Vol. 1, Issue 1, April 2007

 

Hello,

Welcome to the inaugural issue of “Are you prepared?” This monthly newsletter will help connect the dots for stakeholders inundated with advice and headlines blaring about the vulnerability of their operations. Where are feasible solutions, scaleable from the smallest business to the largest multi-national corporation? Is the government forcing me to do something? Or as some of you may remember, the words of Alfred E. Newman, in MAD magazine, “What, me worry?”

It doesn’t pay to worry. It does pay to be prepared. Designing preparedness into your business is as important as implementing efficient processes and respect for the environment. Best of all, preparedness will pay many benefits – enable perfect order fulfillment, customer service reliability, employee confidence. You will be able to measure your results and see them in your bottom line.

The future offers many possibilities for “Are you prepared?” Enjoy this issue by scrolling down. Please forward comments and suggestions at www.scopedu.com.

Irvin S. Varkonyi
President

Supply Chain Operations Preparedness Education (SCOPE)
Fairfax, VA.
ivarkonyi@scopedu.com
703 863-9686

 

Shorten your supply chain – North American Integration

The newly elected Mexican government headed by President Felipe Calderon may focus more on infrastructure development according to the recent Alliance for the Security and Prosperity of North America, signed last year by the leaders of Canada, the United States and Mexico. One objective of that pact is to develop better trade practices among the three nations under a security system that includes participation by private businesses.

In Mexico, the Foreign Relations Secretariat and the Economics Secretariat will oversee creation of better infrastructure at ports and customs facilities as well as continuing to work toward harmonization of rules of origin and norms to reduce costs of doing business. This will mean revising the North American Free Trade Agreement (NAFTA).

This issue has many dimensions with numerable supporters and critiques on the politics and economics of these plans. Supply chain resilience is a major consideration in this project. Resilience as a corporate goal encompasses an almost infinite series of measurable trade-offs. Is there value in positioning goods for the US market in Mexico (or Canada) instead of Asia? See Logistics Today, March 8, 2007. Read an analysis by Drs. Kastner and Ackleson, Kansas State and New Mexico State Universities, respectively, at http://fss.k-state.edu/...

The planned NAFTA Super Highway or, as it is officially called, the Trans Texas Corridor, will be a centerpiece of this program, if it is realized. The state of Nuevo León, with its capital of Monterrey, has become the leading industrial center for trade between Mexico and the U.S. Infrastructure development will be a key to its growth. Organizations can improve their resilience and profitability under this alliance. Compliance issues remain important because of the Customs Trade Partnership Against Terrorism (CTPAT) and its component programs such as Free and Secure Trade (FAST)

Operational Excellence – Efficiency and/or resilience?

Operations professionals utilize Sales and Operations Planning (S&OP) as a critical tool to mold the enterprise’s business plan. Have you looked at S&OP as a tool to develop operational resilience, as well as operational efficiency? Aberdeen Consulting’s report on Best Practices in S&OP in June 2005 noted fundamental changes from pre-Y2K era demand/supply volumetric balancing approaches to incorporating characteristics specifically designed to cope and flourish in today’s chaotic marketplace.

Characteristic	Traditional	Dynamic S&OP
Timing	Quarterly	“Right time”: Weekly/Daily
Objective	Volumetric Balance	Profitability
Approach	Single iteration	Multiple “what if’s”
Ideal Capability	Responsiveness	Shaping
Organizational Scope	Sales and Operations	Enterprise + Network Partners
Predominant Activity	Data gathering and cleaning	Dynamic Decision Making

Aberdeen’s study focused on the three most successful elements of an S&OP program:

• Explicitly linking supply and inventories to demand dynamics
• Contingency planning to shape demand and harmonize supply
• Tightly managing the demand process

Operations excellence does in fact mean efficiency and resilience.

Conducting Business under the Watchful Eye of the Office of Foreign Asset Control

From mortgage companies to car dealers, many have used the Office of Foreign Asset Control's list of "specially designated national" to deny services and loans. In some cases, ordinary customers with names similar to those on the terrorist suspect list have had a hard time garnering services from private firms. An executive order from President Bush following the 2001 terrorist attacks prompted many businesses to get more restrictive, particularly since they could face $10 million in fines or up to 30 years in prison for conducting business with a suspected terrorist.

The Lawyers' Committee for Civil Rights notes that many customers have seen transactions denied or delayed because firms consulted the list. In fact, attorney Tom Hudson reports, "It does not have a minimum dollar amount. The local deli, if it sells a sandwich to someone whose name appears on the list, has violated the law." The U.S. Treasury Department, which made the list available to private firms, claims that the law can be confusing but notes that businesses should refer to the department's guidance on the law's application. See “ Ordinary Customers Flagged as Terrorists"
Washington Post (03/27/07) P. D1; Nakashima, Ellen; Lyford, Bob; Drezen, Richard