture, textiles, and garment
production, Vietnam is one of the leading exporters of
cashew nuts, rice, coffee, seafood, fruits, and vegetables.
The country also has considerable foreign direct invest-
ment, especially in high-tech industries, and the growing
private sector likely will improve the quality of goods.
Observers say that, in order for Vietnam to build on
its manufacturing base, its businesses will need to be
involved earlier in the process, including product design.
Our products are very basic, [but] people want different
materials, says Christophe Lefebvre, regional manager of
furniture manufacturer ARENA, which is headquartered
in Bondoufle, France. The question is, will Vietnam be
able to make mixed-material products? Industry has to be
involved from a design and quality point of view. We also
need a lean supply chain to ensure competitiveness.
So far, Vietnam has not taken the lead in innovation
and creativity. UNIDOs Beranek points out that Vietnam
38 March/April 2016
is PUMAs Asian manufacturing hub, but the sportswear
company does most of its design work in Boston.
Garment and footwear production is one of
Vietnams strongest manufacturing segments, with
Adidas, Nike, and other major global companies
located in the nation. The garment industry has a
strong future in Vietnam, Beranek says. Everything
is here, all the players in the textile chain.
Development in other sectors is beginning to grow
as well. Marevz Verbic, managing director of Easy
Tiger Sourcing, Ho Chi Minh City, notes that the
country is showing potential in the agriculture and
seafood sectors. However, Vietnam needs to enhance
its infrastructure with improved ports and refrigerated
facilities to handle the fresh seafood, he adds.
The county also needs to focus on updating its
electricity grid to prevent power shortages, says Jonas
Franceschina, director of Intercoop House & Garden
Cooperative in Ho Chi Minh City. The future of
Vietnam is semi-automated production, not just a
reliance on cheap labor.
Once infrastructure is established, Vietnamese com-
panies will have to involve themselves in higher-value
industries in order to boost profits and the countrys
GDP. To achieve this, the country is developing its high-
tech industry sector. A number of multinational players
have made major investments in Vietnam this decade.
These include First Solar, a solar power manufacturer,
which invested $300 million; Nokia with $280 million;
Kyocera with $250 million; Samsung with $1.5 billion;
and Intel with $1 billion. Intels facility in Vietnam is
one of its largest global manufacturing facilities.
Sourcing skills
Sourcing raw materials to support production for
either foreign or domestic companies is another devel-
opmental area that requires focus. Depending on a
companys philosophy, sourcing improvements can fol-
low different paths. If a supplier has no knowledge or
interest in developing suppliers for a certain product,
we will work with them over the long term, Lefebvre
explains. In some cases, we need to show them how to
better source raw materials.
Vietnamese businesses can learn to be better suppli-
ers by connecting with buyers through their customers.
 Take suppliers with you to meet buyers in Shanghai,
Hong Kong, or other places, and connect them with
inside sources, UNIDOs Beranek advises. This will
help suppliers develop to a higher level.
Vietnamese manufacturers are acutely aware that there
are other low-cost markets for garment production, such
as Cambodia, Bangladesh, and Indonesia. Vietnam has an
opportunity to differentiate itself and not just rely on low
It takes foreign-invested
enterprises twice as long
to get licenses.
costs to compete. In addition, the nation has difficulty
competing with China because of quality issues, includ-
ing unreliability of information, difficulty of communi-
cation, lack of sourcing experience, high rates of rejection,
and low productivity. The key here is to match existing
know-how and develop the right tools, Seditexs Vossen
explains. As Vietnam reinvents its supply chain with a
focus on price, it should not forget quality.
Still, exports are moving up the value chain in
Photo:iStock/fastsnail
the Vietnamese economy, according to Mike Gildea,
former South East Asia CEO of Agility, which has an
office in Ho Chi Minh City. We dont see any threat to
Vietnam in terms of sourcing, he says.
In 2014, Vietnam became the biggest exporter to the
United States among the 10 Association of Southeast Asian
Nations, Bloomberg Business reports. The countrys young
and inexpensive workforce has attracted the business of
large manufacturers including Samsung Electronics, Intel,
and Siemens, in addition to apparel and shoe makers.
Regulatory hazards
Another way to stay competitive with China is to seek
a more active, supportive role from the Vietnamese
government, similar to that of the Chinese central
government. Although the Vietnamese government
traditionally has been supportive of exports, it restricts
the import of certain consumer goods. In addition, it
is difficult for international businesses to receive retail
and other business licenses, and transportation devel-
opment is limited.
Customs procedures also hamper growth. In
Singapore, it takes 10 minutes for a container to clear
customs, whereas in Ho Chi Minh City it takes 37
days, explains Jim Winkler, project director at the
Vietnam Competitiveness Initiative, a United States
Agency for International Development (USAID) pro-
ject geared toward improving Vietnams competitive-
ness. Governments need to understand the metrics.
Foreign companies doing business in Vietnam also
are at a disadvantage because of stricter government
rules. It takes foreign-invested enterprises twice as
long to get licenses, Winkler says. They have higher
regulatory burdens.
The retail promise
The Vietnamese government currently maintains a
tight grip on the countrys retail sector. For many
[foreign] retail sectors, it is difficult to get retail service
apics.org/magazine 39
 licenses, says Frederick Burke, managing director
of Baker & McKenzie, which has offices in Ho Chi
Minh City and Hanoi. Companies need to find a
workaround or a partner.
Protectionism supports local retailers and brands
but limits the overall development of the sector.
Restricting growth limits process improvements
and best practices that generally are brought in by
outside players.
Another issue is the skill and service levels of retailers.
Basic retail skills are lacking, says Mark Wrice, a retail
consultant focused on Vietnam. Maintaining consist-
ency of service in retail is critical.
Despite these challenges, the retail sector is growing
steadily as some foreign players paired with the right
partners in hypermarkets, supermarkets, and conven-
ience-store chains are thriving. Local players such as
retail cooperative Saigon Co-op continue to prosper
with the support of the government.
According to the General Statistics Office of
Vietnam, the total retail sales of goods and consumer
services increased 24 percent from 2010 to 2011. This
figure sounds high, but it is tempered by inflation.
40 March/April 2016
Vietnamese consumers also face reduced buying power
because they dont necessarily receive wage increases to
match the inflation rate of more than 10 percent.
Securing talent
As in other markets, Vietnam is challenged with
attracting the right individuals to work in the supply
chain field. According to Quyen Nguyen, cofounder of
the Ho Chi Minh City-based nonprofit Vietnam Supply
Chain Community, Talent is elusive; its nowhere but
its everywhere.
Ed Carey, president of Vietnam operations at fur-
niture manufacturer Theodore Alexander says, We
focus on developing our own people and bringing
them through the organization. Our biggest problem
is getting basic labor. We compete with Nike and other
big manufacturers.
Supply chain jobs also are viewed as less appealing
compared with banking or other fields that promise
greater financial rewards. We need to let the new gen-
erations know that supply chain is a cutting-edge field,
says Paul Bradley, chairman and CEO at Singapore-
based Caprica International.
 Another strategy that companies are using to grow
talent is to focus on developing their current personnel.
Training is very important to us, says Tuan Vu, chief
manufacturing officer at Ho Chi Minh City-based
Masan Group, one of the countrys largest private-sec-
tor companies. We invest a lot in training and try
to rotate people into different jobs and create a good
working environment.
Infrastructure lags
Just as the country needs to build up its supply chain
workforce, Vietnam must invest in its infrastructure to
support growth. For example, it takes approximately
four days to travel by road from Hanoi to Ho Chi Minh
City, a distance that could be covered much faster with
better roads. In addition, overall logistics spend in
Vietnam is 1824 percent of the GDP, higher than in
China and much higher than in Europe and the United
States. This cost is obviously a concern for companies
weighing lower labor costs against logistics challenges.
Photo:iStock/Nguyenhieu2206, iStock/HuyThoai , and iStock/Tarzan9280
Some infrastructure reinforcement is happening
on a provincial level, UNIDOs Beranek points out.
Three ports are being built along with a new airport,
even before the capacity need is there, which is a credit
to the authorities, he explains. Vietnam currently
has 250 industrial parks, with 84 under construction,
which is necessary to attract foreign businesses.
On a regional scale, Southeast Asian countries are
developing networks such as the East-West Highway,
which runs from Myanmar to Vietnam and cuts
through Thailand and Laos, as well as several north-
south links to China. Because of its location within
these networks, Vietnam will have an increasingly
important role in regional geopolitics, Beranek says.
The road ahead
Despite all of the advantages of locating in Vietnam,
the country has a long way to go as it strives to
develop a sophisticated manufacturing supply chain.
As in other markets,
Vietnam is challenged
with attracting the right
individuals to work in the
supply chain field.
Vietnam must focus on higher-value industries, as
China is doing, while improving its infrastructure.
Vietnam is a low-value-added producer, USAIDs
Winkler says. Most materials are imported, and the
main input is labor. For example, they produce 110
million pairs of shoes a year for Nike. Does this help
the country?
Other challenges include inf lation, as the
Vietnamese Dong continues to depreciate, and
frequent electricity burnouts, which can cost a small
manufacturer up to $4,000 per occurrence. But
most of these challenges are on par for a developing
economy, and Vietnam appears ready to navigate
the issues. As the nation builds on its successes, the
country can look to a bright future.
Julien Brun is the founder and managing partner of CEL
Consulting, an international supply chain and operations
consultancy in Vietnam. The firm specializes in offering
strategic and operational advisory and training services in
the Association of Southeast Asian Nations. Brun may be
contacted at julien.brun@cel-consulting.com.
To comment on this article, send a message to feedback@apics.org.
apics.org/magazine 41
 CASTING
FOR Strategies struggle to keep pace
with workplace needs

TALENT
By Karen Huelsman

R
egardless of the line of business, there always is work to be
done. Its easy to develop tunnel vision when focusing on
getting products out the door.
Who is responsible for making sure products reach their des-
tinations? Supply chain employees, of course. Although leaders
know that their staffs are crucial to success, it appears hiring
and retention strategies for supply chain professionals have not
been top priorities for many businesses. As the demand for these
professionals reaches new heights, the competition for workers is
spurring some leaders to try new approaches.
Part of the shift in the supply chain hiring world is attribut-
able to the fact that people who are tech savvy and [have] the
ability to interpret information are in high demand in several
other industries, says John Healy, vice president and manag-
ing director of global talent supply chain for Kelly Services, an
outsourcing and full-time placement service. If you think a
traditional approach [to hiring] is going to work, its probably
a little nave.
Jay Nearnberg, CSCP, who spent much of his career
in pharmaceutical supply chain roles, also sees that the
ever-widening set of qualifications may limit the candidates
supply chain leaders consider. If you are looking for a can-
didate with global experience as well as procurement, factory
activity, supply chain planning, and demand planning
backgrounds, its going to be harder than meets the eye, says
Nearnberg, who is manager of consulting for Accentures life

42 March/April 2016
 43
apics.org/magazine
Illustration: iStock/enotmaks
C A STING
FOR
TALENT
Why do we not manage talent
development projects the same
way we manage capital and
technology projects?
sciences supply chain practice. He suggests that busi-
nesses may be able to widen the net by considering
candidates from outside their own industries.
The cross-functional nature of todays supply chain
roles means that its more difficult to gather all of the
traits and skills needed, agrees Paul Dittmann, PhD,
executive director of the Global Supply Chain Institute
at the University of Tennessee in Knoxville. In
addition to doing your job, you need to be constantly
working with both suppliers and customers.
The current hiring scene represents a perfect storm
of challenges as the baby boomer generation retires
at the same time as the profession requires wider
skill sets, says Lisa Smith, instructor and department
coordinator for supply chain management at Harper
College in Palatine, Illinois. Companies now are look-
ing for general, broad-based business acumen.
As a former vice president for procurement at Sara
Lee, Smith has seen how professionals must meet the
higher standards that improved technology makes
possible. The industry has even had to respond to the
Amazon effect that pushes the model of immediate
response, she says.
Today and tomorrow
A 2015 University of Tennessee white paper, Supply
Chain Talent: Our Most Important Resource, sheds
light on the current state of talent management efforts
and offers some important insights. The authors, from
the schools Global Supply Chain Institute, including
Dittmann, write: The shortage of middle management
44 March/April 2016
able to transition an organization to an integrated
end-to-end supply chain operating philosophy is
apparent to senior supply chain leaders struggling
for support at this level. How will a company develop
this internally? Will it need to be seeded with external
hires? These questions should be addressed by a com-
prehensive talent strategy.
But the paper also notes, Paralysis seems to most
accurately capture the current response of many com-
panies to the talent challenges.
Accentures Nearnberg agrees that paralysis is a com-
mon reaction in the field of supply chain hiring. The
difficulty is that supply chain isnt always considered
strategic, he says. And if it isnt considered that way,
then often there is not a lot of thought about the skill
sets, bars, and standards we want coming into the role.
He observes that, if top managers look at supply
chain roles through a more strategic lens, they will see
the value in having a strong hiring plan. In addition,
he points out that businesses skimp on supply chain
talent management at their own peril. What if your
one main supplier has a hiccup? How do you recover
from that? Thats the risk management piece of supply
chain, he explains.
The universitys report also points out that supply chain
leaders havent traditionally made talent a top priority.
Why do we not manage talent development projects the
same way we manage capital and technology projects? The
processes actually should look quite similar.
Chuck Nemer, CPIM, a consultant and adjunct
professor at Metropolitan State College in St. Paul,
 SUPPLY CHAIN
Minnesota, agrees with that assessment. But in his
consulting work, he says he sees businesses that are TALENT
constantly in a reactive mode. A lot of my clients are
so consumed by todays work today [that] they cant MANAGEMENT
take care of tomorrow, he says.
Dittmann points out that, in general, he finds MYTHS
todays most prevalent approach to talent leaves
something to be desired; there needs to be a formal
strategy. He and his fellow authors note that their
goal is to make a clear case for why supply chain
talent should be your highest priorityabove the 1. Talent management is a human
resources responsibility.
current quality crisis, cost compression targets, and
everything else.
The growing visibility of the value of supply chain
could improve talent strategies, according to Arnaud 2. Talent can be neither measured
nor managed.
Deshais, CPIM, CIRM, CSCP, vice president of supply
chain and quality at Redbubble, an online artists mar-
ketplace based in San Francisco. In the past, moving
products was only seen as a cost, he says. Now busi- 3. Companies cannot afford to
spend money on talent recruitment
nesses are realizing that, if you do it well, you will grow and development.
your sales. Youll have more repeat customers.
Harper Colleges Smith agrees with Deshais that
business leaders now are seeing supply chain as a
driver of success. She also observes that the recession 4. Talent development is primarily about
teaching supply chain content.
kept companies from looking down the road at their
talent needs. During that time, talent strategy got put
on the back burner, she says. But the college instruc-
tor is seeing the trend reversing somewhat. The more 5. A one-size-fits-all solution will work
for talent development.
awareness builds about the critical workforce needs,
the more resources and time will be spent solving the
problem, she explains. The emergence of the chief
supply officer position in some larger businesses shows 6. Internal (or external) resources are
always better.
how the role is expanding, she observes.

The HR angle
Observers say that human resources (HR) professionals 7. Development happens primarily in
a classroom.
could be made more aware of the type of talent supply
chain management requires. Im not badmouthing
HR, Dittmann says. As the career requires an increas-
ing number of skills, it is tougher for HR officials to 8. Talent development will happen
naturally and informally.
get their arms around it. I think its more of an issue of
business leaders abdicating the responsibility for finding
qualified candidates to HR. But HR needs a business
partnership to make it happen. 9. Talent development is less important
than the issue du jour.
Accentures Nearnberg agrees, noting that he has
witnessed hiring managers who were too hands off
about the selection process. Ive seen situations where
there was more conversation about compensation than 10. Most businesses are so far behind
that they should give up now.
on what the responsibilities of the job were, he says.
Viewing HR as a business partner can pay big divi-
dends when a company seeks to develop high-potential Courtesy of The Global Supply Chain Institute at the University of Tennessee
talent. Because supply chain touches so many parts of
a business, its important for future leaders to develop

apics.org/magazine 45
C A STING
FOR
TALENT
supply chain competencies, Kelly Services Healy says.
HR can be a strong partner in making sure the stretch
assignments [that challenge employees to grow] include
supply chain experience, he says.
Redbubbles Deshais says he does much of the hiring
footwork himself, noting, The recruiters dont quite
understand what the job is. He says he relies on net-
working, LinkedIn, and attending conferences to attract
talent. He also recalls that it took him six months to find
a senior logistics manager who had the skills and the
cultural fit RedBubble needed. And he points out that
the candidate already had a job, which shows that there
just arent enough people in the industry.
Untapped resources
The shortage of professionals offers employers oppor-
tunities to create what Healy calls talent pools. He
advises companies to actively network in person and
online to form a community of people with supply
chain skills. By actively discussing trends and sharing
ideas and successes, a company can be recognized as
an industry thought leader. Its not just about post-
ing jobs, he observes. This way, you almost become
branded as an employer who understands those new
competencies, he says.
As todays workers seldom spend 2030 years with
one company, they are more accustomed to perform-
ing different jobs at different times. This can serve as
a template for employers as well. An employer with a
Did You Know?
The APICS Career Center offers hiring managers
and human resource professionals access to
an elite community of job seekers. Companies
can post their domestic as well as international
openings on a job board focused on supply
chain and operations positions. The job board
also hosts resumes from professionals seeking
new challenges. Visit http://bit.ly/Qq6gQW.
46 March/April 2016
specific project can look for talent in the free-agent
marketplace. It enables a supply chain manager to
choose employees by assigning a task as opposed to
thinking that every task fits into a defined full-time
job, Healy observes.
As the corporate world and the physical supply
chain are moving away from rigid job descriptions,
employers also can leverage the specialists they need.
You might bring in some independent contractors for
some work and some temporary workers for something
else, Healy says. Youve got to look at the best way to
accomplish the work.
Companies that are willing to expand their talent
pools also can look to stay-at-home parents and the
disabled. These are two groups that have been under-
leveraged, Healy observes. Progressive employers can
tap into this pool where there is less competition.
Redbubbles Deshais looks outside the supply chain
field for talent and recommends seeking out engineers
and workers with a general business background.
Marketing professionals who are strong in data analytics
also can be an asset, he notes. There is only so much
you can learn in theory; you really need to get hands-on,
practical experience in supply chain, he says.
Industrious educators
Supply chain experts are seeing the value of strong
relationships with colleges and universities as a way to
develop talent. As the industry changes, practitioners
and educators are continuously aligning their goals and
content. Smith has witnessed a great deal of collaboration
with area businesses at Harper College. Our industry
partners are always helping us to update our curriculum,
she says. In order to prepare students quickly, the college
offers a certificate that covers inventory and production
control, purchasing, physical distribution, and supply
chain management that can be completed in one year. The
courses also qualify as college credits that can be applied
toward an associates degree.
At least one top-ranking supply chain university
is using a similar playbook in response to the talent
shortage. The Massachusetts Institute of Technology
recently announced a micro-masters certificate in manufacturing but touches on leadership, supply chain
supply chain management. As part of the program,
students are required to complete five online courses
and pass a test.
Preparation for more challenging positions doesnt
stop at the campus border either. For example, APICS
designations, including the Certified in Production and
Inventory Management and Certified Supply Chain
Professional, offer the education current professionals
need to keep their skills fresh.
In addition, schools are reaching into the workplace.
Harper College provides companies on-site training
programs to widen current workers skills, Smith says.
Likewise, the Georgia Institute of Technology offers com-
panies customized training for mid-career professionals
who want to earn a supply chain management certificate.
Dittmann says the highly rated supply chain pro-
gram at the University of Tennessee has strong bonds
with industry. Our school has to offer its own career
day outside of the universitys event, he points out.
We have about 100 companies show up.
Some forward-thinking business leaders are looking
to increase interest in supply chain as a career by
getting in front of high school students. Nemer, who
consults and teaches, says he sees catching students
in high school as a strategy that will pay off. He has a
client who is working through a community college to
offer high school students an introduction to manufac-
turing and supply chain careers. The course centers on
management, and lean. Students are learning about a
world that is unknown to many of them, he says.
Nemer points out that its crucial for employers
to build relationships with high school and college
career counselors. Because few counselors have been
exposed to the workings of supply chain, they arent
vigorously encouraging students to prepare for the
field, he observes. But supply chain applies to any
kind of industry, so it shouldnt matter if students are
interested in health care or financial services, he says.
There is a place for [supply chain skills] everywhere.
Karen Huelsman is senior manager of publications at APICS. She
may be contacted at editorial@apics.org.
To comment on this article, send a message to feedback@apics.org.
Digital Exclusive: Visit the APICS magazine tablet app to listen to APICS
Career Coach Rodney Apple discuss job seekers views about current
hiring practices. To access the digital exclusives, search for APICS mag
in the App Store and on Google play.
apics.org/magazine 47
48 March/April 2016
 SPEAK
UP
Technology encourages employees to promote facility safety
By Jennifer Storelli
f you saw a spill on the shop floor at
work, would you clean it up, report it to a
manager, or walk away and let someone
else worry about it? The first two options
are responsible choices, depending on
the situation. Ignoring a safety issue,
even if it does not cause any harm, still can put you and
your coworkers at risk. Employers of all sizes and around
the world face challenges with tracking safety issues in their
facilities and encouraging employees to speak up about
them. Safety can be improved in some smaller firms by fos-
tering an environment of open communication and teaching
employees to recognize safety hazards. For larger, global
Photo: iStock/omendrive and zhudifeng
companies, web-based software and mobile applications can
connect all of the affected parties and streamline reporting
and investigating procedures. The end goal in both scenarios
is to be able to address accidents and near misses in order to
create a safe working environment.
According to the US Bureau of Labor Statistics, more than
2.7 million nonfatal workplace injuries were reported in the
United States in 2014. In addition to the pain and potentially
reduced quality of life for the injured employees, the compa-
nies face costs from medical bills, property damage, workers
compensation, overtime pay, fines, and litigation, notes Ken
Mazon, senior application specialist for WorkplaceAware, a
health and safety reporting solution. Workers compensa-
tion claims alone average about $5,000, he says. Most [US
Occupational Health and Safety Administration] (OSHA)
fines are about $10,000, although some can total hundreds
of thousands of dollars. OSHA estimates that US employ-
ers pay a combined $1 billion each week for direct workers
compensation costs, in addition to the costs associated with
accident investigation, implementing corrective measures,
lost productivity, repairing damaged property, and training
replacement employees.
These results only consider the reported workplace
injuries. Michael Scaletta, Chicago-area general manager
for Equipment Depot, notes that employees at his company
sometimes are reluctant to mention a safety hazard or
accident that happened at a customers site. They fear that
reporting the incident will hurt the customer relationship.
However, 85 percent of the companys injuries happen to
field techs at customer locations, where the company cannot
directly control the safety of its employees, he says.
The simple solution, Scaletta suggests, is to encourage
feedback and maintain a positive approach to gathering
apics.org/magazine 49
 SPEAK
The success of any safety
UP
program depends on the
attitude of management.
incident information. I believe it really comes down
to communication and fostering an environment
that puts safety first above all other metrics, he says.
Companies also must make the employees aware that
they want to be transparent and that no one will ever
get in trouble for reporting an accident or possible
safety hazards.
Putting safety first means encouraging employees
to report both accidents and near misses, or situa-
tions that have not yet caused any injuries but have
the potential to do so. In his five years as a warehouse
manager overseeing employee safety, Anthony Rera,
CPIM, CSCP, CLSSBB, director of communications
and marketing for the APICS Tappan Zee Chapter, has
noticed that employees neglect to report near misses
because they do not think they are worth mentioning.
However, according to the ConocoPhillips Marine
safety pyramid, for every 3,000 near misses or at-risk
behaviors in industrial facilities, approximately 300
recordable workplace injuries occur. (See Figure 1.) In
2003, the Houston-based business conducted a study
building on the 1931 work of H.W. Heinrich to demon-
strate the ratio between near misses and serious acci-
dents, according to OSHA. Such near misses, which
included bypassing safety components on machinery
or eliminating a safety step in the production process,
are clearly worth talking about.
Rera recalls a specific near miss involving a truck driver
and a forklift operator at a company warehouse. In that
case, the driver thought the loading process was complete
and disengaged the dock plate, triggering an all-clear
green light on the dock and a red light in the warehouse.
However, the forklift operator loading the truck was still
inside the warehouse retrieving the last pallet. When he
returned to the dock, he reengaged the dock plate to load
his pallet onto the truck, triggering the dock light to turn
50 March/April 2016
red and indicate to the driver he should not leave yet.
However, the truck driver did not notice the light change
and drove away with the forklift and its operator in his
trailer. Fortunately, nobody was hurt in this instance, but
the potential for danger was there.
Because the incident was brought to managements
attention, the company was able to conduct an investi-
gation and add more safety measures, such as installing
a dock-locking system and collecting keys from drivers
who back into the loading dock. If the situation had not
been reported, the bigger risk [would have been] not
finding and fixing the cause of the incident, Rera says.
Chris Gab, engineering manager at plastic pallet
and container manufacturer Rehrig Pacifics De Soto,
Kansas facility, echoes the importance of examining
near misses. We never see a near miss as a negative,
he explains. Its an opportunity to make an improve-
ment before anything serious occurs. If we analyze
our near misses, they can point to gaps in our safety
processes or training. Dealing with an accident where
employees are injured or equipment is damaged is far
less productive than near-miss corrections.
Technological advantages
Rehrig Pacific sets the stage for safety at its De Soto,
Kansas, facility with a comprehensive employee safety
training program that includes classroom and pres-
entation events, five-minute trainings called Toolbox
Talks, quizzes, task or process audits, and job-hazard
analyses. After more than 10 years of exceptional
safety performance, plant managers realized that, if
they wanted to maintain that record, they would have
to focus on continuous improvement of the companys
safety culture, Gab says. In addition to accidents, the
plant managers wanted to track near misses, which
are leading indicators of safety improvement opportu-
 1
Fatality

30
Lost workday cases

300
Recordable injuries

3,000
Near misses (estimated)

30,000
At-risk behaviors (estimated)

Figure 1: ConocoPhillips Marine Safety Pyramid, 2003

nities, he says. However, the companys paper reports Whistle-blowing fears

and limited computerized forms were not equipped to
handle that, he explains.
Those doing the work are the foremost experts in
how the work is done and the risks in that work, Gab
says. I thought, Wouldnt it be great if a third-shift
operator could text in a picture of an issue beyond his
control to remedy?
Rehrig Pacific found this solution in
WorkplaceAware, a health and safety reporting
tool for computers and mobile devices. With the
WorkplaceAware mobile app, workers using Apple or
Android smartphones or tablets can submit a report
that includes specific details about the near miss or
incident, a picture, the time and date it was discovered,
and the location of the issue, WorkplaceAwares Mazon
explains. Users also can view past reports they have
submitted and receive updates about them.
WorkplaceAware has helped increase near-miss
reporting in Rehrig Pacifics De Soto plant, Gab says.
Our associates have varying levels of comfort with
written communication, and, especially in a man-
ufacturing plant, they may not know the names of
equipment or be able to completely describe what they
see, he explains. Pictures are more powerful than any
description Plus, it may take a few minutes to fill
out a form, whereas the WorkplaceAware app enables
report submission in seconds.
Even when companies work to foster an environment
of openness and concern for safety, some employees
still might be afraid to blow the whistle. In a survey of
3,000 UK employees, London-based law firm Slater and
Gordon found that 1 in 10 people had suffered a serious
injury at work, and 30 percent of those injured said
they were blamed for the incident. Another 10 percent
of those injured were warned their jobs would be at risk
if they continued to report safety concerns.
Based on situations such as this, one-third of British
workers are afraid to reveal illegal or dangerous activ-
ities at their companies, according to another Slater
and Gordon survey of 2,000 UK employees. However,
67 percent of those surveyed reported that they would
speak up if they could do so anonymously.
The team at Philadelphia-based Transportation
Resource Associates (TRA), which primarily offers
guidance about complex safety, security, opera-
tions, and maintenance issues in the transportation
sector, kept anonymity in mind when designing its
IndustrySafe Safety Management Software. As long
as an employee has internet access, he or she can use
IndustrySafes public web forms to report workplace
incidents that they witness, record observations, and
report any hazards they may encounter, explains
Clare Epstein, a TRA vice president. Our public web
forms can be made available to an entire company via

apics.org/magazine 51
 SPEAK
UP
Apparel factory workers in Dhaka, Bangladesh, learn to use the LaborVoices platform.
a simple web link, so no username or password is
required to use our public forms. Companies can even
allow employees to report their findings anonymously
via the public forms, if they wish to do so.
Similarly, LaborVoices offers an anonymous griev-
ance hotline through which employees can talk about
their safety concerns. LaborVoices forwards general
issue information to the individuals employer or
other stakeholders, but specific employee information
is shared only if the employee allows it. If theres a
specific case that needs to be dealt with, and someone
wants to follow up, we take extra care to make sure the
worker knows that he or she has to opt in to get that
direct communication, explains Kohl Gill, CEO and
founder of the Sunnyvale, California-based company.
However, persuading employees to contact a third-
party system has required some trust-building, Gill
notes. LaborVoices shares information about its ser-
vices with working communities in the United States,
52 March/April 2016
United Kingdom, Turkey, Bangladesh, Dominican
Republic, Argentina, Costa Rica, India, and China and
encourages them to interact with its call-in system
to participate in employee surveys and listen to labor
information through its infocast tool.
You can think of it as a lower-temperature inter-
action, Gill explains. Were not looking to interact
with workers only when things are really urgent.
Were aiming our interaction with workers at a little
bit more of a casual stance, where workers can call at
any time for any issue We found that that is very
useful because it allows the workers to gradually build
up a relationship with us as a system and company that
allows them to surface issues that normally would be
very difficult to talk about.
Traversing language and distance
The talking aspect of LaborVoices enables workers
who are uncomfortable with writing to still give a
report and voice their concerns, Gill points out. The
way weve built our interface for workers has, up until
now, been entirely audio, he says. So, were aiming
for workers who dont necessarily have a smartphone
[and] they arent necessarily literate, or at least not in
a Western language, and so it makes sense to interact
with them via audio.
This feature was actually one of the reasons why
Reliable Source Industrial (RSI) chose the system.
[One of] our goals in implementing the LaborVoices
platform [was to] help design and implement a local
language grievance hotline so that our local employees
can immediately provide feedback or raise a red flag
if there was a concern at the factory operations level
that was against our strict internal code of conduct or
not in total compliance with our core values, explains
Ted Leung, chief compliance officer for the Taipei,
Taiwan-based apparel manufacturer. The company has
close to 10,000 employees in Shanghai; Phnom Penh,
Cambodia; Chittagong, Bangladesh; Hanoi, Vietnam;
and Jakarta, Indonesia.
THE SAFE ROUTE FOR TRUCKERS
Because truck drivers face multiple
uncontrollable hazards on the roads
every day, safety must be top of
mind for every fleet. Truck drivers
must drive not only for themselves,
but also for others on the highway,
explains Joe L. Smith, manager of
fleet safety and risk management
at Kenco Management Services in
Chattanooga, Tennessee. They must
be alert and anticipate erratic maneu-
vers by other drivers who are talking
on cell phones, texting, listening to
loud music, reading while driving,
talking to others in the car, and being
oblivious to those driving around
themparticularly large trucks.
An accident on an interstate can cost
millions of dollars in lost productivity
in addition to the associated investi-
gative, cleanup, insurance, legal, and
reputation costs. Even though a truck
driver may not be at fault in some of the
crashes that occur from other drivers
negligence, early news reports are
often incomplete, and people are quick
to blame the largest vehicle involved,
Smith says.
To prevent accidents in the first place,
the trucking industry uses multiple
forms of safety technology. Lane-
departure warning systems, collision
mitigation systems, adaptive cruise
control, vehicle stability systems, and
rear- and side-collision warning sys-
tems are commonly used to help truck
drivers work safely, says Jacob Pierce,
deputy executive officer of safety pro-
grams for the Arlington, Virginia-based
American Trucking Associations (ATAs)
Safety Management Council. Kenco
also uses a SmartDrive camera system
with outward- and inward-facing cam-
eras in all on-the-road trucks to capture
hazardous situations and coach drivers
to correct unsafe driving behaviors.
In addition, Kenco requires all drivers
to watch a JJ Keller & Associates
online, interactive training video on a
monthly basis. Providing the very best
possible training for drivers and their
supervisors is always the first line of
safety, Smith says. Annual recogni-
tion programs, whether fleet-based or
nationwide, encourage continued safe
practices, he adds.
Because of its safety record, Kenco
earned the 2015 ATA Presidents Trophy
in the Under 25 Million Miles category,
as well as first place in the National
Truck Safety Contest in the General
Commodities/Truckload/Line-Haul up
to 10 Million Miles category, the Safety
Improvement Award, and the Division
Improvement Award. Kenco showed
that safety and health performance
is of the utmost importance, Pierce
says of Kencos achievements. Their
current training programs are designed
to teach, motivate, and sustain safety
knowledge practices amongst all of
their employees.

In one of the first surveys through LaborVoices,
RSI employees voiced concerns about the sanitation
of the company-provided midday meal, and managers
were able to quickly address the issue through local
factory team meetings. Immediately thereafter, our
local factory management team began the process of
investigating and conducting a root-cause analysis of
the employee feedback and learned that our third-party
foodservice company providing our midday meal had
been lax in its hygiene and food-safety-handling proce-
dures, Leung explains.
Our local health and safety manager worked with
the owners of the foodservice company to upgrade and
strengthen the companys standard operating proce-
dures and provide additional training to strengthen
and reinforce safety protocols, Leung says. In turn, the
local team began inspecting midday meals and made
unannounced audits at the foodservice companys
facilities to review handling, preparation, cooking,
and transport procedures. Lastly, RSI followed up
with employees to provide feedback and monitor the
progress of changes.
These actions showed employees that their feedback
and concerns were being taken seriously, Leung says.
In addition, because the LaborVoices system ensured
employee confidentiality but enabled them to receive
feedback through general company meetings, and
because the company openly encouraged employees to
continue providing feedback, participation in the sys-
tem increased. We have noticed that a trust is being
developed with our employees and they are more
open and willing to provide feedback and suggestions
for improvement.
RSIs example of trust-building and encouraging
safety feedback can be applied to many other labor
situations. The success of any safety program depends
on the attitude of management, Equipment Depots
Scaletta notes. I believe that companies can encour-
age employees to speak up about such issues through
transparency and leadership from the top of the com-
pany, he says. Once employees know the company is
committed to safety and making sure all employees go
home safe at the end of the day, they will speak up.
Jennifer Storelli is associate editor for APICS magazine. She
may be contacted at editorial@apics.org.
To comment on this article, send a message to feedback@apics.org.
Digital Exclusive: Visit the APICS magazine tablet app for an
infographic about workplace safety. To access the digital exclusives,
search for APICS mag in the App Store and on Google play.

apics.org/magazine 53
 to Build Up Lean
Tactics for boosting the time-honored methodology
By Joyce Warnacut
Photo:iStock/Ridofranz and Illustrations:iStock/ulimi

54 March/April 2016
 ountless articles in trade publications
have bemoaned the lack of quantifi-
able results and diminishing returns
derived from lean initiatives based on
waste elimination. But few of these sto-
ries have suggested that having a micro-level focus
on individual products and operations actually may
be part of the problem. Perhaps it is time to look
at the process from a macro levela point of view
that considers the variation to provide insights
about which lean tools to use. For instance, those
that enable professionals to study the problems
of variation, capacity, and the interaction of people
and machines can help users focus on the appli-
cation of those tools in order to produce real
results. Seeing lean from the macro level makes it
possible to effectively evaluate the relative effects
of various scenarios, understand the system
impact, and determine where to focus efforts in
order to achieve the benefits sought.
To meet these objectives, it is first necessary to
establish what should be measured, the ultimate
objective, how to measure it, and how success will
be defined and verified.

apics.org/magazine 55
 Lead time
Taiichi Ohno, father of the Toyota Production System
(TPS), said the following about leans benefits: All we
are doing is looking at the timeline from the moment
the customer gives us an order to the point when we
collect the cash. And we are reducing the timeline by
reducing the non-value adding wastes.
Compressing the timeline increases veloc-
ity, reduces inventory, and improves cash flow.
Additionally, compressed timelines simplify
processes by eliminating a multitude of wastes
that accrue with timefor example, the need to
reschedule and expedite as variation results in hot
or delayed orders. The quicker the cycle, the fewer
opportunities there will be for these activities to
occur. Other benefits relate to inventory carry-
ing cost as well as expenses related to put-away
and retrieval, counting and recounting, moving,
What if the problem at hand is caused by
therelationshipbetweenpiecesratherthan
a single item?
recording transactions and adjustments, obsoles-
cence, spoilage, and so on. Finally, compressing the
timeline adds value for the customer in the form of
quicker responses and leads to market opportunities.
Clearly, lead time should be considered a measurable
benefit and can help target specific waste-reduction
initiatives. Note that selecting cost reduction as an
objective or the primary measure does not guarantee
shorter lead times. For example, one can reduce cost
by increasing lot sizes to amortize setup expenses, but
this will result in longer lead times as products wait
in the queue behind large batches. It also will increase
inventory levels and, thus, costs.
Lead time should not be measured at the operation
level, but the system, or macro, level. This is because
reducing lead time at one step while leaving work
in process (WIP) in queue at the next step is futile.
Secondly, lead time must be measured from the point
at which resources are committed to the point at which
56 March/April 2016
customers receive the goods. Traditional on-time
delivery and lead-time metrics would suggest that
making and holding inventory for the purpose of order
fulfillment is beneficial, as it enables quick responses.
But for a true time-based measure built around when
resources are committed to an order, making ahead
is not advantageous. It actually increases response
time because having people, material, and machines
allocated to something that is just going to sit on a shelf
negatively affects both responsiveness and cash flow.
Therefore, lead time must be defined as the time to
complete and ship an order from scratch, beginning
with order placement and on until receipt. Rajan Suri,
creator of the quick-response manufacturing philos-
ophy, refers to this concept in MCT Quick Reference
Guide as manufacturing critical path time. He says
that, when there are multiple paths and subassemblies
involved, the time that matters is the longest path
through the system. Knowing the critical path helps
focus lean initiatives and reveals the greatest opportu-
nities for waste reduction and lead-time improvement.
Variation, or randomness, can come from fluctuat-
ing levels of demand, equipment breakdowns, scrap
and rework effects, material issues, staffing problems,
or any of a dozen other issues that often turn supply
chain and operations managers into firefighters. By
addressing variation at the micro levelmeaning one
product at one machineit is possible to reduce var-
iability in the per-piece run time and to reduce setup
times. But there still will be some variation from
product to product. (Even if variation could be totally
eliminated, there would be randomness in the system
manifesting itself through shifting wait times and
queues.) Lean tools operate on the belief that causes
can be determined and concerns addressed by decon-
structing an issue into smaller and smaller pieces. But
what if the problem at hand is caused by the relation-
ship between pieces rather than a single item?
Solutions from math
Applied mathematics can provide some useful insights
because it enables users to model real-life production
story problems, such as the following:
What should be changed in order to reduce lead times?
What is the best lot size to minimize both lead time
and WIP?
 How many machines should be used?
If a machine is added, how will lead time change?
How many people are required?
What should be their combination of skill sets?
How will lead time be affected if an operator is paid
to attain machinist skills?
First, there is a mathematical formula for lead time.
To model an operation, information on demand, the
jobs setup time and run time, and resource numbers
and availability are required. Most organizations use
the data and model method of traditional advanced
planning and scheduling (APS) systems. However,
to capture reality, it is essential to remember that the
actual time required on any resource is influenced
by variability. Lead time is, after all, simply a sum of
job duration (setup plus processing time) and average
queue time.
Leonard Kleinrock, in his book Queueing Systems,
tells us that queue time may be calculated in the fol-
lowing manner:
Queue time =
variability x (use /(1-use)) x total job time
When this formula is used to calculate lead times
at varying levels of use, a graph such as Figure 1
is produced. This demonstrates that, as machines
exceed roughly 75 percent of capacity, lead time
increases exponentially. It also is worth noting
that, although many supply chain and operations
managers would view 100 percent use as ideal or
a maximum exploitation of resources, achieving
that level of use actually will add to lead times and
impede a companys ability to respond to custom-
ers. Therefore, high use cannot be the performance
measure of a lead-time-based system, and any sched-
uling or rough-cut-capacity planning system that
overlooks variability and use is flawed and ignores
mathematical principles.
Now, consider how WIP can be estimated mathe-
matically in order to further advance the system:
WIP = flow rate x flow (lead) time
LEAD TIME VERSUS USE
25
20
15
LEAD TIME
10
5
0
0 0.5 1
USE
Figure 1: Lead time versus use
For example, if 10 jobs are processed each day, and
each spends three days in process (including wait time,
process time, and setup time), the average number of
jobs in WIP at any point in time is 30. The use of this
formulaand the estimation of WIP and lead time
helps decision makers quickly evaluate the tradeoffs
between carrying WIP and reduced lead times.
Value stream mapping is an effective technique here.
It enables users to produce graphs and estimates for the
use of equipment in a cell, shows the time the equipment
is waiting for labor, and reveals the resulting impact
on use. Furthermore, value stream mapping also can
be used to evaluate lead times for a product. If the goal
is to reduce lead times, then the capability to model
those lead times and the effect of changes to resources
or capacities on lead time are invaluable. Perhaps most
importantly, this tool incorporates reality and the effect
that the interaction of people and machines have on lead
times. The production manager then can evaluate avail-
apics.org/magazine 57
 able options to reduce lead times and select the most
practical and cost-efficient strategies for the job.
Lot size also plays an important role. By adjusting
the lot size for just one product, it is possible to fur-
ther understand its impact on the shop floor using the
curve of lot size versus lead time. As Figure 2 illustrates,
extremely small lots have high lead times, generally
because of their setup times. The lead time will improve
with larger lotsup to a pointbecause the wait times
generated by large lots exceed setup times. The optimum
lot size in terms of the lowest lead time is found at the
bottom of the curve.
To sum up
The requirements for big-picture, system-level mode-
ling are as follows:
Use a sound mathematical foundation that estimates
wait time as a function of demand, capacity, lot size,
setup time, and run time.
LEAD TIME VERSUS LOT SIZE
1.4
1.2
1 use what is known about the process and the business
LEAD TIME
Estimate the wait for labor when there are fewer
people than machines.
Include repair times and backlogs into WIP and
lead-time calculations.
Take into consideration variation and randomness,
and allow for less or more (standard deviation in
the equation).
Incorporate the impact of use on queues.
Provide a reasonable model that can match the com-
plexity of the shop floor.
Additionally, what-if scenarios and models should be
able to demonstrate the impact on WIP and lead times
based on altering variables including
shifts in demand
setup reduction
scrap and rework reduction
downtime reduction (via a preventive-maintenance
program)
cross training
adding or removing people from the process
adding or removing machines from the process
lot-size changes
transfer of batching or concurrent processing
combining processes.
Finally, let software that is based on mathematical
models do the heavy lifting for these decisions. Then
to make informed decisions about which options best
serve current needs.

0.8
The use of lean tools, when applied to the cor-
rect problem defined at a system level, can generate
0.6 measurable results in lead-time reduction. Informed
decision making that is grounded in the complex
0.4 interaction of people and machines and keeps in mind
the critical path through the system can generate
significant bottom-line results.
0.2

Joyce Warnacut is the director of finance at Germanna

0 Community College in Locust Grove, Virginia. This article
0 20 40 60
is based on her 2016 book, The Monetary Value of Time:
LOT SIZE Why Current Accounting Systems Make Customers Wait,
published by CRC-Productivity Press. She may be contacted
Figure 2: Lead time versus lot size at jwarnacut@yahoo.com.

To comment on this article, send a message to feedback@apics.org.

58 March/April 2016

Online and
On Time
Centralized AP system calls in digital support
Challenge: Processing a new, large influx of invoices in a global shared
services center
Solution: Tradeshift
Company: Archer Daniels Midland (ADM)
Headquarters: Chicago
Operation: Global food processing company
The challenge
In 2013, ADM opened a single North American services center to
centralize accounts payable (AP) processing for its 250 manufactur-
ing and grain elevator locations in the United States and Canada.
However, the large agricultural processor and food-ingredient
provider soon was flooded with invoices, and leaders realized they
needed a digital solution to streamline the process.
We had a lot of paper coming in, and much of that paper
didnt have the proper information that we needed in order to
process the invoices, explains Nick Shields, a project leader and
AP accounting supervisor of ADM shared services. Our process
was so backwards: We would take an emailed invoice, print it out
so that we could type it in, and rescan it later.
At the time, the shared services center received 3,000 invoices a
day, and each had to be handled manually. Eight employees were
dedicated to processing any invoices that had errors, and these
professionals sent out 6,600 exception notices to ADM locations
throughout the year. The 32-person customer service team also
fielded about 24,000 calls and 58,000 emails annually.
The solution
The search for a streamlined AP solution began with a request-for-
proposal process that involved seven e-invoicing providers, three of
which were brought in to demonstrate their solutions. In the end,
ADM chose Tradeshift to help meet its AP goals. The cloud-based
platform connects enterprises to digitally communicate, collaborate,
and make transactions with their entire supply chains.
Tradeshift offered a lot of different options for vendors to
submit invoices to us, Shields explains. Its an easy-to-understand
platform, and the only limiting factor is an internet connection. In
addition, Tradeshift includes foreign language capabilities and offers
a help desk with multi-lingual employees, which can help ADM take
its AP standardization to a global level.
ADM also values the invoicing options for its suppliers. The
web-based system is free for suppliers to use and integrate with
their systems in order to submit web-based or emailed invoices.
Tradeshift also gives suppliers visibility into the process, enabling
CASE STUDY
them to see the status of their invoices in
real time, submit comments or questions,
and even receive payments more quickly.
The results
In a little more than a year of using
Tradeshift, ADM has improved its discount
capture rate for electronic invoices by 24
percent compared with the paper invoice
system. In addition, its on-time payment
rate jumped 30 percent for e-invoicing,
and invoice processing time was slashed by
almost 22 days.
The system also helps ensure that all
invoices include the necessary information
before they reach the ADM team. If anything
is incorrect, customer service representatives
ADM is one of the largest grain processors in
the world.
can contact suppliers through the system for
quick amendment. Using Tradeshift, each
invoice actually has its own comment thread
attached to it, Shields explains. When an
invoice comes in, we send a chat message to
our contact within the supplier organization
asking, for example, for a correct purchase
order number, and they can get back to us
within five minutes. The ease of doing busi-
ness has helped ADM improve its supplier
relationships and ensure that everyone is
paid in a timely manner. APICS magazine
welcomes case
study submissions.
Send a message to
editorial@apics.org for
more information.
To comment on this
article, send a message
to feedback@apics.org.
apics.org/magazine 59
LESSONS LEARNED
Diminishing
Returns?
Clearer functionality yields better service
and fewer headaches
H
ow could something as simple as customer returns justify
engaging a consultant? he asked me, looking rather
perplexed. The frustrated general manager was clearly
unhappy that his vice president of operations had hired me to review
and improve the companys returns process. I had been expecting this
attitude from the general manager because I knew that he had risen
through the ranks having never been involved with customer returns.
For anyone reading this who is similarly unacquainted with
returns, I offer this example: A customer calls your business claiming
that your product is defective. An authorized employee creates a
customer return authorization (CRA), which includes the part
number being returned, a description of the product, the quantity,
the nature of the defect, and the customers desired resolution. The
resolution options are vast: Refund the purchase price; replace the
product with the same product; replace it with a different product
and charge or credit any price difference; charge or credit any price
Randall Schaefer,
difference; extend credit toward a future purchase; and on and on.
CPIM, is an industrial
philosopher and retired The CRA manager approves the resolution with the understanding
consultant. He may that the defects are as the customer described. Lets say this instance is
be contacted at
randallschaefer@att.net. a return of 16 red candles the customer wants replaced because they
are broken. However, when the customers return package arrives, it
To comment on this
article, send a message is discovered that there are not 16 but 60 items; they are not red, but
to feedback@apics.org. black; and they are not candles, but candle holders.
60 March/April 2016
Randall Schaefer, CPIM
Things can become quite complex when
a returned products description is wrong or
the quantity is off. Other complications arise
when any defects are the result of customer
negligence; this may even change the resolu-
tion. Each discrepancy between the CRA and
what actually arrives must be resolved with
the customer. Often, the CRA manager has to
re-explain everything many times, particu-
larly when the customers company does not
have a single person responsible for returns.
Moreover, the degree of cooperation the
CRA manager receivesand the amount of
time the resolution takesoften depends on
who answers the phone on the other end.
True simplicity
Now, at my aforementioned consulting job,
I knew I could not prevent all the confusion
generated by returning parts. But I was
confident I could eliminate a good portion
of it. I told the skeptical general manager
that a few days of programming modifica-
tions to his companys CRA software would
help immensely. I explained to him that
the CRA functionality apparently had been
programmed by someone unfamiliar with
returns practices.
As a result, whenever there was a conflict
between the approved CRA and what
actually arrived, the CRA could only be
corrected by canceling it and starting over.
The most elaborate CRAs often had to be
canceled and redone multiple times. This
cost the business time and money and took
its toll on customer goodwill.
When the proposed programming
changes were completed, CRA conflicts
soon were being resolved in a fraction of
the time, and the customer experience was
significantly improved. But even then, that
general manager remained convinced that it
was all a waste of money. Nothing was going
to change his mindhe had gotten a pass
to the executive ranks without ever being
involved with customer returns. Lucky him.
Illustration by Terry Colon
Do you have an anecdote that teaches, enlight-
ens, or amuses? Consider sharing it with the
readers of APICS magazine. Stories should be
approximately 700 words. Email submissions to
Lessons Learned editor Randall Schaefer at
randallschaefer@att.net.
Prepare for your CPIM
Exam with Confidence
If youve been hesitating to take your CPIM exam,
now is the time to take the next step!
APICS is pleased to announce the new CPIM Self-Study Kit.
This new kit includes the Self-Study Guide, Exam Content Manual and CPIM Exam Simulator.
Everything you need to prepare for your exam with confidence.
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