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Supply Chain Outsourcing and Cultural Alignment


In this installment of Value Unchained Live contributing blogger John Gattorna provides his insight on the importance of cultural alignment when selecting an outsource partner.

What do you think is the most important quality in an outsource provider? Please share your thoughts in the comments section below.

Video running time: 02:21


Upcoming Webinar: The Value of Outsourcing


Value Chain ExchangeNext month the Value Chain Exchange webinar series continues with The Value of Outsourcing. Attend this live webinar on May 12th at 11:00 a.m. EDT to hear Nathan White, Chief Operating Officer for Provo Craft, talk about the benefits his company realized after choosing ModusLink as its supply chain partner.

This webinar will examine the value of outsourcing, told through real-world experience. Learn how Provo Craft transformed its supply chain operations, improved its business processes and created new revenue streams. By outsourcing, Provo Craft experienced the following benefits:

  • The ability to focus on its core strengths, new product development, and retail channel management
  • Migration to a best-in-class global supply chain
  • Progressive supply chain savings
  • The flexibility and infrastructure to enter new global markets

Attend this free webinar to learn how you can make these benefits a reality for your business.



Celebrate Earth Day with a Sustainable Value Chain


The following guest blog post was written by Bill McLennan, President, Global Operations for ModusLink.

Earth DayOn this 41st anniversary of Earth Day, I think back to the first Earth Day which took place in the U.S. in 1970.  That event served in many ways as a catalyst for the creation of environmental organizations and regulations like the Environmental Protection Agency and the passage of Clean Air, Clean Water and Endangered Species Acts. Today, the movement towards environmentally friendly practices spans the globe. Throughout my career, I have seen corporate social responsibility grow as awareness and involvement in sustainable practices increase.  Both formal regulation of industry as well as consumer awareness have driven companies to change the way they manufacture and market their products.

Environmental responsibility is an issue that ModusLink takes seriously, not just on Earth Day, but every day of the year. We are committed to helping our clients move toward sustainable value chain solutions. Through services such as sustainable packaging redesign, Greenhouse Gas (GHG) footprinting, optimized configuration, recycling and asset disposition, our goal is to provide clients with environmentally sound processes and materials that will result in a more flexible and cost-effective value chain.

ModusLink’s commitment to social and environmental responsibility runs deeper than just the services and solutions we provide. This responsibility starts from within our corporate belief system and culture, and is driving us to examine our own suppliers, materials, operations and workplace processes.

To support this commitment, and help take it to another level, ModusLink is now an Applicant Member of the Electronic Industry Citizenship Coalition (EICC), an organization dedicated to improving social, economic, and environmental outcomes for all stakeholders in the electronics industry. This membership gives us the opportunity to participate in exclusive meetings, workshops and events that will help improve our corporate social responsibility efforts and the solutions and services we develop for our clients. ModusLink is progressively conforming to the EICC code of conduct and will apply this code to first-tier suppliers, where applicable. In addition, we are leveraging EICC’s tools and approach to the best of our ability, in support of the organization’s vision.

Dedication to organizations such as the EICC will help ModusLink uphold its commitment to environmental responsibility in new, exciting and progressive ways. Further, as our sustainable solutions continue to evolve, we will always grow our social and environmental standards from within.

What drives your company to be more environmentally sound? Do these practices start from within your organization? We encourage you to share.


Sustainability in the Value Chain


In this installment of Value Unchained Live I talk about things you can do to not only reduce the environmental impact of the value chain but also reduce costs and generate new revenue streams.

What is your company doing to improve the sustainability of your value chain activities?

Video running time: 02:01


Package Redesign Can Save the Planet


With Earth Day this Friday, sustainability and the environment are top of mind.  But it’s important to remember that small changes can have a big impact.  Especially in packaging design. The infographic below highlights real-world examples of changes in consumer electronics packaging and the resulting amount of CO2 that can be eliminated. 

ModusLink has helped our clients eliminate a combined 4,085 metric tons of GHG through package changes – the equivalent of 672 passenger vehicles not driven, 8,254 barrels of oil not used and 404,421 gallons of gasoline not used. Not only are these packaging changes good for the environment, they are also good for the bottom line, representing a $6.2 million annual cost reduction.

Do you have a package redesign success story? Share your experiences in the comments section below.

Sustainable Packaging - Infographic


Sustainable Packaging: Room for New organizations, Councils and Consortiums?


As I left Bentonville last week, wrapping up our semi-annual sustainable packaging meeting with the Walmart corporate team, I reminisce about a part of the meeting that made me feel a bit uncomfortable. 

Having been deep in the sustainable packaging movement for years, I felt like we were up to speed. At ModusLink, we beta tested both the Walmart and COMPASS packaging modeling tools before their launches, have been actively involved in the ISO standardization effort, judging awards programs and co-chairing sessions and speaking at various events over the years.  I thought we were at the forefront.

But an uncomfortable feeling came over me when the presentations started to roll.  One after another, the birthing of new sustainable packaging organizations, councils and consortiums were being announced, layered onto the existing gaggle of sustainable this and sustainable that already in place.  More meetings to attend on top of all our already saturated schedules at PIRA, SPC spring, SPC fall, ISTA, Walmart spring, Walmart fall, SPS, Esko, Pack Expo, East Pack, West Pack, etc etc … and that’s just grazing the U.S. events.  As a global company we keep tabs on European and Asian programs as well.

I looked around in the room and saw familiar expressions of concern among my brethren at the event.  During a break I had a conversation with a long time accomplice (we both have a reputation for boisterousness at the events).  “Victor,” I said. “How are we going to keep up with all these meetings?”  Victor owns a consultancy that prospers within the movement.  Unlike my role within the supply chain innovation group at ModusLink, sustainable packaging is his practice … 24/7.  “Chicago, then San Diego, now Bentonville …” Victor scowled. “And I’m starting to wonder why we need some of these new organizations.”

And that’s it.  Redundancy.  As we move through 2011 it will be more important than ever to harmonize our efforts within the movement.  Or else we could lose valuable time stopping the train and removing some excess baggage.  If we are ever going to make breakthroughs with sustainable packaging, educating the general public on what sustainability is and what they need to do to support the models we build behind closed doors within industry, we need to settle into an efficient stride.  Maybe we still have room for some new organizations, councils and consortiums … time will tell.


Value Unchained is One - On its Feet and Starting to be Heard!


First Birthday - Cupcake with Candle

A year ago, we quietly made our entrance into the social media world with the birth of our blog.  Like new parents, we had read the books, picked out a name and taken advice from friends and trusted advisors.  The joy of the new arrival was met with the enthusiasm of the extended family of bloggers nervous about keeping it fed and worried about what would emerge from the other end (those of you in legal know who you are!).

The first twelve months have had their share of ‘this just happened – what do we do now?’ moments and of course our share of firsts – first comment, first twitter coverage, first video blog post (parental guidance advised).  We proudly watched a steady increase in our online readership ‘height chart’.

As we mark this milestone, we would like to recognize some of those that have contributed to the development of Value Unchained:

  • Our expanding family of bloggers – now up to 21 representing seven different countries.  These contributors share a passion for the value chain topics that they cover and have found a voice within Value Unchained.
  • Our guest contributors and advisors – including clients, academics, analysts and social media colleagues.  Your comments have added a valuable dimension to the discussion and we can always learn from your experiences.
  • Our readers - In the first 12 months, our readers have come from 114 countries around the world.  As passionate (some might say obsessive) as we are about the value chain, the real power of this medium is to be able to tap into the experiences of the greater value chain community.  Thank you for your support and I encourage you to join the conversation through your comments and suggestions.
  • Our social media and blog master – Jenn Silva - who has been a key driving force behind Value Unchained.  Like any ‘parent’ her role has been part organizer, part coach, part educator and part disciplinarian.  Without her commitment we would not have reached this milestone.  Thank you, Jenn.

We hope that you have enjoyed the first year of Value Unchained.  We look forward to building on our success in future years by expanding the list of contributors, by employing more innovative means to fuel the discussion and by leveraging the knowledge of the extended value chain community.   

Stay tuned and share with us your suggestions on how we can improve Value Unchained into the future.

Value Unchained Infographic


Journey into Continuous Improvement


Continuous Improvement (CI) has significantly evolved at ModusLink over the last three years. It has been a journey that has driven many Lean Sigma projects that impact our operational processes and leading operations to become more efficient and effective, while at the same time improving client satisfaction. As processes are improved, what used to be our goal is now our new baseline and we now have a new goal to achieve (a new future state).

For more than a year now, we have extended the reach of Continuous Improvement into other functional areas of the company. Every process, no matter if it is operational or transactional, has an opportunity for improvement. For example, Process Variation and Waste Reduction are elements that can be reduced or maybe even eliminated as these unwanted components pose a risk to customer satisfaction and also are leaks of our profitability. It has been very interesting to see how Lean Sigma projects reach into all processes that comprise our supply chain management solutions. With the use of Lean Sigma tools, we can optimize our systems to the benefit of our clients and our business.

Lean Sigma projects are built on some common steps that are grouped in the Six Sigma methodology. This methodology uses data and statistical tools to improve processes and sustain improvements. It also uses both the empirical and the scientific approach so that when these two are combined and balanced, it is very powerful. This methodology consists of five phases: Define, Measure, Analyze, Improve and Control (DMAIC). These five phases are completed in chronological order.

Define – At this phase, projects are selected and Defined based on key business, operational and customer performance indicators (metrics), needs and or linkage to strategic goals and plans. Processes and products to be improved are identified. Key deliverables of this phase include a defined problem statement or business case, the project scope and goals. This information is captured in the project charter.

Measure – In this phase, we apply the use of tools to characterize the process. It also determines the baseline, process capability, sigma level and target performance of the process. We visit the process and document current state (as is) of the flow of people, materials and information. One of the most important key deliverables in this phase is the validation of the measurement system, this is where we make sure our data is reliable, this is one of the most important milestones in a project, because remember, you are going to use this data to analyze the problem, pilot/brainstorm the solutions, and create mechanisms of control. 
Analyze – In the Analyze phase, the sources of variation are identified through use of tools like fishbone diagrams and cause and effect diagrams. Also, statistical relationships between input and output variables are established. Where the magic occurs is when we transform all those identified sources of variation from being potential into true sources through statistical validation, which is the use of hypothesis testing. This is what will make the difference in choosing lasting countermeasures as the true sources have been identified.
Improve – At this phase, the performance of the process is optimized. Here the team identifies the solutions to optimize the outputs and eliminate or reduce variation and defects. Just like we did back in the Analyze phase where we used statistical tools to identify true sources of variation, here now the countermeasures need to also be verified statistically to ensure they work through a pilot. There is a reality check too of the solutions being proposed. We also update our documentation such as process maps, Failure Mode Effects Analysis (FMEAs), standard operating procedures and any other that requires an update with this new process.
Control – This phase documents, monitors and assigns accountability for sustaining the gains made by the process improvements. Here, statistical tools are also applied to ensure the improvement is being sustained over time. The use of control charts and some documents like the control plans are redefined. We also revise documents like the FMEA and the monitoring plan. It is strongly suggested to document lessons learned and best business practices to share with other similar processes.
What is very interesting about the methodology is that it can be applied to any type of process either in the shape of a Transactional Process Variability Reduction (TPVR), a Six Sigma or a Lean project. Where else do you think we can apply the DMAIC methodology? If you have been in a project before, please share your experiences in applying lean sigma techniques in non operational processes.


The Three Questions You Should Be Asking Your Clients


(Even Though You Think You Know the Answers)

QuestionsOk, so there are probably dozens of questions you should be asking your best clients, and most likely your account teams are asking your clients many questions on a regular basis.  But I’ve been thinking recently about some questions that I think aren’t asked frequently enough.  Questions that can serve any type of B2B relationship, including service providers, suppliers and channel partners. The reason I believe they aren’t asked frequently enough is that conscientious sales and account management professionals tend to think they know the answers already.  Many times they’re probably right, but the simple process of asking – and then listening to the answers – can uncover different answers than expected.

1. What are the top 3 things your company is counting on you to accomplish in the next 12 months?

This one seems easy – and is certainly something that is asked in many discussions early in the sales process ,but it can be just as valuable to ask this of the existing clients you know and love.  While a company’s core values may stay the same for a number of years, its short-term business priorities probably change frequently.  Making sure you have current, client-validated information about what your client is on the hook to deliver can help you stay relevant despite those changes.

2. What value do you get from using our services or products?

And, an important follow-up, “Does using our services help you with anything you said in response to the question above?” This is an area where assuming (incorrectly) that you know how your client would answer has dangerous consequences. 

3. Why did you choose to buy from us?

This one may seem like the same question as above, but it’s important to understand not only what perceived value you deliver, but also how buying decisions are made.  Consider the difference between a client who says “we bought from you because you offered the lowest cost, but what we really value is the flexibility and service you offer” and a client who says the inverse and you’ll see what I mean.

As I mentioned, I’m sure there are more than three important questions, but these stood out in my mind.  What else would you add to the list?


Going Direct to Consumer


Managing the Online Shopping Experience

In this video blog I offer some insight on successful e-business strategies and the importance of integrating the online experience with the other processes involved with fulfilling a customer’s order.

Video run time: 01:37 


Increasing Complexity of Managing a Global e-Commerce Function


In the last couple of months I attended several meetings with partners and clients where we discussed trends and experiences in the e-commerce market. One of the topics mentioned during almost every meeting was the increasing complexity to properly manage the growing e-commerce environment. As e-commerce solutions are becoming more and more global, and have several internal clients with country- or brand-specific needs, the complexity to support all of the requirements is increasing. Two drivers can be distinguished that create this complexity:

  1. Increasing demands from diverse parts of the organization 
  2. Managing the integration/relationship with “legacy” systems

Three areas that should be considered when thinking about the complexity of global e-commerce are demand, technical integration and responsibility.


The demand on e-Business teams is coming from multiple parts of the organization. These demands need to be channeled to avoid conflicting directions which will jeopardize the ability to manage the e-Business platform effectively.  In addition, the e-commerce role in CRM continues to expand as organizations adopt elements of social, community and emerging mobile shopping capabilities. Therefore, questions are arising on how to centralize these requests.

Technical integration

Due to the fact that e-commerce services are integrating more and more with “normal” business services and processes, the need for clear organizational structure becomes stronger. This need is the result of more departments going online to sell products and services. To be able to keep track of the amount of changes and the technical integration requirements, organizations must create a governing structure that will regulate the process.

Three distinct functions that will help to structure this are:

  • Direct:
    This function manages the e-commerce strategy/roadmap that is in line with the overall business vision. The direct function is also responsible for managing the coherence between the ‘adjust’ function (e-Business IT demand) and ‘cooperate’ function (e-Business IT supply). To be able to perform this function there are three overall processes/roles present: architecture and IT strategy, IT portfolio and IT program management.
  • Adjust:
    This function channels e-commerce demands (programs/changes/projects) into a cohesive plan. The adjust function is crucial in order to filter the incoming requests for services and truly understand the client’s requirements. In the case of sourcing, this role is vital to prevent an uninhibited stream of requests to the internal or external sourcing partners.
  • Cooperate:
    This function manages the stability and availability of e-commerce services. The cooperate function focuses on IT operation and delivery activities. The direction/guidance is provided by the direct function, the input for new functionality is provided by the adjust function.

Each of these three functions is dependent on the others. In the picture below, the relationships are visualized.

global e-commerce function diagram
Responsibilities and ownership

Once responsibilities have been defined, each function will require an outlined ownership. This may involve remodeling of the former traditional IT organization structure. In the conversations that I have had, it appeared that there is no “golden rule” that will fit for every organization.  Some subjects on responsibilities that we discussed were:

  • Which department should be leading the direct function? This includes processes like: architecture & IT strategy, IT portfolio/roadmap and IT program management. Does this function need to be a part of the CIO department, or can it be managed in a more decentralized department?
  • The adjust function is focused on managing the client’s service requests in several formats. Is this function part of the IT organization? Can standard models like business information services library (BiSL) and application services library (ASL) be used to structure these processes? How to manage if a part of your IT knowledge is acquired via sourcing partners or is only available in different time zones?
  • The cooperate function represents a set of core processes and functions to effectively support the IT supply organization’s services through day to day IT operations. Will complexity increase if a broad variety of (multi-regional) vendors is being used for support?

How does your organization manage the integration of the dynamic e-commerce IT environment and the more traditional IT legacy environment? What is your solution for managing this increasing complexity?



Slow Steaming and the Effects on the Global Supply Chain


Cargo ShipI read an interesting article on about some of the current changes in the container shipping industry. We are all aware of the current challenges with oil prices, but some of the effects on industry, and more importantly the global supply chain, have been fascinating. In an attempt to reduce the effect of increasing fuel costs, since 2008 most shipping lines have reduced the operating speed of their vessels. This approach is called “slow steaming.” If speed is reduced by 20% on a ship, this correlates to a 40% fuel saving. According to an article in the Guardian newspaper, the world's largest cargo ships are travelling at lower speeds today than sailing clippers such as the Cutty Sark did more than 130 years ago.

What does this mean in terms of the supply chain? The slower speeds are:

  • Reducing capacity in the container shipping market as ships are not making as many journeys as they used to.
  • There are fewer containers available as the containers are spending more time aboard ships, leading to shortages.
  • Supply chain delivery times are lengthening driving inventory levels up in the supply chain.
  • With capacity reduced in the market, container ship rates will climb.
  • Longer lead times mean that supply chains are less responsive as orders will be placed further and further away from the actual demand signal.

How will this change future supply chains?  Air freight may be required for more shipments to cope with sudden changes in demand. Postponement strategies may need to be implemented where the final configuration is performed closer to market. Planning rules in many companies will have to be recalibrated to take into account the new lead times.

Have you been affected by slow steaming in your business?


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