Womble Carlyle Supply Chain Management Blog

Following legal issues related to supply chain management.

Thursday, November 12, 2009

Article discusses the importance of supply chain mapping

In a recent article, Supply Chain Digest offers thoughts on Supplier Relationship Management that echo comments made to the Triad Business Journal regarding the important first step of mapping your supply chain.

The Digest article states that there are 6 key steps to Supplier Relationship Management, with the first being “to segment supplies and identify a subset of those as ‘strategic.’ The most frequently used segmentation criteria, according to Webb and Hughes, are spend (historic, forecast or both), value opportunities, dependency, risk and business impact, account attractiveness and relationship complexity.”

In a nutshell, this is mapping based on the items a company actually buys, and triaging them based on “strategic” criteria – which items are mission critical to production, which items have a high per-unit cost, which items are a big-ticket expense (even if per-unit cost is low), etc.
The article stresses that after such analysis, appropriate changes in the supply chain itself will capture the savings by changing “existing supply chains and processes. The fundamental redesign of cost drivers has repeatedly unlocked savings in the range of 10-30 percent for leading organizations.”

The resulting relationship strategy depends on formalizing and managing key suppliers. These changes will typically require modification to or creation of key supply agreements that appropriately capture the Supplier Relationship Management results, and provide flexibility for future adjustments. Hence the reason legal counsel must be sensitive to and knowledgably of Supply Chain Management issues and concepts.

- - Greg Chabon

Monday, November 9, 2009

Greg Chabon quoted in Triad Business Journal SCM article

The Triad Business Journal turned to Womble Carlyle’s Greg Chabon for insight when putting together a major article on supply chain management. The article, “The missing link: Firms need to get to know their supply chain,” is written by staff reporter Michelle Cater Rash and appears in the Oct. 30-Nov. 5th edition of the newspaper.

Greg offers his thoughts on how companies can better understand supply chain management and control costs in this area. To get started, he suggests companies map out their supply chain to determine where money is being spent and where risks occur.

“It’s like your personal budget at home,” he tells the newspaper. “You need to look at everything you spend and where you spend it to see how you can control your costs.”

Monday, November 2, 2009

Rockslide closes I-40, creates supply chain headaches for truckers

Early on the morning of October 26th, a rockslide closed a part of Interstate 40 in western North Carolina. The highway is one of the state's key trucking routes, and one of the chief roads used by tourists and others traveling to the Blue Ridge Mountains, Tennessee and beyond.

According to experts in the trucking industry, the I-40 road closure will require truckers going both east and west to travel an extra 100 miles to detour around the rockslide. Depending upon their tariffs, it could cost an extra $125 to $200 each way. Typical daily truck volume through this section of I-40 is 12,000 to 15,000. That’s $3 million per day. The section is estimated to be closed for up to three months. That adds up to $270 million in extra freight costs, and right in the middle of the holiday season.

This unpredictable natural disaster underscores the need for continual review of your supply chain, and having recovery plans in place and multiple sources of supply and transport available.

- Greg Chabon