Des Moines Register
03-28-07
It's make or break: Supply chain is critical to business' success
Tuning operation to customers' needs is a crucial point, expert says
By WILLIAM RYBERG
REGISTER BUSINESS WRITER
Ames, Ia. — Asparagus and components for aviation electronics have more in
common than it might appear.
Both are parts of supply chains - the stream of ingredients, information and
processes that turn raw materials into products for companies such as food
maker General Mills and Rockwell Collins, the Cedar Rapids-based manufacturer
of communications and aviation electronics equipment.
Businesses have increasingly recognized the importance of supply chains, said
organizers of the annual Voorhees Business Conference at Iowa State
University.
Efficient supply chain management helped Wal-Mart become a retail giant, and
many entrepreneurs know the issue can make or break a business, they add.
"Today, competition is not really between individual organizations," said Mike
Crum, a professor in the College of Business at ISU in Ames. "It's between
supply chains."
Efficient supply chains help companies succeed. Well-managed chains assure
that parts and ingredients arrive when needed from dependable suppliers,
flowing smoothly through a company or organization to create goods and
services. The supply chain often includes post-sales elements, too, such as parts
and service.
"It's very complex, and there's usually not a one-size-fits-all strategy," said Roger
Weiss, supply chain vice president for Rockwell Collins.
Supply chain issues have been the focus at the annual Voorhees Business
Conference at ISU for 15 years. The conference is named in honor of ISU
professor emeritus R. Dale Voorhees, a teacher and researcher in the fields of
transportation and logistics.
The 2007 session, held last week, featured speakers from Rockwell, General
Mills, the Mayo Clinic and America's Second Harvest - the Nation's Food Bank
Network.
"It's all about the customer, understanding needs of customers you serve and
delivering a good or service that meets the needs of the customer," said keynote
speaker Michael Halligan, a senior vice president for Chicago-based Second
Harvest, the nation's largest charitable domestic hunger-relief organization.
Second Harvest uses a computerized system that allows member food banks to
request particular types of products. Second Harvest then delivers food products
accordingly, rather than "pushing" them onto banks that might not need them.
Crum said a key element in supply chain management is a relationship between
companies and suppliers that is more collaborative than adversarial.
Rather than simply buying parts from the supplier that has the cheapest price,
companies take into account quality, dependability and service, such as on-time
delivery, Crum said.
Weiss agreed.
"I don't think you'll hear me say I'm looking for the cheapest part in town," Weiss
told the conference. "I don't think you want me to say that."
Rockwell provides equipment for passenger airliners.
Rockwell innovations include involving suppliers in the designing of new
equipment, and an "electronic portal" that allows suppliers computer access to
information such as inventories, future parts needs and assessments of how well
they're performing.
Rockwell directs more business toward suppliers that perform well, Weiss said.
General Mills, the Minneapolis-based maker of consumer products such as
Cheerios, Hamburger Helper and Green Giant vegetables, faces the challenge of
supplying its products to consumers in new retail channels.
"Consumers are willing to go beyond supermarkets to buy their grocery
products," said Jeff Kester, the company's senior manager for logistics
operations.
In 1980, 98 percent of food and beverage sales were at traditional grocery
stores, Kester said. By 2005, the figure had dropped to 65 percent, Kester said.
The remaining 35 percent was sold through nontraditional grocery marketing
channels such as drug stores, discount stores, convenience stores and super-
center-style stores that offer a full grocery line along with traditional discount
department store merchandise.
There's been a shift in power, too, because of giant operators such as Wal-Mart.
"The big are getting bigger and their expectations are growing," Kester said.
Keeping up with the trend requires building an agile supply chain network that
can respond to customer demand - shipping, for example, directly from a plant to
a store, rather than through a warehouse.
A global view plays a role, also. Take asparagus, for example, Kester said.
Domestic asparagus production normally occurs in a two-month period, requiring
a processor to stock up for a year's worth of sales.
Asparagus can be grown year-round, however, in some parts of the world,
allowing harvesting and production to be spread out and more aligned with sales,
he said.
The result: better quality because of shorter holding time, smaller production
amounts and improved shelf life.
Reporter William Ryberg can be reached at (515) 284-8104 or
bryberg@dmreg.com