Supply Chain Matters received an urgent email this morning routed from the Council of Supply Chain Management (CSCMP), which we are sharing with our reading audience in hopes that organizations can lend a helping hand.

It indicates that there is an urgent request from the New York City Office of Emergency Management seeking warehouse space for sorting, storing, and distributing the donations that have been pouring into the city to help survivors of Superstorm Sandy.  Details of the request are below.  A grant from our industry association partner Food Shippers of America (www.foodshippersofamerica.org) will allow ALAN to provide partial support of logistics volunteer expenses.

Warehouse needs:

Distribution facility

• Usage: store items donated for Sandy response (clothing, bedding, cleaning supplies, food – hopefully non-perishable -  and water)
• 2 – 100,000+ square feet covered and secured space
• Duration 90+ days
• Location within 5 boroughs or close proximity
• 24/7 access
• Sites must have good, safe access and good ingress and egress.
• Ample yard space

Animal shelter facility

• 10,000-30,000 square feet heated
• 30 day duration
• Located within the 5 boroughs

Handling equipment needs – this will be fluid as it comes together

Definite needs

• Forklifts conventional 6000
• Pallet Grabbers and Chain sets
• Pallet Jacks, electric
• Pallet Jacks, hand operated
• Pallets

Possible needs

• Dock plates – dependent on facility
• Portable loading dock ramps – dependent on facility
• Forklifts extended reach with operators 12000 lb.

Volunteer staffing needs

• Skilled forklift operators, warehouse and facility management

Any Warehouse, distribution or logistics organization that can render assistance to these needs should contact the American Logistics Aid Network, www.ALANaid.org.

Supply Chain Matters named sponsor E2open, commissioned a recent research report focused on supply chain disruption, and the study results present important supply chain related insights for many industry supply chains.

Between February and September 2012, Gatepoint Research contacted over 200 supply chain executives, the vast majority of which had responsibilities of Director level and above, with 29 percent at Vice President or CxO level. Respondents for the most part residing in firms with revenues in excess of $1 billion. According to study authors, all the respondents participated voluntarily and none were engaged using telemarketing. Thus this study is a good representation of senior level perceptions and priorities concerning the managing of supply chain disruption.

Responses to the following questions merit discussion.  One question probed on current sources of supply chain disruption:

Question: From what sources have you encountered supply chain disruption?

Notice that the first two responses, responding to unplanned demand and supplier failure, take precedence over natural disaster.  This author just delivered a webinar to an internationally based audience on the topic of Supply Chain Control Tower capabilities.  In the webinar, I conducted an online, real-time interactive polling with a similar type of question. Listeners also ranked “unplanned demand” and “supplier failure” also as the highest category of current disruption.

In essence, supply chain executives and their respective teams are communicating that despite their best efforts at forecasting, planning or sensing customer product demand, unplanned demand remains as a challenge for coordinated and timely response. That is significant because it represents last-minute added business opportunities that supply chains are struggling to fulfill. Customers are indeed more demanding, and expect their suppliers to have adequate supply chain response management capabilities to fulfill last-minute needs. Similarly, despite the best efforts directed at monitoring suppliers, important information related to operational and financial conditions are apparently not being shared or a sugar-coated.

Another reinforcing question provides added insight:

Where in your supply chain do most disruptions occur?

Notice that the responses indicate that disruptions occur just about equally among both the product demand and tier one supply quadrants of the supply chain.

Another set of questions probed on both awareness of a supply chain disruption and perceived actual response to the disruption.  Nearly 34 percent of responders indicate that they were not aware of the disruption until more than a day after occurrence.  A follow-on question probed on the actual perceived response time.

(After awareness of the supply chain disruption) How quickly can you respond to most supply chain disruptions?

Over half of the respondents, 53 percent, respond to a disruption either within, or longer than a week. That is a telling indicator for the need for improved sense and response capabilities.

When asked to prioritize needed improvements to address disruption over the next 12 months, a good indicator of highest priorities, the responses indicated a generally equal balancing among capabilities for increased visibility into tier one supplier inventories (38 percent), deeper partner connectivity and collaboration tools (30 percent and 36 percent respectively), along with the ability to invest in what-if scenario tools (30 percent).

Our readers can perhaps reflect on the results of this survey to their current challenges and priorities in managing supply chain disruption, as well as in future investments in needed capabilities.

Bottom-line, supply chain disruption remains a key executive level concern, and disruption takes on many dimensions, including lost business and industry competitive dimensions.

Readers who desire to view a copy of this mentioned report can do so by clicking on the following web link.

Bob Ferrari

Disclosure: E2open is one of other named sponsors of the Supply Chain Matters Blog. The subject report, Strategies for Managing Supply Chain Disruption is copyright 2012, Gatepoint Research.  All rights reserved.

The following commentary is the author’s weekly guest commentary appearing on both the Supply Chain Expert Community and Supply Chain Matters web sites.

Just over a week since Apple introduced its brand new iPad Mini to the market, we have a first glimpse at the value-chain components that make-up this new device.  On Monday, The Wall Street Journal published highlights of market research firm IHS‘s teardown analysis of the new Mini. (Paid subscription or free metered view).  The analysis includes a comparison to Microsoft’s new Surface tablet as well as Amazon’s Kindle Fire HD.  In our Supply Chain Matters view, the side-by-side comparison provides some insights as to how supply chain strategy is aligned to supply chain outcomes, which is best described by Professor Steven Melnyk of Michigan State University.

According to the IHS analysis, the iPad Mini equipped with Wi-Fi and 16 gigabytes of memory has total estimated component costs of $188 vs. the designated retail price of $329.  That equates to a 43 percent gross margin for this base model.  In the WSJ article, Apple’s CFO is quoted as indicating that this margin is significantly below Apple’s usual average product margin, yet the WSJ notes that the company’s overall gross margin in the latest fiscal quarter averaged 40 percent.  That number gets considerably larger when consumers opt for the more upgraded models of the Mini. Supply Chain Community readers residing in the consumer electronics or high tech industry supply chains may well be aware of the fact that Apple has considerable product pricing as well as component pricing leverage.  Apple garners such margins because of the power of the brand, and the pent-up pull from consumers to own an Apple product, regardless of premium cost.  Indeed, Apple indicated that this past weekend’s launch of the Mini was yet again, a sellout. A strategy of maximizing tablet product margin while leveraging supply chain component scale and negotiating power, combined with maximizing existing high margins on added content and services, yields the extraordinary overall profit margins that Apple can provide for its investors.

There are, however, some other supply chain focused observations when one views the three product comparisons.  The Kindle Fire HD, which arguably may not have all the glitzy features of the Mini, was reported to have a total component cost of $165 vs. a selling price of $199, resulting in 18 percent gross margin.  The WSJ rightfully points out that Amazon’s product strategy, and we would add, its corresponding value chain strategy, is to provide the hardware product with the slimmest of margins, because the broader business strategy is focused on leveraging much higher margin sales of electronic content and online goods.  In essence, Amazon’s business strategy is one of high volume platform concentration, de-emphasizing the device margin for the potential of penetrating the market with a higher concentration of volume devices that can generate recurring sales of content and services. In our view, Amazon demonstrates its willingness to forgo any attractive margins on the Kindle in favor of a much broader profitability strategy that is still playing out in the market.

Concerning Microsoft’s 32 gigabyte Surface, IHS estimates total component costs to be $271 compared to a selling price of $499, indicating a margin of 46 percent. The Surface, since its announcement, has been controversial for Microsoft since it is the first time that this software giant has decided to usurp its hardware partners by directly coming to market with a Microsoft version of what a tablet product should provide in both hardware and software functionality.  Many existing tablet and PC vendors remain frustrated by this strategy.  A scan of all the estimated major component costs provided by IHS and the WSJ would indicate that Microsoft was not initially able to take advantage of the component volume scale and negotiating power of what Apple or Amazon currently can leverage. From our point-of-view, this points to a different business and consequent value-chain strategy. Microsoft’s intent is to make a product functionality statement, and not upset the current pricing dynamics of the tablet market, which would alienate existing and future hardware partners. Thus, the supporting supply chain strategy takes on a different set of dimensions.

Sometimes, management teams can lose focus as to the alignment of supply chain strategy with business outcomes, including leveraging the levers of component sourcing, pricing, channel distribution, and integration with broader product strategy.  Our belief is that this latest IHS teardown analysis provides some important indicators as to the differences in supply chain business strategy alignment.

What’s your view? Do supply chain management teams have the attention and understanding of C-suite executives in understanding this alignment?

Bob Ferrari