Supply Chains Or Whatever We Currently Call Them, And How They Influence Reusable Packaging, As Well As Vice Versa

This long winded title stems from a rather thought provoking and enjoyable keynote address by Richard Sherman at the 2015 Reusable Packaging Forum. Sherman is president of Gold & Dumas Research in Austin, Texas, and author of Supply Chain Transformation: Practical Roadmap to Best Practice Results (Wiley, 2012).

Sherman told the Forum audience that supply chain leaders often make the mistake of reading supply chains from left to right – start to finish. Rather, he said, think of the supply chain from the finish line first. He emphasized starting with the consumer in mind and then engineer backward. We are, Sherman said, better served to think of supply chain in terms of “Supply Network.” “Reusables start with the end-consumer in mind and work back in the supply chain,” he said. “This means companies need to be a strategic partner, not a transactional partner.”

Supply network makes sense. It is overly simplistic to think of a linear solution, which operators too often embrace. James Tompkins, for example, for several years has referred to “Demand Chain,” to bring the customer to the forefront of focus. Jeff Ashcroft of SCI Logistics has used the term “Matrix Commerce” to emphasize the multiple influences. My favorite is “Demand Cacophony.” Not an ideal vision, but tragically often accurate. Supply chain is a complicated part of town to work, and rarely if ever is it linear.

Innovate…or Else

Increasingly,, Sherman noted, customers are looking to supply chains not just for a low cost solution, but for innovation. Surprisingly to me, he said that too many people still don’t have a good idea of what innovation really is. He believes there is a misconception that it pertains to an idea that is brand new and incubated from scratch. Rather he said, successful innovation is more often is about incremental boosts to existing processes and products. In a world of lean logistics and continuous improvement, winning supply chain cultures increasingly embrace the dogged pursuit and celebration of incremental improvements, now typically measured and communicated through standardized metrics. Boring, but productive.

Supply chain is a “Tale of Two Cities,” according to Sherman. The innovators and early adopters enjoy considerable cost advantage over laggards as well as the unabashed appreciation of their customers. The laggards adopt later in order to survive. “Why should supply chains innovate?” he asked rhetorically. “Because that is where the money is!”

Sherman pointed out some ironic truths. At times industry is recruiting young professionals to operate in an environment where the technology is older than they are. No wonder that recruiting can be a challenge. He touched on the importance of getting the organizational structure right, and the urgency of training and empowering front line leaders.

At risk of veering slightly off topic, Sherman asked the Forum audience if any of them shop at Walmart. When no hands went up he commented that the reason for this is that they are affluent enough that they don’t have to shop there. Unfortunately, he noted, a large proportion of the population does not have that luxury.  Getting back to the more affluent, he suggested that trends such as Click and Collect will alter the equation. What if shoppers can enjoy Walmart pricing at the drive through without having to go through the store? And so the opportunity for change is germinated.

How About Reusables?

One line of thought very relevant to reusable packaging and pallet programs is the loss of tribal knowledge as organizations restructure or as waves baby boomers retire. Dupont, he reported, experiences an annual retirement rate of 16 percent. Many reusable packaging programs are built on such tribal knowledge. To manage such losses of tribal knowledge, Sherman stressed the importance of process mapping. While he was speaking in general terms, this is great advice for reusable packaging systems also. Because reusables are often not a core business activity, they are less likely to be formally documented. Sherman said that the loss of knowledge, as people retire, is killing them.

All the while, the marketplace is increasingly becoming customer-centric, omni-channeled, and growling with a ravenous appetite for data. More than ever we have priorities around visibility, food safety, tracking, and more.  How does this play out for reusables? There was some discussion at the Forum on how omni-channel distribution will drive automation, and how this will percolate to the standardization of reusables. And of course the visibility opportunity and having it tied to technology imbedded in reusable assets remains an underutilized opportunity. Global logistics is spawning other challenges, such as the need for greater part density. One automotive sector participant said he was looking at international pooling for the first time, in order to keep expendable packaging out of his facility.

Of Supply Chains and Reusables, Chasing or Leading Transformation?

In the vast “cacophony” of supply chain (choose your term here), reusable packaging plays a unique and potentially pivotal role. In some regards the casting of roles is a reactive one – such as in improving part density and reducing weight and cube as the glitter of cost savings spurs supply chain decision makers to stretch their reach across the globe, or in improving sustainability in response to environmental goals, or in improving ventilation or drainage in response to quality and food safety considerations. In other respects, reusables can play a transformational role in amplifying supply chain change or even changing its course of destiny. We can look at initiatives such as RFID, floor ready displays, visual attraction and so on. In recent history, pallets and later shipping containers played a powerful role in such supply chain change.

In terms of industry adoption, the early wins, the urgently needed ones, are in the innovations that chase supply chain change. The greater value, hopefully, is in the longer sells, those reusable packaging innovations that accelerate and change the face of whatever it is that we currently call it – the supply chain. In a culture of continuous improvement, we are wired to succeed at the former. Yet it isn’t always enough just to get on base, and it is just ultimately more exciting to hit for the fence. There you have it – supply chain-like term confusion and fulfillment trends, reusables, reactive and transformational change invitations, topped off with a cheesy baseball analogy. The keynote at the RPA Forum was thought provoking, and worth a listen. Look for it soon to be posted at the RPA website.