Working on the Chain

With profits down and perils up, companies are focusing on supply-chain management.

Already, McKissock’s Marines have streamlined processes so that the repair technician can receive his part in less than 24 hours. They have shrunk safety stocks of medical supplies to 15 days while cutting intermediate stocks, such as engines and transmissions, by $100 million. In the 40 months since the project began, McKissock’s team has freed up 1,800 Marines from logistics duties, reduced order-cycle time for products and services by 35 to 50 percent, reduced the annual tonnage shipped by up to 70 percent, and achieved inventory cost savings in the range of $125 million to $180 million a year.

And slowly, they are untangling the IT mess. To identify redundancies, techies compared the Marines’ systems with the Supply-Chain Council’s SCOR model; a number of unnecessary systems have been unplugged. A detailed technology architecture remains to be worked out, but the aim is an efficient, integrated complement of supply chain systems.

The Defense Department is clearly impressed with what McKissock’s troops have accomplished so far; it has designated Marine logistics as its supply chain “re-invention lab.” Meanwhile, the new architecture of business rules and processes is currently being tested at the Marine base at Camp Lejeune. The processes will then be rolled out in the 2d Marine Division, and reform should go worldwide by 2003.

One thing won’t change: like any good supply chain operation, Marine Corps logistics puts the customer’s needs first. “We’re not looking to save money or people,” says General McKissock. “We want to meet the war fighter’s requirements, and be more effective on the battlefield.” —E.T.

In Any Event

Samples of events and exceptions captured by SCEM systems.
Source: AMR Research, 2002

Inventory Status/Changes

Events: Exceptions
Receipt of goods: Status outside minimum/maximum boundaries
Condition of delivery: Quality discrepancies
Advance Shipping Notice (ASN): Discrepancy from ASN
Demand forecasts and changes: Errors in forecast
Production of goods completed: Inconsistent inventory counts

Order Status

Events: Exceptions
Purchase order: PO received or not/early/missing
Sales order: Cancellation
Elimiation of product from line: Change in routine ordering policies
Placement of order: Order amount above threshold
Placement of order: Order inconsistent with production-schedule requirements

Top 10 SCM Vendors

Ranked by 2001 SCM license revenue.
Source: AMR Research, 2002

Company Name
Revenue 2001($millions)
Growth Rate 2000­2001
1. i2 Technologies
384
-31%
2. SAP
164
22%
3. Manugistics
128
14%
4. IBS
60
17%
5. Retek
59
128%
6. Manhattan Associates
45
73%
7. Vastera
43
163%
8. Aspen Technology
40
-14%
9. J.D. Edwards
32
-23%
10. Descartes
30
19%

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