The April 1, 2008 issue of Theory and Practice from Manufacturing Insights had a great article on Design For X - the practice of incorporating different tangential factors into the design of a product that are intended to better integrate the new product with downstream activity. One of the more familiar DFX practices is, of course, DFM - Design For Manufacturing - where engineers strive to produce a product to be easier, safer and less costly to manufacture.

However, DFM is not the only DFX discipline that product companies need to consider. There is also DFSC - Design For Supply Chain, DFS - Design For Serviceability, DFC - Design For Compliance (& Sustainability), and DFW - Design For Warranty, and each of these is important. However, in today's economy where costs are rising and discretionary spending is falling, probably the most important consideration in product design is the end cost of production. Since early interaction between design and supply chain is key to making the right build-versus-buy and material selection before design decisions, and associated costs, are locked in - I'd argue that DFSC should be on top of every company's mind. Especially since, as the article points out, DFSC leads to further optimization and agility in the supply chain and reduces the impact of inevitable late changes and quality problems.

Of course, you cannot ignore DFS, DFC, and DFW. There are always going to be failures, and DFS evaluates design modularity and supply chain alternatives in order to maximize serviceability and enhance the customer ownership with inventory and reverse logistics operations in mind. A good design considers the complex dependencies between product design, reliability, service, inventory planning, and reverse logistics. The expected frequency of repairs and the type of parts that need to be replaced will determine the reverse logistics, depot repair, and part restocking requirements in the supply chain.

Similarly, if you actually want to be permitted to sell your products, you have to adhere to product compliance regulations such as RoHS and WEEE for the European electronics industry and the TREAD act for the American tire industry as well as corporate accounting regulations and overall social responsibility. Compliance cannot be an afterthought - it needs to be taken into account during design, manufacturing, shipment, servicing and decommissioning of products through a total life cycle approach. For example, in RoHS if even one separable component contains more than a minute trace of hazardous material, the entire assembly could be banned - leaving you with millions of dollars of inventory that cannot be sold.

Finally, you need to consider what reverse logistics and repair activities will exacerbate warranty costs and insure that tradeoffs are made to minimize those activities that will be most costly in the design process.

In short, DFX is a total lifecycle design practice that takes into account the costs and benefits of each and every design decision in the different life-cycle phases of a product, considering both the short and long term ramifications, from a Manufacturing, Supply Chain, Serviceability, Compliance, and Warranty viewpoint.

The financial reporting supply chain refers to the peopleand processes involved in the preparation, approval, audit, analysis and use of financial reports. The cycle both starts and ends with the investors and other stakeholders, who want to make informed economic decisions about a company and, therefore, require financial information to do so. The chain includes management, the board of directors, auditors, and regulators - and each have their part to play.

In recent years, there have been numerous efforts, particularly in the USA, to change and improve financial reporting. But to what end? Have the reporting processes become better or worse? Have financial reports become more or less relevant, reliable, and understandable? What needs to be done? These are questions that the International Federation of Accountants (IFAC) attempted to answer in a recent survey (administered in June and July of last year) that was summarized in a Current Perspectives and Directions piece released in March of this year.

The reported summarized results on the issues of corporate governance, the financial reporting process, the audit of financial reports, and the usefulness of financial reports. The results included positives, areas of concern, and improvements that are needed. But per haps the most important result of the study is that while corporate governance, the process of preparing financial reports, and the audit of such reports has clearly improved in the last five years, the financial reports themselves have not become more useful.

Considering the huge financial burden placed on companies to prepare these reports, especially since the introduction of Sarbanes-Oxley, this is troublesome. The reports should be useful to the target user groups, they should address the relevant concerns that shareholders have with respect to corporate governance and auditability, and they should enable the supply chain, not detract from it.

So what can be done? The "areas of concern" identified in the report give some clues:

• Reduced usefulness due to complexity
  In other words, the reporting requirements need to be simplified.
• Focus on compliance instead of on the essence of the business
  You comply with laws in the execution of your business, you do not execute your business just to comply with laws.
• Regulatory Disclosure Overload
  Too much information is required.
• Use of Fair Value
  What exactly is fair value?
• Difficult and often changing financial reporting standards.
  Financial reporting standards need to be steady.
• Lack of forward looking information.
  Companies need to move forward as well as looking back.

However, regulatory changes take significant amounts of time, and in the interim, you need to continue to produce complex reports to meet an ever increasing dizzying area of regulation. So what can you do? the doctor recommends that you:

Automate. Centralize (a copy of) all of the relevant financial data in a central database / data warehouse and acquire applications that automate the production of as many regulatory reports as possible.

Simplify. Use whatever leeway you have in report preparation to design reports that are as clear and easy to read as possible. Consider producing different summaries for different groups to simplify message communication. Extrapolate forward based on past and current performance and paint a full, realistic, picture for the stakeholders.

It won't solve all of your problems, but it's a start.

By far the best presentation at this year's 41st Annual Supply Chain & Logistics Canada Conference on Creating a Resilient Supply Chain was Jim Tompkins' (CEO of Tompkins' Associates) presentation on Bold Leadership for Organizational Acceleration. (He also gave the keynote, which was a great presentation as well, but this was one of the best presentations I've been to in years.)

Not only is Jim a great speaker, and if you haven't heard him, I encourage you to attend his session the next time you're at a conference where he is speaking, but he's also really good at telling it like it is. And in this presentation, where he gave his top three tips to bold leadership success, he didn't pull any punches. In reverse order, his tips were:

• Don't Do Anything Stupid,
• Focus, and
• Kill the Left-Suckers.

And I couldn't agree more! What's a left-sucker you ask? It's someone who can't do his (or her) job, and pulls his (or her) manager away from doing what the manager is supposed to be doing to help the individual who can't do his (or her) job. Why is this so bad? Isn't that what managers are for? Well, they are there to help, to teach, and to guide - but they're not there to do their subordinates' jobs. When managers are consistently pulled away from their jobs, they don't get their work done and then their directors have to step in to pick up the slack. When the directors get consistently pulled away from their jobs, they don't get their work done and then the C-Suite has to pick up the slack. When the C-Suite has to pick up the slack, they aren't getting their work done, and then the CEO gets pulled into fire-fighting on a daily basis - and instead of the CEO leading the C-Suite in setting strategic direction, he's bogged down in tactical execution while the company starts burning down around him.

As Jim says, a CEO should have three hours a day to do nothing but focus on the strategic. He needs to think about what the company is doing, what they should be doing in the short and long term, and how they are going to get there over the required time period to either reach the top or maintain their place on the top. If he's consistently being pulled in half-a-dozen directions, that's not going to happen. So you need to make sure that it does - by identifying, and eliminating, the source of the problem - the left-suckers!

If you can train them - great! If you can find them another role that they can do - that's good too. But if you can't train them, or find a role that they can do without constant supervision and hand-holding, then you have no choice ... you have to terminate them. Or they'll terminate your company. Bravo, Jim. Bravo!

In 2007, the Intergovernmental Panel on Climate Change IPCC published a report that called for a reduction in annual emissions from just under 50 billion tons of greenhouse gases today to 10 billion tons or less by 2050 to insure that the planet warms by no more than two degrees centigrade because even though there is uncertainty as to precisely how much damage is done by each ton of greenhouse gas that we generate, dramatic weather pattern changes in recent times have demonstrated that GHGs are damaging the planet, and that levels need to be reduced.

As noted in a recent McKinsey Quarterly article that addressed the issue of what countries can do about cutting carbon emissions, this report has spurred political leaders in some countries to action - with the European Union setting targets to reduce GHG emissions by 20 to 30% of the 1990 level by 2020 and some countries aiming to become carbon neutral by 2050.

But what will be required to reduce GHG emissions to that level? And which approaches will be most effective? In an effort to answer these questions, McKinsey has embarked on a multi-year research initiative and, to date, has taken a focused look at what can be done in Australia, Germany, the UK, and the US. To date, they have discovered that each country can reduce its emissions by at least 25% at little or no cost and without a significant change in the daily lifestyle of the populous. If this happened, it would be a great start when you consider that technology improves every year, and that focussed efforts will probably find another 25% in a few more years.

However, what really caught my eye in this article was their statement that many of the initial GHG reduction opportunities they identified are profitable. They noted that most of the reductions in this first 25% can be achieved through improved energy efficiency -- better insulation, energy efficient appliances and machinery, and energy-efficient heating and cooling systems -- which will also reduce energy requirements and, thus, energy bills. Furthermore, they also noted that there are also low-cost options to reduce GHG as well - coming in at less than $50 / ton. These options include improved fuel efficiency of vehicles (which should be possible, as we've all heard stories of non-hybrid and non-diesel test vehicles getting 50 mpg ratings, or twice what the average small sedan gets today), second generation biofuels (and not just energy inefficient corn-ethanol), better GHG emission management, wind power, solar power and, obviously, the planting of more forests. Considering that one hour of the sun's rays contains more energy than the entire planet uses in a year - the construction of vast solar arrays in deserts could make quite a dent in our energy needs. And since it is the heat from the sun's rays that causes the temperature differences between the land, water, and air needed to create wind, this energy is available even when the sun isn't shining -- and wind turbine farms can be used to capture even more of this energy. Considering the relatively high levels of carbon dioxide emissions per kilowatt hour in North America, solar and wind energy farms could make a substantial dent in GHG emissions - and pay for themselves over their lifetime (as sunlight and wind is free while the price of coal, oil, and natural gas is now increasing by the day, if not the hour).

Now, as pointed out by the McKinsey article, these cuts are not likely to be sufficient in the long run, but they are a great start and technology that is not ready today, or technology that is still too expensive for widespread adoption today, will improve, and come down in price, over time -- and chances are that by the time countries have exhausted the initial low cost options available to them, better technologies enabling more drastic reductions will be available at similar, if not lesser, costs. And there are even more low-cost options than the article mentions. For example, consider new landfill reduction trash processing plants, like the ones being built by Global Renewables, where 75% of the garbage is recycled or processed into a form in which they can be re-used and a considerable portion of the remaining waste is used to power the plant. The ideas being developed today are endless, and statistics dictate that some will be relatively low cost and / or deliver quick payback - making them very low cost in the long run.

Industry Week recently ran a good article called Just In Time - A Manufacturer's Litmus Test for Politicians that had some very good questions that I doubt any of the current US presidential candidates would have good answers to.

However, they, or their equivalents, are questions that any CEO, and, more importantly, any CSCO should be able to answer. Specifically:

• Vision
  What is your vision and mission for the supply chain department ... and how does it sync up with the vision and mission of the company?
• Relevant Experience
  Have you ever worked on a design team that made products similar to those being made by your company? If not, how do you plan to acquire the expertise needed to help the design team make the right decisions in the design stage before up to 80% of the product cost is locked in?
• Customer Focus
  How have you improved the customer experience in the past? What can you do for your current customers?
• Management Experience
  How do you plan to improve ROIC and contribute to overall company growth?
• Competitiveness
  How are you going to increase overall competitiveness of the company supply chain compared to the industry average?
• Environmental Stewardship
  How are you going to reduce the organization's carbon footprint while reducing cost and increasing efficiency?
• Trade Practices
  How are you going to achieve best-cost country sourcing while optimally determining what work to keep in house vs. what work to outsource?
• Training & Education
  An educated employee is a productive employee. What is you plan to insure your team stays up to date on best practices, processes, and methodologies?
• Research & Development
  Innovation should not be confined to R&D. What is your plan to insure that supply management contributes its fair share of innovation to corporate growth?

Today's post is again courtesy of Eric Strovink of BIQ.

9. Spend analysis is a "big iron" problem requiring large servers and databases.
Nonsense. Global 100 datasets fit easily onto ordinary laptop computers, and a modern laptop computer can deliver near-instantaneous drill-down times.

10. Static reports can deliver profound insight, replace procurement analysts and sourcing consultants, and even direct the course of entire sourcing programs.
This idea surfaces every now and then in the writings of pie-in-the-sky analysts and on blogs like Spend Matters. Most recently, it is being promulgated by spend analysis vendors who have run out of new marketing ideas. Of course, if it were really true, those reports would have existed long ago, and we'd all be out of a job.

11. Extracting data from accounting/ERP systems is difficult.
In fact, it's easy, and usually doesn't require IT resources to accomplish. The only difficulty I've ever experienced was a situation where a customer's head of IT folded his arms and swore up-and-down that it simply wasn't possible to dump data from their accounting system. One telephone call to the accounting system vendor (a helpful Canadian firm) provided the command necessary to extract the data trivially.

12. Accounts payable data is all you need for spend analysis.
This meme is on the decline. By now, many practitioners know that A/P spend visibility will find low-hanging fruit, and that it will identify buckets of spend that might be worth a closer look. But they also realize that in order to get to the next level of savings, it's necessary to build commodity-specific analyses that take into account existing contract terms and invoice-level data, as well as balance-of-trade and demand-side considerations. And, this is only the tip of the iceberg when one considers the analysis possibilities buried in HR data and in ops data such as service repair records. Experienced practitioners build data analysis cubes whenever necessary, throwing them away when done, or retaining them if it is useful to do so.

13. Real data analysis requires statistics and applied mathematics.
Some consultants argue that unless rigorous statistical analysis is applied to a dataset, no meaningful conclusions can be drawn. For sourcing, though, the data visibility provided by a spend analysis system is usually more than sufficient. For example, try loading invoice data for a particular SKU over an extended time frame, and scatter-plotting the price. Is the price the same? Many times it isn't, even if you have a contract that should have locked it down. When you find this pattern -- and chances are you will -- you've just written yourself a check, with no applied mathematics required.

14. Spend analysis systems should react in real time to real-time data.
This meme is becoming popular amongst armchair analysts and bloggers, but it's scoffed at by practitioners. What does real time mean? When the requisition arrives? When the PO is issued? When the invoice arrives? When partial payment is made? When full payment is made? And what is anyone going to do about it, anyway, in "real time?" This ties into the notion of the "executive dashboard," where the idea seems to be that an errant transaction will set off some sort of red alert. Even intrusion detection systems, which actually can justify a real-time component, have largely given up on this idea; the "fact" of an alert is not necessarily indicative of anything, and only in-depth after-the-fact pattern analysis can distinguish signal from noise.

15. "We already purchased an enterprise license for [xyz BI system or OLAP database], so we don't need yet another analysis capability."
This is the classic argument that the head of IT feeds to the CFO, which enables the CFO to kill the incipient spend analysis project, as she often does when fed such an argument (CFOs being people who really dislike spending money). Everyone feels good about saving money, and they move on to the next item on the agenda. Procurement doesn't dare argue with IT, typically, so that's the end of the story. Unfortunately, IT and the CFO have just doomed their company to another N years of zero spend visibility, because (a) nobody in Procurement knows how to configure either a BI system or an OLAP database, and (b) nobody in IT is going to take any time out to help them -- assuming, that is, that IT themselves understand the BI system or OLAP database, which in many cases they do not.

16. "It's important to deploy a spend analysis solution enterprise-wide, immediately."
Here are three reasons why this can be a poor idea.

• Procurement is a tricky business with lots of opportunities to overlook things even when work has been done competently and professionally. A spend analysis system, unfortunately, does a great job of pointing out those things. Why should Procurement hang its dirty laundry out the window for the whole company to see? Wouldn't it be a better idea to find (and correct) obvious errors quietly and privately, before publishing a company-wide spend cube -- if a company-wide cube is even necessary?
• Company-wide initiatives create company-wide inertia, starting with IT sticking its thumbs in its belt and making trouble about how much time/money/effort it's going to take to "set up a server" or, worse, how much time and effort it's going to take to "evaluate the vendor's remote hosting site for security compliance." Wouldn't you rather be running the spend cube immediately on your laptop, rather than waiting months for IT to get its act together? You can always deploy the cube company-wide, later, without any pressure.
• Company-wide spend analysis initiatives create company-wide opportunities to kill the initiative. These days, spend analysis can be obtained inexpensively and set up quickly, within your discretionary budget and without asking anyone's permission.

17. It will cost a lot to outsource cube construction, or to train internal resources on the spend analysis system.
This situation has improved substantially, and it continues to improve. New services offerings from some vendors have cut this price substantially from the levels of a few years ago; and contingency-based sourcing consulting firms will not only build your spending cube for free, but also return solid savings to your bottom line.

In summary:

9. Spend analysis can be done on a modern laptop computer.

10. A static report is not capable of providing much in the way of insight.

11. Data extraction from the vast majority of accounting / ERP systems is quite easy. (It might take some mapping to get it into cube form, but that's why spend analysis tools come with good E"T"L tools.)

12. Accounts payable data is just the beginning. Every database is its own gold mine!

13. Data analysis starts with well mapped and relatively complete data - not advanced statistics or applied mathematics. Visibility is key.

14. The spend analysis system should be capable of accepting updated data when the data - and the analyst - is ready for new data. The answer does not lie in "real-time" or "monthly updates" because every organization, and every data set, is different.

15. BI & OLAP is not spend analysis.

16. As with any solution, initial deployment should be limited in scope to that which is controllable while the learning curve is overcome.

17. Training and consulting is a lot more affordable than you think, and if deployed on invoice data first, will return immediate ROI.

Thanks again, Eric!

This is a topic I've been meaning to write about for a while, but due to the depth required even in an introductory piece, and, thus, the time it would take to construct a post I'd be happy with, I've been putting it off until I had the time. I still don't have the time, but Industry Week just published The 'What, Why, How and When' of Carbon Footprinting, which is a really good introduction to the topic. It's five pages, but worth the read. I'll highlight some of the key points below, and add a few of my own.

The article starts off by noting that H.R. 2764, signed into law by President Bush in December of 2007, contains a section that states that of the funds provided in the Environmental Programs and Management account, not less than $3,500,000 shall be provided for activities to develop and publish a draft rule not later than nine months after the date of enactment of this Act, and a final rule not later than 18 months after the date of enactment of this Act, to require mandatory reporting of greenhouse gas emissions above appropriate thresholds in all sectors of the economy of the United States'.

This is a lot more innocuous than it may sound. This says that, by September of this year, reporting guidelines on draft emission standards will be drafted and, more importantly, by July of 2009, GHG emission reporting will be mandatory in the US - just like it is in Australia under the National Greenhouse and Energy Reporting Act of 2007. (And if you're reading this down under and need help preparing the reports, there's a new offering by Tradeslot Pty Ltd called Carbon Navigator that might be able to help.)

Chances are those guidelines will be similar to the mandatory reporting regulation that California is expected to introduce any day now, which is expected to be largely based on the GHG protocol Standards developed through a joint effort of the World Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI), which is becoming the defacto Global Standard.

However, the introduction of legislation is not a bad thing. Collection of this data will help consumer and manufacturer alike! Consumers will have the power to differentiate between green claims and green reality, and the companies that are green in practice, and not just in advertising, will gain favor in the hearts and minds of environmentally conscious consumers. Furthermore, forward-thinking managers will be able to use the resulting data to reduce costs, drive efficiencies, and even open up new sales opportunities. Without the data collection effort that is required to properly tabulate and report emissions, Wal-Mart would have never figured out that the refrigerants used in its grocery sections contributed a greater percentage of its greenhouse gas footprint than its truck fleet!

So what is a carbon footprint? It's a greenhouse gas emissions inventory that includes all of the greenhouse gases (methane, nitrous oxide, and HFCs) in addition to carbon dioxide that is generated by a company in its day to day activities.

How is it measured? The GHG Protocol specifies standard calculation methods and provides worksheets that a company can use to calculate its carbon footprint in a manner that can be compared in an apples-to-apples fashion with other companies. It has three scopes:

• emissions from sources owned by the company
• emissions from electricity purchased from the grid
• emissions created by suppliers in the company's value chain

The first time you do it, it will be a major undertaking. Eaton Corp. started doing ISO 14000 (environmental management) back in 2000, but wasn't able to aggregate verifiable data until 2006. However, the article contains some advice from John Hoekstra of Summit Energy in implementing a program to document and report carbon footprints. It goes as follows:

1. Know the Goal and the Road Ahead
   A formal plan lets you focus on the key data requirements.
2. Set a Realistic Baseline
   Understand your operations and determine if it is possible to compile a historical emissions inventory that meets data materiality thresholds.
3. Define the Boundaries
   Bite off what you can cost-effectively chew.
4. Map out all of your Sources
   Identify each facility, asset, and potential emissions source.
5. Make appropriate assumptions.
   Identify ways to calculate emissions that ensure completeness, but balance level of detail. Where possible, use the GHG Protocol as a guide.
6. Centralize Data Management
   Data is the key.
7. Be flexible
   The regulatory requirements are going to be in a state of formation and flux globally for some time. Be sure you can modify and enhance reporting processes and systems as required.
   
   and to this I'd add
   
   
8. Be patient
   You're not going to accomplish all of your goals overnight.
9. Start Now!
   As per rule 8 above, it's going to take some time - so get a jump start on it and you'll be a leg up over the competition and that much closer to identifying cost savings opportunities that are environmentally friendly.

Until you've collected the data, you won't know where your biggest offenses lie and where your biggest opportunities are. Consider the example of a life-cycle analysis on a 12-pack of glass bottled beer that found that 68% of the carbon footprint was due to supplied materials, and that glass bottles accounted for an astonishing 56% of the carbon footprint.

The life-cycle analysis that will be required as part of the carbon footprinting will pay off! Consider the recently published article Life-cycle Analysis Pays Off in the same publication that documented Caterpillar's Life-cycle analysis project where they found that the remanufacture of a cylinder head reduced GHG emissions by 50%, energy usage by 80%, water usage by 90%, and material usage by 99%, when compared to the manufacturer of a new one.

Wired recently had a short, graphical, article, on the new trash processing facility in Sydney, Australia that was built by Global Renewables in its effort to shrink the millions of tons of recyclables that end up in landfills every year. A high-tech marvel of a processing plant that uses technology that includes wind sifters, optical scanners, magnets, and electrical currents, it is capable of diverting 75% of a city's waste stream to recycling. This significantly cuts down on landfill space requirements, methane production (from rotting garbage), and greenhouse gas emissions.

The 6-step plus process, depicted in the graphic linked through the thumbnail below, is quite ingenious.

1. Robotic Arms open the trash-bags (to prevent workers from injuring themselves on dangerous or hazardous materials) and then workers remove contaminants and toxic materials for safe disposal. The rest of the trash is allowed to proceed on a conveyor belt.
2. A vacuum separates paper and plastic, which are separated by optical scanners.
3. Electrical eddy currents subject the trash to a magnetic field which makes the nonferrous metals actually 'jump' into a bin.
4. Electromagnets attract ferrous metals and a small belt channels the material into a separate chamber for compacting and resale as scrap.
5. A computer-guided camera tracks paper and plastic and air jets blow the refuse into appropriate bins.
6. What's left is fed into a percolate tank and washed with warm water to dissolve readily soluble carbon and other organic compounds. The liquid enters a digester which turns the dissolved carbon into bio-gas to power the plant. A composting hall ferments everything else into fertilizer.

One of the publications I like to peruse regularly is Chief Executive, but more often than not, supply chain has been missing from their pages. However, it looks like that might be changing and it was nice to see the recent article on Shocks to the Supply Chain that noted the importance of the supply chain and the need for a company to look at its supply chain "holistically".

With fuel costs approaching 120 a barrel as I write this, limited shipping capacities, skyrocketing raw material costs in certain categories, and supply chain risk increasing by the day, it's nice to see supply chain getting more press in publications targeted at chief executives as it could be the only shot at profitability for many company's in today's economy which is currently undergoing a recession and stagflation.

It's also nice to see that it noted that supply chain is taking on importance in companies of all shapes in sizes. For example, the article noted that Jamba Juice takes supply chain issues so seriously that last July it made the effort to lure the Vice president of Global Procurement at Wal-Mart to its operation. Furthermore, in an effort to control costs, they also use long-term forecasting models to minimize surprises and develop a holistic approach to mitigate future cost risk.

And although the article was pretty high-level, and not that useful to a supply chain pro, it also had some good advice at a level an executive not well versed in supply chain can understand. For example, the article notes that the supply chain should be flexible and allow for different modes of sourcing, manufacturing, and transport if breaks emerge or if costs increase. So, even though it won't tell you anything you don't already know, it would be worth your time to make sure your CEO's copy of Chief Executive falls open on those pages. Because maybe, just maybe, they'll get a little closer to understanding just how important you are.

SupplyChainBrain recently published a good article by Jeremy Dotson of APEX Analytix that noted that industry estimates show inaccurate freight bills add an average of 0.2% to a typical company's annual freight costs (which is significant on a 100M spend, as this equates to 200K). However, vendors who fail to comply with established routing guidelines can have twice the impact - an average of 0.4%, or a 400K drain to the bottom line. Maybe 0.4% is not that significant in the grand scheme of things, but it's just the tip of the iceberg! If you identify, and stop, five leakages in the 0.4% range, you've saved 2% - or 2M. And you can't tell me that's not significant!

The article described seven common sources of errors that, collectively, will drain percentage points of potential savings from the best network design. Thus, it's important to be familiar with these errors and institute procedures and methods to stop them from occurring.

• Failure to Combine Shipments
  The article points out that sometimes vendors overlook instructions to ship merchandise to the same destination on the same trailer and ship on multiple trailers at LTL rates, costing you significantly more than you need to be paying. However, even more important, is that in companies where different buyers handle different categories, it happens all the time! They'll each schedule pulls from a central warehouses on different days when all pulls can be on the same day and freight consolidated.
• Failure to Create a Single Bill of Lading
  Even if all shipments are consolidated onto a single trailer, if the shipments aren't combined into a single bill of lading, you lose out on volume discounts. More importantly, if individual shipments consolidated onto the same trailer have a volume less than the minimum volume, you'll be paying the difference for each individual shipment on the trailer!
• Selecting the Wrong Carrier or Shipment Method
  Shipping by air when by sea is okay can cost hundreds of thousands of dollars extra!
• Sending pre-paid shipments via freight collect
  Another case of the left hand not knowing what the right hand is doing. Adopt a standard policy for shipments and stick to it!
• Failure to Automate Records
  Unless you do this, it will be virtually impossible to dig through mountains of paper to find the problems.
• Failure to Make Your Routing Guide Web-accessible
  This allows vendors to enter information on each shipment and receive the specific routing instructions they are to use.
• Failure to Review and Update the Routing Guide Regularly
  Your supply chain isn't static. Therefore, your distribution network is not static either. As fuel costs rise, cost-effective breakpoints and shipping methods change. As demand changes, so does appropriate inventory levels and locations. As volume shifts between suppliers, your network needs to adapt.