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3M Supplier Survey Brings Forth Important Insights for Increased Supplier Collaboration

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Diversified products manufacturer 3M recently conducted a survey among supply chain suppliers to hone in on current challenges related to the notions of supplier collaboration. While the survey population was small, the results caught our attention because they uncover important challenges that remain for procurement and supply chain teams.

The purpose of the survey- Driving growth and innovation through supplier partnerships, was designed to uncover insights (not specific to 3M) on the most urgent trends, opportunities and challenges facing suppliers today. Upon review, Supply Chain Matters noted a number of noteworthy findings.

Technology’s Impact Becoming More Important

On a positive note, and further validation of our Ferrari Research and Consulting Group’s 2017 prediction of increased investments in supply chain focused technology, 60 percent of the suppliers surveyed by 3M indicated they are in the process of making major changes and upgrades to their systems and technology to become more digitally connected. That from our lens is encouraging news.

Nearly all suppliers surveyed, ninety-five percent, reported being at least somewhat empowered and encouraged to innovate and make suggestions for improvement for the customers they supply. Yet only 43 percent of suppliers’ report feeling fully empowered to collaborate with their key customers. The survey evaluators indicate that the challenge of collaboration and joint innovation may not lie in lack of incentive and customer openness, but because the organizations they supply lack systems and technology that make collaboration more efficient. Seventy percent of suppliers indicated at least half of the customers they supply do not have a strong system and process in place for buyer and supplier collaboration. A similar theme of discussion emanated from our attendance at this year’s annual conference of the Institute for Supply Management (ISM).

Again, from our lens, that finding may reflect differences fostered in ongoing supply chain segmentation strategies that place major emphasis on key customers and suppliers vs. all trading partners.  Regardless, the finding reinforces that procurement teams need to step-up their technology deployment strategies as well as to re-double efforts to foster various forms of process and product innovation. We suspect that hidden in the numbers are supplier needs to have incentives to want to broaden collaboration. That trend was brought out by the survey authors who indicated that nearly half of the suppliers surveyed have held back from making a strategic recommendation due to lack of incentive or customer openness.



The 3M survey validated that suppliers are facing an unpredictable risk landscape in 2017. The majority, 61 percent, identified volatile commodity and supply prices as their primary concern related to risk. Respondents listed their other concerns as the following:

Uncertain policies of the new U.S. administration- 8 percent

Regulatory compliance- 7 percent

The performance of tier two and tier three suppliers- 6 percent

Natural disasters and supply disruptions- 3 percent

Cybersecurity- 3 percent

Cost concerns remain by far the biggest risk

Here again, suppliers may need to broaden their perspectives of risk, especially since all the other rated categories have increased incidents across multi-industry supply chains.


Widespread Consensus

The area of widespread consensus was reported to be that of sustainability and social responsibility, both of which the survey authors point to as core focus areas in 2017. Nearly 76 percent of suppliers identified the biggest motivator for operating in a more sustainable fashion are positive business outcomes. The next biggest drivers for sustainability is noted as suppliers’ desire to create a more socially responsible supply chain (69 percent), compliance (64 percent) and brand reputation (62 percent).


Supply Chain Matters thanks 3M and its associated supply chain and public relations team for bringing this survey to the attention of our blog readers.

Our readers can review the full PDF version of the 3M supplier survey at this web link.


Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


A Commentary Related to Denying Efforts to Combat Global Climate Change

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Last week, President Donald Trump announced that the United States intends to withdraw from the Paris Climate Agreement. Speaking from the White House, the President indicated he was open to renegotiating aspects of the Paris COP21 Agreement, which was inked under his predecessor and which all nations except two have since signed onto. Paris COP21 A Commentary Related to Denying Efforts to Combat Global Climate Change

Needless to state, the responses to this decision have been widespread and voluminous. Preparing to scribe this blog, we performed a Google search on the terms- “President Trump withdrawal from Paris Climate Agreement”, which yielded over 8.4 million search responses. Obviously, such a number represents a significant amount of reaction, much of which has not been complimentary to the decision, both at home and abroad.

White House communications teams indicated that the decision favors the views of America’s businesses in that the accord did not provide adequate benefits for companies and their employees. Yet, after the announcement of the decision, Twitter and other social media featured direct postings from a multitude of well-recognized CEO’s indicating their disappointment in the decision, and that regardless, their company’s efforts in sustainability actions and commitment will continue. Likewise, over 200 Mayors of U.S. cities, 10 U.S. state governors, and other political leaders collectively indicated that sustainability efforts must continue. The States of California, New York and Washington immediately formed a coalition to unite efforts and share learning in fighting global climate change.

Included in our 2017 Predictions for Industry and Global Supply Chains is our declaration that business, and indeed, our planet’s future, will fuel continued efforts in supply chain sustainability actions and focused initiatives, regardless of any political developments.

We re-iterate that statement in the light of last week’s rejection by President Trump of any U.S. commitment.

As we all began 2017, scientists indicated that the Earth reached its highest temperature on record, the first time in the modern era of global warming data that average temperatures have exceeded prior levels for three years in a row. The Artic Sea has experienced a record ice melt, and the Great Barrier Reef suffered an unprecedented coral breaching in 2016.

Industry supply chain teams know first-hand, the increased impacts of global warming have had on more frequent supply chain disruptions, concerns and actions addressing sustainable and less costly forms of raw materials, food, energy, and commodities. Across many industry supply chains, a lot has already been accomplished in identifying opportunities related to reducing industry supply chain related GHG emissions, preserving natural resources including water, and insuring sustainable supply of Earth dependent commodities. Multi-year objectives have been established that include annual tracking of performance to each objective. The benefits of these initiatives are meaningful in relation to savings on supply chain related costs, reductions in responsible emissions, insuring adequate supply of key strategic supply needs and a more positive perception to one’s corporate and product branding.

In 2017, despite any U.S. political notions that climate change may or may not be a significant factor for business risk, industry supply chains and the respective businesses and customers they support and serve, will be at a disadvantage in de-railing or slowing down sustainability efforts.

Benefits have already been recognized along with added opportunities.

From our lens, the ongoing convergence of digital and physical business processes manifested by Internet of Things (IoT), more predictive analytics, autonomous decision-making and additive manufacturing will provide added opportunities towards sustainability needs and objectives.

Supply Chain Matters therefore urges supply chain leaders and their respective teams to re-double ongoing sustainability efforts in all forms. Such efforts are good for business and ever more important, essential for the future of the planet. To do otherwise is short-sighted.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

Describing an Exponential Organizational and Supply Chain Capability

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In February, this supply chain industry analyst attended the Oracle Modern Supply Chain Experience Conference held in San Jose California.  Through Supply Chain Matters, I have shared several prior observations and takeaways from this conference. We noted the extraordinary attendance, upwards of 2800 attendees at a supply chain management information technology focused conference. We further highlighted the momentum of Cloud-based technology deployments in the many different business process areas that today come under the umbrella of supply chain management along with the building interest levels surrounding Internet of Things (IoT) technology being applied to future supply chain management processes.

There was one keynote that I initially did not share in prior conference highlights, principally because I needed time to absorb the many compelling messages that were delivered. The title was Exponential Organizations and the presenter was Yuri van Geest, Co-Founder of Singularity University. Yuri Exponential Organizations sized 207x300 Describing an Exponential Organizational and Supply Chain Capabilityhas a background in organizational design and is noted as a keen observer of exponential technologies and trends.  He is a co-author of the book- Exponential Organizations- Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it).

The keynote opened with van Geest recounting the dizzying exponential developments that have occurred in artificial intelligence, alternative energy, biotechnology and medicine, robotics, additive manufacturing, sensors, and drones. His primary message was that most of these exponential technology developments will eventually impact supply chains and the organizations and people that makeup this community. His takeaway message was that the best vision of the future is happening at the peripherals of such technology development.

My initial presumption was that many of the conference attendees would have a difficult time absorbing the stark nature of the messages or would dismiss this talk as that of a technology genius speaking far above an ability to absorb the real implications.  Frankly, the conference organizers should have allowed additional time to accommodate all the content as well as to allow for further audience interaction.

Since the conference, I have had the opportunity to read the book and revisit my notes from the keynote. My goal in this blog is help distill what I perceive to be some other key takeaway messages related to future supply chain management organizational purpose, design, and work activities, at least from my perspective after having time to really absorb the content.

Geest did a suberb job of translating today’s far more exponential technology trends to what he viewed as direct impacts on industry supply chains. As an example, he stated that over the next ten years, the exponential developments in 3D printing capabilities will foster the ability to print nearly everything in materials including molecular assembly. The implication is the ability for products to be produced within primary areas of consumption, with the model of contract manufacturing being one of virtual capabilities to receive electronic design information and print on-demand products. A further implication is a more localized supply chain or regional network.

The notions of machine learning or cognitive acquired deep learning technology capabilities will at some point in the future lead to autonomous supply chain planning and customer fulfillment, where algorithms and physical sensing manage supply chain needs. While on the subject of planning, the book declares traditional five-year planning as obsolete, and that in exponential organizations, there should never be more than a one-year planning cycle supplemented by continuous just-in-time learning and events.

Regarding the physical, Geest further spoke to the compelling impacts that IoT focused developments would have on supply chains.  In the book, there is a passage that is worth sharing:

In the same way that today we can no longer handle the complexities of air traffic control or supply chain management without algorithms, almost all the business insights and decisions of tomorrow will be data-driven.”

Obviously, the messages are profound and perhaps threatening to many. None the less, van Geest’s message is that we cannot ignore compelling events and individually, people need to be trained and prepared with new individual and team-based skills.

To better understand the implications, I turned back to book to ascertain what were described as the key competencies of the future Chief Operating Officer, Chief Human Resources Officer and either Chief Data or Chief Innovation Officers.

Here are just a few excerpts to ponder:

  • Digital based production and the unbundling of production steps will free the company to focus on its core competencies (customer relationships, R&D, design, and marketing)
  • The notion of a recycled materials supply chain where production materials recycled and reused multiple times.
  • Internet of Things sensors used to monitor the entire supply chain.
  • The need for long-distance transport to drop over time due to the rise of localized production and a closed-loop material supply chain.
  • Universal Cloud access to social technologies, data, and services, independent of physical location.
  • Data management systems that use methodologies, processes, architectures, and technologies to transform raw data into meaningful and useful business information, available to all teams.
  • The need for Big Data security practices.
  • The hiring of employees based on overall potential, not just past record of accomplishment, and on the premise of who can ask the right questions.
  • New notions of peer-based and continuous learning.
  • Reputation measured by contributions in communities and work teams.


The book addresses the obvious question regarding the impact on future jobs. The premise is that the democratization of technology will allow individuals and teams to follow their passions and create new economic opportunities and businesses, far different than work being performed today.

These are heady messages, and will cause some pause or skeptics. We applaud Oracle’s supply chain management  conference organizers for hosting such a thought-provoking presentation.

From our lens, there is no denying that the exponential changes occurring in technology and business will eventually impact how supply chains are manifested and managed. The question is in what time frames.

The other obvious question, will teams and individuals be prepared?

We encourage readers to share further thoughts and comments.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

Apple Declares a Long-Term Commitment Toward a Closed-Loop Materials Supply Chain

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In its 2017 Environmental Responsibility Report released this week, global consumer electronics provider Apple has declared a goal towards implementing a closed-loop supply chain. This report includes a pledge to end the company’s reliance on mined materials from the earth, and to one day, make its products, including the iPhone, totally from renewable or recycled materials.  Apple Logo Apple Declares a Long Term Commitment Toward a Closed Loop Materials Supply Chain

The section titled Finite Resources includes the following statement:

Traditional supply chains are linear. Materials are mined, manufactured as products, and often end up in landfills after use. Then the process starts over and more materials are extracted from the earth for new products. We believe our goal should be a closed-loop supply chain, where products are built using only renewable resources or recycled material.

Apple is also realistic in acknowledging that a closed supply chain is indeed an ambitious goal for a high-tech and consumer electronics manufacturer. The company’s Vice President of Environmental Affairs, Lisa Jackson, told business network CNBC that while Apple does not currently know how the full objective will be achieved, it will require many years of collaboration across multiple internal teams, component suppliers, and specialty recyclers- but work efforts are already under way. She further indicated that the company is embarking on something it rarely does, establishing a goal before all the elements are completely figured out.

Current efforts include the encouraging customers to return end-of-life products through the Apple Renew recycling program. This program is piloting innovative new recycling techniques that include a line of disassembly robots that helps to reclaim materials from used smartphones and other electronics products. The company has further prioritized which materials to tackle first by creating Material Risk Profiles for 44 elements within products. These profiles identify global environmental, social, and supply risk factors spanning the life of each material.

Describing the need for high quality aluminum material free from defects found in mass level recycling programs Apple has begun a pilot proof-of-concept program using reclaimed aluminum from recycled phones to build new devices. The aluminum enclosures recovered from iPhone are melted and reused to create Mac mini computer enclosures.

What forward thinking companies are continuing to demonstrate is that supply chain sustainability efforts are good for business and they are equally good for the supply chain.  Increasingly customers based their buying decisions on a company’s commitment and demonstrated efforts in sustainability. In our current year predictions for industry supply chains, we have re-iterated that there is literally too-much momentum and positive business benefits to motivate senior executives to derail such efforts. Apple has been one of other early adopters of a supply chain sustainability commitment and this latest declaration of a closed-loop supply chain is indeed, an added manifestation of a sustainable business model, one that assures a continuous supply of product value-chain components at a more controlled cost with assured availability. We also like the emphasis on leveraging new technologies to address such needs.

Supply Chain Matters commends Apple for its declaration and commitment toward manifesting a closed-loop supply chain.

Well done and keep up this good work.

Bob Ferrari

© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

2017 Predictions- The 3M Perspective on the Need for Bimodal Supply Chain Capabilities

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In preparing our overall 2017 Predictions for Industry and Global Supply Chains, and specifically our prior posting, Prediction One- What to Expect in Global Economic Activity, we had the opportunity to speak with both industry, supply chain and technology executives to gain current perspectives of what supply chains should anticipate in the coming months and how to be prepared.

One opportunity was a discussion with Paul Keel, Senior Vice President, Supply Chain for diversified manufacturer 3M Company. In my role as a supply chain industry analyst, my perspectives of 3M extend nearly 15 years, when I first interacted with members of the 3M supply chain leadership team. A lot has occurred since that time, and that came to be the context of the discussion with Keel.

The 3M of today is a $30 billion diversified manufacturer whose supply chains support 5 different business sectors that span both B2B and B2C focused market segments. Industry products are quite diversified spanning industries such as automotive, commercial aerospace, communications, healthcare, high tech electronics and transportation. The consumer segment is the wide variety of 3M branded products that many of us are familiar with including the iconic branded Post-It note pads. Today’s 3M has deeper roots as multi-industry supplier. The company has always been anchored in core manufacturing and today that includes upwards of 220 worldwide manufacturing plants. It all amounts to a considerable scope for 3M’s supply chain teams.

In our interview, Keel referenced Q4 of 2008 as an important milestone checkpoint for 3M, one that created acute awareness to the potential of heightened volatility of industry and global markets brought about by the global financial crisis. He described that point as “opening the aperture” of the 3M of 30 years ago, as a $3B manufacturer, and the aspirations of what 3M has become today in ten-fold revenue growth.  The described anchor has been that of a complete product innovation and continuous improvement mindset across the company. It was also a wake-up call that supply chain capabilities do matter, and that 3M had to excel in all aspects of supply chain competencies.

Regarding 2017 predictions relative to heightened industry competition, continued market uncertainties and potential volatility, Keel remains of the belief that the supply chain will play an increasingly differentiating role for high-performing organizations. He states:

In the hyper-competitive world of global business, we’re finding new ways that supply chain must lead. While historically organizations looked to their supply chains primarily for productivity and cost reduction, today high-performing companies count on us for much more – developing new products, protecting our environment, serving our customers, and driving meaningful value creation across the enterprise.  Fully leveraging the power of supply chain begins with the proper mindset.  ‘Make and deliver’ is no longer enough.  To win in 2017, we’ll need to ‘amaze and delight.’”

Keel further described the notions of a bimodal supply chain perspective:

There was a time when supply chains could settle for trade-offs…cost or speed, service or quality, flexibility or reliability.   Those days are long gone.  The equation has shifted from an imbalanced ‘or’ to an equilibrium centered on ‘and.’  Information and technology are central to achieving this synchronization.  The leaders of tomorrow will be the organizations that can effectively manage a bimodal supply chain.”

We also discussed technology as the enabler of bimodal capabilities. Keel described 3M’s perspective as: “Asset-light and Information-heavy.” In the bimodal lens, it translates to enabling greater levels of efficiency in overall productivity levers, in an end-to-end supply chain risk mitigation approach to manage volatility, and general in moving forward with overall global optimization. The other technology lens is that of the business growth enablement lever, manifested by enabling continued end-to-end supply chain segmentation capabilities along with digitization of supply chain processes and decision-making needs.

Keel further pointed to corporate sustainability and social responsibility initiatives as an essential mindset going forward and a further component of bimodal. For 3M, this equates to declared responsibilities to communities, to employees and to the environment.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


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